8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 12, 2013

COLT DEFENSE LLC

COLT FINANCE CORP.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

333-171547 (Registration Number)	32-0031950 27-1237687 (IRS Employer Identification Number)
547 New Park Avenue, West Hartford, CT (Address of principal executive offices)	06110 (Zip Code)

Registrant’s telephone number, including area code: (860) 232-4489

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01                      Entry into a Material Definitive Agreement.

On July 12, 2013, Colt Defense LLC (the “Company”), New Colt Acquisition Corp., a wholly-owned subsidiary of the Company (“Merger Sub”), New Colt Holding Corp. (“New Colt”) and Donald E. Zilkha and Edward L. Koch III (the “Stockholder Representatives”) entered into an Agreement and Plan of Merger (the “Merger Agreement”).  As a result of this Merger, the two manufacturers of Colt firearms will be consolidated into a single enterprise, reversing a separation that occurred in 2003. In accordance with the Merger Agreement and pursuant to the Delaware General Corporation Law, on July 12, 2013 Merger Sub merged with and into New Colt, and New Colt, as the surviving corporation, became a wholly-owned subsidiary of the Company (the “Merger”).  The Company acquired 100% ownership of New Colt in exchange for an aggregate merger consideration equal to $60.5 million in cash, subject to certain adjustments (the “Merger Consideration”).  A portion of the Merger Consideration was placed in a third party escrow as security for certain post-closing adjustments to the Merger Consideration and obligations of New Colt equityholders under the Merger Agreement.

In connection with the Merger:

·   on July 12, 2013, the Company, Colt Finance Corp. (“Colt Finance”), Merger Sub, New Colt, Colt’s Manufacturing Company, LLC (“Colt’s Manufacturing”) and Colt Canada Corporation (“Colt Canada” and together with the Company, Colt Finance, Merger Sub, New Colt and Colt’s Manufacturing, the “Borrowers”), and Colt Defense Technical Services LLC (“CDTS”) and Colt International Coöperatief U.A. (“Colt Netherlands” and together with CDTS, the “Guarantors”), entered into a term loan agreement (the “Term Loan Agreement”) with Cortland Capital Market Services LLC, as Agent, and the lenders party thereto (the “Lenders”). Under the terms of the Term Loan Agreement, the Lenders extended credit in the form of senior secured term loans of $50.0 million. The Company used the proceeds, together with the proceeds from the sale of additional Company Common Units (as described below) and cash on hand, to finance the Merger and to pay fees and expenses in connection with the Merger and its related transactions. The maturity date of the Term Loan Agreement is November 15, 2016;

·   on July 12, 2013, the Company, Colt Canada (together with the Company, each individually an “Existing Borrower” and collectively, “Existing Borrowers”), Colt Finance, CDTS and Colt Netherlands (together with Colt Finance and CDTS, each individually an “Existing Guarantor” and collectively, the “Existing Guarantors”), Merger Sub, New Colt (together with Merger Sub and Existing Guarantors, each individually a “Guarantor” and collectively, “Guarantors”) and Colt’s Manufacturing (together with Existing Borrowers, each individually a “Borrower” and collectively, “Borrowers”) entered into Amendment No. 4 to Credit Agreement (“Amendment No. 4”) to the Credit Agreement, dated as of September 29, 2011, by and among Existing Borrowers, Colt Finance, Wells Fargo Capital Finance, LLC, as Agent, Sole Lead Arranger, Manager and Bookrunner, and the lenders party thereto (as amended by Amendment No. 1 to the Credit Agreement dated February 24, 2012, Amendment No. 2 to the Credit Agreement dated March 22, 2013 and Amendment No. 3 to the Credit Agreement dated June 19, 2013, and as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, restructured, refinanced or replaced, the “Credit Agreement”).  Amendment No. 4 was entered into to permit Colt’s Manufacturing to become a borrower under the Credit Agreement, and to permit Merger Sub and New Colt to become guarantors under the Credit Agreement, in connection with the Merger;

·   on July 12, 2013, the Company entered into an Indenture Supplement (the “Supplemental Indenture”) by and among New Colt (as successor by merger to Merger Sub), Colt’s Manufacturing (together with New Colt, the “New Subsidiary Guarantors”), the Company, Colt Finance (together with the Company, the “Issuers”), each other then-existing Subsidiary Guarantor under the Indenture dated as of November 10, 2009 (as supplemented by the Indenture Supplement dated June 19, 2013 and as the same now exists or may hereafter be amended, supplemented, waived or otherwise modified, the “Indenture”), and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as Trustee under the Indenture.  The Indenture provides for the issuance of an aggregate principal amount of the Issuers’ $250.0 million 8.75% Senior Notes due 2017.  Under the terms of the Supplemental Indenture, the New Subsidiary Guarantors become parties to the Indenture and each agree to jointly and severally guarantee the obligations under the Indenture;

·   on July 12, 2013, the Company entered into a Limited Liability Company Interests Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company issued and sold 31,165.589 of the Company’s common units to certain new and existing holders for aggregate proceeds of $9.0 million. The Company used the proceeds, together with the proceeds from borrowings under the Term Loan Agreement and cash on hand, to finance the Merger and to pay fees and expenses in connection with the Merger and its related transactions;

·   on July 12, 2013, the Company entered into a Consulting Services Agreement (the “Consulting Agreement”), by and between Sciens Institutional Services LLC (“Sciens”), an affiliated entity, and the Company. Under the Consulting Agreement, Sciens will provide certain legal, financial, management and tax consulting and other services for a yearly fee of $650,000. The Consulting Agreement is effective as of July 12, 2013 and will remain in effect until the earlier of July 12, 2020 or the occurrence of a Capital Transaction (as defined in the Consulting Agreement). The Consulting Agreement will be automatically extended for additional one-year periods after July 12, 2020 unless the Company gives at least 120, but no more than 180, days’ notice to the contrary prior to July 12, 2020 or each anniversary thereof, as applicable;

·   on July 12, 2013, Colt’s Manufacturing entered into an Option Agreement (the “Option Agreement”) by and among Colt’s Manufacturing, Colt Archive Properties LLC (“Colt Archive”) and Donald E. Zilkha and John P. Rigas (together, the “Owners”). Under the Option Agreement, Colt’s Manufacturing received, and the Owners granted, an option to purchase 100% of the membership interests in Colt Archive (the “Interests”). Colt’s Manufacturing may exercise its option at any time prior to July 12, 2015 upon 60 days’ prior written notice to the Owners. If the option is exercised, the aggregate purchase price for the Interests would be $5.0 million subject to possible upward adjustments based on Colt Archive’s pre-tax revenue as described in the Option Agreement; and

·   on July 12, 2013, the Company entered into a Services Agreement (the “Services Agreement”) by and among the Company, Colt Archive and Colt’s Manufacturing. Under the Services Agreement, Colt’s Manufacturing will provide certain archival, record-keeping, research and other services to Colt Archive related to the Archive Assets (as defined in the Services Agreement) for an annual fee of $241,300 for the first year of the Services Agreement and $248,500 for the second year of the Services Agreement. The Services Agreement is effective as of July 12, 2013 and will remain in effect until July 12, 2015. The Services Agreement will be automatically extended for additional one-year periods after July 12, 2015 unless either Colt’s Manufacturing or Colt Archive gives at least 15 days’ notice to the contrary prior to July 12, 2015 or each anniversary thereof, as applicable.

The foregoing descriptions of the Merger Agreement, Term Loan Agreement, Amendment No. 4, Supplemental Indenture, Purchase Agreement, Consulting Agreement, Option Agreement and Services Agreement are qualified in their entirety by reference to the full text of the Merger Agreement, Term Loan Agreement, Amendment No. 4, Supplemental Indenture, Purchase Agreement, Consulting Agreement Option Agreement and Services Agreement, as applicable, copies of which are attached as Exhibits 2.1, 10.1, 10.2, 4.1, 10.3, 10.4, 10.5 and 10.6 respectively, to this Current Report and are incorporated herein by reference.

ITEM 2.01                      Completion of Acquisition or Disposition of Assets.

The information in Item 1.01 of this Current Report is incorporated by reference.

ITEM 2.03                      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 of this Current Report is incorporated by reference.

ITEM 8.01                      Other Events.

On June 28, 2013, Colt Defense LLC amended and restated its Amended and Restated Limited Liability Company Agreement, a copy of which is filed as Exhibit 3.1 to this Current Report and which is incorporated herein by reference.

On July 12, 2013, the Company issued a press release titled “Colt Defense LLC and New Colt Holding Corp. Merge,” a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

ITEM 9.01                      Exhibits.

EXHIBIT NO.	DESCRIPTION
2.1	AGREEMENT AND PLAN OF MERGER, dated July 12, 2013 by and among Colt Defense LLC, New Colt Acquisition Corp., New Colt Holding Corp. and Donald E. Zilkha and Edward L. Koch III.
3.1	AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF COLT DEFENSE LLC, dated as of June 12, 2003, reflecting the amendments adopted as of July 9, 2007, August 11, 2011, March 2012 and June 28, 2013.
4.1	INDENTURE SUPPLEMENT, dated as of July 12, 2013 by and among New Colt Holding Corp., Colt’s Manufacturing Company, LLC, Colt Defense LLC, Colt Finance Corp. and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as Trustee under the Indenture dated as of November 10, 2009.
10.1	TERM LOAN AGREEMENT, dated July 12, 2013 by and among Colt Defense LLC, Colt Finance Corp., New Colt Acquisition Corp., New Colt Holding Corp., Colt’s Manufacturing Company, LLC, Colt Canada Corporation, and Colt Defense Technical Services LLC, Colt International Coöperatief U.A., Cortland Capital Market Services LLC, as Agent and the lenders party thereto.
10.2	AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of July 12, 2013 by and among Wells Fargo Capital Finance, LLC as agent for the Lenders pursuant to the Credit Agreement (as defined therein), the parties to the Credit Agreement as lenders, Colt Defense LLC, Colt Canada Corporation, Colt Finance Corp., Colt Defense Technical Services LLC, Colt International Coöperatief U.A., New Colt Acquisition Corp., New Colt Holding Corp. and Colt’s Manufacturing Company, LLC.
10.3	LIMITED LIABILITY COMPANY INTERESTS PURCHASE AGREEMENT, dated as of July 12, 2013, by and between Colt Defense LLC and the buyers party thereto.
10.4	CONSULTING SERVICES AGREEMENT, dated as of July 12, 2013, by and between Colt Defense LLC and Sciens Institutional Services LLC.
10.5	OPTION AGREEMENT, dated as of July 12, 2013 by and among Colt’s Manufacturing Company LLC, Colt Archive Properties LLC, Donald E. Zilkha and John P. Rigas.
10.6	SERVICES AGREEMENT, dated as of July 12, 2013 by and among Colt Defense LLC, Colt Archive Properties LLC and Colt’s Manufacturing Company LLC.
99.1	Press Release dated July 12, 2013.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COLT DEFENSE, LLC

By:  /s/ Gerald Dinkel

       Name:  Gerald Dinkel

       Title:    Chief Executive Officer and Manager

Dated:  July 15, 2013

EX-2.1

Exhibit 2.1

CONFIDENTIAL

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

COLT DEFENSE LLC,

NEW COLT ACQUISITION CORP.,

NEW COLT HOLDING CORP.

AND

DONALD E. ZILKHA AND EDWARD L. KOCH III, AS STOCKHOLDER REPRESENTATIVES

July 12, 2013

TABLE OF CONTENTS

Page

	ARTICLE I
	THE MERGER
Section 1.1	The Merger	1
Section 1.2	Closing	2
Section 1.3	Effective Time	2
Section 1.4	Effect of the Merger	2
Section 1.5	Certificate of Incorporation and Bylaws	2
Section 1.6	Directors and Officers	3
Section 1.7	Effect on Capital Stock	3
Section 1.8	Merger Consideration	4
Section 1.9	Company Warrants	7
Section 1.10	Surrender of Certificates and Warrants and Payment	7
Section 1.11	No Further Ownership Rights in Company Capital Stock; No Interest	9
Section 1.12	Lost, Stolen or Destroyed Certificates	9
Section 1.13	Closing; Closing Deliverables	9
Section 1.14	Taking of Necessary Action; Further Action	10
Section 1.15	Tax Withholding	11
Section 1.16	Payment of Closing Debt	11
Section 1.17	Payment of Company Transaction Expenses	11
Section 1.18	Termination of Leases	11
	ARTICLE II
	REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1	Organization, Standing and Power	12
Section 2.2	Capitalization; Title to the Securities	12
Section 2.3	Authority; No Conflict	13
Section 2.4	Financial Statements	14
Section 2.5	Absence of Certain Changes	14
Section 2.6	Absence of Undisclosed Liabilities	15
Section 2.7	Litigation	15
Section 2.8	Governmental Authorization	15
Section 2.9	Real Property	16
Section 2.10	Personal Property	16
Section 2.11	Intellectual Property	16
Section 2.12	Tax Matters	17

i

Section 2.13	Employee Benefit Plans	19
Section 2.14	Compliance With Laws	20
Section 2.15	Material Contracts	20
Section 2.16	Board Approval; Vote Required	21
Section 2.17	Brokers’ and Finders’ Fees	21
Section 2.18	State Takeover Statutes	21
Section 2.19	Information Statement	21
Section 2.20	Environmental Matters	22
Section 2.21	Disclaimer of Other Representations and Warranties	22
	ARTICLE III
	REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 3.1	Organization, Standing and Power	23
Section 3.2	Authority	23
Section 3.3	Interim Operations of Merger Sub	24
Section 3.4	Litigation	24
Section 3.5	Brokers’ and Finders’ Fees	24
Section 3.6	Available Funds	24
Section 3.7	Solvency	25
	ARTICLE IV
	CONDUCT PRIOR TO THE CLOSING DATE
Section 4.1	Conduct of Business of the Company	25
Section 4.2	Restriction on Conduct of Business of the Company	25
Section 4.3	Solicitation	27
Section 4.4	Financing	28
Section 4.5	Resignation or Removal of Directors and Officers	28
Section 4.6	Notice of Redemption of Series B Preferred Stock	28
	ARTICLE V
	ADDITIONAL AGREEMENTS
Section 5.1	Access to Information; Notification of Certain Matters	28
Section 5.2	Confidentiality	29
Section 5.3	Public Disclosure	29
Section 5.4	Reasonable Best Efforts; Consents; Cooperation	30
Section 5.5	FIRPTA Certificate	31
Section 5.6	Indemnification; Directors’ and Officers’ Insurance	31
Section 5.7	Takeover Statutes	32

ii

Section 5.8	Certain Tax Matters	32
Section 5.9	Preservation of Records	35
	ARTICLE VI
	CONDITIONS TO THE CLOSING
Section 6.1	Conditions to Obligations of Each Party to Effect the Merger	36
Section 6.2	Additional Conditions to Obligations of the Company	36
Section 6.3	Additional Conditions to Obligations of Parent and Merger Sub	37
Section 6.4	Frustration of Conditions	38
	ARTICLE VII
	TERMINATION; EXPENSES
Section 7.1	Termination	38
Section 7.2	Effect of Termination	39
Section 7.3	Termination Fee	39
Section 7.4	Expenses	40
	ARTICLE VIII
	ESCROW AND INDEMNIFICATION
Section 8.1	Escrow Funds	40
Section 8.2	Indemnification by Company Holders	42
Section 8.3	Indemnification by Parent	44
Section 8.4	Release; Escrow Period	45
Section 8.5	General Claims Procedures	46
Section 8.6	Claims Upon Escrow Fund	46
Section 8.7	Resolution of Conflicts; Litigation	46
Section 8.8	Stockholder Representatives	47
Section 8.9	Actions of the Stockholder Representatives	49
Section 8.10	Third Party Claims	50
Section 8.11	Calculation of Damages; Limitations	51
Section 8.12	Aggregate Merger Consideration Adjustment	52
Section 8.13	Tax Matters	52
	ARTICLE IX
	GENERAL PROVISIONS
Section 9.1	Survival	52
Section 9.2	Notices	53

iii

Section 9.3	Interpretation; Certain Definitions	55
Section 9.4	Amendments and Waivers	64
Section 9.5	Entire Agreement; Nonassignability; Parties in Interest	64
Section 9.6	Severability	65
Section 9.7	Governing Law; WAIVER OF JURY TRIAL	65
Section 9.8	Interpretation	66
Section 9.9	Time of the Essence	66
Section 9.10	Rules of Construction	67
Section 9.11	Specific Performance	67
Section 9.12	Descriptive Headings	67
Section 9.13	Counterparts	67
Section 9.14	Waiver of Conflicts Regarding Representation; Nonassertion of Attorney-Client Privilege	67

EXHIBITS

Exhibit A   Form of Merger Consideration Schedule

Exhibit B   Form of Letter of Transmittal

Exhibit C   Form of Closing Consideration Schedule

Exhibit D   Form of Company Stockholder Written Consent

Exhibit E   Form of FIRPTA Certificate

Exhibit F   Form of FIRPTA Notice

Exhibit G    Exhibit H   Exhibit I   Exhibit J   Exhibit K  Form of Escrow Agreement   Form of Litigation Management Agreement   Form of Colt Archive Agreements   Form of Redemption Notice   Form of Stockholder Agreement Termination Letter

iv

INDEX OF DEFINED TERMS

Page

Acquisition Proposal	55
Actions	36
Actual Adjustment	55
Adjacent Area	63
Affiliate	56
Aggregate Warrant Exercise Price	56
Agreement	1
Alpert Case	43
Arbitrator	5
Assumed Indebtedness	56
Audit	56
Audited Financial Statements	56
BofA Lease	60
BofA Rollover Letter	56
Business Day	56
Cash and Cash Equivalents	56
Certificate of Merger	2
Change in Control Agreements	43
Chen Case	43
Claim	31
Closing	2
Closing Balance Sheet	5
Closing Consideration Schedule	8
Closing Date	2
Closing Indebtedness	56
Closing Statement	5
CMC	9
Code	56
Colt Archive Option Agreement	10
Colt Archive Services Agreement	10
Commercial Tax Agreement	56
Company	1
Company Authorizations	15
Company Board	1
Company Bylaws	3
Company Capital Stock	57
Company Certificate	7
Company Certificate of Incorporation	2
Company Common Stock	12
Company Disclosure Schedule	12
Company Holder	57
Company Indemnified Person	44
Company Indemnified Persons	44
Company Material Adverse Effect	57
Company Preferred Stock	12
Company Stockholder	57

v

Company Stockholder Approval	21
Company Subsidiary	57
Company Transaction Expenses	57
Company Warrant	58
Company-Owned Intellectual Property	57
Confidentiality Agreement	29
Contract	58
Current Representation	67
D&O Insurance	32
Damages	43
De Minimis Amount	44
Deductible	44
Definitive Financing Agreements	24
Delaware Law	1
Designated Person	67
Disputed Amounts	5
Dissenting Shares	4
Effective Time	2
Employee Litigation Escrow Amount	58
Employee Litigation Escrow Fund	41
Employee Plans	19
End Date	39
Environmental Law	58
ERISA	58
Escrow Agent	41
Escrow Agreement	37
Escrow Funds	41
Escrow Period	45
Escrow Release Date	45
Estimated Merger Consideration	4
Estimated Merger Consideration Schedule	4
Excess Employee Payments	43
Financial Statements	58
Financing	24
Financing Condition Termination	40
FIRPTA Certificate	31
FIRPTA Notice	31
Fully Diluted Share Number	58
GAAP	14
GE Lease	60
General Escrow Amount	58
General Escrow Fund	41
Governmental Entity	14
Guarantee	58
Hazardous Materials	58
Income Tax Returns	59
Income Taxes	59
Indebtedness	59
Indemnified Parties	31
Indemnified Person	46
Indemnifying Person	46

vi

Individual Aggregate Warrant Exercise Price	59
Individual Estimated Merger Consideration	59
Individual Fully Diluted Share Number	59
Information Statement	31
Intellectual Property	59
IRS	59
Joinder Agreement	65
Keys Additional Employee Litigation Escrow Amount	60
Keys Additional Employee Litigation Escrow Fund	42
Keys Apartment Lease	60
Keys Auto Lease	60
Keys Benefits Letter	60
Keys Lease Termination Payment	11
Keys Leases	60
Keys Shares	60
Knowledge	60
Lease	16
Leased Real Property	16
Legal Requirement	60
Lenders	24
Letter of Transmittal	7
Lien	60
Litigation Management Agreement	9
Master Leases	60
Material Contract	20
Merger	1
Merger Consideration	61
Merger Sub	1
Net Cash Adjustment	61
Net Debt Adjustment	61
Net Working Capital	61
Net Working Capital Adjustment	61
New Park Avenue Property	22
Non-Income Tax Returns	61
Notice of Objection	5
Officer’s Certificate	46
Parent	1
Parent Indemnified Person	43
Parent Indemnified Persons	43
Parent True-Up Amount	61
Paying Agent	7
Per Share Employee Litigation Escrow Amount	61
Per Share Estimated Merger Consideration	62
Per Share General Escrow Amount	62
Per Share Keys Additional Employee Litigation Escrow Amount	62
Per Share Purchase Price Escrow Amount	62
Per Share Stockholder Representative Expense Amount	62
Permits	62
Person	62
Post-Closing Representation	67
Post-Closing Tax Period	62

vii

Potential Contributor	52
Pre-Closing Tax Period	62
Proportionate Share	62
Proposed Merger Consideration	5
Purchase Price Escrow Amount	63
Purchase Price Escrow Fund	41
Registered Intellectual Property	16
Related Person	40
Release	63
Remediation	63
Schedules	66
Seller True-Up Amount	63
Series B Preferred Stock	12
Solvent	63
Specified Closing Date Taxes	19
Specified Employee Costs	63
Stockholder Representative Escrow Account	42
Stockholder Representative Escrow Fund	42
Stockholder Representative Expense Amount	63
Stockholder Representatives	1
Straddle Period	63
Straddle Period Tax Return	33
Subsidiary	63
Surviving Corporation	1
Surviving Corporation’s Proposed Calculations	5
Takeover Statute	21
Target Net Working Capital	64
Tax	64
Tax Authority	64
Tax Return	64
Termination Fee	40
Third Party Claim	46
Transfer Taxes	35
Treasury Regulations	64
Voting Debt	13
Warrant Tax Benefit	64
Written Consent	31

viii

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of July 12, 2013, by and among Colt Defense LLC, a Delaware limited liability company (“Parent”), New Colt Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), New Colt Holding Corp., a Delaware corporation (the “Company”), and Donald E. Zilkha and Edward L. Koch III, as the Stockholder Representatives (the “Stockholder Representatives”).

RECITALS

WHEREAS, the board of directors of Parent has approved, and deems it advisable and in the best interests of its stockholders to consummate, the merger (the “Merger”) of Merger Sub with and into the Company, upon the terms and subject to the conditions set forth herein;

WHEREAS, the board of directors of the Company (the “Company Board”), having determined that it is advisable and in the best interests of its stockholders to consummate the Merger and the other transactions contemplated hereby, has approved the transactions contemplated hereby and has resolved to recommend to its stockholders the adoption of this Agreement and approval of the Merger, upon the terms and subject to the conditions set forth herein;

WHEREAS, immediately following the execution and delivery of this Agreement, the Company Board and the board of directors of Merger Sub shall present this Agreement to the respective stockholders of the Company and Merger Sub for their adoption hereof and approval of the Merger and the other transactions contemplated by this Agreement;

WHEREAS, the boards of directors of each of Parent, Merger Sub and the Company, and the sole stockholder of Merger Sub, have approved this Agreement, the Merger and the other transactions contemplated hereby in accordance with the provisions of the Delaware General Corporation Law (“Delaware Law”).

NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements, representations and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER

Section 1.1The Merger.

At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of Delaware Law, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation and a wholly owned subsidiary of Parent.  The Company, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Corporation”.

Section 1.2Closing.

The closing of the Merger (the “Closing”) shall take place at 9:00 a.m., New York time, on a date (the “Closing Date”) to be specified by the parties, which shall be no later than the fifth (5th) Business Day after satisfaction or waiver of all of the conditions set forth in ARTICLE VI of this Agreement (other than the conditions which can be satisfied only at the Closing) at the offices of Cahill Gordon & Reindel LLP, 80 Pine Street, New York, New York 10005, or at such other time, date or place as agreed to in writing by the parties hereto.  All deliveries to be made or other actions to be taken at the Closing shall be deemed to occur simultaneously, and no such delivery or action shall be deemed complete until all such deliveries and actions have been completed or the relevant parties have agreed to waive such delivery or action.  If the Closing does not occur, any delivery made or other action taken at the Closing shall be deemed not to have occurred and be without force or effect.

Section 1.3Effective Time.

Upon the terms and subject to the conditions set forth in ARTICLE VI of this Agreement, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger with the Secretary of State of the State of Delaware (the “Certificate of Merger”).  The parties hereto shall make all other filings, recordings or publications required by all applicable Legal Requirements in connection with the Merger.  The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to Delaware Law or at such later time on the Closing Date as shall be agreed upon in writing by the parties and specified in the Certificate of Merger (the “Effective Time”).  In the event that following the filing of the Certificate of Merger, the Paying Agent does not receive the full amount Parent is required to deliver pursuant to Section 1.10(b) or the Escrow Agent does not receive all the amounts Parent is required to deposit or cause to be deposited pursuant to Section 8.1, in each case by 4:30 p.m. New York time on the Closing Date, the Closing and the Effective Time shall be deemed to not have occurred for all purposes under this Agreement and the parties hereto will take all actions necessary (including the revocation of the Certificate of Merger) to restore the parties hereto (including the Company Holders) to the status quo ex ante as if the Closing had not occurred.

Section 1.4Effect of the Merger.

At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

Section 1.5Certificate of Incorporation and Bylaws.

At the Effective Time, the Second Restated Certificate of Incorporation of the Company (the “Company Certificate of Incorporation”) shall be amended and restated in its entirety to be identical to the certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with Delaware Law and as provided in such Company Certificate of Incorporation; provided, however, that at the Effective Time, ARTICLE I of the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is: New Colt Holding Corp. (the “Corporation”).”  At the Effective Time, the Amended and Restated By-laws of the Company (the “Company Bylaws”) shall be amended and restated in their entirety to be identical to the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with Delaware Law and as provided in such Company Bylaws.

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Section 1.6Directors and Officers.

Unless otherwise determined by Parent prior to the Effective Time pursuant to Section 4.5, the initial directors of the Surviving Corporation shall be the directors of Merger Sub immediately prior to the Effective Time, until their respective successors are duly elected or appointed and qualified.  Unless otherwise determined by Parent prior to the Effective Time pursuant to Section 4.5, the initial officers of the Surviving Corporation shall be the officers of the Company immediately prior to the Effective Time, until their respective successors are duly appointed.

Section 1.7Effect on Capital Stock.

(a)Conversion of Company Common Stock.

(i)Company Common Stock.  At the Effective Time, except as provided in Sections 1.7(d) and 1.7(e), each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and shall automatically be converted into the right to receive (A) the Per Share Estimated Merger Consideration, minus the Per Share Purchase Price Escrow Amount, minus the Per Share General Escrow Amount, minus the Per Share Employee Litigation Escrow Amount (and minus, in the case of the Keys Shares, an additional amount equal to the Per Share Keys Additional Employee Litigation Escrow Amount), minus the Per Share Stockholder Representative Expense Amount, (B) the portion of the amount of the Actual Adjustment in respect of such share of Company Common Stock, if and when required to be paid to the Company Holders pursuant to Section 1.8(e)(i) and (C) any amounts required to be paid with respect to such share to the former holder thereof in accordance with the terms of Section 8.4 and the Escrow Agreement, if, as and when such payments are required to be made, in each case subject to any withholding or indemnification contemplated in this Agreement.

(ii)Calculation.  The amount of cash each Company Stockholder is entitled to receive for the shares of Company Common Stock held by such Company Stockholder as of immediately before the Effective Time shall be rounded up to the nearest cent and computed after aggregating cash amounts for all shares of Company Common Stock held by such Company Stockholder immediately prior to the Effective Time.

(b)Redemption of Series B Preferred Stock.  At the Effective Time and immediately after the conversion of Company Common Stock pursuant to Section 1.7(a)(i), each share of Series B Preferred Stock issued and outstanding immediately prior to the Effective Time shall, without any action on the part of the holder thereof, be redeemed and cancelled pursuant to Section 3(c)(i) of the Company Certificate of Incorporation for a redemption price of $1.00 which shall be paid by delivering a Company check in such amount to the address of the record holder of such share by overnight courier promptly following the Closing.

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(c)Capital Stock of Merger Sub.  As of the Effective Time, by virtue of the Merger and without any action on the part of any of the parties hereto or any holder thereof, each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be cancelled and shall automatically be converted into one validly issued, fully paid and non-assessable share of common stock of the Surviving Corporation.  Each stock certificate of Merger Sub evidencing ownership of any such shares of common stock shall evidence ownership of such shares of common stock of the Surviving Corporation.

(d)Dissenters’ Rights.  “Dissenting Share” means any shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded properly in writing appraisal for such shares of Company Common Stock in accordance with Section 262 of Delaware Law.  Notwithstanding any provision of this Agreement to the contrary, Dissenting Shares shall not be converted as provided in Section 1.7(a)(i), but the holder thereof shall be entitled only to such rights as are granted by Delaware Law.  Notwithstanding the foregoing, if any holder of shares of Company Common Stock who demands appraisal of such holder’s shares of Company Common Stock under Delaware Law effectively withdraws or loses (through failure to perfect or otherwise) such holder’s right to appraisal, then as of the Effective Time or the occurrence of such event, whichever later occurs, such holder’s shares of Company Common Stock shall automatically be converted into the right to receive the amounts provided for in Section 1.7(a) upon surrender of the Company Certificates representing such Company Common Stock pursuant to Section 1.10(c).  The Company shall give Parent (i) prompt notice of any written demands for appraisal or payment of the fair value of any shares of Company Common Stock, withdrawals of such demands, and any other instruments served on the Company relating to such demands pursuant to Delaware Law, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under Delaware Law.  Except with the prior written consent of Parent (which shall not be unreasonably withheld, delayed or conditioned), the Company shall not voluntarily make any payment with respect to any demands for appraisal or settle, or offer to settle, any such demands.

(e)Cancellation of Certain Company Capital Stock.  Notwithstanding anything herein to the contrary, at the Effective Time, all shares of Company Capital Stock that are owned by the Company as treasury stock, and all shares of Company Capital Stock owned by Parent or any direct or indirect wholly owned Subsidiary of Parent or of the Company immediately prior to the Effective Time shall be cancelled and extinguished without any conversion or payment in respect thereof pursuant to Section 1.7(a) and shall not be taken into account for purposes of determining the Fully Diluted Share Number or any amounts payable to the Company Holders hereunder.

Section 1.8Merger Consideration.

(a)Estimated Merger Consideration.  No later than 10:00 a.m. (New York time) on the last Business Day prior to the proposed Closing Date, the Company shall deliver to Parent a schedule, together with reasonable supporting documentation (the “Estimated Merger Consideration Schedule”) setting forth a good faith estimate of the Merger Consideration (the “Estimated Merger Consideration”) based on good faith estimates by the Company of the following amounts, which shall also be set forth in the Estimated Merger Consideration Schedule: (i) the Net Debt Adjustment, (ii) the Net Working Capital Adjustment, (iii) the Net Cash Adjustment and (iv) the amount of Company Transaction Expenses, in the form attached hereto as Exhibit A.  The Estimated Merger Consideration Schedule shall be accompanied by a certificate signed by an officer of the Company certifying that the information set forth in the Estimated Merger Consideration Schedule was calculated in good faith in accordance with this Agreement.

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(b)Promptly after the Closing Date, and in any event not later than ninety (90) days following the Closing Date, the Surviving Corporation shall prepare and deliver to the Stockholder Representatives (i) an unaudited consolidated balance sheet of the Company as of 11:59 p.m. on July 2, 2013 (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth the Surviving Corporation’s good faith calculation of the Merger Consideration (the “Proposed Merger Consideration”) based on its good faith calculations of the following amounts, which shall also be set forth on the Closing Statement: (i) the Net Debt Adjustment, (ii) the Net Working Capital Adjustment, (iii) the Net Cash Adjustment and (iv) the amount of Company Transaction Expenses (such calculations collectively, the “Surviving Corporation’s Proposed Calculations”) in the form attached hereto as Exhibit A.  The Surviving Corporation’s Proposed Calculations shall be made in accordance with GAAP applied on a basis consistent with the Financial Statements and Exhibit A.  Upon delivery of the Closing Balance Sheet and the Closing Statement by the Surviving Corporation, the Surviving Corporation shall provide the Stockholder Representatives and their representatives with full access to the Surviving Corporation’s auditors and accounting and other personnel and to the books and records of the Surviving Corporation, Merger Sub and the Company, as the case may be, and any other document or information reasonably requested by the Stockholder Representatives (including the workpapers of the Surviving Corporation’s auditors), in order to allow the Stockholder Representatives and their representatives to verify the accuracy of determination by the Surviving Corporation of the Surviving Corporation’s Proposed Calculations.

(c)If the Stockholder Representatives do not object to the Closing Balance Sheet or the Surviving Corporation’s Proposed Calculations by written notice of objection (the “Notice of Objection”) delivered to the Surviving Corporation within thirty (30) days after the Stockholder Representatives’ receipt of the Closing Balance Sheet and the Closing Statement, the Proposed Merger Consideration shall be deemed the final Merger Consideration for purposes of determining the Actual Adjustment.  A Notice of Objection shall set forth in reasonable detail the Stockholder Representatives’ alternative calculation of the Merger Consideration based on its alternative calculations of the following amounts, which shall also be set forth on the Notice of Objection: (i) the Net Debt Adjustment, (ii) the Net Working Capital Adjustment, (iii) the Net Cash Adjustment and/or (iv) the amount of Company Transaction Expenses.

(d)If the Stockholder Representatives deliver a Notice of Objection to the Surviving Corporation within the thirty (30) day period referred to in Section 1.8(c), then any of the Surviving Corporation’s Proposed Calculations that is not in dispute on the date such Notice of Objection is given shall be treated as final and binding and any dispute (all such disputed amounts, the “Disputed Amounts”) shall be resolved as follows:

(i)the Stockholder Representatives and the Surviving Corporation shall promptly endeavor in good faith to resolve the Disputed Amounts listed in the Notice of Objection.  In the event that a written agreement determining the Disputed Amounts has not been reached within ten (10) Business Days (or such longer period as may be agreed by Parent and the Stockholder Representatives) after the date of receipt by the Surviving Corporation from the Stockholder Representatives of the Notice of Objection, the resolution of such Disputed Amounts shall be submitted to McGladrey LLP, or another nationally recognized accounting firm mutually agreeable to the parties (the “Arbitrator”);

(ii)the Stockholder Representatives and the Surviving Corporation shall use their commercially reasonable efforts to cause the Arbitrator to render a decision in accordance with this Section 1.8(d) along with a statement of reasons therefor and to deliver a copy to each of Parent and the Stockholder Representatives of such decision which shall include as a separate line item a determination of the aggregate difference between the Estimated Merger Consideration and the final Merger Consideration within thirty (30) days of the submission of the Disputed Amounts, or a reasonable time thereafter, to the Arbitrator.  The decision of the Arbitrator shall be final and binding upon each party hereto and the decision of the Arbitrator shall constitute an arbitral award that is final, binding and non-appealable and upon which a judgment may be entered by a court having jurisdiction thereover;

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(iii)in the event the Stockholder Representatives and the Surviving Corporation submit any Disputed Amounts to the Arbitrator for resolution, the out-of-pocket cost of any arbitration (including fees and expenses of the Arbitrator and reasonable attorney fees and expenses of the parties) pursuant to this Section 1.8(d) shall be borne by Parent and the Stockholder Representatives in inverse proportion as they may prevail on matters resolved by the Arbitrator, which proportionate allocations shall also be determined by the Arbitrator at the time the determination of the Arbitrator is rendered on the merits of the matters submitted; and

(iv)the Arbitrator shall act as an arbitrator to determine, based upon the provisions of this Agreement, only the Disputed Amounts and the determination of each amount of the Disputed Amounts shall be made in accordance with the provisions of this Agreement.  The parties hereto shall cause the Arbitrator’s determination of any Disputed Amount to be no (x) less than the lesser of the amount claimed by either the Stockholder Representatives or the Surviving Corporation or (y) greater than the greater of the amount claimed by either the Stockholder Representatives or the Surviving Corporation.

(e)Adjustment to Estimated Merger Consideration.

(i)If the Actual Adjustment is a positive amount, the Surviving Corporation shall deposit with the Paying Agent an amount equal to such positive amount, net of applicable withholding taxes, if any, by wire transfer or delivery of immediately available funds, in each case, within five (5) Business Days after the date on which the Merger Consideration is finally determined pursuant to this Section 1.8, and shall instruct the Paying Agent in writing to promptly deliver to each of the Company Holders as of immediately prior to the Effective Time such Company Holder’s Proportionate Share of the amount of the Actual Adjustment.

(ii)If the Actual Adjustment is a negative amount, then within five (5) Business Days after the date on which the Merger Consideration is finally determined pursuant to this Section 1.8, Parent and the Stockholder Representatives shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver an amount equal to the absolute value of such negative amount from the Purchase Price Escrow Fund (and, only to the extent such absolute value is larger than the amount remaining in the Purchase Price Escrow Fund, from the General Escrow Fund) to Parent, it being understood and agreed that the Purchase Price Escrow Fund and the General Escrow Fund shall be the sole and exclusive source of recovery for the amount of any such Actual Adjustment.

(f)For all purposes of this Agreement, no default or event that with notice, lapse of time or both would constitute a default, shall be deemed to have occurred under the BofA Lease in connection with the execution and delivery of this Agreement, the performance by the parties of their obligations hereunder, or the consummation of the Merger and the other transactions contemplated hereby.  Without limiting the generality of the foregoing, the Merger Consideration (and all components thereof and any adjustments thereto) shall be calculated giving effect to the immediately preceding sentence.

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Section 1.9Company Warrants.

(a)Treatment of Company Warrants.  At the Effective Time, each Company Warrant that is outstanding immediately prior to the Effective Time, whether or not vested or exercisable, by virtue of the Merger, and without any action on the part of the holder thereof, shall be cancelled and shall automatically be converted into the right to receive, for each share of Company Common Stock subject to such Company Warrant, (i) an amount in cash equal to the excess, if any, of (A) the Per Share Estimated Merger Consideration, minus the Per Share Purchase Price Escrow Amount, minus the Per Share General Escrow Amount, minus the Per Share Employee Litigation Escrow Amount (and minus, in the case of the Keys Shares, an additional amount equal to the Per Share Keys Additional Employee Litigation Escrow Amount), minus the Per Share Stockholder Representative Expense Amount, over (B) the per share exercise price for such Company Warrant, (ii) the portion of the amount of the Actual Adjustment in respect of such share, if any, when required to be paid to the Company Holders pursuant to Section 1.8(e)(i) and (iii) any amounts required to be paid with respect to such share to the former holder of such Company Warrant in accordance with the terms of Section 8.4 and the Escrow Agreement, if, as and when such payments are required to be made, in each case subject to any withholding or indemnification contemplated in this Agreement.

(b)No Further Rights.  As of the Effective Time, each holder of any Company Warrants shall cease to have any rights with respect thereto (including any rights to acquire any equity securities of the Company, the Surviving Corporation or any Company Subsidiaries), except as otherwise provided in Section 1.9(a) above, as applicable.  Prior to the Effective Time, the Company shall take all actions necessary to effectuate the provisions of this Section 1.9.

Section 1.10Surrender of Certificates and Warrants and Payment

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(a)Paying Agent.  Cadence Bank, N.A. (or its successor in interest or other institution selected jointly by Parent and the Stockholder Representatives) shall act as paying agent (the “Paying Agent”) in the Merger.

(b)Parent to Provide Cash.  At Closing, Parent shall deliver to the Paying Agent for exchange and payment in accordance with this ARTICLE I, by wire transfer of immediately available funds, the aggregate amount of cash payable to Company Holders in respect of shares of Company Common Stock pursuant to Section 1.7(a)(i)(A) and in respect of Company Warrants pursuant to Section 1.9(a)(i).

(c)Exchange Procedures.  At the Effective Time, the Surviving Corporation shall cause a letter of transmittal (the “Letter of Transmittal”) in the form of Exhibit B to be delivered to each holder of record of (1) a certificate or certificates representing Company Common Stock (each such certificate, a “Company Certificate”) or (2) a Company Warrant.  After the Effective Time and upon (x) surrender of all Company Certificates and Company Warrants held by a Company Holder for cancellation to the Paying Agent, together with a Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and (y) delivery of a properly completed and executed IRS Form W-9 or IRS Form W-8 (as applicable) for each holder of Company Capital Stock and each holder of Company Warrant, certifying that such Person is exempt from U.S. federal backup withholding, the Company Certificates and/or Company Warrants so surrendered shall forthwith be cancelled and, subject to Section 1.15, the holder of such Company Certificates and/or Company

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Warrants shall be entitled to receive in exchange therefor payment of (i) cash in the amounts provided for in Section 1.7(a)(i)(A) in respect of any Company Certificates so surrendered and Section 1.9(a)(i) in respect of any Company Warrants so surrendered upon such surrender and cancellation and (ii) cash in the amounts and at such times provided for in Sections 1.7(a)(i)(B) and 1.7(a)(i)(C) in respect of any Company Certificates so surrendered and Sections 1.9(a)(ii) and 1.9(a)(iii) in respect of any Company Warrants so surrendered.  Until so surrendered, each outstanding Company Certificate or Company Warrant that, prior to the Effective Time, represented Company Common Stock or Company Warrant will be deemed from and after the Effective Time, for all purposes, to evidence solely the right to receive the applicable portion of the amounts provided for in Section 1.7(a) and Section 1.9(a), respectively.

(d)Closing Consideration Schedule.  No later than 10:00 a.m. (New York time) on the last Business Day prior to the Closing Date, the Company shall deliver to Parent a schedule in the form attached hereto as Exhibit C (the “Closing Consideration Schedule”) showing for each Company Holder, as of the Closing Date and based on the Estimated Merger Consideration Schedule: (A) the number and class of shares of Company Capital Stock held, (B) the number and class of shares of Company Common Stock subject to each Company Warrant held, and, if applicable, the exercise price per share of such Company Warrant, (C) a calculation of the amount payable to such Company Holder pursuant to Section 1.7(a)(i)(A) in respect of shares of Company Common Stock and pursuant to Section 1.9(a)(i) in respect of Company Warrants, (D) such Company Holder’s Proportionate Share of the Purchase Price Escrow Amount, (E) such Company Holder’s Proportionate Share of the General Escrow Amount, (F) such Company Holder’s Proportionate Share of the Employee Litigation Escrow Amount (and, if applicable, of the Keys Additional Employee Litigation Escrow Amount) and (G) such Company Holder’s Proportionate Share of the Stockholder Representative Expense Amount.  The Closing Consideration Schedule shall be accompanied by a certificate signed by an officer of the Company certifying that the information set forth in such Closing Consideration Schedule was calculated in good faith in accordance with this Agreement.

(e)Transfers of Ownership.  If any Merger Consideration is to be distributed to a Person other than the Person to whom the Company Certificate or Company Warrant surrendered in exchange therefor is registered, it will be a condition of the distribution of Merger Consideration thereto that the Company Certificate or Company Warrant so surrendered will be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other Taxes required by reason of payment in cash to any Person other than the registered holder of the Company Certificate or Company Warrant surrendered, or established to the satisfaction of Parent or any agent designated by it that such Tax has been paid or is not payable.

(f)No Liability.  Notwithstanding anything to the contrary in this Section 1.10, none of the Paying Agent, the Surviving Corporation or any party hereto shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Legal Requirements.

(g)Return of Merger Consideration.  Any Merger Consideration made available to the Paying Agent and not exchanged for Company Certificates or Company Warrants in accordance with this Section 1.10 within six (6) months after the Effective Time shall be redelivered or repaid by the Paying Agent to Parent, after which time any holder of Company Certificates or Company Warrants who has not theretofore delivered or surrendered such Company Certificates or Company Warrants to the Paying Agent, subject to applicable Legal Requirements, shall look as a general creditor only to Parent for payment of the applicable portion of the Merger Consideration.  If any Company Certificates or Company Warrants are not surrendered prior to the earlier of the second anniversary of the Closing Date and such time as the unclaimed Merger Consideration payable in exchange therefor would otherwise escheat to or become property of any Governmental Entity, such unclaimed Merger Consideration shall, to the extent permitted by applicable Legal Requirements, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

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Section 1.11No Further Ownership Rights in Company Capital Stock; No Interest.

At the Effective Time, the stock and warrant transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of any shares of Company Capital Stock or any Company Warrants on the records of the Company.  From and after the Effective Time, the holders of Company Certificates and Company Warrants evidencing ownership of shares of Company Capital Stock or Company Warrants outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares or Company Warrants, except as otherwise provided for herein or by applicable Legal Requirements.  If, after the Effective Time, Company Certificates or Company Warrants are presented to Parent or the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this ARTICLE I.  Payments due under this ARTICLE I shall be made without interest, except as otherwise expressly provided herein.

Section 1.12Lost, Stolen or Destroyed Certificates.

In the event that any Company Certificates or Company Warrants shall have been lost, stolen or destroyed, Parent shall cause to be paid in exchange for such lost, stolen or destroyed Company Certificates or Company Warrants, upon the making of an affidavit of that fact by the holder thereof, such payment of the Merger Consideration as may be required pursuant to this ARTICLE I; provided, however, that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Company Certificates or Company Warrants to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent or the Surviving Corporation with respect to the Company Certificates or Company Warrants alleged to have been lost, stolen or destroyed.

Section 1.13Closing; Closing Deliverables.

(a)At the Closing:

(i)the Company shall deliver (or cause to be delivered) to Parent the following items:

(A)a reasonably current long-form good standing certificate (or equivalent document) for the Company and each Company Subsidiary issued by the Secretary of State of the State of Delaware and in each state in which the Company or such Company Subsidiary is qualified to do business as a foreign corporation;

(B)the Escrow Agreement, duly executed by the Stockholder Representatives;

(C)an agreement in the form attached hereto as Exhibit H (the “Litigation Management Agreement”), duly executed by the Company, Colt’s Manufacturing Company LLC (“CMC”) and the Stockholder Representatives;

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(D)an agreement in the form attached hereto as Exhibit I-1 (the “Colt Archive Option Agreement”), duly executed by Parent, John P. Rigas (both on behalf of himself and on behalf of Colt Archive Properties LLC), and an agreement in the form attached hereto as Exhibit I-2 (the “Colt Archive Services Agreement”), duly executed by Parent and John P. Rigas on behalf of Colt Archive Properties LLC;

(E)a Stockholder Agreement Termination Letter in the form attached hereto as Exhibit K, duly executed by the Company;

(F)a certificate signed by an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions set forth in Sections 6.3(a) and 6.3(g) have been satisfied;

(G)the FIRPTA Certificate and the FIRPTA Notice;

(H)written evidence of the resignation and/or removal of directors and officers pursuant to Section 4.5; and

(I)each document required to be delivered pursuant to Sections 1.16 and 1.18 of this Agreement.

(ii)Parent shall deliver (or cause to be delivered) to the Stockholder Representatives the following items:

(A)the Escrow Agreement, duly executed by Parent;

(B)the Litigation Management Agreement, duly executed by Parent;

(C)the Colt Archive Option Agreement, duly executed by Donald E. Zilkha (both on behalf of himself and on behalf of Colt Archive Properties LLC), and the Colt Archive Services Agreement, duly executed by CMC and Donald E. Zilkha on behalf of Colt Archive Properties LLC;

(D)a certificate signed by an authorized officer of Parent, dated as of the Closing Date, to the effect that the conditions set forth in Section 6.2(a) have been satisfied; and

(E)the Joinder Agreement, duly executed by an authorized officer of the Surviving Corporation.

Section 1.14Taking of Necessary Action; Further Action.

If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, the officers and directors of Parent, the Company and the Surviving Corporation are fully authorized in the name of their respective entities or otherwise to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.

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Section 1.15Tax Withholding.

Each of Parent, Merger Sub, the Surviving Corporation, the Escrow Agent and the Paying Agent, as the case may be, shall be entitled to deduct and withhold from the aggregate Merger Consideration payable to any holder of Company Capital Stock or any Company Warrant hereunder or under the Escrow Agreement, the amounts required to be deducted and withheld under the Code, or any provision of any U.S. federal, state or local or non-U.S. Tax law.  Any amounts so withheld shall be paid over to the appropriate Governmental Entity.  To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holder in respect of whom such deduction and withholding was made.

Section 1.16Payment of Closing Debt.

Other than with respect to the Assumed Indebtedness or as set forth on Section 1.16 of the Company Disclosure Schedule, at the Closing, the Company shall provide Parent with executed customary payoff letters in form and substance reasonably satisfactory to Parent providing for the satisfaction and discharge of all obligations in respect of the Company’s Indebtedness listed on the Estimated Merger Consideration Schedule and outstanding immediately prior to the Closing, including the termination of all related commitments, the release of all related Guarantees and Liens and filing of all documents necessary or desirable to effectuate, or reflect in public record, such satisfaction, release and discharge, effective upon the payment of such Indebtedness.  At the Closing, Parent, on behalf of the Company, shall pay to the holders of such Indebtedness an amount sufficient to repay all such Indebtedness, with the result that immediately following the Closing there will be no further monetary obligations of the Surviving Corporation or any of its Subsidiaries with respect to any Indebtedness listed on the Estimated Merger Consideration Schedule and outstanding immediately prior to the Closing, other than the Assumed Indebtedness.

Section 1.17Payment of Company Transaction Expenses.

At least one (1) Business Day prior to the Closing, the Company shall cause each payee of Company Transaction Expenses to submit a written invoice for the full amount of such payee’s Company Transaction Expenses.  No later than 10:00 a.m. (New York time) on the last Business Day prior to the Closing Date, the Company shall provide to Parent a complete and correct list of (i) the payees of Company Transaction Expenses, (ii) the amount of Company Transaction Expenses payable to each such payee and (iii) wire instructions for each such payee.  At the Closing, Parent, on behalf of the Company, shall pay all Company Transaction Expenses, in each case by wire transfer of immediately available funds pursuant to such applicable written instructions provided to Parent by the Company.

Section 1.18Termination of Leases.

At or prior to the Closing, the Company shall provide Parent with written evidence that the termination of each of the Keys Leases has become effective or, in the case of the Keys Apartment Lease, will become effective not later than July 31, 2013 and that the termination payment required thereunder (the “Keys Lease Termination Payment”) has been made in full at or prior to the Closing.

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ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the schedule, dated as of the date hereof, and delivered by the Company to Parent in connection with the execution of this Agreement (the “Company Disclosure Schedule”), the Company represents and warrants to Parent and Merger Sub that:

Section 2.1Organization, Standing and Power

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(a)The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware.  The Company has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and use its properties and assets and to carry on its business as now being conducted, is duly qualified to do business and, in jurisdictions where such concept is recognized, is in good standing in each jurisdiction, except for those jurisdictions in which the failure to be so qualified and in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  The Company has made available to Parent a true and correct copy of the Company Certificate of Incorporation and Company Bylaws in effect as of the date hereof.

(b)Each Company Subsidiary is a corporation duly organized, validly existing and, in jurisdictions where such concept is recognized, in good standing under the laws of its jurisdiction of organization.  Section 2.1(b) of the Company Disclosure Schedule lists each entity that is a Company Subsidiary and sets forth the percentage ownership by the Company of such Company Subsidiary.  Each Company Subsidiary has all organizational powers and all governmental licenses, authorizations, permits, consents and approvals required to own its properties and to carry on its business as now being conducted, is duly qualified to do business and, in jurisdictions where such concept is recognized, is in good standing in each jurisdiction, except for those jurisdictions in which the failure to be so qualified and in good standing would not reasonably be expected to be material to the Company and the Company Subsidiaries, taken as a whole.  The Company has made available to Parent a true and correct copy of the certificate of incorporation, bylaws or similar governing documents of each Company Subsidiary in effect as of the date hereof.

Section 2.2Capitalization; Title to the Securities

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(a)The authorized capital stock of the Company consists of (i) 200,000 shares of common stock, par value $0.01 per share (“Company Common Stock”) and (ii) 1,001 shares of preferred stock, par value $0.01 per share (“Company Preferred Stock”), of which 1,000 shares are undesignated and 1 share is designated as “Junior Preferred Stock, Series B” (the “Series B Preferred Stock”).  As of the date hereof, (A) 41,242.15006 shares of Company Common Stock are issued and outstanding, (B) 1 share of Series B Preferred Stock is issued and outstanding, and (C) Company Warrants to purchase 100,430.70100 shares of Company Common Stock are issued and outstanding.  No shares of Company Capital Stock are issued and held in the treasury of the Company.  All shares of outstanding Company Capital Stock are, and all shares of Company Capital Stock which may be issued pursuant to the exercise of outstanding Company Warrants will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable.  The rights, preferences and privileges of the Company Capital Stock are as set forth in the Company Certificate of Incorporation.  As of the Closing, the issued and outstanding Company Capital Stock and Company Warrants (including the shares subject to issuance pursuant to such outstanding Company Warrants) are set forth on the Closing Consideration Schedule.

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(b)Except as disclosed in Section 2.2(b) of the Company Disclosure Schedule, the Company does not directly or indirectly own any equity interest in, or any interest convertible or exchangeable or exercisable for, any equity interest in, any corporation, partnership, joint venture or other business association or entity.  All the outstanding capital stock of each Company Subsidiary is owned directly or indirectly by the Company free and clear of all Liens and all claims or charges of any kind, and is validly issued, fully paid and non-assessable.

(c)Except as set forth above and in Sections 2.2(e) and 2.2(f) of the Company Disclosure Schedule: (i) there are no shares of capital stock or any other securities of the Company or any Company Subsidiary authorized, issued or outstanding; (ii) there are no existing options, warrants, calls, preemptive rights, indebtedness (including indebtedness evidenced by a note, bond, debenture or similar instrument) having general voting rights or debt convertible into securities having such rights (“Voting Debt”) or subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of the Company or any Company Subsidiary obligating the Company or any Company Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any Company Subsidiary or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any Company Subsidiary to make any payment linked to the value of the Company Capital Stock or the sale price of the Company, or obligating the Company or any Company Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment; and (iii) there are no outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire the Company Common Stock, or other capital stock of the Company or any Company Subsidiary or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.

(d)Except as set forth in Section 2.2(d) of the Company Disclosure Schedule, there are no voting trusts or other agreements or understandings to which the Company is a party with respect to the voting of the capital stock of the Company.  Following the Effective Time, no Person will have any right to receive capital stock of the Surviving Corporation upon exercise, conversion or vesting of any Company Warrant, Voting Debt or any other right or convertible instrument.

(e)Section 2.2(e) of the Company Disclosure Schedule sets forth a true, complete and correct list as of the date hereof of each holder of record of Company Capital Stock and the number and class of such securities owned by each such holder.

(f)Section 2.2(f) of the Company Disclosure Schedule sets forth a true and complete list as of the date hereof of all record holders of outstanding Company Warrants, including for each such Company Warrant (i) the number of shares of Company Common Stock subject to each Company Warrant, (ii) if applicable, the exercise price per share, (iii) the date of grant, and (iv) the expiration date.  Each grant of Company Warrants was validly issued and properly approved by the Company Board (or a duly authorized committee or subcommittee thereof) in compliance with all applicable Legal Requirements.

Section 2.3Authority; No Conflict.

(a)The Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby, except

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for the Company Stockholder Approval.  This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent, Merger Sub and the Stockholder Representatives, constitute valid and binding obligations of the Company enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by the effect, if any, of (i) any applicable bankruptcy, reorganization, insolvency, moratorium or other Legal Requirements affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

(b)Neither the execution and delivery by the Company of this Agreement, nor the consummation of the transactions contemplated hereby will conflict with, or result in any breach or violation of, or default under (with or without notice or lapse of time, or both), or the creation or imposition of any Lien on any assets, or give rise to a right of termination, cancellation or obligation or loss of any benefit under (i) assuming receipt of the Company Stockholder Approval, any provision of the Company Certificate of Incorporation or the Company Bylaws, or other equivalent charter documents of any Company Subsidiary, (ii) assuming the consents, waivers and approvals set forth in Section 2.3(b) of the Company Disclosure Schedule are duly obtained, any mortgage, indenture, lease contract, agreement, instrument or understanding to which the Company or any Company Subsidiary is a party or to which any of their respective properties or assets are bound or (iii) subject to the exceptions set forth in the sentence that immediately follows, any Legal Requirement applicable to the Company, any Company Subsidiary or any of their respective properties or assets, except, in the case of clauses (ii) and (iii) above, any such conflicts, breaches, violations, defaults, Liens, rights or losses which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  Except for (A) the filing of the Certificate of Merger and the related certificate of incorporation of the Surviving Corporation in accordance with the requirements of Delaware Law and (B) such other actions by, notices to, filings with, permits, authorizations, consents and approvals of, any court, nation, government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory, taxing or administrative functions of, or pertaining to, government (a “Governmental Entity”) or any arbitral body, the failure to make or obtain which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no action by, notice to, filing with, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the consummation by the Company of the transactions contemplated by this Agreement.

Section 2.4Financial Statements.

Set forth in Section 2.4(i) of the Company Disclosure Schedule are true, correct and complete copies of the Financial Statements.  Except as set forth in Section 2.4(ii) of the Company Disclosure Schedule, each of the Financial Statements (a) was prepared in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied throughout the periods covered thereby (except as may be indicated in the notes thereto); and (b) fairly presents the consolidated financial position of the Company and the Company Subsidiaries as at such dates and the consolidated results of operations, changes in stockholders’ equity and comprehensive income and cash flows of the Company and the Company Subsidiaries for such periods, subject to normal year-end adjustments and the absence of notes.

Section 2.5Absence of Certain Changes.

Except as and to the extent set forth in the Financial Statements, in Section 2.5 of the Company Disclosure Schedule and in connection with the execution, delivery and performance of this Agreement, since December 31, 2012, the Company and the Company Subsidiaries (a) have conducted their business in the ordinary course in all material respects, (b) have not suffered any Company Material Adverse Effect, and no event has occurred that would reasonably be expected to have a Company Material Adverse Effect and (c) have not taken any action that, if taken after the date hereof and prior to the Effective Time, would constitute a breach of the covenants set forth in Section 4.1 or 4.2 in any material respect.

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Section 2.6Absence of Undisclosed Liabilities.

Except (a) as set forth in Section 2.6 of the Company Disclosure Schedule, (b) as disclosed in the Financial Statements, (c) for liabilities and obligations incurred in connection with this Agreement and the transactions contemplated hereby and (d) for liabilities and obligations incurred since December 31, 2012 in the ordinary course of business consistent with past practice (and, in the case of the period from and after the date hereof, as otherwise permitted pursuant to the terms of this Agreement), neither the Company nor any Company Subsidiary has any liability or obligation of any nature, whether or not accrued, contingent or otherwise, that has had, or would be reasonably expected to have a Company Material Adverse Effect; provided that, for purposes of this Section 2.6, “past practice” shall mean the past practice of the Company and its Subsidiaries on or prior to December 31, 2012.

Section 2.7Litigation.

Except as set forth in Section 2.7 of the Company Disclosure Schedule, there is no material private or governmental action, suit, proceeding, claim, charge or arbitration (or, to the Knowledge of the Company, any material governmental inquiry or investigation) pending before any Governmental Entity or arbitral body, or, to the Knowledge of the Company, threatened against the Company or any Company Subsidiary, any of their respective properties or any of their respective officers or directors (in their capacities as such).  There is no judgment, decree or order against the Company or any Company Subsidiary or, to the Knowledge of the Company, any of their respective directors or officers (in their capacities as such), that would reasonably be expected to (a) prevent, enjoin, alter or delay any of the transactions contemplated by this Agreement, (b) have the effect of prohibiting or materially impairing any current business practice of the Company or any Company Subsidiary or the conduct of business by the Company or any Company Subsidiary as currently conducted or (c) have a Company Material Adverse Effect.  Notwithstanding the foregoing, the representations and warranties contained in this Section 2.7 do not apply to governmental authorizations, Intellectual Property, Taxes, Employee Plans and related matters, and environmental matters, which subject matters are addressed in their entirety and exclusively in Sections 2.8, 2.11, 2.12, 2.13 and 2.20, respectively.

Section 2.8Governmental Authorization.

The Company and each Company Subsidiary have obtained each material federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (a) pursuant to which either the Company or any Company Subsidiary currently operates or holds any interest in any of their respective material properties or (b) that is required for the operation of the business of the Company or any Company Subsidiary or the holding of any such interest ((a) and (b) are herein collectively called “Company Authorizations”).  The Company and each Company Subsidiary have complied in all material respects with all material Company Authorizations, and all material Company Authorizations are in full force and effect.

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Section 2.9Real Property.

(a)Section 2.9(a) of the Company Disclosure Schedule sets forth the address of each parcel of all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixture or other interest in real property held by or for the Company or the Company Subsidiaries (collectively, the “Leased Real Property”).  Except as indicated on Section 2.9(a) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property.  The Company has provided or made available to Parent prior to the date of this Agreement true, correct and complete copies of all leases, subleases or licenses, and all amendments, modifications or supplements thereto (each, a “Lease”), under which the Company or any Company Subsidiary leases, subleases or licenses any material Leased Real Property.

(b)The Company and each Company Subsidiary have valid leasehold interests in all Leased Real Property and all other assets and properties necessary to enable the Company and the Company Subsidiaries to conduct their business as conducted as of the date of this Agreement, except for Liens disclosed in the Financial Statements and easements, restrictive covenants and similar encumbrances that, individually or in the aggregate, do not materially interfere with its ability to conduct its business as conducted as of the date of this Agreement.  Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and except as indicated on Section 2.9(b) of the Company Disclosure Schedule, (i) each Lease is valid and in full force and effect and (ii) neither the Company nor any Company Subsidiary, nor to the Company’s Knowledge any other party to a Lease, has violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a material default under the provisions of such Lease.

(c)Neither the Company nor any Company Subsidiary owns any real property.

Section 2.10Personal Property.

Except as set forth in Section 2.10 of the Company Disclosure Schedule, the Company and each Company Subsidiary have good title to all of their respective material personal properties (other than with respect to Intellectual Property, which is addressed in Section 2.11) that each owns or purports to own (tangible and intangible), including all the material personal properties reflected on the Audited Financial Statements, free and clear of all Liens (except for any Liens disclosed in the Financial Statements).  All material personal properties of the Company and each Company Subsidiary that are used in the operations of the business of the Company and each such Company Subsidiary are in good operating condition and repair, subject to normal wear and tear, are adequate for the uses to which they are being put and have been maintained and serviced in accordance with customary industry practice.

Section 2.11Intellectual Property.

(a)Section 2.11(a)(1) of the Company Disclosure Schedule contains a true and complete list of each item of registered Intellectual Property that is material to the Company and the Company Subsidiaries, taken as a whole (collectively, the “Registered Intellectual Property”), with owners and countries indicated, as applicable.  All of the Registered Intellectual Property has been duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office, the United States Copyright Office or their foreign equivalents, as applicable, and the Registered Intellectual Property is in full force and effect, except for failures to be so registered, filed or issued or failures to be in full force and effect, in each case that are not, individually or in the aggregate, material to the Company and the Company Subsidiaries, taken as a whole.  Section 2.11(a)(2) of the Company Disclosure Schedule contains a true and complete list of all material license agreements pursuant to which (i) material Intellectual Property is licensed by the Company or any Company Subsidiary to a third party, or (ii) the Company or a Company Subsidiary licenses any material Intellectual Property (other than license agreements for commercially available, off-the-shelf software programs).

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(b)Except as set forth in Section 2.11(b) of the Company Disclosure Schedule, the Company or the Company Subsidiaries owns or has the right to use all Intellectual Property used in the operation of the businesses of the Company and the Company Subsidiaries as presently conducted, except as would not be material to the Company and the Company Subsidiaries, taken as a whole.

(c)Except as set forth in Section 2.11(c) of the Company Disclosure Schedule, since December 31, 2012, (i) the operation of the businesses of the Company and the Company Subsidiaries has not infringed upon the Intellectual Property of any third party, except as would not be material to the Company and the Company Subsidiaries, taken as a whole, and (ii) the Company has not received written notice of any claim challenging the use or ownership by the Company or the Company Subsidiaries of any Intellectual Property, except as would not be material to the Company and the Company Subsidiaries, taken as a whole.

(d)The representations and warranties contained in this Section 2.11 are the sole and exclusive representations and warranties of the Company concerning Intellectual Property.

Section 2.12Tax Matters.  Except as set forth on Section 2.12 of the Company Disclosure Schedule:

(a)Tax Returns.  The Company and each of the Company Subsidiaries has timely filed or caused to be timely filed all material Tax Returns that are required to be filed by it (taking into account any applicable extension of time within which to file) and each such Tax Return is complete and accurate in all material respects.

(b)Payment of Taxes.  All material Taxes of the Company and each of the Company Subsidiaries that are due and payable have been paid, other than any Taxes being contested in good faith by appropriate proceedings for which reserves have been provided that are adequate (in accordance with GAAP) in all material respects.

(c)Tax Reserves.  There will be no increase in unpaid Taxes or in the Tax reserve from December 31, 2012 through the Closing Date other than for items arising in the ordinary course of business.

(d)Other Tax Matters.

(i)All material Tax deficiencies, assessments or other claims asserted in writing against the Company or any of the Company Subsidiaries by any taxing authority have been paid or fully and finally settled.

(ii)Neither the Company nor any of the Company Subsidiaries is (A) currently the subject of any Tax audit or other examination (and no Tax audit or other examination is pending or, to the Knowledge of the Company, proposed or threatened) or (B) engaged in any administrative or judicial proceeding with any taxing authority.

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(iii)Neither the Company nor any of the Company Subsidiaries (A) has entered into a written agreement or waiver extending any statute of limitations relating to any Taxes that has not since expired or (B) is presently contesting any Tax liability before any court, tribunal or administrative agency.

(iv)All material Taxes that the Company or any of the Company Subsidiaries was required by Law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, member or other third party has been duly withheld or collected, and has been timely paid over to the proper authorities to the extent due and payable.

(v)Neither the Company nor any of the Company Subsidiaries (A) has been a member of an affiliated group for U.S. federal income tax purposes or any similar group for any state, local or non-U.S. income Tax purposes, other than an affiliated or similar group of which the Company is the common parent or (B) is liable for the Taxes of any Person (other than Taxes of the Company or any of the Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Tax Law), as a transferee or successor, by contract (other than pursuant to Commercial Tax Agreements) or otherwise.

(vi)As of the Closing Date, no share of Company Capital Stock will be considered a “United States real property interest” within the meaning of Section 897(c)(2) of the Code.

(vii)No claim has been made in writing by any taxing authority in a jurisdiction in which the Company or any of the Company Subsidiaries does not pay Tax or file a Tax Return that such entity is or may be subject to Taxation by that jurisdiction.

(viii)There are no Tax liens with respect to any asset of the Company or any of the Company Subsidiaries, other than liens in respect of ad valorem property Taxes not yet due and payable.

(ix)Since December 31, 2005, neither the Company nor any of the Company Subsidiaries has been a party to any transaction intended to qualify under Section 355 of the Code.

(x)Neither the Company nor any of the Company Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any Post-Closing Tax Period as a result of (A) any change in method of accounting with respect to any Pre-Closing Tax Period under Section 481 of the Code (or any similar provision of state, local or non-U.S. law), (B) any agreement with a taxing authority relating to Taxes or (C) any installment sale or open transaction occurring on or prior to, or any prepaid income received prior to, the Closing (other than any prepaid income arising in the ordinary course of business), or any change of method of accounting made prior to Closing.

(xi)Neither the Company nor any of the Company Subsidiaries has ever participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

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(xii)There is no outstanding power of attorney with respect to any Tax matter of the Company or any of the Company Subsidiaries other than any power of attorney arising in the ordinary course in favor of Deloitte LLP.

(xiii)The Company and the Company Subsidiaries have made available to Parent true and complete copies of (i) all applicable income and franchise Tax Returns filed by the Company or any of the Company Subsidiaries, for the last three (3) taxable years ended prior to the date hereof (except for those Tax Returns that have not yet been filed) and (ii) any audit correspondence issued by the IRS or any other taxing authority with respect to any Taxable year of the Company or any Company Subsidiary that remains open.

For the avoidance of doubt, notwithstanding anything to the contrary in this Section 2.12 or ARTICLE VIII, (i) no representation or warranty in this Section 2.12 other than those in Section 2.12(d)(x) shall apply to, or give rise to any indemnification claim under, this Agreement for any Damages in respect of or any Taxes attributable to any Post-Closing Tax Period and (ii) no Company Holder shall have any liability for any Taxes resulting from any action taken by Parent, the Surviving Corporation or any of their respective Affiliates after the Closing and on the Closing Date (or as of the Closing Date) that is not in the ordinary course of business of the Company or the Company Subsidiaries (including any election pursuant to Section 338(g) of the Code or any similar provision of state, local or non-U.S. law) (“Specified Closing Date Taxes”).

Section 2.13Employee Benefit Plans.

(a)Section 2.13(a) of the Company Disclosure Schedule contains a correct and complete list identifying each material “employee benefit plan,” as defined in Section 3(3) of ERISA, and each material employment, severance, change in control or similar contract, plan, arrangement or policy and each other material plan or arrangement providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered or contributed to by the Company or any Company Subsidiary and covers any employee or former employee of the Company or any Company Subsidiary, or with respect to which the Company or any Company Subsidiary has any material liability.  Copies of such plans (and, if applicable, related trust or funding agreements or insurance policies) and all material amendments thereto and written interpretations thereof have been made available to Parent, together with the most recent annual report (Form 5500 including, if applicable, Schedule B thereto) and tax return (Form 990) prepared in connection with any such plan or trust.  Such plans are referred to collectively herein as the “Employee Plans”.

(b)Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (either alone or together with any other event) entitle any employee or independent contractor of the Company to material severance pay or accelerate the time of payment or vesting or trigger any material payment or funding (through a grantor trust or otherwise) of compensation or benefits under, materially increase the amount payable or trigger any other material obligation pursuant to, any Employee Plan.

(c)Except as set forth in Section 2.13(c) of the Company Disclosure Schedule or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each Company Subsidiary are in compliance with all applicable laws relating to employment and employment practices, including those relating to terms and conditions of employment, wages and hours, unemployment compensation and employee classification.

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(d)The Company has made available to Parent a list of all current employees of the Company and the Company Subsidiaries as of the date hereof, including their titles, work location, employer, whether active or on leave, annual salary or wage rate, bonus commitments and date of hire.

(e)The representations and warranties in this Section 2.13 are the sole and exclusive representations and warranties of the Company concerning Employee Plans and related matters and labor matters.

Section 2.14Compliance With Laws.

Since January 1, 2011, (a) the Company and each Company Subsidiary have complied in all material respects with all federal, state, local or foreign statutes, laws, regulations or other Legal Requirements that affect the business, properties or assets of the Company and/or any Company Subsidiary and no notice, charge, claim, action or assertion has been received by the Company or any Company Subsidiary or, to the Company’s Knowledge, has been filed, commenced or threatened against the Company or any Company Subsidiary, alleging any violation of any of the foregoing that would, individually or in the aggregate, reasonably be expected to be material to the Company and the Company Subsidiaries, taken as a whole, and (b) neither the Company nor any Company Subsidiary has at any time received any notice or direction from any Governmental Entity challenging or questioning the legal right of the Company or any Company Subsidiary to design, market, offer or sell any of its material products or services or the use of its assets in the present manner or style thereof, except for such notices or directions that would not, individually or in the aggregate, reasonably be expected to be material to the Company and the Company Subsidiaries, taken as a whole.  Notwithstanding the foregoing, the representations and warranties contained in this Section 2.14 do not apply to governmental authorizations, Intellectual Property, Taxes, Employee Plans and related matters, and environmental matters, which subject matters are addressed in their entirety and exclusively in Sections 2.8, 2.11, 2.12, 2.13 and 2.20, respectively.

Section 2.15Material Contracts.

Section 2.15 of the Company Disclosure Schedule contains a list of the following Contracts in effect on the date hereof or that has been duly executed and delivered and will become effective on or after the date hereof (each, a “Material Contract”) to which the Company or a Company Subsidiary is party or bound: (a) Contracts that involve annual expenditures or receipts by the Company of more than $25,000, (b) Contracts that materially restrain, limit or impede the Company’s or the Company Subsidiaries’ ability to compete with or conduct any business or line of business, (c) Contracts with (i) any Company Holder, (ii) any other Affiliate of the Company or any Company Subsidiary or (iii) any current employee, officer, manager or director of the Company, any Company Subsidiary or any Affiliate of the Company, (d) Contracts which provide for “exclusivity” or any similar requirement in favor of any Person other than the Company or any Company Subsidiary, or under which the Company or any Company Subsidiary is restricted in any material respect in the distribution, licensing, marketing, purchasing, development or provision of their respective products or services in any jurisdiction, (e) Contracts containing any “non-solicitation”, “no hire” or similar provision that materially restrict the Company or any Company Subsidiary, (f) Contracts granting the other party to such Contract or a third party “most favored nation” or similar status, (g) Contracts relating to consulting, marketing, advertising, sales services or representation provided to the Company or any Company Subsidiary and involving annual expenditures or receipts by the Company of more than $15,000, (h) Contracts with independent

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contractor and involving annual expenditures or receipts by the Company of more than $15,000 and (i) each of the Keys Leases; provided that “Material Contracts” shall not include any purchase order entered into in the ordinary course of business, and no such purchase order is listed in Section 2.15 of the Company Disclosure Schedule.  Neither the Company nor any of the Company Subsidiaries is in breach or default in any material respect under any Material Contract.  To the Knowledge of the Company, no other party to any such Material Contract is in breach or default in any material respect under any such Material Contract.  The Company has made available to Parent true, correct and complete copies of all Material Contracts listed in Section 2.15 of the Company Disclosure Schedule.

Section 2.16Board Approval; Vote Required.

(a)The Company Board has unanimously (i) approved this Agreement, (ii) determined that the Merger and the other transactions contemplated herein are advisable and in the best interests of the Company Stockholders and on terms that are fair to the Company Stockholders and (iii) resolved to recommend that the Company Stockholders adopt this Agreement and approve the Merger, and none of the aforesaid actions by the Company Board has been amended, rescinded or modified.

(b)The affirmative vote or written consent of the holders of a majority of the outstanding shares of Company Common Stock adopting this Agreement and approving the transactions contemplated hereby (such vote or consent, the “Company Stockholder Approval”) are the only votes or written consents of any class or series of the Company Capital Stock necessary to adopt this Agreement and approve the Merger and the other transactions contemplated hereby.  When executed and delivered by the signatories thereto, the Written Consent will constitute valid and effective Company Stockholder Approval.

Section 2.17Brokers’ and Finders’ Fees.

Except for Moelis & Company, neither the Company nor any Company Subsidiary has incurred, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction contemplated hereby.

Section 2.18State Takeover Statutes.

The Company Board has taken all actions so that the restrictions in Section 203 of Delaware Law applicable to a “business combination” (as defined in such Section 203), and any other similar federal, state, local or foreign “fair price” or “control share acquisition” statutes, laws or regulations (any such statute, law or regulation, a “Takeover Statute”), will not apply to the Merger, including the execution, delivery or performance of this Agreement and the consummation of the Merger and the other transactions contemplated hereby.

Section 2.19Information Statement.

The Information Statement (if any) and any amendments or supplements there to will not, at the time it is provided to the Company Stockholders, contain any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty as to statements or omissions included in the Information Statement based upon information furnished to the Company by Parent or its Subsidiaries or their respective counsel and representatives for use therein.

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Section 2.20Environmental Matters.

(a)To the Knowledge of the Company, (i) the Company is in material compliance with all applicable Environmental Laws, and has obtained, and is in material compliance with, all material Permits required under applicable Environmental Laws in connection with the operation of its properties, assets and business, (ii) there is no material action, complaint, petition, suit, arbitration or other proceeding by any Governmental Entity or other Person pending or threatened in writing in connection with the business, properties or assets of the Company or any of the Company Subsidiaries under any Environmental Law; and (iii) there have been no Releases of or exposures to any Hazardous Materials and there are no other facts, circumstances or conditions relating to the present operation of the properties, assets and business of the Company or any of the Company Subsidiaries, or to any real property currently operated by the Company or any of the Company Subsidiaries, in each case that would reasonably be likely to give rise to any material action, complaint, petition, suit, arbitration or other proceeding, or to any material liability, under any Environmental Law.

(b)Notwithstanding anything in this Agreement to the contrary, (i) the representations and warranties contained in Section 2.20(a) do not relate to, and no representations or warranties of any kind are being made as to, the property located at 545 and 547 New Park Avenue, West Hartford, Connecticut 06110 (the “New Park Avenue Property”) or as to any properties that are not currently owned or operated by the Company and the Company Subsidiaries; (ii) other than the representations and warranties contained in Section 2.20(a), none of the Company, the Company’s Affiliates, the Company Holders or any other Person on behalf of any of the foregoing Persons makes any representation or warranty, whether express or implied, statutory or otherwise, in connection with this Agreement or the transactions contemplated hereby, with respect to matters arising under or relating to any environmental matters; and (iii) without limiting the generality of the foregoing, other than the representations and warranties contained in Section 2.20(a), the representations and warranties of the Company contained in this Agreement do not, and none of them shall be construed to speak to, matters arising under or relating to any environmental matters.

Section 2.21Disclaimer of Other Representations and Warranties.

Except for the representations and warranties set forth in this ARTICLE II, none of the Company, the Company’s Affiliates, the Company Holders or any other Person on behalf of any of the foregoing Persons makes any representation or warranty, whether express or implied, statutory or otherwise, in connection with this Agreement or the transactions contemplated hereby, or with respect to the Company, the Company’s Affiliates or their respective businesses, operations, rights, assets, liabilities or condition (financial or otherwise), and any such representations or warranties are hereby expressly disclaimed.  Without limiting the generality of the foregoing, none of the Company, the Company’s Affiliates, the Company Holders or any other Person on behalf of any of the foregoing Persons makes any representation or warranty with respect to any projections, estimates or budgets of future revenues, future results of operations, future cash flows or future financial condition (or any component of any of the foregoing) of the Company or the Company Subsidiaries.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub jointly and severally represent and warrant to the Company that:

Section 3.1Organization, Standing and Power.

Parent is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware.  Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware.  Each of Parent and Merger Sub has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to own its properties and to carry on its business as now being conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have a material adverse effect on the ability of Parent and Merger Sub to consummate the transactions contemplated by this Agreement.  Each of Parent and Merger Sub is duly qualified to do business and, in jurisdictions where such concept is recognized, is in good standing in each jurisdiction in which the failure to be so qualified and in good standing would have a material adverse effect on the ability of Parent and Merger Sub to consummate the transactions contemplated by this Agreement.  Parent and Merger Sub are not in violation of any of the provisions of their respective certificate of incorporation or bylaws, except as would not reasonably be expected to have a material adverse effect on the ability of Parent and Merger Sub to consummate the transactions contemplated by this Agreement.

Section 3.2Authority.

(a)Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub, and no other corporate action on the part of Parent and Merger Sub is necessary to authorize the execution and delivery by Parent and Merger Sub of this Agreement and the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Parent and Merger Sub, and, assuming the due authorization, execution and delivery hereof by the Company and the other parties hereto, constitute valid and binding obligations of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with the terms hereof, except to the extent that enforceability may be limited by the effect, if any, of (i) any applicable bankruptcy, reorganization, insolvency, moratorium or other Legal Requirements affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

(b)Neither the execution and delivery by Parent or Merger Sub of this Agreement, nor the consummation of the transactions contemplated hereby will conflict with, or result in any breach or violation of, or default under (with or without notice or lapse of time, or both), or the creation or imposition of any Lien on any assets, or give rise to a right of termination, cancellation or obligation or loss of any benefit under (i) any provision of the certificate of incorporation or bylaws of Parent or Merger Sub, (ii) any mortgage, indenture, lease, contract, agreement, instrument or understanding to which Parent or Merger Sub is a party or to which any of their respective properties or assets is bound or (iii) any Legal Requirement applicable to either Parent or Merger Sub or any of their respective properties or assets, except, in the case of clauses (ii) and (iii) above, any such conflicts, breaches, violations, defaults, Liens, rights or losses which would not, individually or in the aggregate, prevent or materially and adversely delay the consummation by Parent or Merger Sub of the transactions contemplated by this Agreement.  Except for the filing and recordation of the Certificate of Merger and the related certificate of incorporation of the Surviving Corporation in accordance with the requirements of Delaware Law, no notice to, filing with, and no permit, authorization, consent, approval or other action of, any Governmental Entity, or any private third party is necessary for the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement.

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Section 3.3Interim Operations of Merger Sub.

Merger Sub was formed by Parent solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.  Merger Sub has no liabilities and is not a party to any agreement other than this Agreement, the agreements contemplated herein and agreements with respect to the appointment of registered agents and similar matters.

Section 3.4Litigation.

There is no private or governmental action, suit, proceeding, inquiry, claim, charge, arbitration or investigation pending before any Governmental Entity, or, to the Knowledge of Parent, threatened against Parent or its Subsidiaries, any of their respective properties or any of their respective officers or directors (in their capacities as such) that would reasonably be expected to prevent or materially and adversely delay the consummation by Parent or Merger Sub of the transactions contemplated by this Agreement.

Section 3.5Brokers’ and Finders’ Fees.

Parent has not incurred, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or the transactions contemplated hereby for which the Company or any Company Holder shall have any liability.

Section 3.6Available Funds.

(a)Parent has, and will have at the Effective Time, sufficient cash resources to enable it to pay the Merger Consideration pursuant to this Agreement.

(b)Parent, certain other borrowers and certain guarantors have entered into a term loan credit agreement (the “Definitive Financing Agreements”) with the lenders on the signatures pages thereof (together with such other lenders or other Persons that may become parties thereto and provide a portion of the Financing, the “Lenders”) and Cortland Capital Markets Services LLC, as agent for the Lenders, pursuant to which the Lenders agree to, subject to the terms and conditions set forth in the Definitive Financing Agreements, provide Parent with debt financing in connection with the transactions contemplated hereby (the “Financing”).  Prior to the date hereof, Parent has delivered to the Company a true and complete copy of the Definitive Financing Agreements, including all amendments or other modifications thereto.

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(c)The Definitive Financing Agreements are in full force and effect and are valid and binding obligations of Parent and the other parties thereto.  Parent has no reason to believe that it will not be able to satisfy any term or condition of closing of the Financing, or that the Financing will not be made available to Parent on the Closing Date.  Subject to the terms and conditions of the Definitive Financing Agreements, the aggregate proceeds of the Financing, together with Parent’s cash on hand and borrowings available under Parent’s existing revolving credit facility, are in an amount sufficient to consummate the Merger and the other transactions contemplated by this Agreement upon the terms contemplated herein and pay all related fees and expenses of Parent, Merger Sub and their respective representatives.

Section 3.7Solvency.

Parent and Merger Sub are not entering the transactions contemplated hereby with actual intent to hinder, delay or defraud either present or future creditors.  Assuming the representations and warranties of the Company contained in this Agreement are true in all material respects, at and immediately after the Effective Time, and after giving effect to the Merger and the other transactions contemplated hereby, each of Parent and the Surviving Corporation will be Solvent.  Immediately after giving effect to the transactions contemplated by this Agreement, the Surviving Corporation will not have unreasonably small capital to carry on its business.

ARTICLE IV

CONDUCT PRIOR TO THE CLOSING DATE

Section 4.1Conduct of Business of the Company.

(a)During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement and the Effective Time, the Company shall use commercially reasonable efforts (except to the extent expressly contemplated by this Agreement, or as set forth in Section 4.1 or Section 4.2 of the Company Disclosure Schedule, or as consented to in writing by Parent, which consent shall not be unreasonably withheld, delayed or conditioned) to (i) carry on its business and the business of each Company Subsidiary in the ordinary course in substantially the same manner as heretofore conducted, (ii) preserve its and each Company Subsidiary’s present business organization, keep available the services of its and each Company Subsidiary’s present directors, officers and key employees and preserve its and each Company Subsidiary’s relationships with customers, suppliers, distributors, licensors, licensees, and others having business dealings with it; provided that, notwithstanding anything to the contrary contained herein, the Company may terminate the GE Lease in its sole discretion at any time prior to or substantially concurrently with the Closing.  The Company and each Company Subsidiary shall retain all books, records, and documents necessary for the preparation of Tax Returns and Audits.

Section 4.2Restriction on Conduct of Business of the Company

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During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement and the Effective Time, except to the extent expressly contemplated or permitted by this Agreement (including permitted by the proviso of the first sentence of Section 4.1(a)), or as set forth in Section 4.1 or Section 4.2 of the Company Disclosure Schedule, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company shall not do or cause, and shall not permit any Company Subsidiaries to do or cause, any of the following:

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(a)Charter Documents; Acquisitions of Securities.  Cause any amendments to the Company Certificate of Incorporation or the Company Bylaws or the charter documents of any Company Subsidiary or organize any Subsidiary or acquire any capital stock or other securities, or equity or ownership interest in the business, of any other Person, other than in the ordinary course of business;

(b)Changes in Capital Stock.  Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, property or otherwise) in respect of any Company Capital Stock or the capital stock of any Company Subsidiary (other than any dividends or other distributions paid solely to the Company or solely to any of its wholly owned Subsidiaries), or split, combine or reclassify any Company Capital Stock or the capital stock of any Company Subsidiary or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock or the capital stock of any Company Subsidiary, or repurchase or otherwise acquire, directly or indirectly, any shares of Company Capital Stock or the capital stock of any Company Subsidiary;

(c)Material Contracts.  Enter into any Material Contract or any other Contracts that involve annual expenditures or receipts by the Company of more than $50,000 individually or $200,000 in the aggregate (other than any Contract entered into in the ordinary course of business), or amend, terminate or otherwise modify or waive any of the material terms of any of its Material Contracts;

(d)Issuance or Repurchase of Securities.  Issue, deliver or sell, or authorize the issuance, delivery or sale of, any Company Capital Stock or the capital stock of any Company Subsidiary or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating the Company or any Company Subsidiary to issue, any such securities, other than the issuance of Company Capital Stock pursuant to the exercise of Company Warrants outstanding as of the date of this Agreement;

(e)Intellectual Property. (i) Transfer or grant to any Person or entity any material right, title or interest in or to any Company-Owned Intellectual Property other than pursuant to non-exclusive license arrangements in the ordinary course of business consistent with past practice, (ii) abandon, permit to lapse or otherwise dispose of any material Company-Owned Intellectual Property, or (iii) enter into any material Contract with respect to or otherwise binding upon any Intellectual Property owned, held or used by the Company and any Company Subsidiary;

(f)Indebtedness.  Incur any indebtedness for borrowed money or guarantees thereof (other than any indebtedness or guarantee incurred (i) in the ordinary course of business or (ii) between the Company and any its wholly owned Company Subsidiaries or between any of such wholly owned Company Subsidiaries);

(g)Liens.  Mortgage, pledge or encumber any material assets;

(h)Payment of Obligations.  Pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) other than (i) the payment, discharge or satisfaction of liabilities in the ordinary course of business consistent with past practice or which are otherwise reflected or reserved against in the Audited Financial Statements and (ii) the payment, discharge or satisfaction of the Company Transaction Expenses;

(i)Capital Expenditures.  Make any capital expenditures, capital additions or capital improvements in excess of $100,000 individually or in excess of $250,000 in the aggregate;

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(j)Grants of or Increases in Compensation and Benefits.  Grant or agree to grant to any employee whose annual compensation exceeds $100,000 any increase in wages or bonus, severance, retention, change in control, profit sharing, retirement, insurance or other compensation or benefits, or establish, adopt or enter into any new compensation or employee benefit plans or arrangements (including any Employee Plan), or terminate, amend or modify or agree to terminate, amend or modify any existing Employee Plans (including to accelerate the time of payment or vesting, or to trigger any payment or funding thereunder), except (A) as may be required under applicable Legal Requirements or (B) pursuant to the Employee Plans in effect on the date hereof;

(k)Litigation.  (A) Settle, or offer or propose to settle, any litigation involving or against the Company or any Company Subsidiary, except for settlements of less than $50,000 in any individual case or series of related cases (net of insurance proceeds) that do not impose any material restrictions on the business or operations of the Company and the Company Subsidiaries, taken as a whole, or (B) settle the Alpert Case and/or the Chen Case except in accordance with the Litigation Management Agreement;

(l)Acquisitions.  Acquire, by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other means, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets, in each such case which are material, individually or in the aggregate, to the Company’s and Company Subsidiaries’ business, taken as a whole (other than pursuant to existing contracts or commitments or in the ordinary course of business);

(m)Dispositions.  (A) Other than in the ordinary course of business consistent with past practice, sell, transfer, abandon or otherwise dispose of or lease, license or otherwise encumber any of its properties, rights or assets that are material, individually or in the aggregate, to the Company and the Company Subsidiaries, taken as a whole, including to any employee, Affiliate or any other third party, or (B) amend, supplement, modify, cancel or terminate any contract relating to the “Colt Rapid Range” activity;

(n)Taxes.  Make, revoke or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, file any amendment to a Tax Return, enter into any closing agreement, settle or compromise any claim or assessment in respect of material Taxes, or consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in respect of Taxes;

(o)Accounting Policies and Procedures.  Make any change to its accounting methods, principles, policies, procedures or practices, except as may be required by GAAP; or

(p)Other.  Agree in writing or otherwise to take any of the actions described in Sections 4.2(a) through (o) above.

Section 4.3Solicitation.

(a)Except as permitted by this Section 4.3, during the period from the date of this Agreement until the earlier of (i) the date this Agreement is terminated in accordance with its terms and (ii) the Closing Date, the Company shall not, and shall direct its Affiliates and its and their respective representatives to refrain from taking any action to, directly or indirectly, knowingly encourage, initiate, solicit or engage in negotiations with, or provide any confidential information to, any Person, other than Parent or Merger Sub (and their Affiliates and representatives), concerning any Acquisition Proposal.

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(b)Immediately following the execution of this Agreement, the Company shall, and shall cause each of the Company Subsidiaries, and shall direct each of their respective representatives to terminate any existing discussions or negotiations with any Persons, other than Parent or Merger Sub (and their respective Affiliates and representatives), concerning any Acquisition Proposal.  The Company shall (i) promptly request each Person that has executed a confidentiality agreement with the Company prior to the date of this Agreement in connection with a process relating to any bona fide Acquisition Proposal to return or destroy all confidential information heretofore furnished to such Person or its representatives by or on behalf of the Company or any of its Subsidiaries, (ii) not amend or waive, and shall enforce, the provisions of each such confidentiality agreement, except that, without limiting any other provision of this Agreement, this clause (ii) shall not apply to any standstill provision contained therein to the extent compliance herewith would be inconsistent with the fiduciary duties of the Company Board under applicable Legal Requirements and (iii) prohibit any access by any such Person or its representatives to any physical or electronic data room of the Company, except as permitted herein.

Section 4.4Financing.

Parent and Merger Sub shall use their reasonable best efforts to (i) maintain in full force and effect the Definitive Financing Agreements, (ii) satisfy on a timely basis all conditions in the Definitive Financing Agreements that are within their control and comply with their obligations thereunder, and not take any action that would reasonably be expected to prevent the availability of the Financing, (iii) consummate and obtain the Financing at or prior to the Closing and (iv) enforce their rights under the Definitive Financing Agreements in the event of a breach of failure to fund that impedes or delays Closing, including seeking specific performance of the parties thereunder.

Section 4.5Resignation or Removal of Directors and Officers.

The Company shall cause each of the directors and officers of the Company and the Company Subsidiaries (other than John P. Rigas, Philip A. Wheeler and Michael Holmes) to submit a letter of resignation or to otherwise be removed from their respective positions, such resignation or removal to be effective as of the Effective Time.

Section 4.6Notice of Redemption of Series B Preferred Stock.

No later than five (5) days prior to the Closing Date, the Company (or Parent on the Company’s behalf) shall deliver to each holder of record of Series B Preferred Stock a written notice in accordance with the requirements set forth in Section 3(c)(i) of the Company Certificate of Incorporation of the Company’s intention to redeem all outstanding Series B Preferred Stock at the Closing pursuant to Section 3(c)(i) of the Company Certificate of Incorporation.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1Access to Information; Notification of Certain Matters.

(a)The Company shall afford Parent and its accountants, counsel and other representatives reasonable access during normal business hours during the period prior to the Closing to (i) all of the properties, books, Tax Returns, Contracts, commitments and records and personnel of the Company and the Company Subsidiaries and (ii) all other information concerning the business of the

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Company and the Company Subsidiaries, their respective properties and personnel as Parent may reasonably request; provided,however, that, if the Company reasonably believes that the provision of such access or information would violate applicable Legal Requirements or an obligation of confidentiality under a Contract with a third party, or jeopardize attorney-client privilege, then the Company (A) may limit such access or information to the extent the provision of such access or information is so restricted and (B) shall reasonably cooperate with Parent to eliminate or limit such restriction and allow such access or information to the maximum extent possible.  No information or Knowledge obtained in any investigation pursuant to this Section 5.1(a) shall affect or be deemed to modify any representation or warranty contained in this Agreement or the conditions to the obligations of the parties to consummate the transactions contemplated hereby.

(b)Parent, on the one hand, and the Company, on the other hand, shall use their respective commercially reasonable efforts to promptly notify each other of (i) any material actions, suits, claims or proceedings in connection with the transactions contemplated by this Agreement commenced or, to the Knowledge of Parent and/or Merger Sub or the Knowledge of the Company, threatened against the Company or any of the Company Subsidiaries, as the case may be, or (ii) the occurrence or non-occurrence of any fact or event which would be reasonably likely to cause any condition set forth in ARTICLE VI not to be satisfied; provided, that no such notification, nor the obligation to make such notification, shall affect the representations, warranties or covenants of any party hereto or the conditions to the obligations of any party to this Agreement.  With respect to any material stockholder claims or litigation against the Company and/or its directors relating to the transactions contemplated by this Agreement, the Company shall (i) promptly notify Parent of the initiation of any such litigation, (ii) promptly notify Parent of any material communication with the applicable stockholders or any material development with respect to such litigation and (iii) subject to reasonable limitations to protect attorney-client privilege, consult in good faith with Parent with respect to any material decisions and the Company’s general strategy regarding such litigation.

(c)If prior to the Closing, Parent or Merger Sub shall have Knowledge of any material breach of a representation, warranty, covenant, agreement or condition of the Company, Parent shall promptly notify the Company of such knowledge in reasonable detail.

Section 5.2Confidentiality.

The parties hereto acknowledge that Parent and the Company have previously executed a Confidentiality Agreement dated August 15, 2012 (the “Confidentiality Agreement“), which Confidentiality Agreement shall notwithstanding its terms continue in full force and effect until the Effective Time or, if this Agreement is terminated pursuant to ARTICLE VII, the third anniversary of the termination of this Agreement.  In addition, the parties hereto agree that the terms and conditions of the transactions contemplated hereby, and information exchanged in connection with the execution hereof and the consummation of the transactions contemplated hereby, shall be subject to the Confidentiality Agreement.

Section 5.3Public Disclosure.

At the Closing, Parent and the Company shall issue a press release announcing the consummation of the Merger, the content and timing of such press release to be mutually agreed upon by Parent and the Company.  Prior to the Closing, none of Parent, the Company or any of their respective Affiliates shall issue any additional press release or make any other public statement or disclosure regarding the terms of this Agreement or the transactions contemplated hereby without the prior written approval of the other party (which approval shall not be unreasonably withheld), except as may be required by applicable Legal Requirements, in which case the party proposing to issue such press release or make such public statement or disclosure shall use reasonable best efforts to consult in good faith with the other party before issuing such press release or making any such public statement or disclosure.

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Section 5.4Reasonable Best Efforts; Consents; Cooperation.

(a)Regulatory Filings.  Each of Parent, Merger Sub and the Company shall coordinate and cooperate with one another and shall use all reasonable best efforts to comply with, and shall each refrain from taking any action that would impede compliance with, all Legal Requirements, and as promptly as practicable after the date hereof, each of Parent, Merger Sub and the Company shall make, give or effect all filings, notices, petitions, statements, registrations, submissions of information, applications or submissions of other documents required by any Governmental Entity in connection with the Merger and the other transactions contemplated hereby.  Parent, Merger Sub and the Company each shall promptly supply the other with any information that may be required in order to effectuate any filings or application pursuant to this Section 5.4(a).  Each of Parent, Merger Sub and the Company will notify the other promptly upon the receipt of (A) any comments or communications from any officials of any Governmental Entity in connection with any filings made pursuant hereto and (B) any request by any officials of any Governmental Entity for amendments or supplements to any filings made pursuant to, or information provided to comply in all material respects with, any Legal Requirements.  Whenever any event occurs that is required to be set forth in an amendment or supplement to any filing made pursuant hereto, Parent, Merger Sub or the Company, as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the applicable Governmental Entity such amendment or supplement.

(b)Reasonable Best Efforts.  Upon the terms and subject to the conditions set forth herein, each of the parties agrees to use all reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by this Agreement, including the following: (i) the taking of all acts necessary to cause the conditions precedent set forth in ARTICLE VI to be satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from Governmental Entities and the making of all necessary registrations, declarations, submissions and filings (including registrations, declarations, filings and submissions of responses to requests for additional information and documentary material with Governmental Entities, if any) and the taking of all steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity, (iii) the obtaining of all necessary consents, approvals or waivers from third parties, (iv) the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, and whether brought by any Governmental Entity or any other Person, challenging this Agreement or the consummation of the transactions contemplated hereby or seeking to prevent, impede or delay the Closing and (v) the execution or delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.  In connection with seeking the consents, waivers and approvals referred to in the foregoing subsection (iii), the Company shall keep Parent informed of all material developments and shall, at Parent’s reasonable request, include Parent in any discussions or communications with any parties from which any such consent, waiver or approval is sought hereunder.  Without limiting the generality of the foregoing, prior to the Closing, Parent shall not, and shall cause its Affiliates not to, take any action, or fail to take any action, that would be reasonably likely to prevent or materially impede or delay the consummation of the Merger.

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(c)The Company shall duly take all lawful action to obtain the Company Stockholder Approval within twenty-four (24) hours after the execution and delivery hereof pursuant to executed written consents (the “Written Consent”) in the form attached hereto as Exhibit D.  The materials submitted to the Company Stockholders in connection with the Written Consent shall include the unanimous recommendation of the Company Board that the Company Stockholders vote their shares of Company Common Stock in favor of the adoption of this Agreement; provided however, that, prior to obtaining the Company Stockholder Approval, the Company Board may change such recommendation if the Company Board determines that it must take such action in order to comply with its fiduciary duties under applicable Legal Requirements; and provided further, that no such change shall relieve the Company of its obligation to seek the Written Consent pursuant to this Section 5.4(c).  Promptly following receipt of the Written Consent, the Company shall cause its corporate Secretary to deliver a copy of such Written Consent to Parent.  No later than ten (10) days after the receipt by the Company of the Company Stockholder Approval pursuant to the Written Consent, the Company shall deliver notice thereof (the “Information Statement”) to the stockholders of the Company in compliance with Sections 228(e) and 262 of Delaware Law, to the extent applicable.

Section 5.5FIRPTA Certificate.

The Company shall, on or prior to the Closing Date, provide Parent with a properly executed Foreign Investment and Real Property Tax Act of 1980 notification letter (the “FIRPTA Certificate”), substantially in the form of Exhibit E attached hereto, which states that shares of capital stock of the Company do not constitute “United States real property interests” under Section 897(c) of the Code.  In addition, simultaneously with delivery of such FIRPTA Certificate, the Company shall mail to the IRS (by certified mail, return receipt requested) a notice prepared in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2) in substantially the form of Exhibit Fattached hereto (the “FIRPTA Notice”) and provide a copy of such mailing to Parent.

Section 5.6Indemnification; Directors’ and Officers’ Insurance.

(a)From and after the Effective Time, Parent shall cause the Surviving Corporation to indemnify and hold harmless, and advance expenses to, each current or former director or officer of the Company or any Company Subsidiary at or prior to the Effective Time (collectively, the “Indemnified Parties”) to the extent provided for under the terms and conditions of the Company Certificate of Incorporation and the Company Bylaws (each as in effect as of the date hereof) in connection with any Claim (as defined below) and any judgments, damages, losses, claims, liabilities, fines (including excise taxes), penalties, expenses (including attorneys’ fees and expenses) and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties, expenses or amounts paid in settlement) resulting therefrom.  The indemnification obligations of the Surviving Corporation pursuant to this Section 5.6(a) shall cover acts and omissions occurring at or before the Effective Time and any Claim relating thereto (including any acts or omissions occurring in connection with the approval of this Agreement and the consummation of the transactions contemplated hereby and any Claim relating thereto).  As used in this Section 5.6(a), the term “Claim” means any threatened, asserted, pending or completed claim, action, suit or proceeding, or any inquiry or investigation, whether instituted by the Company, any Governmental Entity or any other party, that any Indemnified Party in good faith believes might lead to the institution of any such claim, action, suit or proceeding, whether civil, criminal, administrative, investigative or other, or pursuant to arbitration or any other alternative dispute resolution mechanism, arising out of or pertaining to matters that relate to such Indemnified Party’s duties or service as a director, officer, trustee, employee, agent, or fiduciary of the Company, any Company Subsidiary, any employee benefit plan maintained by any of the foregoing at or prior to the Effective Time or any other Person at the request of the Company or any Company Subsidiary.

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(b)From and after the Effective Time, Parent shall cause the Surviving Corporation to keep in full force and effect, and comply with the terms and conditions of, the agreements listed in Section 5.6(b) of the Company Disclosure Schedule.

(c)If the Surviving Corporation or any of its successors or assigns shall (i) consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to any Person, then, in each such case, Parent shall cause proper provisions to be made so that the successors and assigns of Parent and the Surviving Corporation assume all of the obligations of Parent and the Surviving Corporation set forth in this Section 5.6.

(d)The provisions of this Section 5.6 shall survive the consummation of the Merger for a period of six (6) years and (i) are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs, executors and personal and legal representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by contract or otherwise (including the agreements referred to in Section 5.6(b)).  The obligations of Parent and the Surviving Corporation under this Section 5.6 shall not be terminated or modified in such a manner as to adversely affect the rights of any Indemnified Party under this Section 5.6 without the consent of such affected Indemnified Party.

(e)Prior to the Effective Time, the Company shall obtain and fully pay the premium for the non-cancellable extension for a period of at least six (6) years from and after the Effective Time of the Company’s directors’ and officers’ insurance policies and fiduciary liability insurance policies (collectively, “D&O Insurance”) in place as of the date hereof with the Company’s current insurance carriers with respect to such D&O Insurance.

Section 5.7Takeover Statutes.

If any Takeover Statute or similar Legal Requirement is or may become applicable to the transactions contemplated hereby, the Company Board shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate the effects of any Takeover Statute on any of the transactions contemplated hereby.

Section 5.8Certain Tax Matters.

(a)Tax Returns

(i)Pre-Closing Income Tax Returns Filed Post-Closing.  The Stockholder Representatives shall prepare, or shall cause to be prepared, all Income Tax Returns of the Company or any Company Subsidiary that relate to Pre-Closing Tax Periods (other than Straddle Periods) but that are required to be filed after the Closing Date. All such Income Tax Returns shall be prepared by treating items on such Income Tax Returns in a manner consistent with the past practices of the Company and the Company Subsidiaries with respect to such items, except as required by applicable Legal Requirements.  The Stockholder Representatives shall deliver to Parent, at least twenty (20) days prior to the due date (taking into account extensions) for the filing of each such Income Tax Return, a draft of such Tax Return for review by Parent.  The Stockholder Representatives shall consider in good faith any reasonable comments that Parent submits to the Stockholder Representatives in writing no less than five (5) days before the due

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date for filing each such Income Tax Return and shall not finalize the form of such Income Tax Return without Parent’s prior written consent (not to be unreasonably withheld, conditioned or delayed).  At least two (2) Business Days before the due date for filing each such Income Tax Return, (A) the Stockholder Representatives shall deliver to Parent the final form of such Income Tax Return and (B) the Stockholder Representatives shall make a cash payment to Parent equal to the Seller True-Up Amount, if any. If there has been an overpayment of Taxes with respect to any such Income Tax Return, Parent shall request that such overpayment be refunded and, no later than five (5) Business Days after such refund is received by the Company or any Company Subsidiary, Parent shall make a cash payment to the Stockholders Representatives equal to the Parent True-Up Amount, if any.  Parent shall timely file, or shall cause to be timely filed, with the relevant taxing authority, each such Income Tax Return and shall timely pay to the relevant Governmental Entity all Taxes shown to be due and payable on such Tax Return.

(ii)Pre-Closing Non-Income Tax Returns Filed Post-Closing.  Parent shall prepare, or shall cause to be prepared, all Non-Income Tax Returns of the Company or any Company Subsidiary that relate to Pre-Closing Tax Periods (other than Straddle Periods) but that are required to be filed after the Closing Date and the Stockholder Representatives shall pay, or cause to be paid, to Parent all Taxes due with respect to such Non-Income Tax Returns, other than any such Taxes (A) to the extent specifically reflected as a liability in the Net Working Capital finally determined pursuant to Section 1.8 or (B) that are Specified Closing Date Taxes (each of which shall be the responsibility of Parent).  All such Non-Income Tax Returns shall be prepared by treating items on such Non-Income Tax Returns in a manner consistent with the past practices of the Company and the Company Subsidiaries with respect to such items, except as required by applicable Legal Requirements.  The Stockholder Representatives shall make a cash payment to Parent equal to any Taxes for which they are responsible under this Section 5.8(a)(ii) at least two (2) Business Days prior to the due date for paying the Taxes in question.  Parent shall timely file, or shall cause to be timely filed, with the relevant Governmental Entity each such Non-Income Tax Return and shall timely pay to the relevant Governmental Entity all Taxes due with respect to each such Non-Income Tax Return.

(iii)Straddle Period Tax Returns.  Parent shall prepare, or cause to be prepared, any Tax Return (a “Straddle Period Tax Return”) required to be filed by the Company, the Surviving Corporation or any Company Subsidiary for any Straddle Period.  Except as required by applicable Legal Requirements, such Straddle Period Tax Returns shall be prepared by treating items on such Tax Returns in a manner consistent with the past practices of the Company or the Company Subsidiaries with respect to such items, but only to the extent such items would impact any payment required to be made by the Stockholder Representatives under this Section 5.8(a)(iii).  Parent shall deliver to the Stockholder Representatives, at least (20) days before the due date (taking into account extensions) for filing each Straddle Period Tax Return that is an Income Tax Return, a draft of such Straddle Period Tax Return for the Stockholder Representatives’ review.  Parent shall consider in good faith any reasonable comment that the Stockholder Representatives submit to Parent no less than ten (10) days prior to the due date of such Straddle Period Tax Return and Parent shall not file any such Straddle Period Tax Return without the Stockholder Representatives’ prior written consent (not to be unreasonably withheld, conditioned or delayed).  In the case of each Straddle Period Tax Return that is an Income Tax Return, at least two (2) Business Days prior to the due date for filing such Straddle Period Tax Return, the Stockholder Representatives shall make a cash payment to Parent equal to the Seller True-Up Amount,

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if any.  If there has been an overpayment of Income Taxes allocable to the pre-Closing  portion of any Straddle Period (treating any Warrant Tax Benefit actually realized with respect to such Tax Return as arising in the pre-Closing portion of such Straddle Period), Parent shall request that such overpayment be refunded (to the extent such overpayment is not applied against the Income Tax due with respect to the post-Closing portion of such Straddle Period) and, no later than five (5) Business Days after the later of the date such refund is received by the Company or any Company Subsidiary and the date such overpayment is applied against the Income Taxes due with respect to the post-Closing portion of such Straddle Period, Parent shall make a cash payment to the Stockholder Representatives equal to the Parent True-Up Amount.  In the case of each Straddle Period Tax Return that is a Non-Income Tax Return, at least two (2) Business Days prior to the due date for filing such Straddle Period Tax Return, the Stockholder Representatives shall make a cash payment to Parent equal to the portion of the Taxes due with respect to such Straddle Period Tax Return that are allocable to the Pre-Closing Tax Period (other than any such Taxes (A) to the extent specifically reflected as a liability in the Net Working Capital finally determined pursuant to Section 1.8 or (B) that are Specified Closing Date Taxes, each of which shall be the responsibility of Parent).  Parent shall timely file, or shall cause to be timely filed, with the relevant Governmental Entity each Straddle Period Tax Return and shall timely pay to the relevant Governmental Entity all Taxes due with respect to each Straddle Period Tax Return.

(iv)Tax Allocation for Straddle Period.  For all purposes of this Agreement, the portion of any Tax with respect to any Straddle Period that is allocable to the Pre-Closing Tax Period will be: (i) in the case of ad valorem property or similar Taxes, the Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of such Straddle Period ending on the day immediately prior to the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period, and (ii) in the case of all other Taxes, determined as though the taxable year of the Company terminated at the end of the Closing Date, provided that any Specified Closing Date Taxes shall be deemed to arise in a Post-Closing Tax Period.

(v)Amended Tax Returns and Carrybacks.  Prior to the Escrow Release Date, Parent shall not cause or permit any amendment of any Tax Return of the Company or any of the Company Subsidiaries for any Pre-Closing Tax Period or Straddle Period, or cause or permit any carryback of any Tax attributes from any Post-Closing Tax Period or Straddle Period to any Pre-Closing Tax Period or Straddle Period, without the prior written consent of the Stockholder Representatives (not to be unreasonably withheld, conditioned or delayed), except in each case as required by applicable Legal Requirements (e.g., where the Company or any Company Subsidiary is prohibited from waiving its right to carry back the applicable Tax attribute).

(b)Cooperation on Tax Matters

.  Parent and the Surviving Corporation, on the one hand, and the Company Holders, on the other hand, will cooperate fully, as and to the extent reasonably requested by the other party, in connection with any Tax matters relating to the Company (including by the provision of reasonably relevant records or information).  All out-of-pocket costs and expenses (other than payments due to any Governmental Entity in respect of any Tax Return) incurred by Parent pursuant this Section 5.8 shall be reimbursed to Parent out of the General Escrow Fund.

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(c)Transfer Taxes

.  Notwithstanding anything to the contrary herein, all transfer, documentary, sales, use, stamp, recording and other similar Taxes (including any penalties, additions to Taxes and interest) imposed on or in connection with the Merger and resulting from transfer of the equity interest of the Company and the Company Subsidiaries (“Transfer Taxes”) shall be paid one-half by Parent, on the one hand, and one-half by the Company Holders, on the other hand, and Parent will file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and, if required by applicable Legal Requirements, the Stockholder Representative or Company Holders will, and will cause their Affiliates to, join in the execution of any such Tax Returns and other documentation; provided, however, if the Stockholder Representative or Company Holders fail to join in the execution of any such Tax Returns and other documentation then Parent shall be authorized to execute such Tax Returns and other documentation on behalf of Stockholder Representative or Company Holders.

(d)           Tax Sharing Agreements.  All agreements or arrangements with respect to Tax matters between the Company or any of the Company Subsidiaries, on the one hand, and the Company Holders or any of their respective Affiliates, on the other hand, shall be terminated or modified prior to the Closing so as to cause there to be no continuing liability on the part of the Company or any of the Company Subsidiaries.

(e)           Tax Due With Respect To a Tax Return.  For the avoidance of doubt, references in this Section 5.8 (including defined terms used herein) to a Tax due with respect to any Tax Return shall mean the Tax due after reduction for any estimated Taxes previously paid with respect to such Tax Return.

(f)           Escrow Accounts.  All interest or other income earned with respect to the Funds (as defined in the Escrow Agreement), other than the Stockholder Representative Escrow Fund and the Keys Additional Employee Litigation Escrow Fund, shall be allocated to Parent for U.S. federal income tax purposes and reported, by the Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by Parent from such Funds for U.S. federal income tax purposes whether or not said income has been distributed during such year.  All interest or other income earned with respect to the Stockholder Representative Escrow Fund and the Keys Additional Employee Litigation Escrow Fund shall be allocated to the Company Holders and William M. Keys, respectively, for U.S. federal income tax purposes and reported, by the Escrow Agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by the Company Holders and William M. Keys, respectively, from such Funds for U.S. federal income tax purposes.

Section 5.9Preservation of Records.

(a)For a period of seven (7) years (or such shorter period as provided in the proviso to this sentence) after the Closing Date or such other longer period as required by applicable Legal Requirements, Parent shall preserve and retain, all corporate, accounting, legal, auditing, human resources and other books and records of the Surviving Corporation and each of its Subsidiaries (including (a) any documents relating to any governmental or non-governmental claims, actions, suits, proceedings or investigations and (b) all Tax Returns, schedules, work papers and other material records or other documents relating to Taxes of the Surviving Corporation) relating to the conduct of the business and operations of the Surviving Corporation and its Subsidiaries prior to the Closing Date; provided, however, that notwithstanding the foregoing, any such books and records described in this Section 5.9(a) that have come into existence prior to the Closing Date shall only be required to be preserved and retained for a period of seven (7) years from the date such book or record came into existence or such other longer period as required by applicable Legal Requirements; provided, further, that notwithstanding anything to the contrary in this Section 5.9(a), Parent shall preserve and retain all such books and records related to the Alpert Case, the Chen Case or any related claim (provided that Parent has actual knowledge of such claim), until such litigation or claim is fully resolved by final judgments of courts of competent jurisdiction and/or settlements by the respective parties thereto.  Notwithstanding the foregoing, during such required retention period, Parent may dispose of any such books and records which are offered to, but not accepted by, the Stockholder Representatives.  If at any time after such required retention period

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Parent intends to dispose of any such books and records, Parent shall not do so without first offering such books and records to the Stockholder Representatives.  The provisions of this Section 5.9(a) shall cease to apply in the event of a sale or disposition of the Surviving Corporation or any of its Subsidiaries by Parent, provided that Parent has caused the subsequent owner(s) of such entity to assume the obligations of Parent set forth in this Section 5.9(a).  Additionally, any books and records described in this Section 5.9(a) that, as of the Closing Date, are in the exclusive possession of any Company Holder or a Stockholder Representative (in his capacity as such) and retained by such party after the Closing Date, shall not be subject to the preservation or retention requirements of this Section 5.9(a).  Notwithstanding anything to the contrary contained in this Agreement, nothing in this Section 5.9(a) shall be applicable to books and records related to Colt Archive Properties LLC, which are addressed in the Colt Archive Side Letter.

(b)In the event and for so long as Parent, the Surviving Corporation, its Subsidiaries or the Stockholder Representatives are actively contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand (collectively, “Actions”) (except for Actions arising out of or related to the Alpert Case or the Chen Case which are addressed in the Litigation Management Agreement) in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Company or any of the Company Subsidiaries, each of the other parties shall use commercially reasonable efforts to cooperate with it and its counsel in the defense or contest, make available their personnel, and provide such testimony and access to their books and records as shall be necessary or reasonably requested in connection with the defense or contest, all at the sole cost and expense of the contesting or defending party.  Such cooperation obligation shall also include the obligation to, to the extent commercially reasonable, execute such other or further agreements or file such pleadings or other papers as may be necessary or desirable to preserve all applicable privileges, immunities from disclosure, and/or confidentiality.

ARTICLE VI

CONDITIONS TO THE CLOSING

Section 6.1Conditions to Obligations of Each Party to Effect the Merger.

The respective obligations of each party to this Agreement to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived to the extent permissible by applicable Legal Requirements, in writing, by agreement of all the parties hereto:

(a)Company Stockholder Approval.  The Company Stockholder Approval shall have been received.

(b)No Order.  No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which (i) is in effect and (ii) has the effect of making the Merger illegal or otherwise prohibiting or preventing consummation of the Merger.

Section 6.2Additional Conditions to Obligations of the Company.

The obligations of the Company to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived to the extent permissible by applicable Legal Requirements, in writing, by the Company:

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(a)Representations, Warranties and Covenants.  (i) The representations and warranties of Parent and Merger Sub contained in ARTICLE III shall be true and correct (determined without regard to any materiality or material adverse effect qualification contained in any representation or warranty) as of the Closing Date as if made at and as of such time (other than those made at and as of a specified date, which shall be true and correct in all respects at and as of such specified date), except for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement; and (ii) Parent and Merger Sub shall each have performed and complied in all material respects with all covenants and obligations of this Agreement required to be performed and complied with by it as of the Closing Date.

(b)Certificate of Parent.  The Company shall have received a certificate signed by an authorized officer of each of Parent and Merger Sub, dated as of the Closing Date, certifying fulfillment of the conditions specified in Section 6.2(a).

(c)Escrow Agreement.  The Escrow Agent and Parent shall have executed and delivered the Escrow Agreement in the form attached hereto as Exhibit G (the “Escrow Agreement”).

(d)Closing Deliverables.  Each of the deliverables set forth in Section 1.13(a)(ii) shall have been delivered to the Company.

Section 6.3Additional Conditions to Obligations of Parent and Merger Sub.

The obligations of Parent and Merger Sub to consummate and effect the Merger and the other transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived to the extent permissible by applicable Legal Requirements, in writing, by Parent and Merger Sub:

(a)Representations, Warranties and Covenants.  (i) The representations and warranties of the Company set forth in Sections 2.2(a) and 2.3(a) shall be true and correct in all respects (except for de minimis failures to be true and correct) as though made as of the Closing (except to the extent expressly made as of an earlier date, in which case as of such earlier date).  All other representations and warranties of the Company contained in ARTICLE II shall be true and correct (determined without regard to any materiality or Company Material Adverse Effect qualification contained in any representation or warranty) as of the Closing Date as if made at and as of such time (other than those made at and as of a specified date, which shall be true and correct in all respects at and as of such specified date), except for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and (ii) the Company shall have performed and complied in all material respects with all covenants of this Agreement required to be performed by it as of the Closing Date.

(b)Certificates of the Company.  Parent shall have received a certificate signed by an authorized officer of the Company, dated as of the Closing Date, certifying fulfillment of the conditions set forth in Sections 6.3(a) and 6.3(g).

(c)Merger Consideration Schedules; Closing Consideration Schedule.  The Company shall have delivered to Parent (i) the Estimated Merger Consideration Schedule and related certificate pursuant to Section 1.8(a) and (ii) the Closing Consideration Schedule and related certificate pursuant to Section 1.10(d).

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(d)Resignation or Removal of Directors and Officers.  The directors and officers of the Company and each Company Subsidiary (other than John P. Rigas, Philip A. Wheeler and Michael Holmes) shall have resigned or been removed from their respective positions as directors or officers of the Company and each Company Subsidiary effective as of the Effective Time, and Parent shall have received letters of resignation from such persons or evidence of the removal of such persons from their respective positions.

(e)Delivery of Notice of Redemption.  The Company (or Parent on the Company’s behalf) shall have delivered to each holder of record of Series B Preferred Stock a written notice of redemption in the form attached here to as Exhibit J.

(f)Escrow Agreement.  The Escrow Agent and the Stockholder Representatives shall have executed and delivered the Escrow Agreement in the form attached hereto as Exhibit G.

(g)Closing Deliverables.  Each of the deliverables set forth in Section 1.13(a)(i) shall have been delivered to Parent.

(h)No Material Adverse Effect.  Since the date of this Agreement, there shall not have been any change, development or event that, individually or in the aggregate, has had, or would reasonably be expected to have, a Company Material Adverse Effect.

Section 6.4Frustration of Conditions.

Neither Parent nor the Company may rely on the failure of any condition set forth in this ARTICLE VI to be satisfied if such failure was caused by such party’s failure to comply with or perform any of its covenants or obligations set forth in this Agreement.

ARTICLE VII

TERMINATION; EXPENSES

Section 7.1Termination.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned, at any time prior to the Effective Time:

(a)by mutual written consent of the Company and Parent;

(b)by either Parent, on the one hand, or the Company, on the other hand, if:

(i)any court or other Governmental Entity shall have issued, enacted, entered, promulgated or enforced any permanent injunction or other order (that is final and non-appealable and has not been vacated, withdrawn or overturned) restraining, enjoining or otherwise prohibiting the Merger; provided, that the party seeking to terminate pursuant to this Section 7.1(b)(i) shall have complied with its obligations, if any, under Sections 5.4(a) and 5.4(b) in connection with such permanent injunction or order;

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(ii)the Effective Time shall not have occurred on or prior to July 12, 2013 (the “End Date”); provided, however, the right to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall not be available to any party whose actions in breach of this Agreement or failure to take action in breach of this Agreement has been the principal cause of or resulted in any of the conditions set forth in ARTICLE VI having failed to be satisfied prior to such date; or

(iii)if within two (2) Business Days following the execution and delivery of this Agreement by all of the parties hereto the Company shall not have delivered to Parent a copy of the executed Written Consent evidencing receipt of the Company Stockholder Approval.

(c)by the Company, if: (i) any of the representations and warranties of Parent and Merger Sub contained in ARTICLE III shall fail to be true and correct or (ii) there shall be a breach by Parent and/or Merger Sub of any covenant or agreement of Parent or Merger Sub in this Agreement that, in either case, (A) would result in the failure of a condition set forth in Section 6.1 or Section 6.2 and (B) is incapable of being cured before the End Date; provided, that the Company may not terminate this Agreement pursuant to this Section 7.1(c) if the Company is in material breach of this Agreement; or

(d)by Parent, if: (i) any of the representations and warranties of the Company contained in ARTICLE II shall fail to be true and correct or (ii) there shall be a breach by the Company of any covenant or agreement of the Company in this Agreement that, in either case, (A) would result in the failure of a condition set forth in Section 6.1 or Section 6.3 and (B) is incapable of being cured before the End Date; provided, that Parent may not terminate this Agreement pursuant to this Section 7.1(d) if Parent or Merger Sub is in material breach of this Agreement.

Section 7.2Effect of Termination.

In the event of termination of this Agreement as provided in Section 7.1, this Agreement shall forthwith become void, and except as provided in Sections 7.3 and 7.4, there shall be no liability or obligation on the part of Parent, Merger Sub, the Company, any of their respective Subsidiaries or any of their respective officers, directors, equity holders or Affiliates, except to the extent that such termination results from the willful and intentional breach by a party hereto of any of its representations, warranties, covenants or agreements set forth in this Agreement, in which case the breaching party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such breach; provided that the provisions of Section 5.2 (Confidentiality), Section 5.3 (Public Disclosure), ARTICLE VII (Termination; Expenses) and ARTICLE IX (General Provisions) (other than Section 9.1) hereof shall remain in full force and effect and survive any termination of this Agreement.

Section 7.3Termination Fee.

(a)In the event that (x)  this Agreement is terminated by the Company pursuant to Section 7.1(c) as a result of a material misrepresentation involving Section 3.6 and/or a material breach of Section 4.4 or (y) this Agreement is terminated by the Company or Parent pursuant to Section 7.1(b)(ii) and at the time of such termination, (A) the representation and warranties contained in Section 3.6 are not true and correct in any material respect or (B) Parent and/or Merger Sub has materially breached the covenants contained in Section 4.4 (a termination described in clause (x) or (y) above, a “Financing Condition Termination”), then Parent shall pay to the Company a termination fee equal to $3,500,000 (the “Termination Fee”) by wire transfer of immediately available funds to an account designated in writing by the Company.  The Termination Fee shall be payable within two Business Days

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after written notice of such termination in the case of a termination by the Company and concurrently with such termination in the case of a termination by Parent.  The Company agrees that in the event that the Termination Fee is paid to the Company pursuant to this Section 7.3, notwithstanding anything in this Agreement to the contrary, the payment of such Termination Fee shall be the sole and exclusive remedy of the Company and its Related Persons against Parent or any of its Related Persons for, and in no event shall the Company or any of its Related Persons seek to recover any other money damages or seek any other remedy based on a claim in law or equity with respect to, (A) any loss suffered as a result of the failure of the Merger to be consummated, (B) the termination of this Agreement, (C) any liabilities or obligations arising under this Agreement, or (D) any claims or actions arising out of or relating to any breach, termination or failure of or under this Agreement, in each case, with respect to a Financing Condition Termination and any event related thereto or otherwise in connection with a breach of this Agreement, and upon payment to the Company of the Termination Fee, neither Parent nor any Related Person of Parent shall have further liability or obligation to the Company or any of its Related Persons relating to or arising out of this Agreement or the transactions contemplated hereby (except as provided in Section 7.2).  Notwithstanding the foregoing, this Section 7.3(a) shall in no way prohibit or restrict a party’s right, at its sole election, to seek specific performance of this Agreement or any other equitable relief as contemplated by the provisions of Section 9.11 hereof in lieu of (or as an alternative to) receiving the Termination Fee; provided, however, that while any party may pursue both (x) a grant of specific performance in accordance with and to the extent expressly permitted by Section 9.11 and (y) the payment of the Termination Fee as provided by this Section 7.3, under no circumstances shall any party be permitted or entitled to receive both such grant of specific performance and such payment of the Termination Fee.  For purposes of this Section 7.3(a), “Related Person” means, with respect to a party, any former, current or future, direct or indirect stockholder, director, officer, employee, agent, representative, Affiliate or assignee of such party, or any former, current or future director, officer, employee, agent, representative, Affiliate or assignee of any of the foregoing.

(b)If Parent shall fail to pay the Termination Fee when required pursuant to Section 7.3, Parent shall reimburse the Company for all reasonable costs and expenses actually incurred or accrued by the Company (including reasonable expenses of counsel) in connection with the collection under and enforcement of this Section 7.3 and shall pay interest on such unpaid Termination Fee from the date such payment was required to be made until the date of payment at the prime lending rate prevailing during such period as published in The Wall Street Journal.

Section 7.4Expenses.

Subject to Section 1.8(d) (with respect to the cost of arbitration pursuant thereto), and Section 5.8(c) (with respect to Transfer Taxes), whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby (including the fees and expenses of each party’s advisers, accountants and legal counsel) shall be paid by the party incurring such expense.

ARTICLE VIII

ESCROW AND INDEMNIFICATION

Section 8.1Escrow Funds.

(a)Prior to or on the Closing Date, Parent and the Stockholder Representatives shall appoint Bank of America, National Association (or its successor in interest or other institution selected by Parent with the consent of the Stockholder Representatives), as escrow agent (the “Escrow Agent”).

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(b)On the Closing Date, Parent shall deposit or cause to be deposited with the Escrow Agent:

(i)in an account separate from the accounts in which the General Escrow Fund, the Employee Litigation Escrow Fund, the Keys Additional Employee Litigation Escrow Fund and the Stockholder Representative Escrow Fund are held an amount of cash equal to the aggregate Per Share Purchase Price Escrow Amount deducted from the amounts payable in respect of the Company Holders as of Closing.  Such account shall constitute an escrow fund (the “Purchase Price Escrow Fund”) which shall be available to compensate Parent for any negative Actual Adjustment pursuant to Section 1.8(e)(ii) and be governed by the terms set forth herein and in the Escrow Agreement.

(ii)in an account separate from the accounts in which the Purchase Price Escrow Fund, the Employee Litigation Escrow Fund, the Keys Additional Employee Litigation Escrow Fund and the Stockholder Representative Escrow Fund are held an amount of cash equal to the aggregate Per Share General Escrow Amount deducted from the amounts payable in respect of the Company Holders as of Closing.  Such account shall constitute an escrow fund (the “General Escrow Fund”) which shall be available to compensate Parent Indemnified Persons pursuant to the indemnification obligations of the Company Holders under Section 8.2(a) and be governed by the terms set forth herein and in the Escrow Agreement.

(iii)in an account separate from the accounts in which the Purchase Price Escrow Fund, the General Escrow Fund, the Keys Additional Employee Litigation Escrow Fund and the Stockholder Representative Escrow Fund are held an amount of cash equal to the aggregate Per Share Employee Litigation Escrow Amount deducted from the amounts payable in respect of the Company Holders as of Closing.  Such account shall constitute an escrow fund (the “Employee Litigation Escrow Fund” and, together with the General Escrow Fund, the “Escrow Funds”) which shall be available to compensate Parent Indemnified Persons pursuant to the indemnification obligations of the Company Holders under Section 8.2(b) and be governed by the terms set forth herein and in the Escrow Agreement and the Litigation Management Agreement.  It is understood and agreed that (x) the Company believes that the Alpert Case and the Chen Case are without merit and intends to vigorously defend its rights with respect thereto, (y) the Employee Litigation Escrow Amount and the Keys Additional Employee Litigation Escrow Amount are based on, among other things, the amount demanded by the plaintiffs in the Alpert Case and the Chen Case, and (z) the Employee Litigation Escrow Amount and the Keys Additional Employee Litigation Escrow Amount do not in any way represent any estimate or indication of the amounts that the Company expects to pay or incur in resolving the Alpert Case and the Chen Case.

(iv)in addition to the amount deposited pursuant to clause (iii) above, in an account separate from the accounts in which the Purchase Price Escrow Fund, the General Escrow Fund, the Employee Litigation Escrow Fund and the Stockholder Representative Escrow Fund are held an amount of cash equal to the aggregate Per Share Keys Additional Employee Litigation Escrow Amount deducted from the amounts payable to William M. Keys as of Closing.  Such account shall constitute an escrow fund (the “Keys Additional Employee Litigation Escrow Fund”)

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which shall be governed by the terms set forth herein and in the Escrow Agreement.  Parent acknowledges and agrees that (A) funds in the Keys Additional Employee Litigation Escrow Fund are for the sole and exclusive benefit of the Company Holders (in their respective capacities as such) and, to the extent not released to the Company Holders pursuant to the Escrow Agreement, William M. Keys, and (B) neither Parent nor any of its Affiliates shall have any right, title or interest in or claim upon any portion of the Keys Additional Employee Litigation Escrow Fund.

(v)in an account (the “Stockholder Representative Escrow Account”) separate from the accounts in which the Purchase Price Escrow Fund, the General Escrow Fund, the Employee Litigation Escrow Fund and the Keys Additional Employee Litigation Escrow Fund are held an amount of cash equal to the aggregate Per Share Stockholder Representative Expense Amount deducted from the amounts payable in respect of the Company Holders as of Closing.  Such account shall constitute an escrow fund (the “Stockholder Representative Escrow Fund”) (which fund, for the avoidance of doubt, shall include all amounts deposited pursuant to this clause (v) and clause (vi) below) which shall be available to defray, offset, or pay any charges, fees, costs, liabilities or expenses of the Stockholder Representatives incurred in connection with the transactions contemplated by this Agreement and the Escrow Agreement (and that are not otherwise paid pursuant to the terms and conditions of this Agreement and the Escrow Agreement) and be governed by the terms set forth herein and in the Escrow Agreement.

(vi)in addition to the amounts deposited pursuant to clause (v) above, in the Stockholder Representative Escrow Account, $750,000 in cash, which (in addition to the uses permitted under clause (v) above) shall be used by the Stockholder Representatives (A) to pay for additional advisory fees or employee bonuses relating to the Merger, or (B) otherwise as determined by the Stockholder Representatives in accordance with the Escrow Agreement.

Section 8.2Indemnification by Company Holders.

(a)Subject to the limitations set forth in this ARTICLE VIII, from and after the Effective Time, the Company Holders shall, solely out of the General Escrow Fund, indemnify and hold harmless the Surviving Corporation, Parent and their respective Subsidiaries and each of their respective officers, directors, Affiliates, agents and employees (hereinafter referred to individually as a “Parent Indemnified Person” and collectively as “Parent Indemnified Persons”) from and against any and all losses, costs, damages, liabilities and expenses (including reasonable legal fees and expenses) (collectively, “Damages”) incurred by the Parent Indemnified Persons and arising out of or relating to:

(i)any misrepresentation or breach of any of the representations and warranties made by the Company in this Agreement;

(ii)any breach or violation of any covenants or agreements made by or to be performed by the Company in this Agreement;

(iii)without duplication of amounts included in Company Transaction Expenses, amounts actually paid by the Company (including the Surviving Corporation) under the letter agreements (the “Change in Control Agreements”) regarding certain severance arrangements, each dated October 10, 2012, respectively between CMC and Joyce Rubino, Dennis Veilleux, Martin Tavares and Jim Tipton,

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including (x) for the avoidance of doubt, any payments to be made thereunder following the Escrow Release Date and (y) any amounts paid by the Company to such individuals in any dispute or litigation arising out of or relating to the Change in Control Agreements (or any settlements thereof), but only for the portion of such amounts described in this Section 8.2(a)(iii) that in the aggregate exceed $300,000 (the “Excess Employee Payments”); and

(iv)amounts actually paid by the Surviving Corporation in connection with the Remediation, provided that in no event shall Parent Indemnified Persons be indemnified for Damages of more than $50,000 in the aggregate arising out of or relating to this Section 8.2(a)(iv).

(b)Subject to the limitations set forth in this ARTICLE VIII, from and after the Effective Time, the Company Holders shall, solely out of the Employee Litigation Escrow Fund (and, to the extent permitted under Section 8.2(c), the General Escrow Fund), indemnify and hold harmless the Parent Indemnified Persons from and against any and all Damages incurred by the Parent Indemnified Persons and arising out of or relating to liabilities and obligations of the Company (including the Surviving Corporation), any Company Subsidiary or any of their respective directors, officers or stockholders (in each case solely in their respective capacities as such) arising out of the following litigation: (1) Merrick Alpert v. Colt’s Manufacturing Company LLC et al., currently pending before the Superior Court of the State of Connecticut (the “Alpert Case”), (2) Carlton S. Chen v. Colt’s Manufacturing Company LLC et al., currently pending before the Superior Court of the State of Connecticut and one charge filed with the United States Equal Employment Opportunity Commission and the State of Connecticut Commission on Human Rights and Opportunities captioned Chen v. Colt’s Manufacturing Company, LLC, et al. (together, the “Chen Case”), and (3) any related claim, controversy, dispute or suit brought by or on behalf of any of the plaintiffs in the Alpert Case and/or the Chen Case whether in state or federal court; provided that in no event shall any Company Holder be liable for, and no indemnification shall be made under this Agreement for, Damages incurred by any other Parent Indemnified Person or by any director, officer or stockholder of the Company or any Company Subsidiary in any other capacity (including, without limitation, Parent or Sciens Capital Partners L.P. in its capacity as a defendant in the Alpert Case, the Chen Case or any related claim or otherwise).

(c)From and after the Closing, (i) the right to obtain payment from, and only from, the General Escrow Fund shall be the Parent Indemnified Persons’ sole and exclusive remedy against the Company Holders in satisfaction of their indemnification obligations under Section 8.2(a); (ii) the right to obtain payment from, and only from, the Employee Litigation Escrow Fund shall be the Parent Indemnified Persons’ sole and exclusive remedy against the Company Holders in satisfaction of their indemnification obligations under Section 8.2(b); provided that, subject to the limitations set forth in this ARTICLE VIII, to the extent there is no amount remaining in the Employee Litigation Escrow Fund and there are amounts remaining in the General Escrow Fund, Parent Indemnified Persons may be indemnified pursuant to Section 8.2(b) out of the General Escrow Fund; and (iii) the Parent Indemnified Persons shall have no right to seek payment from the Company Holders directly pursuant to Section 8.2.  Notwithstanding anything else to the contrary contained herein, the Company Holders’ indemnification obligations under Section 8.2(a) shall terminate on the Escrow Release Date; provided, however, that such obligations shall survive with respect to any claim for indemnification that any Parent Indemnified Person has made under Section 8.2(a) in accordance with the terms hereof prior to such date.  Nothing contained in this Agreement shall limit the rights of the Parent Indemnified Persons to seek or obtain injunctive relief or any other equitable remedy to which such Parent Indemnified Person is otherwise entitled.  From and after the Closing, the sole and exclusive remedy of the Parent Indemnified Persons against the Company Holders and their Affiliates with respect to claims for Damages or otherwise, including those set forth in Section 8.2, in connection with, arising out of or resulting from this Agreement, the subject matter hereof, and the transactions contemplated hereby, shall be indemnification under the provisions of this ARTICLE VIII.

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(d)Except for any indemnification with respect to any breach of any representations and warranties contained in Sections 2.1(a), 2.2, 2.3(a) and 2.12, the Company Holders shall not be liable for any Damages pursuant to Section 8.2(a)(i) (x) for any individual claim, or series of related claims, except to the extent the Damages relating thereto exceed Twenty-Five Thousand Dollars ($25,000) (the “De Minimis Amount”) or (y) for any claims unless and until the aggregate amount of Damages relating to all claims pursuant to Section 8.2(a)(i) exceeds $200,000 (the “Deductible”), and then only to the extent of the excess of such aggregate amount of Damages over the Deductible.

(e)For purposes of Section 8.2(a)(i), in determining the existence of a breach or the amount of any Damage arising therefrom, any qualifications in the representations or warranties of the Company in this Agreement with respect to Company Material Adverse Effect, materiality, material or similar standards shall be disregarded and will not have any effect.

Section 8.3Indemnification by Parent.

(a)Subject to the limitations set forth in this ARTICLE VIII, from and after the Effective Time, Parent shall indemnify and hold harmless the Company Holders and their respective Affiliates, successors and assigns (hereinafter referred to individually as a “Company Indemnified Person” and collectively as “Company Indemnified Persons”) from and against any and all Damages incurred by the Company Indemnified Persons and arising out of or relating to:

(i)any misrepresentation or breach of any of the representations and warranties made by Parent in this Agreement;

(ii)any breach or violation of any covenants or agreements made by or to be performed by Parent or the Surviving Corporation in this Agreement; and

(iii)any Damages of any Parent Indemnified Person (other than the Company, any Company Subsidiary or any other Person in its capacity as a director, officer or stockholder of the Company or any Company Subsidiary) arising out of or relating to the Alpert Case, the Chen Case or any related claim.

(b)Nothing contained in this Agreement shall limit the rights of the Company Indemnified Persons to seek or obtain injunctive relief or any other equitable remedy to which such Company Indemnified Person is otherwise entitled.

(c)Parent shall not be liable for any Damages pursuant to Section 8.3(a)(i) (x) for any individual claim, or series of related claims, except to the extent the aggregate Damages relating thereto exceed the De Minimis Amount or (y) for any claims unless and until the aggregate amount of Damages relating to all claims pursuant to Section 8.3(a)(i) exceeds $200,000, and then only to the extent of the excess of such aggregate amount of Damages over $200,000.

(d)For purposes of Section 8.3(a)(i), in determining the existence of a breach or the amount of any Damage arising therefrom, any qualifications in the representations or warranties of Parent in this Agreement with respect to material adverse effect, materiality, material or similar standards shall be disregarded and will not have any effect.

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(e)Notwithstanding anything to the contrary contained herein, the rights of the Company Indemnified Persons to seek indemnification with respect to the representations and warranties contained in Section 3.6 and the covenants contained in Section 4.4 shall terminate at the Closing.

Section 8.4Release; Escrow Period.

(a)Within five (5) Business Days after the date on which the Merger Consideration is finally determined pursuant to Section 1.8 (or, if the Actual Adjustment is a negative number, then within five (5) Business Days after the date on which the Escrow Agent delivers payment to Parent pursuant to Section 1.8(e)(ii)), Parent and the Stockholder Representatives shall deliver a joint written authorization to the Escrow Agent to deliver to the Company Holders as of immediately prior to the Effective Time all amounts remaining in the Purchase Price Escrow Fund, including any interest and other income resulting from the investment of such amount, pro rata based upon such Company Holders’ respective Proportionate Shares.

(b)The escrow period (the “Escrow Period”) shall terminate at 11:59 p.m. New York time on the first Business Day that is on or after the day twelve (12) months after the Closing Date (the “Escrow Release Date”).  Within five (5) Business Days after the Escrow Release Date, Parent and the Stockholder Representatives shall deliver a joint written authorization to the Escrow Agent to deliver to the Company Holders as of immediately prior to the Effective Time all amounts remaining in the General Escrow Fund, including any interest and other income resulting from the investment of such amount, pro rata based upon such Company Holders’ respective Proportionate Shares; provided,however, that a portion of the General Escrow Fund as is necessary to satisfy any unsatisfied or unresolved claims pursuant to Section 8.2(a) for Damages specified in any Officer’s Certificate delivered to the Escrow Agent prior to the Escrow Release Date shall remain in the Escrow Fund until such claims have been resolved.

(c)At any time following the Closing, if both the Alpert Case and the Chen Case are resolved by final judgments of courts of competent jurisdiction and/or settlements by the respective parties thereto, in each case in accordance with the Litigation Management Agreement, then within five (5) Business Days of such resolution, Parent and the Stockholder Representatives shall deliver a joint written authorization to the Escrow Agent to deliver to the Company Holders as of immediately prior to the Effective Time all amounts remaining in the Employee Litigation Escrow Fund, including any interest and other income resulting from the investment of such amount, pro rata based upon such Company Holders’ respective Proportionate Shares; provided that if one but not both of the Alpert Case and the Chen Case is so resolved, then Parent and the Stockholder Representatives shall deliver a joint written authorization to the Escrow Agent to deliver from the Employee Litigation Escrow Fund an amount equal to the excess, if any, of (1) the amount then remaining in the Employee Litigation Escrow Fund over (2) $2.0 million (if the Alpert Case is so resolved) or $3.0 million (if the Chen Case is so resolved), including any interest and other income resulting from the investment of such amount, to the Company Holders as of immediately prior to the Effective Time pro rata based upon such Company Holders’ respective Proportionate Shares.

(d)Promptly following the release of all amounts remaining in the Purchase Price Escrow Fund, the General Escrow Fund and the Employee Litigation Escrow Fund pursuant to this Section 8.4 and the release of all amounts remaining in the Keys Additional Employee Litigation Escrow Fund, the Stockholder Representatives shall deliver a written authorization to the Escrow Agent to deliver to the Company Holders as of immediately prior to the Effective Time (other than holders of the Keys Shares) all amounts remaining in the Stockholder Representative Escrow Fund, including any interest and other income resulting from the investment of such amounts, pro rata based upon their respective Proportionate Shares.

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Section 8.5General Claims Procedures.

The party seeking indemnification under Section 8.2 or Section 8.3(a) (the “Indemnified Person”) agrees to give prompt notice in writing to the party against whom indemnity is to be sought (the “Indemnifying Person”) or, in the case of an indemnification claim pursuant to Section 8.2, the Stockholder Representatives of the assertion of any claim or the commencement of any suit, action or proceeding by a third party in respect of which indemnity may be sought under Section 8.2 or Section 8.3(a), as applicable (a “Third Party Claim”).  Such notice shall set forth in reasonable detail a description of such claim, the basis for indemnification therefor and a good faith estimate of the amount of Damages arising therefrom.  In the case of any indemnification claim by Parent pursuant to Section 8.2 (other than indemnification claims pursuant to Section 8.2(b), which are addressed in the Litigation Management Agreement), such notice shall take the form of a certificate signed by an officer of Parent (an “Officer’s Certificate”), which Parent shall simultaneously deliver to both the Stockholder Representatives and the Escrow Agent.  The failure to notify the Indemnifying Person (or, in the case of an indemnification claim pursuant to Section 8.2, the Stockholder Representatives) in accordance with this Section 8.5 shall not relieve the Indemnifying Person of its indemnification obligations hereunder, except to the extent such failure shall have actually and materially prejudiced the Indemnifying Person.

Section 8.6Claims Upon Escrow Fund.

(a)Upon receipt of any Officer’s Certificate, the Escrow Agent shall set aside a portion of the applicable Escrow Fund equal to the good faith estimate of Damages set forth therein.

(b)The Stockholder Representatives shall have twenty (20) Business Days from the receipt of the Officer’s Certificate to object to the claim set forth therein.  Except as provided in Section 8.6(c), the Escrow Agent shall make no delivery of any portion of the Escrow Funds to Parent during such twenty (20) Business Day period, or at any time thereafter if the Stockholder Representatives deliver a written statement to Parent and the Escrow Agent objecting to the claim set forth in the Officer’s Certificate within such twenty (20) Business Day period.

(c)On the fifth (5th) Business Day after the earliest of (i) the Escrow Agent’s receipt of written authorization from the Stockholder Representatives or from the Stockholder Representatives jointly with Parent, (ii) the Escrow Agent’s receipt of written notice of a final decision in litigation of the claim pursuant to Section 8.7, and (iii) the expiration of the twentieth (20th) Business Day after delivery of the Officer’s Certificate to the Stockholder Representatives and the Escrow Agent, if and only if the Stockholder Representatives have not contested the applicable claim pursuant to Section 8.6(b) within such period, the Escrow Agent shall deliver the applicable portion of each applicable Escrow Fund to Parent equal in the aggregate to the amount of Damages to be paid in accordance with the terms hereof and of the Escrow Agreement.

Section 8.7Resolution of Conflicts; Litigation.

(a)In case the Stockholder Representatives shall object in writing to any claim or claims by Parent made in any Officer’s Certificate pursuant to Section 8.6(b), Parent shall have twenty (20) days after receipt by the Escrow Agent of such objection by the Stockholder Representatives to respond in a written statement to the objection of the Stockholder Representatives.  If after such twenty

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(20) day period there remains a dispute as to any claims, the Stockholder Representatives and Parent shall attempt in good faith for thirty (30) days to agree upon the rights of the respective parties with respect to each of such claims.  If the Stockholder Representatives and Parent should so agree, a written statement setting forth such agreement shall be prepared and signed by both parties and shall be furnished to the Escrow Agent.  The Escrow Agent shall be entitled to rely on any such written statement and shall distribute the applicable portion of the applicable Escrow Fund in accordance with the terms thereof and the Escrow Agreement.

(b)If no such agreement can be reached after good faith negotiation during the thirty (30) day period set forth in Section 8.7(a), either Parent or the Stockholder Representatives may, by appropriate process and consistent with Section 9.7, institute litigation of the matter between Parent and the Stockholder Representatives, unless the amount of the Damages is at issue in pending litigation with a third party, in which event litigation between Parent and the Stockholder Representatives shall not be commenced until the amount of such Damages is ascertained.  The final decision in such litigation shall be binding and conclusive upon the parties to this Agreement, and notwithstanding anything in this Section 8.7, the Escrow Agent shall be entitled to act in accordance with such decision and make or withhold payments out of the Escrow Funds in accordance therewith and the terms hereof and of the Escrow Agreement.

Section 8.8Stockholder Representatives.

(a)Donald E. Zilkha and Edward L. Koch III are hereby constituted, appointed and empowered as the Stockholder Representatives, for the benefit of the Company Holders and the exclusive agents and attorneys-in-fact to act on behalf of each Company Holder, in connection with and to facilitate the consummation of the transactions contemplated hereby, which shall include the power and authority: (i) to negotiate, execute and deliver such waivers, consents and amendments (other than any written consent of the Company Holders adopting this Agreement) under this Agreement and the consummation of the transactions contemplated hereby as the Stockholder Representatives, in their sole discretion, may deem necessary or desirable; (ii) as the Stockholder Representatives, to enforce and protect the rights and interests of the Company Holders and to enforce and protect the rights and interests of such Persons arising out of or under or in any manner relating to this Agreement and the transactions provided for herein, and to take any and all actions which the Stockholder Representatives believe are necessary or appropriate under this Agreement for and on behalf of the Company Holders including, consenting to, compromising or settling any such claims, conducting negotiations with Parent, the Surviving Corporation and their respective representatives regarding such claims, and, in connection therewith, to (A) assert any claim or institute any action, proceeding or investigation; (B) investigate, defend, contest or litigate any claim, action, proceeding or investigation initiated by Parent, the Surviving Corporation or any other Person, or by any Governmental Entity against the Stockholder Representatives and/or any of the Company Holders, and receive process on behalf of any or all Company Holders in any such claim, action, proceeding or investigation and compromise or settle on such terms as the Stockholder Representatives shall determine to be appropriate, and give receipts, releases and discharges with respect to, any such claim, action, proceeding or investigation; (C) file any proofs of debt, claims and petitions as the Stockholder Representatives may deem advisable or necessary; (D) settle or compromise any claims asserted under this Agreement; and (E) file and prosecute appeals from any decision, judgment or award rendered in any such action, proceeding or investigation, it being understood that the Stockholder Representatives shall not have any obligation to take any such actions, and shall not have any liability for any failure to take any such actions; (iii) to refrain from enforcing any right of the Company Holders arising out of or under or in any manner relating to this Agreement; provided, however, that no such failure to act on the part of the Stockholder Representatives, except as otherwise provided in this Agreement, shall be deemed a waiver of any such right or interest by the Stockholder Representatives or by the Company Holders unless such waiver is in writing signed by the waiving party or by the

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Stockholder Representatives; (iv) to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the Stockholder Representatives, in their sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the transactions contemplated by this Agreement; (v) to engage special counsel, accountants and other advisors and incur such other expenses on behalf of the Company Holders in connection with any matter arising under this Agreement; and (vi) to instruct the Escrow Agent to collect, hold and disburse the Purchase Price Escrow Fund, the General Escrow Fund, the Employee Litigation Escrow Fund, the Keys Additional Employee Litigation Escrow Fund and the Stockholder Representative Escrow Fund in accordance with the terms of this Agreement, the Escrow Agreement and the Litigation Management Agreement.

(b)By voting in favor of the adoption of this Agreement and the consummation of the Merger or participating in the Merger and receiving the benefits thereof, including the right to receive the consideration payable in connection with the Merger, each Company Holder grants unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary or desirable to be done in connection with the specific and limited matters described above, as fully to all intents and purposes as such Company Holder might or could do in person, hereby ratifying and confirming all that the Stockholder Representatives may lawfully do or cause to be done by virtue hereof.  Each Company Holder further acknowledges and agrees that, upon execution of this Agreement, with respect to any delivery by the Stockholder Representatives of any documents executed by the Stockholder Representatives pursuant to this Section 8.8, such Company Holder shall be bound by such documents as fully as if such Company Holder had executed and delivered such documents.  No bond shall be required of the Stockholder Representatives, and each Stockholder Representative shall receive as compensation for his services a fee of $75,000, payable in four equal installments at the beginning of the first, second, third and fourth quarters, respectively, following the Closing.

(c)The Stockholder Representatives shall be entitled to receive reimbursement from, and be indemnified by, the Company Holders for certain expenses, charges and liabilities as provided below.  In connection with this Agreement, and in exercising or failing to exercise all or any of the powers conferred upon the Stockholder Representatives hereunder, (i) the Stockholder Representatives shall incur no responsibility whatsoever to any Company Holders by reason of any error in judgment or other act or omission performed or omitted hereunder, excepting only responsibility for any act or failure to act which represents willful misconduct, and (ii) the Stockholder Representatives shall be entitled to rely on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any error in judgment or other act or omission of the Stockholder Representatives pursuant to such advice shall in no event subject the Stockholder Representatives to liability to any Company Holders.  Each Company Holder shall indemnify, severally and not jointly, based on such Company Holder’s Proportionate Share, the Stockholder Representatives against all losses, damages, liabilities, claims, obligations, costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any claim, investigation, challenge, action or proceeding or in connection with any appeal thereof, relating to the acts or omissions of the Stockholder Representatives hereunder in their specific capacities as such in accordance with the first sentence of Section 8.8(g) below.  The foregoing indemnification shall not apply in the event of any action or proceeding which finally adjudicates the liability of the Stockholder Representatives hereunder for their willful misconduct.  The Stockholder Representatives shall have the right to recover, at their sole discretion, from the Stockholder Representative Escrow Fund, prior to any distribution to the Company Holders, any amounts to which they are entitled pursuant to the expense reimbursement and indemnification provisions of this Section 8.8(c).  In the event of any indemnification hereunder, upon written notice from the Stockholder

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Representatives to the Company Holders as to the existence of a deficiency toward the payment of any such indemnification amount, each Company Holder as of immediately prior to the Effective Time shall promptly deliver to the Stockholder Representatives full payment of his or her Proportionate Share of the amount of such deficiency.  The Stockholder Representatives shall establish such terms and procedures for administering, investing and disbursing any amounts from the Stockholder Representative Escrow Fund as they may determine in their reasonable judgment to be necessary, advisable or desirable to give effect to the provisions of this Agreement.

(d)All of the indemnities, immunities and powers granted to the Stockholder Representatives under this Agreement shall survive the Effective Time and/or any termination of this Agreement.

(e)Subject to Section 8.9, Parent and the Surviving Corporation shall have the right to rely upon all actions taken or omitted to be taken by the Stockholder Representatives pursuant to this Agreement, all of which actions or omissions shall be legally binding upon the Company Holders.

(f)The grant of authority provided for herein (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of any Company Holder and (ii) shall survive the consummation of the Merger, and any action taken by the Stockholder Representatives pursuant to the authority granted in this Agreement shall be effective and absolutely binding on each Company Holder notwithstanding any contrary action of or direction from such Company Holder, except for actions or omissions of the Stockholder Representatives constituting willful misconduct.

(g)Each of the Company, Merger Sub and Parent acknowledges and agrees that the Stockholder Representatives are a party to this Agreement solely to perform certain administrative functions in connection with the consummation of the transactions contemplated hereby.  Accordingly, each of the Company, Merger Sub and Parent acknowledges and agrees that, other than in the Stockholder Representatives’ role as Company Holders, the Stockholder Representatives shall have no liability to, and shall not be liable for any losses of, any of the Company, Merger Sub, the Surviving Corporation, Parent or any of their respective Affiliates in connection with any obligations of the Stockholder Representatives under this Agreement or otherwise in respect of this Agreement or the transactions contemplated hereby, except to the extent such losses shall be proven to be the direct result of fraud or willful misconduct by the Stockholder Representatives in connection with the performance of its obligations hereunder.

Section 8.9Actions of the Stockholder Representatives.

A decision, act, consent or instruction of the Stockholder Representatives hereunder shall constitute a decision of all of the Company Holders and shall be final, binding and conclusive upon each and every Company Holder, and the Escrow Agent, the Paying Agent, Parent, Merger Sub, the Company and the Surviving Corporation may rely upon any decision, act, consent or instruction of the Stockholder Representatives as being the decision, act, consent or instruction of each and every Company Holder; provided, however, that, notwithstanding anything to the contrary in this Agreement, the Stockholder Representatives shall not have the authority to bind the Company Holders for Damages in excess of their respective Proportionate Shares of the Purchase Price Escrow Amount, the General Escrow Amount and the Employee Litigation Escrow Amount and, in the case of William M. Keys, the Keys Additional Employee Litigation Escrow Amount.  The Escrow Agent, the Paying Agent and Parent are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of the Stockholder Representatives.

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Section 8.10Third Party Claims.

(a)The Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) shall be entitled to participate in the defense of any Third Party Claim for which indemnity may be sought from such Indemnifying Person under this ARTICLE VIII and, subject to this Section 8.10, shall be entitled to control the defense of any such Third Party Claim, including the settlement and compromise thereof, in each case at its own expense.

(b)If the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) desires to assume the control of the defense of any Third Party Claim in accordance with this Section 8.10, the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) shall give written notice to the Indemnified Person within thirty (30) days after the Indemnified Person has given written notice of the Third Party Claim pursuant to Section 8.5.  If such notice is duly given, the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) shall be entitled to control the defense of such Third Party Claim so long as (i) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief against the Indemnified Person or otherwise involve the recall of products sold by the Company and its Subsidiaries and (ii) the Third Party Claim does not relate to or otherwise arise in connection with any criminal enforcement action of a Governmental Entity.  If the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) assumes control of the defense of a Third Party Claim, (A) the Indemnified Person shall be entitled to participate in the defense thereof and to employ separate counsel of its choice for such purpose at its own expense, and (B) the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) shall obtain the prior written consent of the Indemnified Person before entering into any settlement of such Third Party Claim unless such settlement (i) releases the Indemnified Person and its Affiliates from all liabilities and obligations with respect to such Third Party Claim, (ii) does not impose any equitable relief against the Indemnified Person, (iii) does not involve the disposition of, or creation of any encumbrance on, any property or asset of the Indemnified Person, the Surviving Corporation or any of their Affiliates and (iv) does not create or impose any obligations on the Indemnified Person, the Surviving Corporation or any of their Affiliates (other than customary confidentiality obligations and other provisions that are customary for a settlement of the same type as such settlement, including customary obligations and restrictions regarding release of claims, non-disparagement, non-defamation and no re-employment, as applicable) (and, in the case of a Third Party Claim related to Taxes, such settlement does not adversely affect Parent or any of its Affiliates (including the Surviving Corporation and the Company Subsidiaries) in any Post-Closing Tax Period), in which case the Indemnified Person’s prior written consent shall not be required in connection with such settlement.

(c)If the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) does not duly deliver the notice contemplated by Section 8.10(b), or if such notice is duly given but any of the other conditions in Section 8.10(b) is unsatisfied, the Indemnified Person may defend, and may, subject to Section 8.10(d), consent to the entry of any judgment or enter into any compromise or settlement with respect to, the Third Party Claim.

(d)Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.  Whether or not the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder

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Representatives on behalf of the Company Holders) shall have assumed the defense of a Third Party Claim, no Indemnified Person (or any of its Affiliates) shall admit any liability, consent to the entry of any judgment or enter into any compromise or settlement with respect to such Third Party Claim without the prior written consent of the Indemnifying Person (or, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders), such consent not to be unreasonably withheld, conditioned or delayed.

(e)Notwithstanding anything in this Agreement to the contrary, nothing in this Section 8.10 shall be applicable to the Alpert Case, the Chen Case or any related claims.

Section 8.11Calculation of Damages; Limitations.

(a)The amount of any Damages payable under Section 8.2 or Section 8.3(a), as applicable, by any Indemnifying Person shall be determined net of any (i) amounts actually recovered by the relevant Indemnified Person under applicable insurance policies or from any other Person alleged to be responsible therefor and (ii) cash Tax savings actually realized by such Indemnified Person and its Affiliates in the taxable year in which such indemnification payment is made arising from the events that resulted in the indemnity payment.  Each Indemnified Person shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Damages payable under Section 8.2 or Section 8.3(a), as applicable; provided that, unless the Indemnified Person breaches its obligations under this Section 8.11(a), the Indemnifying Person shall not be entitled to raise any alleged failure of the Indemnified Person to pursue insurance coverage or any other Person alleged to be responsible as a basis for contesting the Indemnified Person’s right to recover from the General Escrow Fund.  Subject to the terms of the Litigation Management Agreement, if the Indemnified Person receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible, for any Damages, after an indemnification payment by the Indemnifying Person in respect of such Damages, then such Indemnified Person shall promptly reimburse the Indemnifying Person for any payment made or expense incurred by such Indemnifying Person in connection with providing such indemnification payment up to the amount received by the Indemnified Person, net of any costs and expenses incurred by such Indemnified Person in collecting such amount and any increase to premiums resulting from making any claim thereunder.

(b)The Indemnifying Person shall not be liable under Section 8.2 or Section 8.3(a), as applicable, for any (i) Damages relating to any costs, fees, expenses or liabilities to the extent that such costs, fees, expenses or liabilities were taken into account in the determination of the Actual Adjustment pursuant to Section 1.8, (ii) Damages relating to any matter arising under one provision of this Agreement to the extent that the Indemnified Persons have recovered such Damages with respect to such matter under another provision of this Agreement, (iii) consequential or punitive Damages or (iv) Damages for lost profits (except, in the cases of the foregoing clauses (iii) and (iv), for any such Damages incurred by an Indemnified Person in connection with a Third Party Claim against such Indemnified Person for such Damages).

(c)Each Indemnified Person shall take commercially reasonable steps to mitigate in accordance with applicable Legal Requirements any Damages for which such Indemnified Person seeks indemnification under this Agreement upon becoming aware of any event that would reasonably be expected to give rise to such assertion.  If such Indemnified Person mitigates its Damages after the Indemnifying Person has paid the Indemnified Person under any indemnification provision of this Agreement in respect of such Damages, the Indemnified Person must notify the Indemnifying Person (and, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) and pay to the Indemnifying Person the extent of the value of the benefit to the Indemnified Person of that mitigation (less the Indemnified Person’s reasonable costs of mitigation) within thirty (30) days after the benefit is received.

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(d)If any Indemnified Person receives payment from an Indemnifying Person in respect of any Damages pursuant to Section 8.2 or Section 8.3(a), as applicable, and the Indemnified Person could have recovered all or a part of such Damages from a third Person (a “Potential Contributor”) based on the underlying claim asserted against the Indemnifying Person, the Indemnified Person shall assign such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Person (and, if the Indemnifying Person is a Company Holder, the Stockholder Representatives on behalf of the Company Holders) to recover from the Potential Contributor the amount of such payment; provided that if the Indemnified Person shall not have received payment in full of all such Damages (including as a result of any limits on indemnification in this ARTICLE VIII), then no such assignment shall be required until such full payment has been received from the Indemnifying Person and such third party.

(e)Notwithstanding anything in this Section 8.11 to the contrary and, without limitation of Section 8.2(c), no Indemnified Person shall be permitted to seek contribution, or in any other manner seek to recover, from any Indemnifying Person with respect to any matters that is subject to the indemnification provisions in this ARTICLE VIII.

(f)If the Company Holders, as Indemnifying Persons, are entitled to any amounts pursuant to the last sentence of Section 8.11(a) or Section 8.11(c), the Stockholder Representatives shall distribute such amounts to the Company Holders pro rata based on their respective Proportionate Shares.

Section 8.12Aggregate Merger Consideration Adjustment.

The Company, Parent, the Stockholder Representatives and the Company Holders agree to treat each indemnification payment pursuant to this ARTICLE VIII as an adjustment to the aggregate Merger Consideration for all Tax purposes and shall take no position contrary thereto unless required to do so by applicable Tax law.

Section 8.13Tax Matters.

Notwithstanding anything herein to the contrary, the rights and obligations of the parties with respect to indemnification for any and all Tax matters (including with respect to any breach of any representation or warranty set forth in Section 2.12) shall be subject to the provisions of this ARTICLE VIII.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1Survival.

The representations and warranties of the Company contained herein shall survive until the first Business Day that is on or after the day twelve (12) months after the Closing Date.  The agreements set forth in this Agreement shall terminate at the Effective Time except for those certain\

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covenants and agreements (such as those relating to the right to indemnification) that specifically call for action after the Effective Time, which shall survive until the expiration of the applicable statute of limitations unless otherwise specifically provided herein. In no case shall the termination of the representations, warranties, covenants and agreements affect any claim for misrepresentation or breach thereof or default thereunder if written notice of such misrepresentation, breach or default is given to the Stockholder Representatives in accordance with the terms of Section 8.5 prior to such termination.

Section 9.2Notices.

All notices and other communications hereunder shall be in writing and shall be deemed received (i) on the date of delivery if delivered personally and/or by messenger service, (ii) on the date of confirmation of receipt of transmission by facsimile (or, the first Business Day following such receipt if (1) the date is not a Business Day or (2) confirmation of receipt is given after 5:00 p.m., New York time) or (iii) on the date of confirmation of receipt if delivered by a nationally recognized courier service (or, the first Business Day following such receipt if (1) the date is not a Business Day or (2) confirmation of receipt is given after 5:00 p.m., New York time), to the parties at the following address or facsimile numbers (or at such other addresses or facsimile number for a party as shall be specified by like notice):

(a)if to Parent, Merger Sub or the Surviving Corporation, to:

Colt Defense LLC

PO Box 118

Hartford, Connecticut 06141

Attention:  Jeffrey G. Grody, General Counsel

Facsimile No.:  (860) 244-1442

E-mail:  jgrody@colt.com

with a copy (not notice) to:

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005-170

Attention:  William J. Miller, Esq.

                  John Papachristos, Esq.

Facsimile No.:  (212) 269-5420

E-mail:  wmiller@cahill.com

              jpapachristos@cahill.com

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(b)if to the Company prior to the Closing, to:

New Colt Holding Corp.

545 New Park Ave.

West Hartford, CT  06110

Attention:  Donald E. Zilkha

                 Joseph Dieso

Facsimile No.:  (860) 244-1442

Email:  dzilkha@zilkhainvestments.com

            jdieso@colt.com

with a copy (not notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:  Richard J. Sandler, Esq.

                 John H. Butler, Esq.

Facsimile No.:  (212) 701-5800

E-mail:  richard.sandler@davispolk.com

             john.butler@davispolk.com

(c)if to the Stockholder Representatives, to:

Donald E. Zilkha

c/o Zilkha Investments, L.P.

152 West 57th Street

37th Floor

New York, NY  10019

Facsimile No.:  (212) 333-4155

Email:  dzilkha@zilkhainvestments.com

Edward L. Koch III

1725 York Avenue, Apt. #26A

New York, NY 10128

Facsimile No.:  (212) 687-0411

Email:  tedkoch@verizon.net

with a copy (not notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:  Richard J. Sandler, Esq.

                  John H. Butler, Esq.

Facsimile No.:  (212) 701-5800

E-mail:  richard.sandler@davispolk.com

             john.butler@davispolk.com

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Section 9.3Interpretation; Certain Definitions.

The term “this Agreement” means this Agreement and Plan of Merger together with all Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof.  When a reference is made in this Agreement to Articles, Sections, Schedules or Exhibits, such reference shall be to an Article or Section of, or a Schedule or Exhibit to, this Agreement unless otherwise indicated.  No party hereto, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any party.  Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to any statute or regulation shall be deemed to be to such statute or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, any rules and regulations promulgated thereunder), and references to any section of any statute or regulation shall be deemed to include any successor to the section; and (f) references to any Contract are to such Contract as amended, modified, supplemented or replaced from time to time.  The phrase “made available” in this Agreement means that the information referred to has been made available if requested by the party to whom such information is to be made available.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

As used herein, the terms below shall have the following meanings.  Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

“Acquisition Proposal” with respect to the Company, means any offer or proposal relating to any transaction or series of related transactions involving: (a) any purchase or acquisition by any Personor “group” (as defined under Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of ten percent (10%) or more interest in the total outstanding voting securities of the Company or any Company Subsidiary or any tender offer or exchange offer that if consummated would result in any Personor group beneficially owning ten percent (10%) or more of the total outstanding voting securities of the Company or any Company Subsidiary, (b) any merger, consolidation, business combination or similar transaction involving the Company or any Company Subsidiary, (c) any sale, lease (other than in the ordinary course of business consistent with past practice), exchange, transfer, license (other than in the ordinary course of business consistent with past practice), acquisition or disposition of ten percent (10%) or more of the assets of the Company and the Company Subsidiaries, taken as a whole, or (d) any liquidation or dissolution of the Company (provided,however, that the transactions between Parent and the Company contemplated by this Agreement shall not be deemed an Acquisition Proposal).

“Actual Adjustment” means (a) the Merger Consideration as finally determined pursuant to Section 1.8 minus (b) the Estimated Merger Consideration.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.  For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.

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“Aggregate Warrant Exercise Price” means the aggregate amount that would be paid to the Company in respect of all Company Warrants outstanding as of immediately prior to the Effective Time had such Company Warrants been exercised in full (and assuming concurrent payment in full of the exercise price of each such Company Warrant solely in cash), immediately prior to the Effective Time in accordance with the terms of the applicable warrant documents pursuant to which such Company Warrant was issued.

“Assumed Indebtedness” means the Indebtedness set forth on Section 9.3(a) of the Company Disclosure Schedule.

“Audit” means any audit, investigation, assessment of Taxes, other examination by any Tax Authority, or any administrative or judicial proceeding or appeal of such proceeding relating to Taxes.

“Audited Financial Statements” means the audited consolidated balance sheets of the Company and the Company Subsidiaries as at December 31, 2012 and December 31, 2011, respectively, together with the related consolidated statements of operations, changes in stockholders’ equity and comprehensive income and cash flows for the years then ended, including the notes thereto, all as certified by Marcum LLP, independent public accountants, whose reports thereon are included therein.

“BofA Rollover Letter” means the letter agreement, dated on or about July 10, 2013, by and among Banc of America Leasing & Capital, LLC, the Company and CMC.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions located in New York, New York are authorized or obligated by law or executive order to close.

“Cash and Cash Equivalents” means (a) the accounting book balance of all cash and cash equivalents (including marketable securities and short term investments), net of checks issued by the Company or any Company Subsidiary but not yet cashed, of the Company and the Company Subsidiaries on a consolidated basis as of 11:59 p.m. on July 2, 2013, plus (b) the aggregate amount paid prior to or substantially concurrently with the Closing by the Company and the Company Subsidiaries pursuant to or under the GE Lease in connection with the termination thereof; plus (c) the aggregate Keys Lease Termination Payment paid by the Company and the Company Subsidiaries as of 11:59 p.m. on the day preceding the Closing Date.

“Closing Indebtedness” means the aggregate amount of Indebtedness of the Company as of 11:59 p.m. on July 2, 2013.

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

“Commercial Tax Agreement” means any commercial agreement not primarily related to Taxes that may impose contractual liability on the Company or a Company Subsidiary for Taxes of another Person, such as credit facilities with gross provisions or real estate leases with tax escalation provisions; provided, that an agreement relating to the sale or other disposition (including a spinoff or splitoff) of an entity or any assets shall not be considered a Commercial Tax Agreement.

“Company Capital Stock” means all shares of Company Common Stock and Company Preferred Stock.

“Company Holder” means, together, the Company Stockholders and each holder of Company Warrants at any time of determination.

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“Company Material Adverse Effect” means any event, change, effect, circumstance or development that has had a materially adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business, operations or results of operations of the Company and the Company Subsidiaries, taken as a whole; provided, however, that in determining whether a Company Material Adverse Effect has occurred, there shall be excluded any effect on the Company and the Company Subsidiaries relating to or arising in connection with (a) any action taken or not taken at the request of Parent and its directors, officers, counsel and representatives, or any action required to be taken or prohibited from being taken pursuant to the terms and conditions of this Agreement, the Escrow Agreement or the Litigation Management Agreement; (b) changes affecting the industries in which the Company and the Company Subsidiaries operate generally or the economy of the United States of America or any other country; (c) any changes in capital markets, exchange rates or interest rates in the United States of America or any other country; (d) any changes in general political or social conditions in the United States of America or any other country; (e) any changes in applicable Legal Requirements or GAAP, or the interpretation or enforcement thereof; (f) any failure by the Company and the Company Subsidiaries to meet internal budgets, plans or projections (it being understood and agreed that the facts and circumstances that may gave rise or contributed to such failure may be taken into account in determining whether there has been a Company Material Adverse Effect); (g) the announcement, pendency or consummation of the Merger and the other transactions contemplated by this Agreement (including any cancellation or non-renewal of customer orders or agreements or any other disruption in customer, supplier, distributor, partner or similar business relationships); and (h) hostilities, acts of war, terrorism or natural disasters, or any material escalation of any such hostilities, acts of war or terrorism existing as of the date hereof, except to the extent that any of the effects referred to in the foregoing clauses (b), (c) and (d) have a unique or materially disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and the Company Subsidiaries operate, in which case the extent of such unique or disproportionate impact may be taken into account in determining whether a Company Material Adverse Effect has occurred.

“Company-Owned Intellectual Property” means all Intellectual Property that is owned or is purported (by the Company or any Company Subsidiary) to be owned (whether in whole or in part, but only to the extent of such purported ownership) by the Company or any Company Subsidiary.

“Company Stockholder” means a holder of shares of Company Common Stock.

“Company Subsidiary” means any Subsidiary of the Company.

“Company Transaction Expenses” means (a) all legal, accounting, consulting (including, without limitation, Almada Corp.), broker’s, investment banker, advisor (including, without limitation, Moelis & Company), dataroom provider or other similar out-of-pocket fees and expenses, all bonuses (excluding, for the avoidance of doubt, ordinary course annual bonuses), in each case, incurred and unpaid as of immediately prior to the Effective Time by the Company and the Company Subsidiaries in connection with the negotiation, preparation and execution of this Agreement, the consummation of the transactions contemplated hereby and the Closing; and (b) the premium payable by the Company in connection with the extension of its D&O Insurance pursuant to Section 5.6 of this Agreement.  For the avoidance of doubt, (i) “Company Transaction Expenses” shall not include any Transfer Taxes, (ii) “Company Transaction Expenses” shall not be deemed to include any amounts paid or payable by the Company or any Company Subsidiary in connection with the termination of any Master Lease or the BofA Rollover Letter, and (iii) “Company Transaction Expenses” shall not include any amounts to the extent paid out of the Stockholder Representative Escrow Fund.

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“Company Warrant” means each warrant to acquire shares of Company Common Stock.

“Contract” means any written or oral agreement, contract, subcontract, settlement agreement, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan or legally binding commitment, obligation, arrangement or undertaking of any nature, as in effect as of the date hereof or as may hereinafter be in effect.

“Employee Litigation Escrow Amount” means $5.0 million.

“Environmental Law” means any Legal Requirement relating to the environment, natural resources, endangered or threatened species or relating to pollution or protection of the environment, or the emission, discharge, storage, release or threatened release of Hazardous Material into the environment or otherwise relating to the manufacture, use, disposal, or handling of, or exposure to, Hazardous Material, and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC §§ 9601 et seq. or the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC §§ 6901 et seq.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Financial Statements” means the Audited Financial Statements (including in all cases the notes and schedules thereto, if any).

“Fully Diluted Share Number” means the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding any and all shares of Company Common Stock owned by the Company as treasury stock or owned by Parent or any direct or indirect wholly owned Subsidiary of Parent or the Company), assuming for this purpose the exercise in full of all Company Warrants outstanding immediately prior to the Effective Time (assuming for-cash exercise).

“General Escrow Amount” means $3.0 million.

“Guarantee” of or by any Person means any obligation, contingent or otherwise, of such Person guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term Guarantee shall not include endorsements for collection or deposit.

“Hazardous Materials” means any contaminant, pollutant, petroleum or petroleum products, radioactive materials or wastes, asbestos in any form, polychlorinated biphenyls, hazardous or toxic substances and any other chemical, material, substance or waste (including, without limitation, lead), in each case that is regulated under Environmental Law.

“Income Tax Returns” means any Tax Returns with respect to Income Taxes.

“Income Taxes” means all Taxes based upon, measured by, or calculated with respect to (a) net income or profits (including any capital gains or alternative minimum Taxes), (b) multiple bases (including corporate franchise, doing business or occupation Taxes) if one or more of the bases on which that Tax may be measured or calculated is described in clause (a) of this definition or (c) franchise or similar Taxes imposed in lieu of net income or profits Taxes.

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“Indebtedness” of any Person means (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money; (b) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security; (c) any accrued and unpaid interest owing by such Person with respect to any indebtedness of a type described in clauses (a) or (b); (d) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (e) all Guarantees by such Person; and (f) all capital lease obligations of such Person (other than those capital lease obligations listed on Section 9.3(b)(1) of the Company Disclosure Schedule); (g) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (h) all obligations of such Person as an account party in respect of letters of credit (but only to the extent such letters of credit are drawn) and bankers’ acceptances; provided, that Indebtedness shall not include (i) accounts payable to trade creditors, accrued expenses and deferred revenues, the endorsement of negotiable instruments for collection, and Indebtedness owing from the Company or any wholly owned Company Subsidiary to the Company, any wholly owned Company Subsidiary, Parent of any of its Affiliates or (ii) any amounts related to or arising out of the GE Lease or the BofA Rollover Letter.  For the avoidance of doubt, all items categorized as “capital leases” in Section 9.3(b)(2) of the Company Disclosure Schedule shall be deemed to be capital leases and all items categorized as “operating leases” in Section 9.3(b)(2) of the Company Disclosure Schedule shall be deemed to be operating leases for all purposes under this Agreement.  The Indebtedness of any Person shall include all Indebtedness of any partnership in which such Person is a general partner.

“Individual Aggregate Warrant Exercise Price” means, with respect to each Company Holder, the aggregate exercise price that would be paid to the Company in respect of all Company Warrants held by such Company Holder as of immediately prior to the Effective Time had such Company Warrants been exercised in full (and assuming concurrent payment in full of the exercise price of each such Company Warrant solely in cash), immediately prior to the Effective Time in accordance with the terms of the applicable warrant documents pursuant to which such Company Warrant was issued.

“Individual Estimated Merger Consideration” means, with respect to each Company Holder, an amount equal to the excess of (a) the product of (1) the Per Share Estimated Merger Consideration, multiplied by (2) the Individual Fully Diluted Share Number of such Company Holder, over (b) the Individual Aggregate Warrant Exercise Price of such Company Holder.

“Individual Fully Diluted Share Number” means, with respect to each Company Holder, the number of shares of Company Common Stock held by such Company Holder immediately prior to the Effective Time, assuming for this purpose the exercise in full of all Company Warrants held by such Company Holder immediately prior to the Effective Time (assuming for-cash exercise).

“Intellectual Property” means trademarks, service marks, trade names, mask works, inventions, patents, trade secrets, copyrights, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property rights.

“IRS” means the Internal Revenue Service.

“Keys Leases” means (a) the Apartment Lease between Peter Behnke of 70 Arundel Ave., West Hartford, Connecticut 06107, as landlord, and CMC of 545 New Park Avenue, West Hartford, Connecticut 06110, as tenant, with respect to the apartment located at 37 Whitman Avenue, Apartment No. 1., West Hartford, Connecticut, having a term starting on May 1, 2013 and ending on April 30, 2014 (the “Keys Apartment Lease) and (b) Closed End Motor Vehicle Lease Agreement relating to Account Number 04-0532-61611, as extended on August 8, 2012, between CMC as Lessee and Lexus Financial Services as Lessor, having a maturity date of March 1, 2013 (the “Keys Auto Lease).

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“Keys Additional Employee Litigation Escrow Amount” means $1.25 million.

“Keys Benefits Letter“ means the letter agreement, dated as of July 12, 2013, by and between the Company and Williams M. Keys, relating to the payment by the Company of certain health plan premiums for Williams M. Keys.

“Keys Shares” means the (i) the 4,336 shares of Company Common Stock owned by William M. Keys on the date hereof (Stock Certificate No. C 19), (ii) the 19,018.16 shares of Company Common Stock subject to Company Warrants owned by William M. Keys on the date hereof (Warrant Certificate No. NCH-2) and (iii) any securities received with respect to the foregoing upon any stock split, stock dividend, recapitalization, anti-dilution adjustment or other similar event and, in the case of Company Warrants, upon the exercise thereof.

“Knowledge” means (a) with respect to any natural person, the actual knowledge, of such person, or (b) with respect to any corporation or entity, the actual knowledge of such party’s officers (including vice presidents) and directors.

“Legal Requirement” means, with respect to any Person, any law, treaty, statute, code, ordinance, decree, administrative order, constitution, bylaw, permit, directive, policy, standard, rule, regulation, guideline and lawful requirements of any Governmental Entity or arbitral body and all judicial, administrative and arbitral judgments, orders (including injunctions), decisions or awards of any Governmental Entity or arbitral body, including general principles of common law, civil law and equity applicable to such Person, any property (immovable and real or movable and personal, tangible or intangible) of such Person or any activity of such Person.

“Lien” means, with respect to any asset (including any security), any mortgage, lien, pledge, charge, security interest, encumbrance or restriction of any kind in respect of such asset; provided,however, that the term “Lien” shall not include (a) statutory liens for Taxes, which (i) are not yet due and payable or (ii) are being contested in good faith by appropriate proceedings and disclosed in Section 2.12 of the Company Disclosure Schedule, (b) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented, (c) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pension or other social security programs mandated under applicable Legal Requirements, (d) statutory or common law liens in favor of carriers, warehousemen, mechanics and materialmen, and other like liens, to secure claims for labor, materials or supplies incurred in the ordinary course of business and (i) not yet delinquent or (ii) being contested in good faith, (e) restrictions on transfer of securities imposed by applicable state and federal securities laws and (f) non-exclusive licenses and sublicenses of Intellectual Property granted in the ordinary course of business.

“Master Leases” means (a) Master Lease Agreement, dated January 14, 2009, by and between Banc of America Leasing & Capital, LLC and CMC, and all related ancillary agreements and documents, exhibits and schedules (collectively, the “BofA Lease”) and (b) the Master Lease Agreement dated November 9, 2007 by and between General Electric Capital Corporation and CMC, and all related ancillary agreements and documents, exhibits and schedules (collectively, the “GE Lease”).

“Merger Consideration” means (a) $60,500,000, plus (b) the Net Cash Adjustment (which may be a negative number), plus (c) the Net Working Capital Adjustment (which may be a negative number), minus (d) the Net Debt Adjustment (which may be a negative number), minus (e) the amount of Company Transaction Expenses.

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“Net Cash Adjustment” means (a) the amount by which Cash and Cash Equivalents exceeds Two Million Dollars ($2,000,000), or (b) the amount by which Cash and Cash Equivalents is less than Two Million Dollars ($2,000,000), as applicable; provided that any amount which is calculated pursuant to clause (b) above shall be deemed to be a negative number.

“Net Debt Adjustment” means (a) the amount by which Closing Indebtedness exceed One Million Dollars ($1,000,000), or (b) the amount by which Closing Indebtedness is less than One Million Dollars ($1,000,000), as applicable; provided that any amount which is calculated pursuant to clause (b) above shall be deemed to be a negative number.

“Net Working Capital” means, as of 11:59 p.m. on July 2, 2013, (a) the consolidated current assets (excluding all Tax assets (including deferred Tax assets) other than refunds receivable in respect of non-income Taxes) less (b) the consolidated current liabilities (excluding all Tax liabilities (including deferred Tax liabilities) other than payables in respect of non-income Taxes), in each case (1) of the Company and the Company Subsidiaries, (2) giving effect to the termination of the GE Lease and (3) excluding any amounts taken into account in the calculation of Cash and Cash Equivalents, and, in the case of clause (b), other than (A) any Keys Lease Termination Payment payable by the Company and the Company Subsidiaries, (B) any amounts with respect to or included in (x) Company Transaction Expenses or (y) Specified Employee Costs, (C) any amounts related to or arising out of the BofA Rollover Letter, and (D) any amounts payable under the Keys Benefits Letter (and, if any amounts are actually paid with respect to the Keys Benefits Letter prior to 11:59 p.m. on July 2, 2013, Net Working Capital shall be increased by the amount of such payments).

“Net Working Capital Adjustment” means (a) the amount by which Net Working Capital exceeds Target Net Working Capital, or (b) the amount by which Target Net Working Capital exceeds Net Working Capital, as applicable; provided that any amount which is calculated pursuant to clause (b) above shall be deemed to be a negative number.

“Non-Income Tax Returns” means any Tax Returns other than Income Tax Returns.

“Parent True-Up Amount” means:

(a)     in the case of any Income Tax Return for a Pre-Closing Tax Period other than a Straddle Period, either (1) if such excess is a positive number, the excess of (A) any overpayment of Income Tax with respect to such Tax Return over (B) 50% of any Warrant Tax Benefit actually realized in such Tax Return or (2) if the excess in clause (1) is not a positive number, zero (0); and

(b)      in the case of any Income Tax Return that is a Straddle Period Tax Return, either (1) if such excess is a positive number, the excess of (A) any overpayment of Income Taxes allocable to the pre-Closing portion of such Straddle Period (treating any Warrant Tax Benefit actually realized with respect to such Tax Return as arising in the pre-Closing portion of such Straddle Period) over (2) 50% of any Warrant Tax Benefit actually realized in such Tax Return or (2) if the excess in clause (1) is not a positive number, zero (0).

“Per Share Employee Litigation Escrow Amount” means, with respect to each share of Company Common Stock or Company Common Stock subject to a Company Warrant, the product of (a) the Proportionate Share of the holder of such share or Company Warrant, as applicable, immediately prior to the Effective Time, multiplied by (b) the Employee Litigation Escrow Amount, divided by (c) the Individual Fully Diluted Share Number of such holder.

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“Per Share Estimated Merger Consideration” means an amount equal to the quotient of (a) the Estimated Merger Consideration, plus the Aggregate Warrant Exercise Price, divided by (b) the Fully Diluted Share Number.

“Per Share General Escrow Amount” means, with respect to each share of Company Common Stock or Company Common Stock subject to a Company Warrant, the product of (a) the Proportionate Share of the holder of such share or Company Warrant, as applicable, immediately prior to the Effective Time, multiplied by (b) the General Escrow Amount, divided by (c) the Individual Fully Diluted Share Number of such holder.

“Per Share Keys Additional Employee Litigation Escrow Amount” means, with respect to each Keys Share, (a) the Proportionate Share of the holder of such Keys Share of the Keys Additional Employee Litigation Escrow Amount divided by (b) the aggregate number of Keys Shares held by such holder immediately prior to the Effective Time (assuming the exercise in full of all Company Warrants (assuming for-cash exercise)).

“Per Share Purchase Price Escrow Amount” means, with respect to each share of Company Common Stock or Company Common Stock subject to a Company Warrant, the product of (a) the Proportionate Share of the holder of such share or Company Warrant, as applicable, immediately prior to the Effective Time, multiplied by (b) the Purchase Price Escrow Amount, divided by (c) the Individual Fully Diluted Share Number of such holder.

“Per Share Stockholder Representative Expense Amount” means (a) the Stockholder Representative Expense Amount divided by (b) the Fully Diluted Share Number.

“Permits” means all federal, state, local and foreign permits, approvals, licenses, authorizations, certificates, rights, exemptions, judgments, orders, injunctions, decrees and writs from Governmental Entities.

“Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a Government Entity or any other type of entity.

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date and any post-Closing portion of a Straddle Period.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and any pre-Closing portion of a Straddle Period.

“Proportionate Share” means, with respect to each Company Holder, a fraction, the numerator of which is the Individual Estimated Merger Consideration of such Company Holder, and the denominator of which is the Estimated Merger Consideration; provided that with respect to the Keys Additional Employee Litigation Escrow Amount, the Per Share Keys Additional Employee Litigation Escrow Amount and the Keys Additional Employee Litigation Escrow Fund, “Proportionate Share” means, with respect to each holder of Keys Shares as of immediately prior to the Effective Time, a fraction the numerator of which is the Individual Estimated Merger Consideration of such holder and the denominator of which is the aggregate Individual Estimated Merger Consideration of all holders of Keys Shares immediately prior to the Effective Time.

“Purchase Price Escrow Amount” means $1 million.

“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within any building, structure, facility or fixture.

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“Remediation” means the removal and replacement of soil contaminated with lead in the area adjacent to CMC’s “Commercial Range” (the “Adjacent Area”) at the New Park Avenue Property in a manner substantially consistent with the soil removal and replacement that occurred in 2011 in the Adjacent Area, but only to the extent such removal and replacement is undertaken in a reasonably cost-effective manner to fulfill the Company’s obligations under the minimum requirements of applicable Environmental Laws, using, where permissible, risk based standards, engineering or institutional controls or deed or other restrictions so long as such standards, controls or restrictions do not materially limit those industrial activities being performed at the New Park Avenue Property as of Closing.

“Seller True-Up Amount” means:

(a)           in the case of any Income Tax Return for a Pre-Closing Tax Period other than a Straddle Period, either (1) if such excess is a positive number, the excess of (A) any Income Taxes due with respect to such Tax Return plus 50% of any Warrant Tax Benefit actually realized in such Tax Return over (B) any overpayment of Income Tax with respect to such Tax Return or (2) if the excess in clause (1) is not a positive number, zero (0); and

(b)            in the case of any Income Tax Return for a Straddle Period, either (1) if such excess is a positive number, the excess of (A) any Income Taxes allocable to the pre-Closing portion of such Straddle Period plus 50% of any Warrant Tax Benefit actually realized in such Tax Return over (B) any overpayment of Income Taxes allocable to the pre-Closing portion of such Straddle Period (treating any Warrant Tax Benefit actually realized in such Tax Return as arising in the pre-Closing portion of such Straddle Period) or (2) if the excess in clause (1) is not a positive number, zero (0).

“Solvent” means, with respect to any Person, that (a) the property of such Person, at a present fair saleable valuation, exceeds the sum of its debts (including contingent and unliquidated debts); (b) the present fair saleable value of the property of such Person exceeds the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured; (c) such Person does not have unreasonably small capital to carry on its business; and (d) such Person does not intend or believe it will incur debts beyond its ability to pay as such debts mature.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become actual or matured liabilities.

“Specified Employee Costs” means obligations and liabilities of the Company arising out of or resulting from (i) the Alpert Case, the Chen Case or any related claim, (ii) the Change in Control Agreements or (iii) the Excess Employee Payments.

“Stockholder Representative Expense Amount” means $750,000.

“Straddle Period” means any Tax period that begins on or prior to, and ends after, the Closing Date.

“Subsidiary” means, with respect to any Person, any Person if such Person (a) directly or indirectly owns or controls securities or other interests representing more than fifty percent (50%) of the voting power of such Person, or (b) is entitled, by Contract or otherwise, to elect, appoint or designate directors constituting a majority of the members of such Person’s board of directors or other governing body.

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“Target Net Working Capital” means $2.5 million.

“Tax” or “Taxes” means (i) all federal, state, local or non-U.S. taxes, duties, imposts, levies, assessments or similar charges imposed by any Governmental Entity, including all income, corporation, alternative minimum, gross receipts, capital, sales, use, ad valorem, value added, transfer, stamp duty, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, (ii) all interest, penalties, additions to tax or other additional amounts imposed by any taxing authority in connection with any item described in clause (i) and (iii) all transferee, successor, joint and several, contractual or other liability (including liability pursuant to Treasury Regulation Section 1.1502-6 (or any similar state, local or foreign provision)) in respect of any items described in clause (i) or (ii).

“Tax Authority“ means any governmental authority (domestic or foreign) responsible for the imposition, administration or collection of any Tax.

“Tax Return” means any original or amended Tax return, statement, report, election, declaration, disclosure, schedule or form (including any estimated tax or information return or report) filed or required to be filed with any Tax Authority.

“Treasury Regulations“ means all regulations of the U.S. Treasury under the Code.

“Warrant Tax Benefit” means, with respect to any Income Tax Return for a Pre-Closing Tax Period ending on the Closing Date or a Straddle Period that includes the Closing Date, any cash Income Tax savings actually realized with respect to such Tax Return that is attributable to the cash out of the Company Warrants on the Closing Date (determined on a “with and without” basis).

Section 9.4Amendments and Waivers.

(a)Subject to applicable Legal Requirements, the parties hereto may amend this Agreement at any time by execution of an instrument in writing signed by each of Parent, the Company and the Stockholder Representatives.

(b)At any time prior to the Effective Time, any party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein.  Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed by such party and specifically referencing the provisions being waived.  No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

Section 9.5Entire Agreement; Nonassignability; Parties in Interest.

(a)This Agreement, the Escrow Agreement, the Litigation Management Agreement, the documents and instruments and other agreements specifically referred to herein or

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delivered pursuant hereto and the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.  In the event of a conflict between the terms of this Agreement and the terms of the Litigation Management Agreement, the terms of the Litigation Management Agreement shall govern and control.  Except as specifically stated in a particular section of this Agreement, and except for the Company Holders, who are intended third party beneficiaries hereunder, including with respect to the receipt of the Merger Consideration pursuant to ARTICLE I, no provision of this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; providedthat no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto, except that (x) Parent may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates, and (ii) designate one or more of its Affiliates to perform its obligations hereunder (providedthat in any or all cases under this clause (x) Parent nonetheless shall remain responsible for the performance of all of its obligations hereunder); (y) in the event of the death, incapacity or unwillingness to serve of one of the Stockholder Representatives, the other Stockholder Representative shall be entitled to appoint a replacement Stockholder Representative and, in the event of the death, incapacity or unwillingness to serve of both Stockholder Representatives, Company Holders whose Proportionate Shares total more than 50% shall be entitled to appoint one or more replacement Stockholder Representatives, in each case without such consent and with the consent of the appointee(s), upon which appointment the replacement Stockholder Representative(s) shall assume all rights and obligations of the retiring Stockholder Representative(s) hereunder and the retiring Stockholder Representative(s)’ obligations hereunder shall cease and terminate; and (z) each of Parent, Merger Sub and the Company may assign its rights hereunder for collateral security purposes to any lender or lenders (and any agent for any such lender(s)) providing financing to such Person or to any assignee or assignees of any such lender, lenders or agent, in each case pursuant to customary written documentation reasonably satisfactory to the Stockholder Representatives.  Any attempted assignment in violation of this Section 9.5(a) will be void.

(b)At Closing, the Surviving Corporation shall execute a joinder to this Agreement, which will be in form and substance reasonably acceptable to the parties (the “Joinder Agreement”), pursuant to which the Surviving Corporation will assume, and will be obligated with Parent and each other on a joint and several basis, each of Parent’s obligations pursuant to this Agreement and its post-Closing obligations as otherwise set forth in this Agreement.

Section 9.6Severability.  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.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

Section 9.7Governing Law; WAIVER OF JURY TRIAL.

THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW, EXCEPT TO THE EXTENT THAT DELAWARE LAW MANDATORILY APPLIES TO THE MERGER.  In any action between or among

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any of the parties, whether arising out of this Agreement or otherwise, (a) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York or any New York State court sitting in the Borough of Manhattan in New York, New York; (b) each of the parties irrevocably waives, to the fullest extent permitted by applicable Legal Requirements, any objection that it may now or hereafter have to the laying of venue of any such action in any such court, or that any such action brought in any such court has been brought in an inconvenient forum; (c) if any such action is commenced in any such state court, then, to the fullest extent permitted by applicable Legal Requirements, no party shall object to the removal of such action to any such federal court; (d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF; and (e) each of the parties irrevocably consents to service of process anywhere in the world, whether within or without the jurisdiction of any such court, and agrees that service of process as provided in Section 9.2 shall be deemed effective service of process on such party.

Section 9.8Interpretation.  Matters reflected in the schedules (the “Schedules”) to this Agreement are not necessarily limited to matters required by this Agreement to be reflected in such Schedules.  To the extent any such additional matters are included, they are included for informational purposes and do not necessarily include other matters of a similar nature.  In no event shall any disclosure of additional matters be deemed or interpreted to broaden or otherwise amend any of the covenants or representations or warranties in this Agreement.  Headings and subheadings have been inserted in the Schedules for convenience of reference only and shall to no extent have the effect of amending or changing the express description thereof as set forth in this Agreement.  Disclosure of any fact or item in this Agreement or any Schedule referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to every other Section in this Agreement to the extent that it is reasonably apparent that such disclosure would apply to such other Sections.  Neither the specification of any dollar amount in the representations and warranties contained in this Agreement nor the inclusion of any specific item in any Schedule is intended to imply that such amounts, higher or lower amounts, or the item so included or other items, are or are not material or are within or outside the ordinary course of business, and no party hereto shall use the fact of the setting forth of such amounts or the fact of the inclusion of any such item in any Schedule in any dispute or controversy between the parties hereto as to whether any obligation, item or matter is or is not required to be disclosed (including, whether such amounts or items are or are not material), or may constitute an event or condition which could be considered to have a Company Material Adverse Effect or material adverse effect. No matter or item disclosed on a Schedule relating to a possible breach or violation of any Contract or Legal Requirement shall be construed as an admission or indication that breach or violation exists or has actually occurred.  The parties hereto do not assume any responsibility to any Person that is not a party to this Agreement for the accuracy of any information set forth in the Schedules.  The information set forth in the Schedules was not prepared or disclosed with a view to its potential disclosure to others.  Subject to applicable Legal Requirements, such information is disclosed in confidence for the purposes contemplated in this Agreement and is subject to the confidentiality provisions of any other agreements, including the Confidentiality Agreement, entered into by the parties hereto or their Affiliates.  Moreover, in disclosing the information in the Schedules, each party hereto expressly does not waive any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed therein.

Section 9.9Time of the Essence.  Time is of the essence in this Agreement.

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Section 9.10Rules of Construction.  The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

Section 9.11Specific Performance.  The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and an injunction or injunctions to prevent breaches of this Agreement, in addition to any other remedy at law or equity, in each case without the necessity of providing any bond or other security in connection with any such order or injunction.  The rights and remedies of the parties hereto shall be cumulative (and not alternative).

Section 9.12Descriptive Headings.  The descriptive headings herein are inserted for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

Section 9.13Counterparts.  This Agreement may be executed in two or more counterparts (including by facsimile or electronic mail in “portable document format” (.pdf) form), 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.

Section 9.14Waiver of Conflicts Regarding Representation; Nonassertion of Attorney-Client Privilege.

(a)Parent waives and will not assert, and agrees to cause the Company and each Company Subsidiary to waive and not to assert, any conflict of interest arising out of or relating to the representation, after the Closing (the “Post-Closing Representation”), of the Company Holders or any shareholder, officer, employee or director of the Company or any Company Subsidiary (any such Person, a “Designated Person”) in any matter involving this Agreement or any other agreements or transactions contemplated hereby, by any legal counsel currently representing the Company or any Company Subsidiary in connection with this Agreement or any other agreements or transactions contemplated hereby (the “Current Representation”), including Davis Polk & Wardwell LLP, John Droney, Hinckley, Allen & Snyder LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

(b)Parent waives and will not assert, and agrees to cause the Company and each Company Subsidiary to waive and to not assert, any attorney-client privilege with respect to any communication between any legal counsel and any Designated Person occurring during the Current Representation in connection with any Post-Closing Representation involving a dispute with Parent or any of its Affiliates, and following the Closing, with the Company or any Company Subsidiary, it being the intention of the parties hereto that all such rights to such attorney-client privilege and to control such attorney-client privilege shall be retained by such Designated Person.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company, Parent, Merger Sub and the Stockholder Representatives have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized, all as of the date first written above.

COLT DEFENSE LLC

By: /s/ Gerald R. Dinkel

Name: Gerald R. Dinkel

Title: CEO

NEW COLT ACQUISITION CORP.

By: /s/ Gerald R. Dinkel

Name: Gerald R. Dinkel

Title: CEO

NEW COLT HOLDING CORP.

By: /s/ Dennis Veilleux

Name: Dennis Veilleux

Title: President/CEO

/s/ Donald E. Zilkha

Donald E. Zilkha, as Stockholder Representative

/s/ Edward L. Koch III

Edward L. Koch III, as Stockholder Representative

[Signature Page to Agreement and Plan of Merger]

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED LIMITED

LIABILITY COMPANY AGREEMENT

OF

COLT DEFENSE LLC

Dated as of June 12, 2003

REFLECTING THE AMENDMENTS ADOPTED

as of July 9, 2007,

August 11, 2011,

March 2012

and

June 28, 2013

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

COLT DEFENSE LLC

TABLE OF CONTENTS

Page

ARTICLE I.

DEFINITIONS

ARTICLE II.

ORGANIZATION OF THE COMPANY

2.1.	Formation and Name of Company	8
2.2.	Purpose	8
2.3.	Registered Office; Registered Agent	8
2.4.	Principal Place of Business	8
2.5.	Term	8

ARTICLE III.

MEMBERS

3.1.	Members	8
3.2.	Voting Rights Generally	8
3.3.	Meetings of Members	9

ARTICLE IV.

UNITS

4.1.	Units Generally	10
4.2.	Common Units	10
4.3.	Certificates for Units	11
4.4.	Profits Interests, Warrants, Options, etc.	12
4.5.	Pre-Emptive Rights	12

ARTICLE V.

MANAGEMENT

5.1.	Management Generally	14
5.2.	Authority of Governing Board	14
5.3.	Number of Members of Governing Board	14
5.4.	Election	14
5.5.	Removal	14
5.6.	Vacancies	14

-i-

Page

5.7.	Books	15
5.8.	Compensation	15
5.9.	Fundamental Transactions	15
5.10.	Limitation on Liability of Members of Governing Board	17
5.11.	Meetings of the Governing Board	17
5.12.	Committees	18
5.13.	Officers	18
5.14.	Managers	19

ARTICLE VI.

SPECIAL RIGHTS; TRANSFER RESTRICTIONS; ETC.

6.1.	Election of Members of Boards	19
6.2.	[Reserved]	21
6.3.	[Reserved]	21
6.4.	Restrictions on Transfer and Issuance of Units, etc.	21
6.5.	Co-Sale Right	26

ARTICLE VII.

CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS

7.1.	Initial Capital Contributions	27
7.2.	Additional Capital Contributions	27
7.3.	Capital Accounts	27
7.4.	General Allocations	27
7.5.	Special Allocations	28
7.6.	Allocations for Tax Purposes	29
7.7.	Determination by Governing Board of Certain Matters	29
7.8.	Transfer of Units	29

ARTICLE VIII.

DISTRIBUTIONS

8.1.	Distributions	30
8.2.	Minimum Distributions for Income Tax Purposes	30

ARTICLE IX.

TRANSFERS OF INTEREST; ADMISSION OF ADDITIONAL MEMBERS

9.1.	Transfer of Interests	30
9.2.	Admission of Additional Members	30
9.3.	Admission of Current Members	31

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Page

ARTICLE X.

DISSOLUTION

10.1.	Dissolution	31
10.2.	Winding Up and Liquidation	31
10.3.	Liabilities	31
10.4.	Settling of Accounts	31
10.5.	Distribution of Proceeds	32
10.6.	Filing	32
10.7.	No Restoration of Deficit Capital Account Balances	32

ARTICLE XI.

TAX RETURNS; BOOKS AND RECORDS; REPORTS

11.1.	Filing of Tax Returns	32
11.2.	Tax Matters Partner	32
11.3.	Annual Reports to Current and Former Members	32
11.4.	Records to be Kept	33
11.5.	Confidentiality	33

ARTICLE XII.

INDEMNIFICATION

12.1.	Right to Indemnification	34
12.2.	Right to Advancement of Expenses	34
12.3.	Right of Indemnitee to Bring Suit	35
12.4.	Non-Exclusivity of Rights	35
12.5.	Insurance	35
12.6.	Indemnification of Employees and Agents of the Company	36

ARTICLE XIII.

NOTICES

13.1.	Generally	36
13.2.	When Deemed Given, etc.	36
13.3.	Waiver	36

ARTICLE XIV.

MISCELLANEOUS

14.1.	General	36
14.2.	Amendments and Waivers	37
14.3.	Choice of Law	37
14.4.	Headings	37
14.5.	Pronouns	37
14.6.	Entire Agreement	37

-iii-

Page

14.7.	Third Parties	37
14.8.	Severability	37
14.9.	Effectiveness	38
14.10.	Counterparts	38
14.11.	Interpretation	38

-iv-

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

COLT DEFENSE LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, made and entered into as of the 12th day of June, 2003 and amended as of the 9th day of July, 2007, the 11th day of August, 2011, March, 2012 and the 28th day of June, 2013, by and among Colt Defense Holding LLC, a Delaware limited liability company (“C-Defense Holding”), and Colt Defense LLC, a Delaware limited liability company (the “Company”).  Certain capitalized terms used in this Agreement have the respective meaning ascribed thereto in Article I.

Recitals.

The Company was formed as a limited liability company under the Act by the filing on September 18, 2002 of the initial Certificate of Formation in the office of the Secretary of State of Delaware.

The initial member of the Company had executed a limited liability company agreement, dated as of November 1, 2002.

The initial member of the Company and the Company had completed a series of transactions pursuant to which as of June 11, 2003 the Company succeeded to the defense related business of Colt Manufacturing Company, Inc. (now a limited liability company known as Colt’s Manufacturing Company LLC, “CMC”).

On June 12, 2003, certain members and former members of the Company entered into an Amended and Restated Limited Liability Company Agreement (the “First Amended Agreement”) that provided for the establishment of designated series of limited liability company interests in the Company and warrants and options in connection with the purchase of limited liability company interests in the Company and, in a partial liquidation, for the distribution of all of the issued and outstanding limited liability company interests in the Company to the holders of the outstanding common stock of New Colt Holding Corp., a Delaware corporation (“New Colt”), or their designees, for the distribution of certain such outstanding warrants to the holders of the outstanding warrants of New Colt or their designees, and for the distribution of certain such outstanding options to the holders of the outstanding options of New Colt or their designees, all as further provided in the First Amended Agreement and the Distribution Agreement.

On July 9, 2007, certain members and former members of the Company entered into an Amended and Restated Limited Liability Company Agreement (the “Second Amended Agreement”).

The parties hereto desire to amend the Second Amended Agreement and to set out in this Agreement (as amended) their respective rights, obligations and duties with respect to the Company and its business, management and operations.

NOW, THEREFORE, in consideration of the terms, covenants and conditions contained herein, the parties hereby agree that the First Amended Agreement (and that such amendment is permitted in accordance with Section 14.2 of the First Amended Agreement) is hereby amended in its entirety to read as follows, and further hereby agree as follows:

ARTICLE I. 

Definitions

For purposes of this Agreement, unless the context otherwise requires:

“Act” means the Delaware Limited Liability Company Act, as amended from time to time, or any corresponding provision or provisions of any succeeding or successor law of the State of Delaware.

“Additional Sale Notice” is defined in Section 6.4.3(c).

“Adjusted Capital Account” means, with respect to any Member, the balance in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

               (i)Credit to such Capital Account any amounts which such Member is obligated to restore or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations §§ 1.704-2(g)(1) and 1.704-2(i)(5); and

               (ii)Debit to such Capital Account the items described in Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“Affiliate” means, as to any holder of Equity Securities, (i) the partners, retired partners, directors and officers, as the case may be, of such holder, (ii) the partners of any of the parties referred to in the foregoing clause of this definition, (iii) any corporation, limited liability company or partnership controlled by such holder or by any of the parties referred to in the foregoing clauses of this definition, and (iv) any other party that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, any holder of Equity Securities.

“Agreement” means this Amended and Restated Limited Liability Company Agreement, as amended, modified or supplemented from time to time.

“Applicable Board” means, (i) in the case of the Company, the Governing Board, and (ii) in the case of any subsidiary of the Company, the governing board, board of directors or other similar governing body of such subsidiary.

“Bankruptcy Code” means the United States Bankruptcy Code (Title 11, U.S.C.), as amended.

“Bankruptcy Event” means any of the following events: (i) filing any voluntary petition in bankruptcy pursuant to the Bankruptcy Code on behalf of the Company or any of its subsidiaries; (ii) not defending, or to the extent permitted under applicable law, objecting to or seeking the dismissal of the filing of any involuntary petition under the Bankruptcy Code against the Company or any of its subsidiaries; (iii) filing of any petition with respect to the Company or any of its subsidiaries seeking reorganization or relief under any applicable law relating to bankruptcy or insolvency; (iv) not objecting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any of its subsidiaries or a substantial part of their respective assets; (v) making any assignment with respect to the Company or any of its subsidiaries for the benefit of creditors; or (vi) taking of any action by the Company or any of its subsidiaries in furtherance of any such action described in this definition.

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“Bona Fide Offer” is defined in Section 6.4.3(a).

“Capital Account” means the Capital Account maintained for each Member pursuant to Section 7.3.

“Capital Contribution(s)” means the aggregate of all contributions made by the Member to the Company, Any reference to the Capital Contribution of a then Member shall include a Capital Contribution previously made by any prior Member with respect to the Interest of such then Member.

“C-Defense Holding” is defined in the introductory paragraph.

“Certificate of Formation” means the Certificate of Formation of the Company, as filed with the Secretary of the State, as amended from time to time.

“Class B Common Units” means up to 18,878 Units of the Company having identical terms to the Common Units authorized and issued as of July 9, 2007; provided, that under no circumstance shall the Class B Common Units have the rights attributed to Common Units under Section 4.2.2 or any other voting rights hereunder.

“CMC” is defined in the Recitals.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Colt Designee” is defined in Section 6.1.1(c).

“Common Member” means a Member that holds one or more Common Units or Class B Common Units.

“Common Units” is defined in Section 4.1.

“Company” is defined in the introductory paragraph.

“Company Minimum Gain” has the meaning set forth in Regulations §§ 1.704-2(d), but substituting the term “Company” for the term “partnership” as the context requires.

“Company Sale” means either a transaction or series of related transactions with a Person or Persons acting as a group or in concert that, in either case, is not a Member or an Affiliate of any Member (or including any Person that is a Member or an Affiliate of a Member), pursuant to which such Person or Persons acquire: (i) all or substantially all of the equity securities of the Company, or (ii) all or substantially all of the Company’s assets determined on a consolidated basis (in any case, whether by merger, consolidation, sale, exchange, issuance, transfer or redemption of the Company’s equity securities, by sale, exchange or transfer of the Company’s consolidated assets, or otherwise); provided, that a Company Sale shall not include a transaction whereby the equity interests of the Company are exchanged for the securities of a corporation (through a merger, securities exchange or otherwise) in connection with an initial public offering of such securities.

“Co-Sale Right” is defined in Section 6.5.

“Credit Agreement” means the credit agreement dated as of September 29, 2011 among the Company as the U.S. borrower, Colt Canada Corporation, as the Canadian borrower, Colt Finance Corp., as guarantor, the lenders party thereto, and Wells Fargo Capital Finance LLC, as agent, as amended, supplemented, amended and restated or modified from time to time.

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“Distribution Agreement” means the Distribution Agreement, dated as of even date of the First Amended Agreement, among New Colt and the other parties named therein.

“Distribution Date” is defined in Section 10.3.

“Drag-Along Notice” is defined in Section 6.4.4(a).

“Drag-Along Pro Rata Portion” is defined in Section 6.4.4(a).

“Drag-Along Sale” is defined in Section 6.4.4(a).

“Drag-Along Sale Price” is defined in Section 6.4.4(a).

“Drag-Along Sellers” is defined in Section 6.4.4(a).

“Employee Plan” means the New Colt Holding Corp. Employee Stock Ownership Plan & Trust, as amended from time to time.

“Employee Plan Holding” is defined in the introductory paragraph.

“Equity Equivalents” is defined in Section 4.5.1.

“Equity Security” means any limited liability company interests (including, without limitation, the Units), capital stock or other similar equity security of the Company or any subsidiary, as the case may be, whether now authorized or not, and rights, options, warrants or rights to purchase any such limited liability company interests, capital stock or other similar securities or any other Equity Security, and securities of any type whatsoever that are, or may become, directly or indirectly convertible into any such limited liability company interests or capital stock or any other Equity Security.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute and the rules and regulations thereunder, and as the same shall be in effect from time to time.

“Fair Market Value” means, with respect to any asset, as of the date of determination, the cash price at which a willing seller would sell and a willing buyer would buy such asset in a transaction negotiated at arm’s length, each being apprised of and considering all relevant facts, circumstances and factors, and neither acting under compulsion, with the parties being unaffiliated third parties acting without time constraints, as determined in good faith by the Governing Board; provided, that any Market Securities shall be valued at the average of the sale or closing bid prices as reported for composite transactions during the ten (10) consecutive trading days preceding the trading day immediately prior to the date of valuation.

“Fiscal Year” means the calendar year.  Fiscal Year shall also be the Company’s taxable year.

“First Union Designee” is defined in Section 6.1.1(b).

“Governing Board” is defined in Section 5.1.

“Gross Income” means all items of income and gain that are included in the definition of Net Income and Net Loss.

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“Initiating Sellers” is defined in Section 6.4.4(a).

“Interests” means the entire ownership interest of the Members in the Company.

 “Joinder” is defined in Section 6.4.1(a).

“Liquidator” is defined in Section 10.2.

“Majority in Interest of the Members” means the Members holding voting Units representing more than 50% of the aggregate number of all outstanding voting Units.

“Market Securities” means securities that (i) are of a class of securities listed on a national or recognized international stock exchange; (ii) constitute, in the aggregate, not more than 5% of the outstanding securities of such class, (iii) are eligible for immediate sale by the recipient thereof pursuant to a registration statement effective under the Securities Act, Rule 144 under the Securities Act or other similar provision then in force, and (iv) are otherwise freely tradable by the recipient without restriction under applicable federal and state securities and are not subject to any “lock-up” or other contractual restriction on transfer.

“Members” means the members of the Company.

 “Net Income and Net Loss” mean, respectively, an amount equal to the Company’s taxable income or loss, for U.S. federal income tax purposes, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (1) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant hereto shall be included in income; (2) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Regulations § 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Income or Net Loss pursuant hereto, shall be deducted from income; (3) income, gain, loss and deduction of the Company shall be computed (i) as if the Company had purchased any property contributed by a Member on the date of such contribution at a price equal to its Fair Market Value on such date, and (ii) as if the Company had sold any property distributed to a Member on the date of such distribution at a price equal to its Fair Market Value on such date; (4) in the event that the carrying value of a Company asset is adjusted pursuant to, or as permitted by, Regulations Section 1.704-1(b)(2)(iv)(f), the gain or loss that would result if such adjustment were an actual sale or exchange of such asset shall be included as gain or loss; and (5) to the extent provided in Regulations Section 1.704-1(b)(2)(iv)(m), any adjustment pursuant Regulations Section 1.704-1(b)(2)(iv)(m) shall be treated as a gain or loss upon the sale or exchange of a Company asset.

“New Colt” is defined in the introductory paragraph.

“Nonrecourse Deductions” has the meaning set forth in Regulations § 1.704-2(b)(1).

“Offer Price” is defined in Section 6.4.3(a).

“Offered Securities” is defined in Section 6.4.3(a).

“Organizer” means the Person who executed the initial Certificate of Formation.

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“Permitted Issuance” means (i) the issuance of Equity Equivalents as a unit dividend or other distribution or upon any subdivision, split or combination of all of the outstanding Units; (ii) the issuance of Equity Equivalents upon conversion, exchange or redemption of any convertible or exchangeable securities outstanding on the date hereof or which were issued in compliance with Section 4.5; (iii) the issuance of Equity Equivalents to acquire Common Units or Class B Common Units to any employee, consultant or board member of the Company or any of its subsidiaries pursuant to any equity incentive plan approved and adopted by the Governing Board (provided, that the aggregate of all such issuances as of the time of determination (including the proposed issuance) shall not exceed 18,878 Units (as equitably adjusted for any distributions of Units, in each case, on the Common Units or Class B Common Units or subdivision or reclassification of such Common Units or Class B Common Units); provided, that the allocation of such Units between Common Units and Class B Common Units shall be expressly authorized and determined by resolution of the Governing Board; (iv) the issuance to any Person that is not a Member of an Affiliate of a Member of Equity Equivalents as consideration (whether partial or otherwise) for the purchase by the Company or any of its subsidiaries of assets, stock or other equity securities of any Person, whether in a merger, acquisition, joint venture or otherwise; (v) the issuance of Equity Equivalents by any of the Company’s wholly-owned subsidiaries to the Company or any other wholly-owned subsidiary of the Company; and (vi) the issuance of any Equity Equivalents to financial institutions, banks or equipment lessors, in connection with bona fide loans from them to the Company or its subsidiaries.

“Person” means any natural person, partnership, joint venture, association, corporation, limited liability company, trust or other entity.

“Preferred Units” is defined in Section 4.1.

“Prospective Buyers” is defined in Section 6.4.3(a).

“Qualified Public Offering” means an underwritten sale to the public of the Company’s (or its successor’s) equity securities pursuant to an effective registration statement filed with the Securities and Exchange Commission on Form S-1 (or any successor form) which results in gross proceeds to the Company and/or selling stockholders of at least $75,000,000 and in which the managing underwriter is a nationally recognized investment banking firm; provided that a Qualified Public Offering shall not include any issuance of equity securities in any merger or other business combination, and shall not include any registration of the issuance of securities to existing securityholders or employees of the Company and its subsidiaries on Form S-4 or Form S-8 (or any successor form).

“Regulations” means the regulations (including, without limitation, any temporary regulations) issued under the Code by the Department of the Treasury, as they may be amended from time to time, or any applicable successor regulations.  Reference herein to any particular section of the Regulations shall be deemed to refer to the corresponding provision of any applicable successor regulations.

“Remaining Securities” is defined in Section 6.4.3(c).

“Reporting Company” means an issuer that has become a reporting company pursuant to Section 12 or Section 15 of the Exchange Act as a result of an underwritten sale to the public of the Company’s (or its successor’s) Equity Securities pursuant to an effective registration statement filed with the Securities and Exchange Commission on Form S-1 (or any successor form) (other than any issuance of equity securities in any merger or other business combination).

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“Sale” means, as to any Equity Securities, to sell, or in any other way directly or indirectly transfer, assign, distribute, encumber or otherwise dispose of any such Equity Securities, either voluntarily or involuntarily; provided, that with respect to any member of the Sciens Group, any transfer or other disposition of any direct or indirect interest in such member of the Sciens Group shall not be deemed to be a Sale of Equity Securities for purposes of this Agreement.

“Sale Notice” is defined in Section 6.4.3(a).

“Senior Notes” means the aggregate amount of $250,000,000 of 8.75% Senior Notes due 2017 co-issued by the Company and Colt Finance Corp. on November 10, 2009.

“Sciens” means Sciens Management LLC, a Delaware limited liability company.

“Sciens Group” means Sciens together with each of its Affiliates (to the extent that Sciens or an investment advisor under common control with Sciens retains voting control over the Units held by such Affiliate).

“Sciens Ownership Period” means the period of time beginning July 9, 2007 and ending on the date that the Sciens Group ceases to own at least 22,839.488 Common Units beneficially owned by the Sciens Group as of July 9, 2007, as equitably adjusted for any distributions of Units on the Common Units or subdivision or reclassification of such Common Units.

“Second Union Designee” is defined in Section 6.1.1(b).

“Secretary of the State” means the Secretary of the State of the State of Delaware.

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

“Selling Holder” is defined in Section 6.4.3(a).

“Single Union Designee” is defined in Section 6.1.1(b).

“Tag-Along Holder” is defined in Section 6.4.5(a).

“Tag-Along Notice” is defined in Section 6.4.5(a).

“Tag-Along Notice Period” is defined in Section 6.4.5(a).

“Tag-Along Price” is defined in Section 6.4.5(a).

“Tag-Along Pro Rata Portion” is defined in Section 6.4.5(a).

“Tag-Along Rights” is defined in Section 6.4.5(a).

“Tag-Along Sale” is defined in Section 6.4.5(a).

“Tax Exempt Member” means a Member who is not subject to Federal income tax on income allocated to such Member by the Company.

“Tax Matters Partner” is defined in Section 11.2.

“Third Party” is defined in Section 6.4.3(a).

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“Union” means the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America.

“Units” is defined in Section 4.1.

ARTICLE II.

Organization of the Company

2.1.Formation and Name of Company.  The Company was formed on September 18, 2002.  The Organizer has no further rights, obligations or duties in such capacity with respect to the Company.  The Governing Board may from time to time cause an authorized Person to further execute, and shall cause the filing or recording with the proper offices of, any other certificates or instruments required by any limited liability company act, fictitious name act or similar statute in effect from time to time.

2.2.Purpose.  The purpose of the Company is to engage in any lawful act or activity for which limited liability companies may be formed under the Act.

2.3.Registered Office; Registered Agent.  (a) The registered office of the Company in the State of Delaware shall be located at Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, and the Company’s registered agent at such address for service of process is Corporation Service Company; and (b) the registered office(s) in the state(s) in which the Company does business shall be established by the Governing Board.

2.4.Principal Place of Business.  The principal place of business of the Company is 547 New Park Avenue, West Hartford, CT 06110, or such other place as from time to time may be designated by the Governing Board.

2.5.Term.  The term of the Company commenced upon the filing of the Certificate of Formation with the Secretary of the State.  The existence of the Company shall be perpetual unless the Company is earlier dissolved in accordance with either the provisions of this Agreement or the Act.

ARTICLE III.

Members

3.1.Members.  The Persons that on the date of this Agreement are Members of the Company are listed on Schedule 1.  Each such Person shall continue to be a Member until it ceases to be a Member in accordance with the Act or this Agreement.  A Person shall not cease to be a Member as a result of the occurrence with respect to such Person of any of the events described in Section 18-304 of the Act (Events of Bankruptcy).

3.2.Voting Rights Generally.  Except as otherwise provided by the Act or this Agreement, including, without limitation, Section 5.6, Section 5.9, Section 6.1, and Section 6.5, the Members shall not participate in any way in the control or management of the business of the Company.  The Members are not agents of the Company and do not have the authority to act for, or bind, the Company in any matter.  Written consent signed by a Majority in Interest of the Members (or such other percent as may be required under the Act or this Agreement) shall be deemed effective as the vote or consent of the Members when the vote or consent of the Members is required under this Agreement.

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3.3.Meetings of Members.

3.3.1All meetings of Members shall be held at the registered office of the Company, or at such other place (within or without the State of Delaware) as may be fixed from time to time by the Governing Board.

3.3.2Annual meetings of Members shall be held at such place (within or without the State of Delaware), date and hour as shall be designated in the notice thereof, except that no annual meeting need be held if all actions required by the Act and this Agreement to be taken at an annual meeting of Members are taken by written consent in lieu of a meeting pursuant to Section 3.3.7.  At each annual meeting of Members, the Members will elect members of the Governing Board and transact such other business as may properly be brought before the meeting.

3.3.3Special meetings of Members may be called at any time for any purpose or purposes by the Governing Board or by the President, and must be called by the President or the Secretary upon the written request of a majority of the members of the Governing Board or upon the written request of the Majority in Interest of the Members.  Each written request must state the time, place and purpose or purposes of the proposed meeting.  A special meeting of Members called by the Governing Board or the President, other than one required to be called by reason of a written request of Members, may be cancelled by the Governing Board at any time not less than one (1) Business Day prior to the scheduled date of the meeting.

3.3.4Written notice of each annual or special meeting of Members, stating the date, time and place of the meeting and the matters to be voted upon at it, must be given in the manner set forth in ARTICLE XIII.  Unless otherwise required by law, such notice shall be given not less than ten nor more than 60 days before the date of the meeting, to each Member entitled to vote at the meeting.

3.3.5Except as otherwise required by law or this Agreement, the presence in person or by proxy of holders of a majority of the Units entitled to vote at a meeting of Members will be necessary, and shall constitute a quorum, for the transaction of business at such meeting.  If a quorum is not present or represented by proxy at any meeting of Members, the holders of a majority of the Units entitled to vote at the meeting who are present in person or represented by proxy may adjourn the meeting from time to time until a quorum is present.  An adjourned meeting may be held later without notice other than announcement at the meeting, except that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given in the manner set forth in ARTICLE XIII to each Member of record entitled to vote at the adjourned meeting.

3.3.6At any meeting of Members each Member having the right to vote shall be entitled to vote in person or by proxy.  Except as otherwise provided by law or in this Agreement, each Member shall be entitled to one vote for each Unit entitled to vote standing in the Member’s name on the books of the Company.  All elections will be determined by plurality votes.  Except as otherwise provided by law or in this Agreement, any other matter will be determined by the vote of a majority of the Units that are voted with regard to it at a meeting where a valid quorum is present.

3.3.7Whenever the vote of Members at a meeting is required or permitted in connection with any Company action, the meeting and vote may be dispensed with if the action taken has the valid written consent of the Members having at least the minimum number of votes required to authorize the action at a meeting at which all Members entitled to vote were present and voted.

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ARTICLE IV. 

Units

4.1.Units Generally.  The Interests in the Company shall be issued as units of limited liability company interest (the “Units”).  Except as otherwise provided herein, the Company may issue fractional Units and Members may transfer fractional Units to the extent transfers are permitted hereunder.  Subject to the provisions of the Act and this Agreement, the Units may be issued in series each having separate rights, powers or duties appurtenant thereto.  The total number of Units of all series that the Company has authority to issue is 1,250,000 consisting of 1,000,000 Common Units (“Common Units”), as further described below in Section 4.2, which shall include 18,878 nonvoting Common Units (“Class B Common Units”) as further described below in Section 4.1.3 and 250,000 Preferred Units (the “Preferred Units”), 250,000 of which are on the date of this Agreement undesignated.

4.1.1Preferred Units Generally.  The Governing Board is hereby expressly authorized, by resolution or resolutions, to provide, out of the authorized undesignated Preferred Units, for one or more series of Preferred Units, and before any Units of any such series are issued, the Governing Board shall fix, and hereby is expressly empowered to fix by resolution or resolutions, the designations, rights, preferences and powers, including, without limitation, voting powers of such series,

4.1.2Securities – Article 8 Opt In.  Each of the Units shall be a security governed by Article 8 of the Uniform Commercial Code of the State of Delaware.

4.1.3Class B Common Units Generally.  Class B Common Units will be a new series of Common Units under this Agreement, having all the rights and attributes of Common Units, except for voting rights under section 4.2.2.  Immediately prior to the consummation of a Qualified Public Offering approved in accordance with this Agreement, the outstanding Class B Common Units will be converted or exchanged into Equity Securities of the same class or series as the securities being offered in such Qualified Public Offering (“IPO Securities”), such that holders of the Class B Common Units will receive IPO Securities having a value equal to the same proportion of the aggregate pre-Qualified Public Offering value, if any, that such holder would have received if all of the Company’s cash and other property had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in Section 8.1 as in effect immediately prior to such distribution. Notwithstanding anything in this Agreement to the contrary, the holders of the Class B Common Units will not be considered “Members” for the purposes of Sections 3.2, 3.3.4, 3.3.5, 3.3.6, 3.3.7, 4.3.5, 4.5, 5.4. 5.5, 5.6, 5.8, 6.1.2, 6.1.3 and 12.4 and will not be entitled to exercise the rights of Members set forth in such Sections.

4.2.Common Units.

4.2.1Outstanding Units.  The number of issued and outstanding Units as of the date of this Agreement are reflected in Schedule 1.  Subject to the terms of this Agreement, the Company may issue additional Common Units from time to time (including, without limitation, upon the exercise or conversion of any warrants or options for Common Units or securities convertible into Common Units that the Company may issue), on such terms and conditions as the Governing Board may determine, within the aggregate number of authorized Common Units,

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4.2.2Voting.  Except as may be otherwise provided in this Agreement or by law, the holders of Common Units shall be entitled to one vote for each Common Unit so held with respect to each matter voted on by the Members of the Company, including, without limitation, the election of members of the Governing Board.

4.2.3Liquidation Rights.  Subject to the prior and superior rights, if any, of the holders of Preferred Units, upon any liquidation, dissolution or winding up of the affairs of the Company, the holders of Common Units shall be entitled to receive all remaining assets of the Company.  Such assets shall be distributed ratably among the holders of Common Units on the basis of the number of Common Units held by each of them at such time.

4.2.4Distributions.  Distributions may be paid on the Common Units if, as and when declared by the Governing Board, subject, however, to the prior and superior rights, if any, of the holders of Preferred Units.  Such distributions shall be made ratably among the holders of Common Units on the basis of the number of Common Units held by each of them at such time.

4.2.5Units Calculations.  In making any calculations with respect to holdings or ownership of the Common Units, the Company’s records of Units shall be conclusive evidence of such holdings and ownership, absent manifest error.

4.3.Certificates for Units.

4.3.1The Units will be represented by certificates, in such form as the Governing Board may from time to time prescribe, signed by the President or a Vice-President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary.

4.3.2Any or all signatures upon a certificate may be a facsimile.  Even if an officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate ceases to be that officer, transfer agent or registrar before the certificate is issued, that certificate may be issued by the Company with the same effect as if he or it were that officer, transfer agent or registrar at the date of issue.

4.3.3The Governing Board may direct that a new certificate be issued in place of any certificate issued by the Company that is alleged to have been lost, stolen or destroyed.  When doing so, the Governing Board may prescribe such terms and conditions precedent to the issuance of the new certificate as it deems expedient, and may require a bond sufficient to indemnify the Company against any claim that may be made against it with regard to the allegedly lost, stolen or destroyed certificate or the issuance of the new certificate.

4.3.4The Company or a transfer agent of the Company, upon surrender to it of a certificate representing Units, duly endorsed or accompanied by proper evidence of lawful succession, assignment or authority to transfer, shall issue a new certificate to the Person entitled thereto, and shall cancel the old certificate and record the transaction upon the books of the Company.

4.3.5The Governing Board may fix a date as the record date for determination of the Members entitled (i) to notice of or to vote at any meeting of Members, (ii) to express consent to, or dissent from, company action in writing without a meeting, or (iii) to receive payment of any regular or special distribution or other distribution or allotment of any rights or to take or be the subject of any other action.  The record date must be on or after the date on which the Governing

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Board adopts the resolution fixing the record date and in the case of (i) must be not less than ten nor more than 60 days before the date of the meeting, in the case of (ii) must be not more than ten days after the date on which the Governing Board fixes the record date, and in the case of (iii) must be not more than 60 days prior to the proposed action.  If no record date is fixed, the record date will be the date ten days before the date of the meeting.  A determination of Members entitled to notice of or to vote at any meeting of Members that has been made as provided in this Section will apply to any adjournment of the meeting, unless the Governing Board fixes a new record date for the adjourned meeting.

4.3.6The Company shall for all purposes be entitled to treat a Person registered on its books as the owner of Units as the owner of those Units, with the exclusive right, among other things, to receive distributions and to vote with regard to those Units (if they are entitled to vote), and the Company shall be entitled to hold a Person registered on its books as the owner of Units liable for calls and assessments, if any may legally be made, and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not the Company has notice of the claim or interest of the other Person, except as otherwise provided by the laws of Delaware.

4.4.Profits Interests, Warrants, Options, etc.   The Company shall, subject to Section 5.9, issue profits interests, options, warrants or rights to purchase any limited liability company interests in the Company, capital stock or other similar securities on such terms and conditions as from time to time determined by the Governing Board.  The Company shall maintain a register of all outstanding profits interests, options, warrants or rights to purchase any limited liability company interests in the Company, capital stock or other similar securities, which register shall list the name and address of the holder of such securities, and, as applicable, the current profits interests threshold or exercise or conversion price, the expiration date of such security, the date that such security was granted or issued and, as of each Fiscal Year, the amount of Units that a holder has the right to purchase as of such date upon the exercise or conversion thereof.

4.5.Pre-Emptive Rights.

4.5.1If, at any time after the date hereof and prior to a Qualified Public Offering, the Company or any of its subsidiaries authorizes the issuance of any equity securities or any options, warrants or other rights to acquire equity securities or any notes or other debt securities convertible into or exchangeable for equity securities, other than any Permitted Issuance or in connection with a Qualified Public Offering (all such equity securities and other rights and securities, collectively, the “Equity Equivalents”) to any Person or Persons, the Company shall, at its election, either:

(a)prior to the consummation of such sale or issuance, deliver a notice of intention to sell or otherwise issue (the “Company’s Notice of Intention to Sell”) to each Member (the “Pre-Sale Offerees”) setting forth a description and the number of the Equity Equivalents and any other securities proposed to be issued and the proposed purchase price (which shall be for cash in U.S. dollars) and terms of sale; or

(b) not later than thirty (30) days following the consummation of such sale or issuance, deliver a notice of sale or issue (the “Company’s Notice of Sale”) to each Member who was a Member prior to such sale or issuance described in the applicable Company’s Notice of Sale (the “Post-Sale Offerees”, the Pre-Sale Offerees or the Post-Sale Offerees, as the context may dictate, are each herein referred to as the “Offerees”) setting forth a description and the number of the Equity Equivalents and any other securities that have been sold or issued and the purchase price (which shall be for cash in U.S. dollars) and terms of the sale.

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Upon receipt of the Company’s Notice of Intention to Sell or the Company’s Notice of Sale, as applicable, each Offeree shall have the right to elect to purchase, at the price and on the terms stated in the Company’s Notice of Intention to Sell or the Company’s Notice of Sale, as applicable, a number of the Equity Equivalents equal to the product of (i) the percentage determined by dividing (A) the number of Common Units then owned by such Offeree by (B) (x) in the case of an offer pursuant to clause (a) above, the number of Common Units then outstanding at such time or (y) in the case of  an offer pursuant to clause (b) above, the number of Common Units outstanding prior to the sale or issuance described in the applicable Company’s Notice of Sale, multiplied by (ii) (x) the number of Equity Equivalents proposed to be issued (as described in the applicable Company’s Notice of Intention to Sell) or (y) the number of Equity Equivalents issued (as described in the applicable Company’s Notice of Sale), as applicable.  If the Company is issuing or has issued Equity Equivalents in connection with the issuance of any debt or other equity securities of the Company or any of its subsidiaries (other than in a Permitted Issuance), then any Offeree who elects to purchase such Equity Equivalents pursuant to this Section 4.5 must also purchase a corresponding proportion of such other debt or equity securities, all at the proposed purchase price and on terms of sale as specified in the applicable Company’s Notice of Intention to Sell or Company’s Notice of Sale .

4.5.2Such election shall be made by the electing Offeree by written notice to the Company within ten (10) business days after delivery to such Offeree of the Company’s Notice of Intention to Sell or the Company’s Notice of Sale, as applicable (the “Acceptance Period”).  If all of the Equity Equivalents available for purchase by the Offerees are not fully subscribed by such Offerees, then the remaining Equity Equivalents so available shall be reoffered (until no Offeree elects to purchase any more Equity Equivalents or until all available Equity Equivalents have been subscribed for) by the Company to the Offerees purchasing their full allotment upon the terms set forth in this Section 4.5, except that such Offerees must exercise such purchase rights within three (3) business days after receipt of such reoffer.

4.5.3If, after the reoffering provisions of Section 4.5.2, all of the Equity Equivalents available for purchase by the Offerees are not fully subscribed by such Offerees, then the Company or the applicable subsidiary may, at their election:

(a)during a period of 90 days following the expiration of the applicable Acceptance Period, issue and sell the remaining Equity Equivalents to be issued and sold to any Person at a price that is equal to or greater than 95% of the price stated in the applicable Company’s Notice of Intention to Sell or Company’s Notice of Sale (provided, that any purchasing Offeree shall be entitled to the same price) and upon other terms not more favorable in the aggregate to such Person than those stated in the applicable Company’s Notice of Intention to Sell or Company’s Notice of Sale, as applicable; or

(b)           not issue and sell any of the Equity Equivalents described in the Company’s Notice of Intention to Sell or Company’s Notice of Sale, as applicable, to any of the Offerees and, instead, proceed with the offering of the Equity Equivalents on the terms and conditions described in the applicable Company’s Notice of Intention to Sell or Company’s Notice of Sale, as applicable; provided, that no purchaser in such transaction is a Member or an Affiliate of a Member and that the Company used reasonable efforts to permit those Offerees who so elected to participate in the issuance; provided, further, that such offering must be at the price set forth in, and upon other terms and conditions not more favorable in the aggregate to such Person than those stated in, the applicable Company’s Notice of Intention to Sell or Company’s Notice of Sale and the offering and sale must be completed within 90 days.

4.5.4The Company and its subsidiaries shall not thereafter issue or sell any Equity Equivalents covered by a Company’s Notice of Intention to Sell or a Company’s Notice of Sale, as applicable that were not sold by them within the applicable 90-day period without first offering such Equity Equivalents to each Offeree in the manner provided in this Section 4.5.  The failure by an Offeree to elect to purchase with respect to one issuance and sale of Equity Equivalents shall not affect its right to purchase Equity Equivalents in any subsequent offering, sale and purchase.

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ARTICLE V.

Management

5.1.Management Generally.  Subject to the provisions of the Act and any limitations in this Agreement, the management of the Company shall be exclusively vested in a governing board (the “Governing Board”), which, unless otherwise specified in this Agreement (including, without limitation, Section 6.1.1), shall act by majority decision of its members.

5.2.Authority of Governing Board.  Except as otherwise provided in this Agreement, including, without limitation, Sections 5.6, 5.9, 6.1, and 6.5, the Governing Board shall exclusively manage and control the business and affairs of the Company, including making such policy, rules and regulations not inconsistent with law, with the Certificate of Formation or with this Agreement.

5.3.Number of Members of Governing Board.  The number of members of the Governing Board will be such number, not to exceed twelve, as shall be determined by the Governing Board from time to time.  Until further action by the Governing Board, the number of members of the Governing Board will be up to eight, plus such additional members of the Governing Board designated by the Union pursuant to Section 6.1.1(b).  The members of the Governing Board as of the date of this Agreement are: (i) the following, each as a Colt Designee: George Casey, Gerald Dinkel, John P. Rigas and Daniel J. Standen; and (ii) the following: Philip A. Wheeler (as the First Union Designee) and Michael Holmes (as the Second Union Designee).

5.4.Election.  Subject to the provisions of Section 6.1, the members of the Governing Board will be elected at each annual meeting of Members or by written consent of the Members in accordance with Section 3.2 in lieu of such a meeting.  The members of the Governing Board need not be elected by written ballot.  Except as otherwise provided by law or this Agreement, each member of the Governing Board elected will serve until the next succeeding annual meeting of Members and until his successor is elected and qualified.

5.5.Removal.  Any of the members of the Governing Board may be removed for cause by vote of a majority of the Governing Board, excluding the member of the Governing Board then being voted upon.  Unless otherwise provided for in this Agreement, including, without limitation, Section 6.1, any or all of the members of the Governing Board may be removed for cause or without cause by vote of a Majority in Interest of the Members.

5.6.Vacancies.  Except as set forth in this Agreement, including, without limitation, Section 6.1, newly created seats on the Governing Board resulting from an increase in the number of members of the Governing Board and vacancies occurring in the Governing Board may, subject to the last sentence of this Section 5.6, be filled by vote of a-majority of the members of the Governing Board then in office, even if less than a quorum exists.  A member of the Governing Board elected to fill a vacancy, including a vacancy created by a newly created seat on the Governing Board, will, subject to the last sentence of this Section 5.6, serve until the next succeeding annual meeting of Members and until the successor of such member of the Governing Board is elected and qualified.  Notwithstanding the foregoing, any such newly created or vacant seat occurring in the Governing Board may be filled by vote of a Majority in Interest of the Members, which right of such Members, if exercised, shall take precedence over and shall override and reverse any prior inconsistent action by the Governing Board to fill such seat.

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5.7.Books.  The books of the Company, except as such are required by law to be kept within the State of Delaware, may be kept at the principal place of business of the Company or such other place or places within or outside of the State of Delaware as the Governing Board may from time to time determine.

5.8.Compensation.  The Governing Board, by the affirmative vote of a majority of the members of the Governing Board then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of any or all members of the Governing Board for services to the Company as members of the Governing Board or officers or otherwise.  All members of the Governing Board shall be reimbursed for all reasonable out-of-pocket expenses incurred by them to independent unaffiliated third parties in connection with the performance of their duties as members of the Governing Board (and as members of any board or similar governing body of any subsidiary of the Company) and in connection with their attendance at any meeting of the Governing Board (or any such subsidiary board or governing body) and any committee thereof; provided, that such reimbursement shall not include reimbursement for accountants, attorneys or other professional advisors without the prior consent of the Governing Board.

5.9.Fundamental Transactions.  Notwithstanding the provisions of Sections 5.1 and 5.2 and except as otherwise provided by the provisions of Section 6.5, the Company shall not (and shall not permit any of its subsidiaries to) consummate (or commit to consummate) any of the following transactions or do any of the following things, without the prior written consent or approval of (i) a majority of the Governing Board; and (ii) if such transaction is to be consummated during the Sciens Ownership Period, C-Defense Holding or its designee that is an Affiliate of Sciens:

5.9.1           a sale, lease, conveyance, transfer or other disposition of all or substantially all of the Company’s assets (on a consolidated basis) or a merger (other than a merger in which the Members retain their ownership of the Company’s Units and which is permitted under Section 5.9.3 below), including, without limitation, any merger that would result in any of the Company’s Equity Securities being publicly traded;

5.9.2           the incurrence of indebtedness for borrowed funds, other than indebtedness incurred in the ordinary course of business under the Credit Agreement, the Senior Notes or other indebtedness up to $20,000,000 in the aggregate at any time outstanding;

5.9.3           an investment in, acquisition of, capital contributions to, or purchase of assets from any Person, including, without limitation, acquisitions through the purchase of equity or debt securities, by merger, or asset acquisition, in each case, other than any such investments, acquisitions, contributions and purchases in an aggregate amount of $30,000,000 or less since the date of this Agreement (including, without limitation, any earn-outs or other deferred consideration) and other than any purchases of goods, materials, inventory, components, supplies and other products used in the ordinary course of business and other than purchases permitted under Section 5.9.8;

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5.9.4           an initial public offering of the equity interests in the Company (or its successor) or in any of the Company’s subsidiaries, other than a Qualified Public Offering;

5.9.5           a disposition of assets (including, without limitation, investments), other than: (i) dispositions of inventory in the ordinary course of business; (ii) dispositions of assets that are abandoned or obsolete or no longer useful in the ordinary course of business; or (iii) dispositions in transactions in which the aggregate net proceeds to the Company are $30,000,000 or less since the date of this Agreement; provided that such dispositions must be at Fair Market Value and at least 85% of the proceeds to the Company must be in cash;

5.9.6           any repurchase of Equity Securities of the Company or any of its subsidiaries, other than a repurchase that is: (i) in accordance with the terms of an option or other management incentive plan of the Company adopted by the Governing Board; (ii) in accordance with the terms of severance arrangements with employees of the Company or any of its subsidiaries approved by the Governing Board or (iii) a repurchase that is concurrent with the exercise of any options, warrants or rights to purchase any such limited liability company interests, capital stock or other similar securities (i.e., a “cashless exercise”);

5.9.7           issuances or sales of any Equity Securities, other than Permitted Issuances;

5.9.8           [Reserved];

5.9.9           [Reserved];

5.9.10             termination of the employment of the Chief Executive Officer of the Company or the appointment of a new Chief Executive Officer;

5.9.11             changing the independent public accountants of the Company to a firm whose stature and reputation on a regional or national basis is less than the Company’s then current independent public accountants;

5.9.12             other than in connection with a Qualified Public Offering, changing the treatment of the Company under the Code as a partnership for U.S. federal income purposes (and for purposes of corresponding provisions of state and local income tax law);

5.9.13             any transaction between the Company and any Member or any Affiliate of any Member other than: (i) transactions that are consistent with the transactions under the Intercompany Services Agreement between the Company and CMC, dated June 26, 2007; (ii) the obligations under the letter agreement, dated as of July 9, 2007, between the Company and Sciens Management LLC; and (iii) those agreements between the Company and any Member or any Affiliate of any Member entered into on or prior to the date hereof and any extensions, amendments, supplements or replacements thereof;

5.9.14             a distribution to the Members of any assets, other than cash or Market Securities;

5.9.15             a Bankruptcy Event; or

5.9.16             a dissolution of the Company other than as provided in Section 10.1.3.

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5.10.Limitation on Liability of Members of Governing Board.  No member of the Governing Board shall be personally liable to the Company or its Members for monetary damages for breach of fiduciary duty as a member of the Governing Board, except for liability (i) for any breach of such Person’s duty of loyalty to the Company or its Members or (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law.  If the Act is amended to authorize company action further eliminating or limiting the personal liability of managers of a limited liability company, then the liability of the member of the Governing Board shall be eliminated or limited to the fullest extent permitted by the Act, as so amended.

5.11.Meetings of the Governing Board.

5.11.1The first meeting of each newly elected Governing Board will be held immediately following the annual meeting of the Members.  If the meeting is held at the place of the meeting of Members, no notice of the meeting need be given to the newly elected members of the Governing Board.  If the first meeting is not held at that time and place, it will be held at a time and place specified in a notice given in the manner provided for notice of special meetings of the Governing Board.

5.11.2Regular quarterly meetings of the Governing Board shall be held upon such notice, or without notice, at such times and at such places within or outside of the State of Delaware, as shall be determined from time to time by the Governing Board.  The Governing Board shall meet once each calendar quarter and any and all actions of the Executive Committee, if any, since the last quarterly meeting of the Governing Board shall be submitted to a vote of the Governing Board and ratified upon the vote, subject to the provisions of Section 6.1.1(b) of a majority of the members thereof.

5.11.3Special meetings of the Governing Board maybe called by the Chairman of the Board, if there is one, or by the President, on at least forty-eight (48) hours’ notice to each member of the Governing Board and must be called by the President or the Secretary on like notice at the written request of any members of the Governing Board collectively having two or more votes.

5.11.4Whenever notice of a meeting of the Governing Board is required, the notice must be given in the manner set forth in ARTICLE XIII and shall state the place, date and hour of the meeting.  Except as provided by law or other provisions of this Agreement, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Governing Board need be specified in the notice or waiver of notice of the meeting.

5.11.5Except as otherwise required by law or other provisions of this Agreement, a majority of the members of the Governing Board in office, but in no event less than one-third of the Governing Board, shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the Governing Board present at any meeting at which a quorum is present shall be the act of the Governing Board.  If a quorum is not present at any meeting of members of the Governing Board, a majority of the members of the Governing Board present at the meeting may adjourn the meeting from time to time, without notice of the adjourned meeting other than announcement at the meeting.  To the extent permitted by law, a member of the Governing Board participating in a meeting by conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other will be deemed present in person at the meeting and all acts taken by him during his participation shall be deemed taken at the meeting.

5.11.6Whenever the vote of the Governing Board at a meeting is required or permitted in connection with any Company action, the meeting and vote may be dispensed with if the action taken has the valid written consent of Governing Board members having at least the minimum number of votes required to authorize the action at a meeting at which all members of the Governing Board were present and voted; provided, that each Governing Board member has been given written notice of the action proposed to be taken and a copy of the form of consent being solicited at least 72 hours prior to the date that the written consent of any Governing Board member may first become effective with respect to such action.

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5.12.Committees.

5.12.1The Governing Board may designate from among its members an Executive Committee and other committees, each consisting of two or more members of the Governing Board, and may also designate one or more of its members to serve as alternates on these committees; provided, that during the Sciens Ownership Period one of the Colt Designees shall have the right (but not the obligation) to be a member of each of the committees of the Governing Board, which right may be exercised by C-Defense Holding providing a notice to such effect (with respect to any one or more or all of such committees) to the Governing Board.  To the extent permitted by law, the Executive Committee shall have all the authority of the Governing Board, except as the Governing Board otherwise provides, and the other committees shall have such authority as the Governing Board grants them.  The minutes of the meetings of the Executive Committee shall be distributed to the members of the Governing Board upon their request.  The Governing Board shall have power at any time to change the membership of any committees, to fill vacancies in their membership and to discharge any committees.  All resolutions establishing or discharging committees, designating or changing members of committees, or granting or Limiting authority of committees, may be adopted only by the affirmative vote of a majority of the Governing Board.

5.12.2Each committee shall keep regular minutes of its proceedings and report to the Governing Board as and when the Governing Board requires.  Unless the Governing Board otherwise provides, a majority of the members of any committee may determine its actions and the procedures to be followed at its meetings (which may include a procedure for participating in meetings by conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other), and may fix the time and place of its meetings.

5.12.3Any action of a committee shall be taken without a meeting if written consent to the action signed by all the members of the committee is filed with the minutes of the committee.

5.13.Officers.

5.13.1The officers of the Company shall be a President, a Secretary and a Treasurer.  In addition, the Governing Board may also elect a Chairman of the Board, one or more Vice Presidents (one or more of whom may be designated an Executive Vice President or a Senior Vice President), one or more Assistant Secretaries or Assistant Treasurers, and such other officers as it may from time to time deem advisable.  Any number of offices, may be held by the same person.  No officer except the Chairman of the Board need be a member of the Governing Board.

5.13.2Each officer will be elected by the Governing Board and will hold office for such term, if any, as the Governing Board shall determine.  Any officer may be removed at any time, either with or without cause, by the vote of a majority of the Governing Board.

5.13.3Any officer may resign at any time by giving written notice to the Governing Board or to the President.  Such resignation shall take effect at the time specified in the notice, or if no time is specified, at the time of receipt of the notice, and the acceptance of such resignation shall not be necessary to make it effective.

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5.13.4The compensation of officers will be fixed by the Governing Board or in such manner as it may provide.

5.13.5The Chairman of the Board, if any, shall preside at all meetings of the Members and of the Governing Board and will have such other duties as from time to time may be assigned to the Chairman of the Board by the Governing Board.

5.13.6The President shall be the Chief Executive Officer of the Company, shall have general charge of management of the business and affairs of the Company, subject to the control of the Governing Board, and shall insure that all orders and resolutions of the Governing Board are carried into effect.  The President will preside over any meeting of the Members or the Governing Board at which the Chairman of the Board is not present.

5.13.7The officers of the Company, other than the Chairman of the Board and the President, shall have such powers and perform such duties in the management of the property and affairs of the Company, subject to the control of the Governing Board and the President, as customarily pertain to their respective offices in a Delaware corporation, as well as such powers and duties as from time to time may be prescribed by the Governing Board.

5.13.8The Company may secure the fidelity of any or all of its officers or agents by bond or otherwise.  In addition, the Governing Board may require any officer, agent or employee to give security for the faithful performance of his duties.

5.14.Managers.  Each of the Governing Board, in its capacity as the governing board pursuant to Sections 5.1 and 5.2, and the officers of the Company, in their respective capacities as officers pursuant to Section 5.13, shall, subject to the terms of this Agreement, be deemed to be a “Manager” (as such term is defined in the Act) of the Company.

ARTICLE VI.

Special Rights; Transfer Restrictions; etc.

6.1.Election of Members of Boards.

6.1.1Designation of Nominees.

(a)[Reserved]

(b)So long as the Employee Plan owns common stock of Employee Plan Holding and Employee Plan Holding owns Common Units, (A) the number of members of the Governing Board as set forth in Section 5.3 shall be increased by two (subject to the last sentence of this Section 6.1.1(b)), and the Union shall have the exclusive and special right to designate two individuals who are at all times United States, citizens as nominees to serve as members of the Governing Board (one of whom shall be designated the “First Union Designee” and the other of whom shall be designated the “Second Union Designee”) to fill such newly created seats on the Governing Board; (B) the First Union Designee and the Second Union Designee shall each be entitled to one-half of one vote on matters submitted to a vote of the Governing Board; and (C) every reference in this Agreement to a majority or other proportion of members of the Governing Board shall refer to a majority or other proportion of votes of the members of the Governing Board.  Except for the removal of any such member of the Governing Board by the Union, each member of the Governing Board designated by the Union shall have a one-year term of office.  The

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right of the Union to designate two members of the Governing Board may be exercised by written consent of the Union.  At the time the Employee Plan no longer owns common stock of Employee Plan Holding or Employee Plan Holding no longer owns Common Units, the special right of the Union so to designate two members of the Governing Board shall terminate and the terms of such two members of the Governing Board designated by the Union shall terminate effective immediately without any further action upon such Person’s part.  At any time when the Union has the right to designate a member of the Governing Board as provided in this Section 6.1.1(b), the Union shall have the exclusive right to remove such member of the Governing Board, without cause, from time to time and designate his or her successor and any vacancies in the seat held by the member of the Governing Board designated by the Union shall be filled only by designation of the Union.  In addition, for so long as the Employee Plan owns shares of the common stock of Employee Plan Holding and Employee Plan Holding owns Common Units, the Union shall be entitled, but shall be under no obligation, to (y) designate one nominee for election to the Applicable Board of each subsidiary of the Company (provided, that any such nominee shall at all times be a United States citizen) and (z) send a representative (who in no event shall have voting rights with respect to any actions of the Governing Board or any committee thereof) to each meeting of the Governing Board of the Company and Applicable Board of each subsidiary of the Company and any committee thereof; provided, that such representative shall have executed and delivered a confidentiality agreement in form and substance reasonably satisfactory to the Company.  Notwithstanding the foregoing provisions of this Section 6.1.1(b) and anything else in this Agreement to the contrary, the Union may at its option at any time, instead of a First Union Designee and a Second Union Designee each entitled to one-half of one vote on matters submitted to a vote of the Governing Board, designate a single member of the Governing Board entitled to one full vote on matters submitted to a vote of the Governing Board (a “Single Union Designee”), with such Single Union Designee otherwise being subject to the same requirements, and having the same rights, as a First Union Designee or a Second Union Designee; it being agreed that the Union may from time to time switch from having both a First Union Designee and a Second Union Designee (each with one-half vote) to having a Single Union Designee (with one full vote), or switch from having a Single Union Designee (with one full vote) to having both a First Union Designee and a Second Union Designee (each with one-half vote).

(c)During the Sciens Ownership Period, C-Defense Holding shall be entitled, but shall be under no obligation, to designate the members of the Governing Board (each, a “Colt Designee”) that are not designated by the Union in accordance with Section 6.1.1(b).  If the Sciens Ownership Period is no longer in effect and the Sciens Group owns, directly or indirectly, at least 7,614.685 of the Common Units beneficially owned on July 9, 2007, as equitably adjusted for any distributions of Units on the Common Units or subdivision or reclassification of such Common Units, then Sciens shall be permitted to send a representative (who in no event shall have voting rights with respect to any actions of the Governing Board or any committee thereof) to each meeting of the Governing Board of the Company and any committee thereof; provided, that such representative shall have executed and delivered a confidentiality agreement in form and substance reasonably satisfactory to the Company.  Subject to the provisions of the immediately preceding sentence, such representative, if he or she is bound by a confidentiality agreement reasonably acceptable to the Company, shall be treated as if she or he were a member of the Governing Board with respect to notice of meetings, access to information and management and similar matters, including, without limitation, that such representative shall be entitled to receive copies of all written materials (including, without limitation, copies of meeting minutes) given to members of the Governing Board (at the same time and in the same manner as given to such members) in connection with such meetings (and, if the Company proposes to act by written consent, the Company shall provide such observer with copies of all written materials given to members of the Governing Board in connection with such action).  At any time when C-Defense has the right to designate members of the Governing Board as provided in this Section 6.1.1(c), (i) C-Defense Holding shall have the exclusive right to remove any Colt Designee, without cause, from time to time and designate his or her successor and any vacancies in the seat held by the Colt Designee shall be filled only by designation of C-Defense Holding and (ii) at least one Colt Designee shall be entitled, but shall be under no obligation, to serve on each committee of each Applicable Board.  Promptly after the Sciens Ownership Period, each of the Colt Designees shall offer to resign and the Company shall have the right to remove such individuals from the membership of each Applicable Board and either the Members shall elect their successors or, absent such action, such board positions shall remain vacant.

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(d)In the event a designation is not made by the Union or C-Defense Holding, as the case maybe, and such Members that are entitled to make such designation in accordance with Section 6.1.1, unless otherwise agreed by the Union or C-Defense Holding, as the case may be, the Members and the Company will keep such position on the Governing Board vacant until a nominee is so designated.

6.1.2Voting for Nominees.  Each Member and the Company, as the case may be, agrees to vote the Equity Securities held by it from time to time for the nominees so designated in accordance with this Section 6.1 at each annual meeting of members or shareholders, and at any special meeting of members or shareholders called for the election of members of any Applicable Board, or by written consent, in such manner and at such time as may be required to elect such nominee to the Applicable Board of the Company or any subsidiary of the Company.

6.1.3Removal; Election of Successors.  If

(i)[Reserved]

(ii)(x) the Company receives a written notice that the Union wishes to remove a member of the Governing Board designated pursuant to Section 6.1.1(b), or (y) such member of an Applicable Board shall have resigned or shall be unable to serve, or

(iii)during the Sciens Ownership Period, (x) the Company receives a written notice that C-Defense Holding wishes to remove a member of an Applicable Board designated pursuant to Section 6.1.1(c), or (y) such member shall have resigned or shall be unable to serve

then, in any such case, the Company and the Members agree to take such action as may be necessary to call a special meeting of the Members of the Company or the members or shareholders of any subsidiary of the Company, as applicable, or to act by written consent for the purpose of effecting any such removal or filling such vacancy, as the case may be, and at such meeting or in such written consent each Member shall vote to accomplish said result.

6.2.[Reserved].

6.3.[Reserved].

6.4.Restrictions on Transfer and Issuance of Units, etc.

6.4.1General Prohibition on Transfers and Issuance of Equity Securities.

(a)Except as otherwise provided herein, prior to the earlier of a Company Sale and the consummation of a Qualified Public Offering:  (A) no Member or other party shall propose or complete a Sale of any Equity Securities; and (B) no Member or other party shall pledge any Equity Securities, or create any encumbrance thereon, unless:

(i)in the case of either (A) or (B), any such Sale is made to a party that is an Affiliate of such Member or other party or pursuant to Section 6.4.3, 6.4.4, 6.4.5 or 6.5, and such party becomes a party to this Agreement by execution of a joinder agreement (“Joinder”), in the form attached hereto as Exhibit A or in such other form as may be approved by President and Chief Executive Officer of the Company; or

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(ii)in the case of (B), such pledge or encumbrance is to secure financing for the Company and the pledgee or other secured party agrees in writing to be subject to the requirements of this ARTICLE VI as though such pledgee or other secured party were a party to this Agreement;

(iii)in the case of (B), Sciens Group may pledge its Equity Securities to its lenders (without complying with (A) and (B) above); or

(iv)in the case of (A), any Member may propose or complete a Sale of any Equity Securities to Sciens or any of its Affiliates.

(b)Except as otherwise provided herein or in connection with a Qualified Public Offering, until the Company becomes a Reporting Company, the Company shall not issue any Equity Securities to any party unless such party is already a party to this Agreement or such party becomes a party to this Agreement by execution of a Joinder hereto.

(c)Upon the execution of a Joinder or as otherwise provided herein, Schedule 1 shall be amended to add or delete Persons listed therein to reflect the transfer of the Equity Securities requiring the execution of a Joinder or as otherwise provided herein.

(d)Until such time as the Company becomes a Reporting Company, no Equity Securities may be sold on an established securities market, a secondary market, or the substantial equivalent thereof (all as defined in Section 7704 of the Code and the Regulations thereunder) or otherwise transferred or held in a manner that would cause the Company to be treated as a “publicly traded partnership”.

6.4.2Registration of Transfer.  The Company shall permit registration of transfer of Equity Securities only in accordance with the terms of this Agreement.  Any transfer of Equity Securities that is made in any manner contrary to the provisions of this Agreement shall be null and void and shall not be effective to constitute the transferee as a Member or other holder of Equity Securities entitled to any rights, benefits, and privileges as such.

6.4.3Rights of First Refusal.

(a)If, at any time prior to the consummation of the earlier to occur of a Company Sale or a Qualified Public Offering, a holder of Equity Securities (a “Selling Holder”) proposes a Sale of any Equity Securities (the “Offered Securities”) held by it to a Person who is not an Affiliate of such Selling Holder (the “Third Party”), prior to any such Sale (other than any Sale by any Member to Sciens or an Affiliate of Sciens) it shall, unless such Sale is a Drag-Along Sale (in which event the provisions of Section 6.4.4, rather than the provisions of this Section 6.4.3, shall apply), obtain a bona fide, arm’s-length written offer (a “Bona Fide Offer”) from such Third Party for the purchase of such Offered Securities and shall give written notice of the proposed Sale (the “Sale Notice”) to (i) the Company and (ii) each of the other Common Members (the “Prospective Buyers”), accompanied by a copy of the Bona Fide Offer and evidence demonstrating to the reasonable satisfaction of the Company the Third Party’s ability to consummate the Sale of the Offered Securities in accordance with the terms of the Bona Fide Offer, The Bona Fide Offer shall include (x) the identity of the Third Party, (y) the price per unit (which shall be in cash and/or marketable securities only) being offered by the Third Party for the Offered Securities (the “Offer Price”) and (z) all other material terms of the Bona Fide Offer.  Notwithstanding the foregoing, this Section 6.4.3 shall not apply to any transfer permitted under Section 6.4.1(a)(iii).

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(b)Unless such Sale is a Drag-Along Sale, for a period of 30 days following its receipt of the Sale Notice, the Company shall have an irrevocable option to purchase all or any portion of the Offered Securities at the Offer Price and subject to the same material terms and conditions as described in the Bona Fide Offer, exercisable by delivery of notice to the Selling Holder, with a copy to each of the Prospective Buyers, specifying the number of Offered Securities with respect to which the Company is exercising its option.  If the Company fails to purchase all of the Offered Securities by exercising the option granted in this Section 6.4.3(b) within the period provided, the Offered Securities shall be subject to the options granted to the Prospective Buyers pursuant to this Agreement.

(c)Unless such Sale is a Drag-Along Sale, if the Company has declined to purchase all or a portion of the Offered Securities pursuant to Section 6.4.3(b), then the Selling Holder shall give each Prospective Buyer an additional notice (the “Additional Sale Notice”), which shall include all of the information required in a Sale Notice and shall additionally identify the Offered Securities that the Company has declined to purchase (the “Remaining Securities”) and briefly describe the Prospective Buyers’ rights of first refusal with respect to the proposed Sale.  For a period of 30 days following its receipt of the Additional Sale Notice, each of the Prospective Buyers shall have an irrevocable option to purchase its respective pro rata portion of the Remaining Securities at the Offer Price and subject to the same material terms and conditions as described in the Bona Fide Offer.  Each Prospective Buyer may exercise such option and, thereby, purchase all or any portion of its pro rata share (with any reallotments as provided below) by notifying the Selling Holder and the Company in writing (the “Prospective Buyer Notice”) before the expiration of the 30 day period as to the maximum number of Remaining Securities it wishes to purchase (including any reallotment).  Each Prospective Buyer’s pro rata share of the Remaining Securities shall be a fraction of the Remaining Securities, of which the number of outstanding Common Units owned by the Prospective Buyer on the date of the Sale Notice shall be the numerator and the total number of outstanding Common Units held by all of the Prospective Buyers shall be the denominator.  Each Prospective Buyer shall have the right of reallotment such that, if any other Prospective Buyer fails to exercise the option to purchase its full pro rata share of the Remaining Securities, the other participating Prospective Buyers may exercise an additional option to purchase, on a pro rata basis, the Remaining Securities not previously purchased.  Each Prospective Buyer’s pro rata share of such realloted Remaining Securities shall be a fraction of such Remaining Securities, of which the number of outstanding Common Units owned by the Prospective Buyer on the date of the Sale Notice shall be the numerator and the total number of outstanding Common Units held by all of the Prospective Buyers that exercised the option to purchase their full pro rata share of the Remaining Securities shall be the denominator.

(d)Notwithstanding the foregoing provisions of this Section 6.4.3, the Selling Holder may indicate in the Sale Notice and subsequent Additional Sale Notice that neither the Company nor any Prospective Buyer may purchase any Offered Securities or Remaining Securities unless all of the Offered Securities are to be purchased (whether by the Company or the Prospective Buyers, or any combination thereof).

(e)If all notices required to be given pursuant to this Section 6.4.3 have been duly given, and the Company and the Prospective Buyers determine not to exercise their respective options to purchase the Offered Securities at the Offer Price or determine, subject to the provisions of Section 6.4.3(d), to exercise their options to purchase less than all of the Offered Securities, then the Selling Holder shall have the right, for a period of 60 days (or such longer period as may be necessary to obtain any regulatory or other governmental approvals or consents in connection with such Sale) from the earlier of (i) the expiration of the last applicable option period pursuant to this Section 6.4.3 or (ii) the date on which such Selling Holder receives notice from the Company and all of the Prospective Buyers that they will not exercise in whole or in part the options granted pursuant to this Section 6.4.3, to sell to the Third Party the Offered Securities remaining unsold under this Section 6.4.3 at a price not less than the Offer Price and on terms no more favorable to the Third Party than the terms set forth in the Bona Fide Offer; provided, that prior to any such Sale to a Third Party such Third Party executes and delivers to the Company, for the benefit of the Company and all Members, the joinder required pursuant to Section 6.4.1(a).

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(f)The closing of any Sale pursuant to this Section 6.4.3 (other than to the Third Party) shall take place not later than 90 days after the Company’s receipt of the Sale Notice.  At the closing of any such Sale, the Selling Holder shall deliver certificates evidencing the Offered Securities and/or Remaining Securities being sold duly endorsed, or accompanied by written instruments of transfer in form reasonably satisfactory to the purchasers thereof, duly executed by the Selling Holder, free and clear of any liens, against delivery of the Offer Price therefor.

6.4.4Drag-Along Rights.

(a)If, at any time prior to the consummation of the earlier to occur of a Company Sale or a Qualified Public Offering, the holders of a majority of the outstanding voting Units or Sciens upon the exercise of its rights under Section 6.5 (the “Initiating Sellers”), should desire to consummate a Company Sale, the Initiating Sellers may, at their option, require all of the other holders of Units (the “Drag-Along Sellers” to participate in such Company Sale to the extent desired by the Third Party (a “Drag-Along Sale”).  The Initiating Sellers shall provide written notice (a “Drag-Along Notice”) of such Drag-Along Sale to the Drag-Along Sellers.  The Drag-Along Notice shall identify the purchaser, the number of Units subject to the Drag-Along Sale, the price per Unit (which shall be in cash and/or marketable securities only) being offered by the Third Party (the “Drag-Along Sale Price”) and all other material terms of the proposed Drag-Along Sale.  Each Drag-Along Seller shall be required, as set forth below, to tender such number of Units as constitutes its Drag-Along Pro Rata Portion.  “Drag-Along Pro Rata Portion” means, with respect to each Drag-Along Seller at the time of the Drag-Along Sale, a number equal to the product of (x) the total number of Units then owned by such Drag-Along Seller and (y) a fraction, the numerator of which shall be the total number of Units proposed to be sold by the Initiating Sellers, and the denominator of which shall be the total number of Units owned by the Initiating Sellers.  Within ten days following the date of the Drag-Along Notice, each of the Drag-Along Sellers shall deliver to a representative of the Initiating Sellers designated in the Drag-Along Notice certificates representing the Units held by such Drag-Along Seller, duly endorsed, together with all other documents required to be executed in connection with such Drag-Along Sale.  In the event that a Drag-Along Seller should fail to deliver such certificates to the Initiating Sellers, the Company shall cause the books and records of the Company to show that such Units are bound by the provisions of this Section 6.4.4 and that such Units shall be transferred to the Third Party immediately upon surrender for transfer by the Drag-Along Seller of such Units.

(b)The per Unit consideration to be paid to the Initiating Sellers and each Drag-Along Seller required to participate in the Drag-Along Sale shall be the Drag-Along Sale Price.

(c)If, within 90 days (or such longer period as may be necessary to obtain any regulatory or other governmental approvals or consents in connection with such Sale) after the Initiating Sellers give the Drag-Along Notice, they have not completed the sale of all the Units subject to the Drag-Along Sale, the Initiating Sellers shall return to each of the Drag-Along Sellers all certificates representing Units that such Drag-Along Seller delivered for sale pursuant hereto, and all the restrictions on sale or other disposition contained in the Agreement with respect to Units owned by the Drag-Along Sellers shall again be in effect.

(d)Promptly after the consummation of the sale of Units of the Initiating Sellers and the Drag-Along Sellers pursuant to this Section 6.4.4, the Initiating Sellers shall give notice thereof to the Drag-Along Sellers, shall remit to each of the Drag-Along Sellers who has surrendered its certificates the total consideration for the Units of such Drag-Along Sellers sold pursuant thereto as computed pursuant to Section 6.4.4(b), and shall furnish such other evidence of the completion and time of completion of such sale or other disposition and the terms thereof as may be reasonably requested by such Drag-Along Sellers.

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(e)If the Third Party does not desire to buy all of the Units that would be required to be tendered pursuant to this Section 6.4.4, then this Section 6.4.4 shall not apply and the Initiating Holders shall be required to comply with Section 6.4.3 and Section 6.4.5.

6.4.5Tag-Along Rights.

(a)If, at any time prior to the consummation of the earlier to occur of a Company Sale or a Qualified Public Offering, any holder of Units proposes to transfer any of its Units to a Third Party (other than any transfer by any Member to Sciens or an Affiliate of Sciens) and the rights of first refusal are not exercised as set forth in Section 6.4.3 with respect to all of the Units proposed to be transferred to such Third Party (a “Tag-Along Sale”), such Selling Holder shall provide written notice (“Tag-Along Notice”) of such proposed Tag-Along Sale to each holder of Units other than any holder who exercised its right of first refusal with respect to (and was actually entitled to acquire) any portion of the Units proposed to be transferred to such Third Party (each, a “Tag-Along Holder”).  The Tag-Along Notice shall identify the number of Units subject to the Tag-Along Sale, the price per Unit (which shall be in cash and/or marketable securities only) being offered by the Third Party (the “Tag-Along Price”) and-all other material terms of proposed Tag-Along Sale.  Each Tag-Along Holder shall, as to Units held by it, have the right and option, exercisable as set forth below, to participate in the Tag-Along Sale (the “Tag-Along Rights”) for up to the number of Units as constitute its Tag-Along Pro Rata Portion of the number of Units, and the number of Units to be sold by the Selling Holder in the Tag-Along Sale shall be reduced to the extent the Tag-Along Holders elect to participate.  “Tag-Along Pro Rata Portion” means, with respect to each Tag-Along Holder at the time of the Tag-Along Sale, the number of Units to be sold to the Third Party multiplied by a fraction, the numerator of which is the number of Units owned by the Tag-Along Holder and the denominator of which is the number of Units owned by the Selling Holder and all Tag-Along Holders.  Each Tag-Along Holder that desires to exercise such option shall provide the Selling Holder with written irrevocable notice within ten days after the date the Tag-Along Notice is given (the “Tag-Along Notice Period”), and shall simultaneously provide a copy of such notice to the Company and the other Tag-Along Holders.  Each accepting Tag-Along Holder shall deliver to the Selling Holder the certificate or certificates representing the Units to be sold or otherwise disposed of pursuant to such sale by such Tag-Along Holder, together with a limited power-of-attorney authorizing the Selling Holder to sell or otherwise dispose of such Units pursuant to the terms of the Tag-Along Sale.  Delivery of such certificate or certificates representing the Units to be sold and the limited power-of-attorney authorizing the Selling Holder to sell or otherwise dispose of such Units shall constitute an irrevocable acceptance of the Tag-Along Sale by the Tag-Along Holder.  Notwithstanding the foregoing, this Section 6.4.5 shall not apply to any transfer permitted under Section 6.4.1(a)(iii).

(b)The per Unit consideration to be paid to the Selling Holder and each Tag-Along Holder participating in the Tag-Along Sale shall be the Tag-Along Price.

(c)Promptly after the consummation of the sale or other disposition of the Units of the Selling Holder and the Tag-Along Holders pursuant to the Tag-Along Sale, the Selling Holder shall notify the Tag-Along Holders thereof, shall remit to each of the Tag-Along Holders the total consideration for the Units of such Tag-Along Holder sold or otherwise disposed of pursuant thereto as computed pursuant to Section 6.4.5(b), and shall furnish such other evidence of the completion and time of completion of such sale or other disposition and the terms thereof as may be reasonably requested by the Tag-Along Holders.

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(d)If at the termination of the Tag-Along Notice Period any Tag-Along Holder shall not have elected to participate in the Tag-Along Sale, such Tag-Along Holder will be deemed to have waived any of and all of its rights under this Section 6.4.5 with respect to the sale or other disposition of its Units pursuant to such Tag-Along Sale.  The Selling Holder shall have 90 days in which to sell the applicable Units at a price not higher than that contained in the Tag-Along Notice and on terms not more favorable to the Selling Holder than were contained in the Tag-Along Notice.  Promptly after any sale pursuant to this Section 6.4.5, the Selling Holder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion thereof (including time of completion) of such sale and of the terms thereof as the Company may request If, at the end of such 90-day period, the Selling Holder has not completed the sale of all the Units, the Selling Holder shall return to such Tag-Along Holders all certificates representing the Units that such Tag-Along Holders delivered for sale or other disposition pursuant to this Section 6.4.5, and all the restrictions on sale or other disposition contained in this Agreement with respect to Units owned by the Tag-Along Holders shall again be in effect.

(e)Notwithstanding anything contained in this Section 6.4.5, there shall be no liability on the part of the Selling Holder to any Tag-Along Holder if the sale of Units pursuant to this Section 6.4.5 is not consummated for whatever reason.  Any decision as to whether to sell Units shall be at the Selling Holder’s sole and absolute discretion.

6.4.6Legends.  Each certificate of Common Units and certificates representing other Equity Securities of the Company issued on or after the date hereof shall be stamped or otherwise have endorsed or imprinted thereon a legend in substantially the following form:

“The transfer of the units represented by this certificate, and the rights of the holder hereof, are subject to the terms and conditions of an Amended and Restated Limited Liability Company Agreement, dated as of June 12, 2003, as amended as of July 9, 2007, August 11, 2011, March 2012, and amended and restated as of June 28, 2013 (a copy of which is on file with the Company), as the same may be further amended from time to time, and no transfer of the units represented hereby or of units issued in exchange thereof shall be valid or effective unless the terms and conditions of such Agreement have been fulfilled.”

6.5.Co-Sale Right.

6.5.1C-Defense Holding (if during the Sciens Ownership Period) has the right (“Co-Sale Right’) to cause a Company Sale or a Qualified Public Offering.  Such right may be exercised by such Member delivering a notice to such effect to the Company and each other Member.

6.5.2The Member that duly exercised its Co-Sale Right shall propose the plan for marketing the Company for sale or for the public offering, including, without limitation, the selection of investment bank or banks or underwriters, as applicable, other financial professionals and legal professionals, the estimated valuation of the Company, and the preferred structure for such Company Sale or Qualified Public Offering.

6.5.3Each Member shall, to the extent reasonable and at the cost of the Company, cooperate with the Member that duly exercised its Co-Sale Right in connection with the marketing of the Company Sale or the Qualified Public Offering.

6.5.4The Member that duly exercised its Co-Sale Right shall have the right, notwithstanding the provisions of Section 6.4.4 (or any other provision of this Agreement) to cause a Drag-Along Sale or, notwithstanding the provisions of Sections 5.1, 5.2 and 5.9 (or any other provision of this Agreement), cause a sale of all or substantially all of the assets of the Company or the merger of the Company with or into any Third Party purchasers in connection with such Company Sale.

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6.5.5In the event that the Member that duly exercised the Co-Sale Right elects to cause the Company Sale through a Drag-Along Sale, then the provisions of Section 6.4.4 shall be applicable, except that the Member that duly exercised the Co-Sale Right shall have the right to issue a Drag-Along Notice.

6.5.6The Co-Sale Right shall terminate upon the consummation of the earlier to occur of a Company Sale or a Qualified Public Offering.

ARTICLE VII.

Capital Contributions, Capital Accounts and Allocations

7.1.Initial Capital Contributions.  Each Member has contributed its respective initial capital contribution to the Company prior to the date of this Agreement.

7.2.Additional Capital Contributions.  No Member shall be obligated to make any additional Capital Contributions to the Company.

7.3.Capital Accounts.  A separate capital account shall be established and maintained for each Member.  The Capital Account of each Member: (a) shall be credited with (i) the amount of cash and the agreed upon Fair Market Value of any property contributed by such Member to the Company (net of liabilities secured by such contributed property or that the Company is considered to assume or otherwise take subject to under Section 752 of the Code), (ii) such Member’s share of any Net Income allocated to it under this Agreement, and (iii) such Member’s share of other items required to be credited thereto under Regulations § 1.704-1(b)(2)(iv); and (b) shall be debited with (i) the amount of cash and the Fair Market Value of any property distributed to such Member (net of liabilities secured by such distributed property or that such Member is considered to assume or otherwise take subject to under Section 752 of the Code), (ii) such Member’s share of any Net Loss allocated to it under this Agreement, and (iii) such Member’s share of other items required to be debited thereto under Regulations § 1.704(b)(2)(iv).  Any adjustments to the tax basis of Company property under Sections 732, 734, or 743 of the Code will be reflected as adjustments to the Capital Accounts of the Members only in the manner and to the extent provided in Regulations § 1.704-1(b)(2)(iv)(m).  If any property of the Company is to be distributed in kind, such property shall be distributed on the basis of its Fair Market Value after the Members’ Capital Accounts have been adjusted to reflect the manner in which any unrealized gain and loss with respect to such property (that has not been previously reflected in the Capital Accounts) would be allocated among the Members as if there were a taxable disposition of the property for its Fair Market Value in the manner provided in Regulations § 1.704-1(b)(2)(iv)(e).  The Governing Board may, at its discretion, cause the Capital Accounts of the Members to be adjusted at the times and in the manner permitted by Regulations § 1.704 1(b)(2)(iv)(f).  These provisions and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations § 1.704-1(b), and shall be interpreted and applied in a manner consistent with such section of the Regulations.

7.4.General Allocations.  Subject to the rights of the Preferred Units, if any, as authorized by the Governing Board pursuant to Section 4.1.1, Net Income or Net Loss for each Year (excluding, for this purpose, any item specially allocated under Section 7.5) shall be allocated among the Capital Accounts of the Members holding Common Units and Class B Common Units in such manner that the Capital Account of each Member, plus the Member’s share of Minimum Gain and Member Nonrecourse Debt Minimum Gain, shall, to the extent possible, be equal to the amount which would be distributed to such Member if (i) the Company were to sell the assets of the Company for an amount equal to their then-book value (determined, for the avoidance of doubt, without any adjustment on account of the deemed liquidation), (ii) the Company were to distribute the proceeds of sale pursuant to Section 4.2.4 (subject to the rights of any Preferred Units) and (iii) the Company were to dissolve pursuant to Article X.

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7.5.Special Allocations.  Notwithstanding any other provision of this Article VII, the following special allocations shall be made in the order required by the Code and the applicable Treasury Regulations:

7.5.1           Minimum Gain Chargeback.  If there is a net decrease in Company Minimum Gain during any Fiscal Year, the Members shall be specially allocated items of Gross Income for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to the portion of such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations §1.704-2(g)(2).  Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to the Members pursuant thereto.  The items to be so allocated shall be determined in accordance with Regulations § 1.704-2(f)(6).  This Section 7.5.1 is intended to comply with the minimum gain chargeback requirement in such section of the Regulation and shall be interpreted consistently therewith.

7.5.2           Nonrecourse Deductions.  Except as may be provided for any Preferred Units hereunder, any Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Members holding Common Units and Class B Common Units in proportion to the number of Common Units and Class B Common Units held by them.

7.5.3           Member Minimum Gain Chargeback.  If during any Fiscal Year of the Company there is a net decrease in Member Nonrecourse Debt Minimum Gain (as such term is defined by Regulations § 1.704-2(i) but substituting the term “Member” for the term “partner” as the context requires) then each Member shall be specially allocated items of Gross Income for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in the manner provided in Regulations § 1.704-2(i).  This Section 7.5.3 is intended to comply with the partner nonrecourse debt chargeback provisions of Regulations § 1.704-2(i) and shall be interpreted consistently therewith.

7.5.4           Member Nonrecourse Deductions.  Members nonrecourse deductions (as defined in Regulations § 1.704-2(i)(2) but substituting the term “Member” for the term “partner” as the context requires) shall be allocated as prescribed in Regulations § 1.704-2(i)(I).

7.5.5           Limitations.  To the extent possible, no allocations of items of expense or net realized capital loss shall be made to a Member if such allocation would cause or increase a deficit in such Member’s Adjusted Capital Account.  Any such item shall instead be allocated to other Members to the extent of, and in proportion to, their positive Adjusted Capital Accounts.

7.5.6           Qualified Income Offset.  In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Gross Income shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible provided that an allocation pursuant to this Section 7.5.6 shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in Sections 7.4 and 7.5 have been tentatively made as if this Section 7.5.6 were not in the Agreement.

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7.5.7           Curative Allocations.  Any special allocations pursuant to Sections 7.5.1 to 7.5.6 may not be consistent with the manner in which the Members intend to allocate Net Income or Net Loss of the Company or make Company distributions.  Accordingly, notwithstanding the other provisions of this Article VII, but subject to the allocations required by Sections 7.5.1 to 7.5.6, income, gain, deduction and loss allocated pursuant to this Section 7.5 shall be taken into account in computing subsequent allocations pursuant to Article VII, so that the allocations of such items to each Member pursuant to Article VII shall be equal to the allocations that would have been made to each Member pursuant to the provisions of Article VII if the adjustments, allocations, or distributions and the resulting special allocations pursuant to Sections 7.5.1 to 7.5.6 had not occurred.  In general, the Members anticipate that this will be accomplished by specially allocating items of Company income, gain, deduction, and loss among the Members so that the net amount of the allocations pursuant to Sections 7.5.1 to 7.5.6 is zero.

7.5.8           Special Income Allocations.  Subject to the preceding provisions of this Section 7.5, in the event that any option or warrant for Units is exercised, then, items of Gross Income shall be specially allocated to the exercising Member to the extent provided in applicable Treasury Regulations.

7.6.Allocations for Tax Purposes.  Taxable income, gain, loss or deduction of the Company (as well as any credits and the basis of property to which such credits apply) as determined for U.S. federal income tax purposes shall be allocated in the same manner as the corresponding income, gain, loss or deduction is allocated for purposes of adjusting Capital Accounts hereunder.  In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company, or property held by the Company subject to a revaluation pursuant to adjustment of the Capital Accounts, shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial (or adjusted) book value, using any method(s) selected by the Governing Board (including the remedial method).

7.7.Determination by Governing Board of Certain Matters.  Liabilities shall be determined in accordance with generally accepted accounting principles, applied on a consistent basis; and, consistent therewith, the Governing Board may provide reserves for estimated accrued expenses, liabilities or contingencies.  All matters concerning the valuation of assets of the Company, and the allocation of Net Income, Net Loss, items of income, deduction, gain, loss, credit and other matters among the Members including, without limitation, taxes thereon, and accounting procedures not expressly provided for by the terms of this Agreement shall be determined in good faith by the Governing Board, whose determination shall be final and conclusive as to all of the Members.  The Governing Board shall have the discretion to make any elections available to the Company under the Code, including, without limitation, an election under Section 754 of the Code.

7.8.Transfer of Units.  Generally, a transferee of an interest in the Company shall succeed to a pro-rata portion of the Capital Account of the transferor.  Except as decided by the Governing Board, the Company’s items of income, gain, loss and deduction allocable to a Member with respect to the Fiscal Year in which the transfer takes place shall be divided between the transferor and the transferee of a Unit based on the number of days each held the Unit during the relevant Fiscal Year or using any other method permitted by the Code, as determined by the Governing Board.

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ARTICLE VIII.

Distributions

8.1.Distributions.  Subject to any restrictions under applicable law and this Agreement (including, without limitation, Sections 4.2.3 and 4.2.4), any assets of the Company may be distributed from time to time to the Members upon determination of the Governing Board.  Subject to the provisions of any Preferred Units, all distributions shall be made pro rata on the basis of the Units held by such Members at such time.

8.2.Minimum Distributions for Income Tax Purposes.  For each taxable year ending after the date hereof with respect to which the Company is a partnership for U.S. federal income tax purposes, minimum distributions, advances or other payments shall be made to each Member, in an amount equal to the product of (1) the portion of the Company’s “taxable income” (as modified below) allocable to such Member for such period and (2) the highest combined marginal federal, state and/or local income tax rate applicable to any Member for such period; provided that, for purposes of this Section 8.2, the Company’s “taxable income” for any period shall be computed (1) without any deduction for any interest expense attributable to any indebtedness of the Company used to finance distributions (as determined in accordance with Treasury Regulation Section 1.163-8T) or any indebtedness treated as having refinanced any such indebtedness, or any other interest expense incurred by the Company that, in each case, is not treated as deductible for U.S. federal income tax purposes by each Member of the Company, and (2) for the avoidance of doubt, by including any increases to taxable income as a result of any tax examination, audit or other adjustment, whether for taxable years ended prior to or after the date hereof; provided further, that any distributions pursuant to this Section 8.2 shall only be made to the extent the Governing Board determines in its discretion that the Company has funds available and that making such distributions will not violate the terms of any agreements to which the Company is a party.  Such distributions shall in each case be made not later than 15 days prior to the date upon which U.S. federal estimated tax payments are required for individuals, with such distributions made on the basis of estimated allocations for the taxable period as determined by the Governing Board.  Such distributions shall be treated as advances of distributions otherwise to be made pursuant to Section 8.1, and any distributions otherwise to be made to Members pursuant to Section 8.1 shall be reduced by the amount previously distributed to them pursuant to this Section 8.2.  Any U.S. federal, state, local or non-U.S. tax withholding shall be treated as a distribution to the Member in respect of whom such withholding has been made.

ARTICLE IX.

Transfers of Interest; Admission of Additional Members

9.1.Transfer of Interests.  Subject to Sections 6.4 and 6.5, any Member may transfer all or any portion of its Interest in the Company to any Person at any time.

9.2.Admission of Additional Members.  No Person (other than Members who are already parties to this Agreement) shall be admitted as a Member of the Company, or have any rights as a holder of Units, after the date of this Agreement unless such Person is the holder of one or more Units and such Person executes and delivers to the Company a Joinder.

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9.3.Admission of Current Members.  Each of the Persons listed on Schedule 1 under the caption “Members” has been duly admitted as a member in the Company on or prior to the date of this Agreement as conclusively evidenced by the books and records of the Company.

ARTICLE X.

Dissolution

10.1.Dissolution.  The Company shall be dissolved and its affairs wound up on the first to occur of the following:

10.1.1             subject to Section 5.9.16, the prior consent or approval of a majority of the Governing Board and the prior consent or approval of a Majority in Interest of the Members to such dissolution and winding up;

10.1.2             the sale or transfer of all or substantially all of the assets of the Company other than in the ordinary course of business and the cessation of the Company’s business; or

10.1.3             entry of a decree of judicial dissolution.

10.2.Winding Up and Liquidation.  Upon the dissolution of the Company, the Company shall cease to engage in any further business, except to the extent necessary to perform existing obligations, and shall wind up its affairs and liquidate its assets.  Such Person(s) as may be selected by the Governing Board (the “Liquidator”), shall wind up and liquidate the Company’s business and affairs.

10.3.Liabilities.  Liquidation shall continue until the Company’s affairs are in such condition that there can be a final accounting, showing that all fixed or liquidated obligations and liabilities of the Company are satisfied or can be adequately provided for under this Agreement.  The assumption or guarantee in good faith by one or more financially responsible Persons shall be deemed to be an adequate means of providing for such obligations and liabilities.  When the Liquidator has determined that there can be a final accounting, the Liquidator shall establish a date for the distribution of the proceeds of liquidation of the Company (the “Distribution Date”).  The Liquidator may make interim distributions of the proceeds of liquidation if the Liquidator concludes that such interim distributions would not adversely affect the rights of the Company’s creditors to be paid in full when and as their debts become due.  The net proceeds of liquidation of the Company shall be distributed to the Members as provided in Section 10.5 not later than the Distribution Date.

10.4.Settling of Accounts.  Subject to any applicable provisions of the Act, upon the dissolution and liquidation of the Company, the proceeds of liquidation shall be applied as follows: (i) first, to pay all expenses of liquidation and winding up; (ii) second, to pay all debts, obligations and liabilities of the Company in the order of priority as provided by law, other than on account of the Capital Contributions; and (iii) to establish reasonable reserves for any remaining contingent or unforeseen liabilities of the Company not otherwise provided for, which reserves shall be maintained by the Liquidator on behalf of the Company in a regular interest-bearing trust account for a reasonable period of time as determined by the Liquidator.  If any excess funds remain in such reserves at the end of such reasonable time, then such remaining funds shall be distributed by the Company to the Members pursuant to Section 10.5.

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10.5.Distribution of Proceeds.  Subject to any restrictions contained in the Act, upon final liquidation of the Company but not later than the Distribution Date the net proceeds of liquidation shall be distributed to the Members in accordance with Section 8.1.

10.6.Filing.  Upon dissolution and liquidation of the Company, the Liquidator shall cause to be executed and filed with the Secretary of the State a certificate of cancellation in accordance with the Act.

10.7.No Restoration of Deficit Capital Account Balances.  Upon dissolution and liquidation of the Company, no Member with a deficit balance in its Capital Account shall be obligated to restore such deficit to the Company.

ARTICLE XI.

Tax Returns; Books and Records; Reports

11.1.Filing of Tax Returns.

11.1.1The Governing Board shall prepare and file, or cause the accountants of the Company to prepare and file, a U.S. federal information tax return in compliance with Section 6031 of the Code and any required state and local income tax and information returns for each tax year of the Company.

11.1.2Any provisions hereof to the contrary notwithstanding, solely for U.S. federal and applicable state and local income tax purposes, each Member hereby recognizes that the Company will be subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, that the filing of U.S. Partnership Returns of Income shall not be construed to extend the purposes of the Company or expand the obligations or liabilities of the Members.

11.2.Tax Matters Partner.  C-Defense Holding shall be designated on the Company’s annual federal information tax return as the Tax Matters Partner (the “Tax Matters Partner”) for purposes of Section 6231(a)(7) of the Code.  In the event the Company shall be the subject of an income tax audit by any U.S. federal, state or local or non-U.S. authority, to the extent the Company is treated as an entity for purposes of such audit, including administrative settlement and judicial review, the Tax Matters Partner shall be authorized to act for, and its decision shall be final and binding upon, the Company and each Member thereof.  All expenses incurred in connection with any such audit, investigation, settlement or review shall be borne by the Company.

11.3.Annual Reports to Current and Former Members.

11.3.1Within 90 days after the end of each Fiscal Year, or as soon as practicable after receipt of all necessary information by the Company, if later, the Company shall prepare and mail, or cause its accountants to prepare and mail, to each Member, and to the extent necessary, to each former Member (or such Member’s legal representatives), a report setting forth in sufficient detail such information as shall enable such Member or former Member (or such Member’s legal representatives) to prepare their respective U.S. federal and Connecticut and New York state income tax returns in accordance with the laws, rules and regulations then prevailing.

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11.3.2Within 90 days after the end of each Fiscal Year, the Company shall deliver to each Member a copy of its annual financial statements together with the certified (audit) report thereon by the Company’s independent public accountants; provided, that if the audit is not completed within such 90-day period and if the Company was diligently working in good faith to provide such financial statements by such deadline, then the Company shall have an additional 30 days to deliver such financial statements.

11.3.3No later than the end of each Fiscal Year, the Company shall deliver to C-Defense Holdings a copy of its annual business plan that includes a reasonable general summary of the anticipated significant commercial transactions and events during the following Fiscal Year.

11.3.4Within 45 days after the end of each fiscal quarterly period, the Company shall deliver to each Member a copy of its most recent unaudited quarterly balance sheet, statement of operations and statement of net cash flow, each of which shall not be required to include footnote disclosures or reflect annual adjusting entries or accruals.

11.3.5The Company shall not be obligated to comply with the delivery requirements of Sections 11.3.2 and 11.3.4 for any fiscal period with respect to which the Company is subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, and timely files with the SEC all periodic reports required to be filed pursuant to such reporting requirements for such fiscal period.

11.4.Records to be Kept.  The Company shall keep at its principal place of business or at such other office as shall be designated by the Governing Board:

11.4.1             A current list in alphabetical order of the full name and last known business, residence or mailing address of each Member;

11.4.2             A copy of the filed Certificate of Formation and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any document has been executed;

11.4.3             Copies of this Agreement, and all amendments hereto;

11.4.4             Copies of the Company’s U.S. federal income tax returns and reports for the five most recent years; and

11.4.5             Copies of any financial statements of the Company for the five most recent years.

11.5.Confidentiality.  Each Member shall retain in strict confidence, and shall not use for any purpose whatsoever, or divulge, disseminate or disclose to any Third Party (other than in furtherance of the business purposes of the Company or as may be required by law) any proprietary or confidential information relating to the business of the Company, including, without limitation, information regarding financial information, pricing information, business methods, management information systems and software, customer lists, supplier lists, leads, solicitations and contacts, know how, show-how, inventions, improvements, specifications, trade secrets, agreements,

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research and development, business plans and marketing plans of the Company, whether or not any of the foregoing are copyrightable or patentable; provided, that (i) a Member may in connection with any Sale of Interests that is not prohibited under the terms of this Agreement provide to a potential buyer or transferee financial and other information with respect to the Company (provided such buyer or transferee agrees to maintain the confidentiality of such information); (ii) that each Member may divulge, disseminate or disclose any such proprietary and confidential information to its agents, consultants, professional advisors and co-investors for the purposes of managing its investment in the Company; (iii) each Member may divulge, disseminate or disclose any such proprietary and confidential information to any of its Affiliates or otherwise to the extent necessary to comply with applicable legal requirements; and (iv) Members that participate in any proposed Company Sale approved in accordance with Section 5.9 or 6.5 shall have the right to provide any proprietary or confidential information relating to the business of the Company in connection therewith subject to the terms and provisions of a confidentiality agreement reasonably acceptable to the Company.

ARTICLE XII.

Indemnification

12.1.Right to Indemnification.  Each Person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a member of the Governing Board (or any other Applicable Board) or officer of the Company or is or was serving at the request of the Company as a member of the governing board, director, officer, employee or agent of another company or of a corporation, partnership, joint venture, trust or other enterprise, including, without limitation, service with respect to an employee benefit plan, or is or was serving as the Tax Matters Partner (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a member of the governing board, director, officer, employee or agent,  or in any other capacity while serving as a member of the governing board, director, officer, employee or agent or while serving as the Tax Matters Partner, shall be indemnified and held harmless by the Company to the fullest extent authorized by the Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA-excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a member of the governing board, director, officer, employee or agent or the Tax Matters Partner and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 12.3 with respect to proceedings to enforce rights to indemnification, the Company shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Governing Board.

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12.2.Right to Advancement of Expenses.  The right to indemnification conferred in this ARTICLE XII shall include the right to be paid by the Company the expenses incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (hereinafter an “advancement of expenses”); provided, that an advancement of expenses incurred by an indemnitee in his or her capacity as a member of the Governing Board, as the Tax Matters Partner or an officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Company of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

12.3.Right of Indemnitee to Bring Suit.  The rights to indemnification and to the advancement of expenses conferred in this ARTICLE XII shall be contract rights.  If a claim under this ARTICLE XII is not paid in full by the Company within 60 days after a written claim has been received by the Company, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim.  If successful in whole or in part in any such suit, or in a suit brought by the Company to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit.  In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Company to recover an advancement of expenses pursuant to the terms of an undertaking the Company shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Act or this Agreement.  Neither the failure of the Company (including, without limitation, the Governing Board, independent legal counsel, or the Members) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Act or this Agreement, nor an actual determination by the Company (including, without limitation, the Governing Board, independent legal counsel, or the Members) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit.  In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Company to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section or otherwise shall be on the Company.

12.4.Non-Exclusivity of Rights.  The rights to indemnification and to the advancement of expenses conferred in this ARTICLE XII shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, this Agreement, any other agreement, vote of Members or disinterested-members of the Governing Board or otherwise.

12.5.Insurance.  The Company shall maintain insurance, at its expense, to protect itself and any member of the Governing Board, officer, employee or agent (including the Tax Matters Partner) of the Company or another company, corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under the Act.

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12.6.Indemnification of Employees and Agents of the Company.  The Company may, to the extent authorized from time to time by the Governing Board, grant rights to indemnification, and to the advancement of expenses to any employee or agent (including the Tax Matters Partner) of the Company to the fullest extent of the provisions of this ARTICLE XII with respect to the indemnification and advancement of expenses of members of the Governing Board and officers of the Company.

ARTICLE XIII.

Notices

13.1.Generally.  Subject to Section 13.2, all notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or delivered either by hand or by messenger, or sent via telex, telecopier, computer mail or other electronic means, in the case of any party hereto, to the address of such party set forth in Schedule 2, or to such other address as such party shall have furnished in writing to the party initiating the notice or communication.  Any such notice or other communications so addressed and mailed, postage prepaid, by registered or certified mail (in each case, with return receipt requested) shall be deemed to be delivered and given when so mailed.  Any notices so addressed and otherwise delivered shall be deemed to be given when actually received by the addressee.

13.2.When Deemed Given, etc.  Any notice to a member of the Governing Board or any Person having observation rights with respect to the Governing Board may be given personally, by telephone or by mail, facsimile transmission, telex, telegram, cable, e-mail or similar means.  A notice will be deemed given when actually given in person or by telephone, when received if given by facsimile transmission, telex or e-mail, on the third business day after the day when deposited in the United States mail, postage prepaid, or on the day when delivered to a cable or similar communications company, directed to the member of the Governing Board at the member’s business address or at such other address as the member of the Governing Board may have designated to the Secretary in writing as the address to which notices should be sent

13.3.Waiver.  Any Person may waive notice of any meeting by signing a written waiver, whether before or after the meeting.  In addition, attendance at a meeting will be deemed a waiver of notice unless the Person attends for the purpose, expressed to the meeting at its commencement, of objecting to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE XIV.

Miscellaneous

14.1.General.  This Agreement shall be binding on the executors, administrators, heirs, and successors and assigns of the parties.

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14.2.Amendments and Waivers.  Neither this Agreement nor any term hereof may be amended, waived, discharged, or terminated, except by written instrument signed by (i) the Company, (ii) Common Members holding greater than 50% of the voting Equity Securities held by such Common Members and (iii) if any voting Preferred Units are then outstanding, the holders of Preferred Units holding greater than 50% of the votes represented by such Preferred Units; provided, however, that (a) the obligations of any Member or other party may not be increased without the consent of such Member or other party; and (b) the rights of the Union pursuant to Sections 6.1.1(b), 6.1.1(d) and 6.1.3 may not be amended, waived, discharged, or terminated, except by written instrument signed by the Union; and (c) Articles VIII and XII, Sections 4.2.3, 4.2.4, 4.5, 5.8, 5.10, 5.11, 6.1.2, 6.4, 6.5, 7.8 and 11.3 and this Section 14.2 may not be amended, waived, discharged or terminated without the written consent of the Sciens Group; and (d) Articles VIII and XII, Sections 4.2.3, 4.2.4, 4.5, 5.8, 5.10, 5.11, 6.1.2, 6.4, 6.5 and 11.3 and this Section 14.2, and the rights of Sciens or C-Defense Holding pursuant to Sections 5.9, 5.12.1, 6.1.1(c) and 6.1.3 (and any defined terms or other provisions to the extent related to any of the foregoing Articles or Sections) may not be amended, waived, discharged, or terminated, except with the written consent of C-Defense Holding.  Notwithstanding the foregoing, the Governing Board may amend this Agreement without the consent of any Member or the Union to reflect the issuance of Preferred Units, Common Units, Class B Common Units or profits interests permitted to be issued in accordance with this Agreement, as contemplated by Sections 4.1 and 4.4.  No waiver of any provision of this Agreement or any breach hereunder shall be deemed a waiver of any other provision or subsequent breach, nor shall any such waiver constitute a continuing waiver.

14.3.Choice of Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles.

14.4.Headings.  The headings of the Articles and the Sections of this Agreement are for convenience of reference only, and are not to be considered in constructing the terms and provisions of this Agreement.

14.5.Pronouns.  All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Person or Persons may require in the context thereof.

14.6.Entire Agreement.  This Agreement, and the Schedules and Exhibits hereto constitute the entire agreement of the parties with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements, representations, and understandings of the parties with respect thereto.

14.7.Third Parties.  Except for the rights of Sciens expressly provided in this Agreement and the rights of any indemnitee set forth in Article XII of this Agreement, nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto, and their successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

14.8.Severability.  If one or more provisions of this Agreement are held by a proper court to be unenforceable under applicable law, portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by law, shall be severed herefrom, and the balance of this Agreement shall be enforceable in accordance with its terms.

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14.9.Effectiveness.  This Agreement shall be become effective when each of the parties hereto indicated in the introductory paragraph of this Agreement shall have executed and delivered a counterpart hereof to the Company.

14.10.Counterparts.  This Agreement may be executed in counterparts, each of which when so executed and delivered shall constitute a complete and original instrument but all of which together shall constitute one and the same agreement.

14.11.Interpretation.  The words “herein”, “hereof”, “hereby” or “hereto” shall refer to this Agreement unless otherwise expressly provided.  All pronouns and any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.  Any reference in this Agreement to an exhibit, schedule or section shall, unless the context otherwise requires, be a reference to an exhibit or schedule to, or a section of, this Agreement.  Any reference in this Agreement to a “business day” shall mean a day in which the New York branch of the Federal Reserve Bank is open for business during its normal hours of operation.  Any reference to a “Member” shall mean the Member admitted in the Company on or prior to the date of this Agreement and any successor Member which acquired a Membership Interest by a permitted transfer or assignment from any such original Member and any new Member which acquires a Membership Interest directly from the Company.  Any reference to “date hereof”, “date of this Agreement” or similar terms shall mean June 28, 2013.

[Balance of Page Intentionally Left Blank]

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The undersigned have duly executed this Amended and Restated Limited Liability Company Agreement, dated as of the date set forth above.

COLT DEFENSE HOLDING LLC

By:  Sciens Management LLC, its manager

By:  /s/ John Rigas

       Name:  John Rigas

       Title:    Manager

COLT DEFENSE LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

[Signature Page to Amended and Restated Limited Liability Company Agreement]

Schedule 1

Member	Class A Common Units
COLT DEFENSE HOLDING LLC		60,213.137
CSFB SP III INVESTMENTS, LP		12,221.799
COLT DEFENSE HOLDING II LLC		10,505.293
WILLIAM M. KEYS		7,698.471
JAMES R. BATTAGLINI		1,511.815
JEFFREY J. GRODY		1,344.892
COLT DEFENSE EMPLOYEE PLAN HOLDING CORPORATION		1,204.733
ORPHEUS HOLDINGS LLC		1,069.408
JOYCE M. RUBINO		958.343
ARCHER DIVERSIFIED INVESTMENTS, LLC		763.862
RICHARD NADEAU		539.925
STF LLC		458.317
DONALD W. YOUNG		434.901
MICHAEL P. REISSIG		419.746
JOHN F. YOUNG		412.577
KEVIN J. BROWN		337.514
JOHN M. MAGOURIK		235.215
JOHN B. IBBOTSON		235.215
CARLTON S. CHEN		173.960
BRENER INTERNATIONAL GROUP, LLC		129.310
THOMAS C. MOORE		87.665
CIRQUE INVESTMENTS LLC		52.239
TOTAL		101,008.337

Options issued for Class B Common Units:

Name	Number of Options	Exercise Price
Gerald R. Dinkel	6,957	$100
Scott B. Flaherty	2,854	$100
George Casey	300	$100
J. Michael Magouirk	500	$100

Options committed to be issued for Class B Common Units:

Name	Number of Options	Exercise Price
Leslie Striedel	600	FMV
Ronald Belcourt	400	FMV
Kevin Green	300	FMV

Schedule 2

Colt Defense Holding LLC	c/o Sciens Capital Management 667 Madison Avenue, 5th Floor New York, NY  10065
Colt Defense Employee Plan Holding Corp.	P.O Box 118 Hartford, CT  06141
General William M. Keys	5105 Stillhouse Road Hume, VA  22639
Joyce M. Rubino	2861 Ironwood Drive Akron, OH  44312
Michael P. Reissig	56 Old King Street Enfield, CT  06082
John F. Young	48 Hill Street West Springfield, MA  01089
Kevin J. Brown	32 Clover Springs Drive Willington, CT  06279
John M. Magouirk	16 Farmbrook Drive Tolland, CT  06084
John B. Ibbotson	14 Alger Road Moodus, CT  06469
Thomas C. Moore	35 Meadowlark Road Simsbury, CT  06092
Donald W. Young	3640 Piping Rock Road Houston, TX 77027
Brener International Group, LLC	P.O. Box 10119 c/o Gabriel Brener Beverly Hills, CA  90213
Carlton S. Chen	648 Nod Hill Road Wilton, CT  06897-1305
James Battaglini	179 Whitman Ave., Apt 2 West Hartford, CT  06107
Richard Nadeau	1910 Ballycour Drive Vienna, VA  22182

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Jeffrey G. Grody	110 High Wood Road West Hartford, CT  06117
Orpheus Holdings LLC	135 East 57th Street, 6th Floor Attn: Erich Schram, Guggenheim Partners New York, NY 10022
Archer Diversified Investments, LLC	c/o Devon Archer, Rosemon Capital, LLC 401 Greenwich Streeet, 3rd Floor New York, NY 10013
Colt Defense Holding II, LLC	c/o Sciens Capital Management 667 Madison Avenue, 5th Floor New York, NY  10065
CSFB SP III Investments, LP	11 Madison Aveneue, 14th Fl. New York, NY 10010
STF LLC	1250 Fourth Street, 5th Floor Santa Monica, CA 90401
Colt Defense Holding II, LLC	c/o Sciens Capital Management 667 Madison Avenue, 5th Floor New York, NY  10065

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EXHIBIT A

FORM OF JOINDER TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

THIS JOINDER (this “Joinder”) to that certain Amended and Restated Limited Liability Company Agreement of Colt Defense LLC (the “Company”), dated as of the 12th day of June, 2003 and amended as of the 9th day of July, 2007, the 11th day of August, 2011, March, 2012 and the 28th day of June, 2013, by and among the Company and certain unitholders of the Company (the “LLC Agreement”), is made and entered into as of _______________ ____, 20___, by and between the Company and ____________________ (“Holder”).  Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the LLC Agreement.

WHEREAS, Holder has acquired certain units of limited liability company interest of the Company (“Holder Units”), and pursuant to the terms of the LLC Agreement, the Holder is required, as a holder of such units, to become a party to the LLC Agreement, and Holder agrees to do so in accordance with the terms hereof.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Joinder hereby agree as follows:

1.           Agreement to be Bound.  Holder hereby agrees that upon execution and delivery of this Joinder by the Holder and the Company, it shall become a party to the LLC Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the LLC Agreement as though an original party thereto and shall be admitted as a Member for all purposes thereof on the date and time specified below or, if no date and time are specified, at 11:59 p.m. on the date of this Joinder.  In addition, Holder hereby agrees that all Holder Units are Common Units for all purposes of the LLC Agreement.

2.           Successors and Assigns.  This Joinder shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and Holder and its successors and assigns.

3.           Counterparts.  This Joinder may be executed in any number of counterparts (including by facsimile or electronic copy), each of which shall be an original and all of which together shall constitute one and the same agreement.

4.           Notices.  For purposes of Section 13.1 of the LLC Agreement, all notices, demands or other communications to the Holder shall be directed to:

Name:            _____________________________________                                                               

Address:       _____________________________________

                       _____________________________________                                                                    

Facsimile Number:   ________________________________                                                                        

5.           Governing Law.  The LLC Agreement, including this Joinder, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

Exhibit A - Page 1

6.           Descriptive Headings.  The descriptive headings of this Joinder are inserted for convenience only and do not constitute a part of this Joinder.

Exhibit A - Page 2

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Joinder as of the date first above written.

COLT DEFENSE LLC

By:  _______________________________

       Name:

       Title:

[NAME OF HOLDER]

[By:  _______________________________

        Name:

        Title:]

[__________________________________]

[Form Signature Page to Joinder to LLC Agreement]

EX-4.1

Exhibit 4.1

INDENTURE SUPPLEMENT

This Supplemental Indenture, dated as of July 12, 2013 (this “Supplemental Indenture” or “Guarantee”), among New Colt Holding Corp. (as successor by merger to New Colt Acquisition Corp.) and Colt’s Manufacturing Company LLC(the “New Subsidiary Guarantors”), Colt Defense LLC (together with its successors and assigns, the “Company”), Colt Finance Corp. (“Colt Finance” and, together with the Company, the “Issuers”), each other then existing Subsidiary Guarantor under the Indenture referred to below, and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as Trustee under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Issuers, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of November 10, 2009 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of an aggregate principal amount of $250.0 million of 8.75% Senior Notes due 2017 of the Issuers (the “Securities”);

WHEREAS, Section 3.12 of the Indenture provides that after the Issue Date the Issuers are required to cause each Restricted Subsidiary (other than a Foreign Subsidiary that does not Guarantee any Indebtedness of the Company or any Restricted Subsidiary) created or acquired by the Company or one or more Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary will unconditionally Guarantee, on a joint and several basis with the other Subsidiary Guarantors, the full and prompt payment of the principal of and interest on the Securities; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the Issuers are authorized to execute and deliver this Supplemental Indenture to amend or supplement the Indenture, without the consent of any Securityholder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantors, the Issuers, the other Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:

ARTICLE I

Definitions

SECTION 1.1       Defined Terms.  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined.  The words “herein,” “hereof’ and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof

ARTICLE II

Agreement to be Bound; Guarantee

SECTION 2.1       Agreement to be Bound.  The New Subsidiary Guarantors hereby become a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.  The New Subsidiary Guarantors agree to be bound by all of the provisions of the Indenture applicable to a Subsidiary Guarantor and to perform all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.

SECTION 2.2       Guarantee.  The New Subsidiary Guarantors agree, on a joint and several basis with all the existing Subsidiary Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Securities and the Trustee the Obligations pursuant to Article X of the Indenture.

ARTICLE III

Miscellaneous

SECTION 3.1        Notices.  All notices and other communications to the New Subsidiary Guarantors shall be given as provided in the Indenture to the New Subsidiary Guarantors, at its address set forth below, with a copy to the Issuers as provided in the Indenture for notices to the Issuers.

SECTION 3.2        Parties.  Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.

SECTION 3.3        Governing Law.  This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.4.       Severability Clause.  In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5.       Ratification of Indenture; Supplemental Indentures Part of Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

SECTION 3.6.       Counterparts.  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

SECTION 3.7        Headings.  The headings of the Articles and the sections in this Guarantee are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

[Signature pages to follow.]

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

NEW COLT HOLDING CORP. (as successor by

merger to New Colt Acquisition Corp.),

as a New Subsidiary Guarantor

By:  /s/ Gerald R. Dinkel

        Name:  Gerald R. Dinkel

        Title:    President and Chief Executive Officer

        545 New Park Avenue

        West Hartford, CT 06110

COLT’S MANUFACTURING COMPANY LLC,

as a New Subsidiary Guarantor

By:  /s/ Gerald R. Dinkel

        Name:  Gerald R. Dinkel

        Title:    President and Chief Executive Officer

        545 New Park Avenue

        West Hartford, CT 06110

WILMINGTON TRUST, NATIONAL

ASSOCIATION (as successor by merger to

Wilmington Trust FSB), as Trustee

By:  /s/ Joseph P. O’Donnell

        Name:  Joseph P. O’Donnell

        Title:   Vice President

COLT DEFENSE LLC,

as an Issuer

By:  /s/ Gerald R. Dinkel

        Name:  Gerald R. Dinkel

        Title:    President and Chief Executive Officer

COLT FINANCE CORP.,

as an Issuer

By:  /s/ Gerald R. Dinkel

        Name:  Gerald R. Dinkel

        Title:    President and Chief Executive Officer

[Indenture Supplement]

EX-10.1

Exhibit 10.1

EXECUTION VERSION

TERM LOAN AGREEMENT

by and among

COLT DEFENSE LLC,

COLT FINANCE CORP.,

NEW COLT ACQUISITION CORP. (WHICH ON THE

CLOSING DATE SHALL BE MERGED WITH AND INTO),

NEW COLT HOLDING CORP. (WITH NEW COLT

HOLDING CORP. SURVIVING THE MERGER),

COLT’S MANUFACTURING COMPANY, LLC AND

COLT CANADA CORPORATION,

as Borrowers,

THE SUBSIDIARIES OF COLT DEFENSE LLC

NAMED AS GUARANTORS HEREIN,

as Guarantors,

THE LENDERS THAT ARE PARTIES HERETO,

as the Lenders,

and

CORTLAND CAPITAL MARKET SERVICES LLC,

as Agent

Dated as of July 12, 2013

TABLE OF CONTENTS

Page

1.	DEFINITIONS AND CONSTRUCTION.		2
	1.1	Definitions	2
	1.2	Accounting Terms	2
	1.3	Code	3
	1.4	Construction	3
	1.5	Schedules and Exhibits	3
	1.6	Pro Forma and Other Calculations	3
2.	TERM LOAN AND TERMS OF PAYMENT.		5
	2.1	[Reserved]	5
	2.2	Term Loan	5
	2.3	[Reserved]	6
	2.4	Payments; Reductions of Commitments; Prepayments	6
	2.5	[Reserved]	10
	2.6	Interest Rate:  Rate, Payments, and Calculations	10
	2.7	Crediting Payments; Clearance Charge	11
	2.8	Designated Account	11
	2.9	Maintenance of Loan Account; Statements of Obligations	12
	2.10	Fees	12
	2.11	[Reserved]	12
	2.12	Special Provisions Applicable to LIBOR Rate	12
	2.13	Capital Requirements	13
	2.14	Joint and Several Liability of Borrowers	14
	2.15	Accordion	16
3.	CONDITIONS; TERM OF AGREEMENT.		18
	3.1	Conditions Precedent to the Initial Extension of Credit	18
	3.2	[Reserved]	18
	3.3	Maturity	18
	3.4	Effect of Maturity	18
	3.5	Early Termination by Borrowers	18
	3.6	Conditions Subsequent	18
4.	REPRESENTATIONS AND WARRANTIES.		19
	4.1	Due Organization and Qualification; Subsidiaries	19
	4.2	Due Authorization; No Conflict	20
	4.3	Governmental Consents	20
	4.4	Binding Obligations; Perfected Liens	20
	4.5	Title to Assets; No Encumbrances	21
	4.6	Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims; Locations of Inventory and Equipment	21
	4.7	Litigation	21
	4.8	Compliance with Laws	22
	4.9	No Material Adverse Change	22
	4.10	Solvency; Fraudulent Transfer	22

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Page

	4.11	Employee Benefits	22
	4.12	Environmental Matters	23
	4.13	Intellectual Property	24
	4.14	Leases	24
	4.15	Deposit Accounts and Securities Accounts	24
	4.16	Complete Disclosure	25
	4.17	Material Contracts	25
	4.18	Patriot Act; etc.	25
	4.19	Indebtedness	25
	4.20	Payment of Taxes	25
	4.21	Margin Stock	26
	4.22	Governmental Regulation	26
	4.23	OFAC	26
	4.24	Employee and Labor Matters	26
	4.25	Amended ABL Loan Documents	26
	4.26	Target Acquisition Documents	27
	4.27	[Reserved]	27
	4.28	Use of Proceeds	27
	4.29	Common Enterprise	27
	4.30	Specified Equipment Lease Documents	27
	4.31	Senior Note Indenture	27
	4.32	Insurance	28
	4.33	Centre of Main Interests and Establishments	28
	4.34	Tax Status	28
5.	AFFIRMATIVE COVENANTS.		28
	5.1	Financial Statements, Reports, Certificates	28
	5.2	Collateral Reporting	28
	5.3	Existence	28
	5.4	Maintenance of Properties	28
	5.5	Taxes	29
	5.6	Insurance	29
	5.7	Inspection	29
	5.8	Compliance with Laws	30
	5.9	Environmental	30
	5.10	[Reserved]	31
	5.11	Formation of Subsidiaries	31
	5.12	Further Assurances	31
	5.13	Lender Meetings	32
	5.14	Material Contracts	32
	5.15	Locations of Inventory and Equipment	32
	5.16	Compliance with ERISA and the IRC	32
	5.17	Canadian Employee Benefits	33
	5.18	Post-Closing Restructuring Transactions	33
6.	NEGATIVE COVENANTS.		34
	6.1	Indebtedness	34
	6.2	Liens	34
	6.3	Restrictions on Fundamental Changes	34
	6.4	Disposal of Assets	34

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Page

	6.5		Change Name	35
	6.6		Nature of Business	35
	6.7		Certain Payments of Debt and Amendments	35
	6.8		Senior Note Indenture; Secured Debt Cap	37
	6.9		Restricted Payments	37
	6.10		Accounting Methods	38
	6.11		Investments	38
	6.12		Transactions with Affiliates	38
	6.13		Use of Proceeds	39
	6.14		Limitation on Issuance of Equity Interests	39
	6.15		[Reserved]	39
	6.16		Specified Canadian Pension Plans	39
	6.17		Sale Leaseback Transactions	40
	6.18		Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries	40
	6.19		Limitations on Negative Pledges	40
	6.20		Employee Benefits	41
7.	FINANCIAL COVENANTS.			41
8.	EVENTS OF DEFAULT.			45
9.	RIGHTS AND REMEDIES.			48
	9.1		Rights and Remedies	48
	9.2		Remedies Cumulative	48
	9.3		Appointment of a Receiver	49
10.	WAIVERS; INDEMNIFICATION.			49
	10.1		Demand; Protest; etc.	49
	10.2		The Lender Group’s Liability for Collateral	49
	10.3		Indemnification	49
11.	NOTICES.			50
12.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.			52
13.	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.			53
	13.1		Assignments and Participations	53
	13.2		Successors	56
14.	AMENDMENTS; WAIVERS.			57
	14.1	Amendments and Waivers		57
	14.2	Replacement of Certain Lenders		58
	14.3	No Waivers; Cumulative Remedies		59
15.	AGENT; THE LENDER GROUP.			59
	15.1	Appointment and Authorization of Agent		59
	15.2	Delegation of Duties		60
	15.3	Liability of Agent		60
	15.4	Reliance by Agent		60
	15.5	Notice of Default or Event of Default		60
	15.6	Credit Decision		61

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Page

	15.7	Costs and Expenses; Indemnification	61
	15.8	Agent in Individual Capacity	62
	15.9	Successor Agent	62
	15.10	Lender in Individual Capacity	62
	15.11	Collateral Matters	63
	15.12	Restrictions on Actions by Lenders; Sharing of Payments	64
	15.13	Agency for Perfection	65
	15.14	Payments by Agent to the Lenders	65
	15.15	Concerning the Collateral and Related Loan Documents	65
	15.16	Collateral Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	65
	15.17	Agent May File Proofs of Claim	66
	15.18	Several Obligations; No Liability	67
	15.19	Appointment for the Province of Québec	67
	15.20	Dutch Parallel Debts	68
16.	WITHHOLDING TAXES.		68
	16.1	No Setoff; Payments	68
	16.2	Exemptions	69
	16.3	Lender Indemnification	71
	16.4	Refunds	71
17.	GENERAL PROVISIONS.		71
	17.1	Effectiveness	71
	17.2	Section Headings	71
	17.3	Interpretation	71
	17.4	Severability of Provisions	72
	17.5	[Reserved]	72
	17.6	Debtor-Creditor Relationship	72
	17.7	Counterparts; Electronic Execution	72
	17.8	Revival and Reinstatement of Obligations	72
	17.9	Confidentiality	72
	17.10	Lender Group Expenses	73
	17.11	Survival	73
	17.12	Patriot Act	74
	17.13	Integration	74
	17.14	Administrative Borrower as Agent for Borrowers	74
	17.15	Currency Indemnity	75
	17.16	Anti-Money Laundering Legislation	75
	17.17	Quebec Interpretation	76
	17.18	New Colt and its Subsidiaries	76

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EXHIBITS AND SCHEDULES

Exhibit A-1 Form of Assignment and Acceptance

Exhibit B-1 Form of Term Loan Note

Exhibit C-1 Form of Compliance Certificate

Exhibit D-1 Form of Tax Compliance Certificate

Exhibit D-2 Form of Tax Compliance Certificate

Exhibit D-3 Form of Tax Compliance Certificate

Exhibit D-4 Form of Tax Compliance Certificate

Exhibit I-1 Form of IP Reporting Certificate

Schedule A-1 Agent’s Account

Schedule A-2 Authorized Persons

Schedule C-1 Commitments

Schedule D-1 Designated Account

Schedule E-1 Disqualified Lenders

Schedule L-1 Exclusive Intellectual Property and other Intangible Licenses

Schedule P-1 Permitted Investments

Schedule P-2 Permitted Liens

Schedule P-3 Permitted Holders

Schedule S Security Documents

Schedule 1.1 Definitions

Schedule 3.1 Conditions Precedent

Schedule 3.6 Conditions Subsequent

Schedule 4.1(b) Capitalization of Loan Parties

Schedule 4.2 Due Authorization; No Conflict

Schedule 4.3 Governmental Consents

Schedule 4.4(b) UCC Filing Jurisdictions

Schedule 4.6(a) Jurisdiction of Organization

Schedule 4.6(b) Chief Executive Offices

Schedule 4.6(c) Organizational Identification Numbers

Schedule 4.6(d) Commercial Tort Claims

Schedule 4.6(e) Locations of Inventory and Equipment

Schedule 4.7 Litigation

Schedule 4.9 GAAP

Schedule 4.11 Benefit Plans

Schedule 4.12 Environmental Matters

Schedule 4.14 Leases

Schedule 4.15 Deposit Accounts and Securities Accounts

Schedule 4.19 Permitted Indebtedness

Schedule 4.24 Employee and Labor Matters

Schedule 4.32 Insurance

Schedule 5.1 Financial Statements, Reports, Certificates

Schedule 5.2 Collateral Reporting

Schedule 6.12(d) Agreements with Affiliates

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TERM LOAN AGREEMENT

THIS TERM LOAN AGREEMENT (this “Agreement”), is entered into as of July 12, 2013, by and among:

(i)         the lenders identified on the signature pages hereof (each of such lenders, together with their respective successors and permitted assigns, are referred to hereinafter as a “Lender,” as that term is hereinafter further defined);

(ii)          CORTLAND CAPITAL MARKET SERVICES LLC, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”);

(iii)           COLT DEFENSE LLC, a Delaware limited liability company (“Parent”), COLT FINANCE CORP., a Delaware corporation (“Colt Finance”), NEW COLT ACQUISITION CORP., a Delaware corporation (“Acquisition Sub”), which on the Closing Date shall be merged with and into, NEW COLT HOLDING CORP., a Delaware corporation (“New Colt”), with New Colt surviving the Merger (as hereinafter defined), COLT’S MANUFACTURING COMPANY, LLC, a Delaware limited liability company (“Colt’s Manufacturing”), and COLT CANADA CORPORATION, a Nova Scotia unlimited company (“Colt Canada”, and together with Parent, Colt Finance, Acquisition Sub, New Colt and Colt’s Manufacturing, each individually, a “Borrower” and, collectively, “Borrowers”); and

(v)                     COLT DEFENSE TECHNICAL SERVICES LLC, a Delaware limited liability company (“CDTS”), and COLT INTERNATIONAL COOPERATIEF U.A., a cooperative organized under the laws of the Netherlands registered with the trade register of the Chamber of Commerce in the Netherlands under number 56651317 (“Colt Netherlands” and, together with CDTS and any other Guarantor party hereto from time to time, each individually a “Guarantor” and, collectively, “Guarantors”).

WITNESSETH:

WHEREAS, pursuant to the Target Acquisition Agreement (as hereinafter defined), Acquisition Sub shall merge with and into New Colt, with New Colt as the surviving entity and, upon consummation of the Merger, Parent shall own 100% of the Equity Interests of New Colt;

WHEREAS, upon consummation of the Merger, New Colt will assume all of the obligations of Acquisition Sub under this Agreement and the Loan Documents;

WHEREAS, in connection with the Merger, the Loan Parties shall enter into the Post-Closing Restructuring Transactions (as hereinafter defined), pursuant to which the corporate and capital structure of the Loan Parties shall be restructured, as more fully described in the Post-Closing Restructuring Certificate;

WHEREAS, the Loan Parties shall enter into an amendment or amendments to the ABL Loan Documents (as hereinafter defined) to, among other things, permit the Transactions, including the execution of this Agreement and the transactions contemplated hereby;

WHEREAS, Borrowers have requested that Agent and the Lenders provide a term loan facility to Borrowers to, among other things, finance the merger and Parent’s acquisition of New Colt in connection therewith; and

WHEREAS, Agent and the Lenders have indicated their willingness to provide such financing on the terms and conditions set forth herein.

The parties agree as follows:

1.   DEFINITIONS AND CONSTRUCTION.

1.1Definitions.  Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

1.2Accounting Terms.  Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the financial statements of Parent most recently received by Agent prior to the date hereof; provided, however, that (a) upon the adoption by Parent of IFRS as required by Parent’s independent certified public accountants and notification by Administrative Borrower to Agent of such adoption (the “IFRS Adoption”) or (b) if Administrative Borrower notifies Agent that Borrowers request an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Agent notifies Administrative Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such the IFRS Adoption or Accounting Change or in the application thereof, then Agent and Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such IFRS Adoption or Accounting Change with the intent of having the respective positions of the Lenders and Borrowers after such IFRS Adoption or Accounting Change conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the provisions in this Agreement, including the covenants, shall be calculated in accordance with GAAP as in effect, and as applied by Parent and its Subsidiaries as if no such IFRS Adoption or Accounting Change had occurred.  In the case of the IFRS Adoption or the Accounting Change until such covenants are amended in a manner satisfactory to Parent, Agent and the Required Lenders (i) all calculations made for the purpose of determining compliance with the financial ratios and financial covenants contained herein shall be made on a basis consistent with GAAP in existence immediately prior to such adoption and (ii) financial statements delivered pursuant to Section 5.1 shall be accompanied by a reconciliation showing the adjustments made to calculate such financial ratios and financial covenants.  Notwithstanding anything to the contrary contained herein, all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof.  Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that does not include any qualification, explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or the scope of the audit.  When used herein, the term “financial statements” shall include the notes and schedules thereto.  Whenever the term “Parent” or “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean Parent or Borrowers and their Subsidiaries on a consolidated basis, unless the context clearly requires otherwise.  For purposes of calculations pursuant to the terms of this Agreement, GAAP will be deemed to treat operating leases in a manner consistent with the current treatment under GAAP as in effect on the Closing Date, notwithstanding any modification or interpretive changes thereto that may occur hereafter.

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1.3Code.  Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein and any terms used in this Agreement that are defined in the PPSA and pertaining to Collateral consisting of assets of any Canadian Loan Party shall be construed and defined as set forth in the PPSA unless otherwise defined herein; provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern.

1.4Construction.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and  “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 14.1 or is cured if such Event of Default is capable of being cured.  Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations, the Secured Obligations (as defined in the Security Documents) or the Guarantied Obligations (as defined in the applicable Guaranty) shall mean the repayment in full in cash or immediately available funds of all of the Obligations other than unasserted indemnification Obligations.  Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day.  For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided, that, with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any event consist of at least one full day.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise or the Required Lenders otherwise determine, amounts expressed in US Dollars at any time when used with respect to Foreign Subsidiaries or similar matters shall be deemed to mean the US Dollar Equivalent of such amounts at such time.

1.5Schedules and Exhibits.  All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

1.6Pro Forma and Other Calculations.

(a)Notwithstanding anything to the contrary herein, financial ratios and tests, including Consolidated EBITDA, the Fixed Charge Coverage Ratio and the Secured Leverage Ratio shall be calculated in the manner prescribed by this Section 1.6; provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.6, when calculating Consolidated EBITDA, the Fixed Charge Coverage Ratio and the Secured Leverage Ratio, each as applicable, for purposes of Section 7(a), Section 7(b) and Section 7(c) (other than for the purpose of determining pro forma

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compliance with Section 7(a), Section 7(b) and Section 7(c)), the events described in this Section 1.6 that occurred subsequent to the end of the applicable period shall not be given pro forma effect.  In addition, whenever a financial ratio or test is to be calculated on a pro forma basis, the reference to “4 quarter period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended 4 fiscal quarter period for which Agent has received or is required to have received financial statements (it being understood that for purposes of determining pro forma compliance with Section 7(a), Section 7(b) and Section 7(c), if no 4 quarter period with an applicable level cited in Section 7(a), Section 7(b) and Section 7(c), as applicable, has passed, the applicable level shall be the level for the first 4 quarter period cited in such section with an indicated level).  For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating Consolidated EBITDA, the Fixed Charge Coverage Ratio and the Secured Leverage Ratio, each as applicable, for purposes of Section 7(a), Section 7(b) and Section 7(c) (other than for the purpose of determining pro forma compliance with such Section to the extent referenced in such Section or another Section), each of which shall be based on the financial statements delivered to Agent pursuant to Section 5.1, as applicable, for the relevant period.

(b)For purposes of calculating any financial ratio or test, Specified Transactions (including, with any incurrence or repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.6) that have been made (i) during the applicable period or (ii) if applicable as described in clause (a) above, subsequent to such period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable period.  If, since the beginning of any applicable period, any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Parent or any of its Subsidiaries since the beginning of such period as a result of a Specified Transaction that would have required adjustment pursuant to this Section 1.6, then such financial ratio or test shall be calculated to give pro forma effect thereto in accordance with this Section 1.6.

(c)Whenever pro forma effect is to be given to any Specified Transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Parent, which shall include any adjustments that would be required to be included in a Registration Statement on Form S-1 in accordance with Article 11 of Regulation S-X promulgated under the Securities Act; provided, however, that, without  the prior written consent of the Required Lenders, no such pro forma calculations shall include any cost savings, operating expense reductions, synergies or other similar items.

(d)In the event that (x) Parent or any Subsidiary of Parent incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and not replaced), or (y) Parent or any Subsidiary of Parent issues, repurchases or redeems Disqualified Equity Interests, in each case, included in the calculations of any financial ratio or test, (i) during the applicable period or (ii) subsequent to the end of the applicable period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, or such issuance or redemption of Disqualified Equity Interests, in each case to the extent required, as if the same had occurred on the last day of the applicable period (except in the case of Consolidated EBITDA, the Fixed Charge Coverage Ratio and the Secured Leverage Ratio (or similar ratio), in which case such incurrence, assumption, guarantee, redemption, repayment, retirement or extinguishment of Indebtedness or such issuance, repurchase or

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redemption of Disqualified Equity Interests will be given effect, as if the same had occurred on the first day of the applicable period).  Notwithstanding the foregoing or any other provision contained in the Loan Documents, with respect to the repayment or redemption of Indebtedness with the proceeds of an Excluded Issuance, such repayment or redemption shall be disregarded for all purposes under this Agreement, including the calculation of any financial covenants or ratios and, for the avoidance of doubt, Sections 7(a), (b) and (c), until Parent has delivered the financial information required under Section 5.1 for the first full fiscal quarter of Parent ending after the fiscal quarter in which such repayment or redemption was made.

(e)If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of Consolidated EBITDA, the Fixed Charge Coverage Ratio or the Secured Leverage Ratio is made had been the applicable rate for the entire period (taking into account any interest hedging arrangements applicable to such Indebtedness permitted by this Agreement).  Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Responsible Officer of the Parent to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent or Subsidiary may designate.

2.   TERM LOAN AND TERMS OF PAYMENT.

2.1[Reserved].

2.2Term Loan.

(a)Subject to the terms and conditions of this Agreement, on the Closing Date each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make a term loan (collectively, the “Term Loan”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Term Loan Amount.

(b)Each Term Loan made by each Lender shall be evidenced by this Agreement and, if requested by a Lender, a Term Note payable to such Lender or its registered assigns in the original principal amount of such Term Loan.

(c)Borrowers shall pay to Agent for the account of each Lender the then unpaid principal amount of the Term Loan of such Lender in installments payable on the dates set forth below in an aggregate amount for all Lenders set forth opposite the respective date below:

Installment Date	Aggregate Principal Amount
September 30, 2013	$625,000
December 31, 2013	$625,000
March 31, 2014	$625,000
June 30, 2014	$625,000
September 30, 2014	$1,875,000

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Installment Date	Aggregate Principal Amount
December 31, 2014	$1,875,000
March 31, 2015	$1,875,000
June 30, 2015	$1,875,000
September 30, 2015	$1,875,000
December 31, 2015	$1,875,000
March 31, 2016	$1,875,000
June 30, 2016	$1,875,000
September 30, 2016	$1,875,000

provided, that, the outstanding unpaid principal balance of, and all accrued and unpaid interest on, the Term Loan shall be due and payable on the earlier of (i) the Maturity Date and (ii) the date of the acceleration of the Term Loan in accordance with the terms hereof.  Any principal amount of the Term Loan that is repaid or prepaid may not be reborrowed.  All principal of, interest on, and other amounts payable in respect of the Term Loan shall constitute Obligations hereunder.

2.3[Reserved].

2.4Payments; Reductions of Commitments; Prepayments.

(a)Payments by Borrowers.

(i)           Except as otherwise expressly provided herein, all payments by any Borrower shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (New York time) on the date specified herein.  Any payment received by Agent later than 11:00 a.m. (New York time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(ii)           Unless Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the interest rate then applicable to the Term Loan for each day from the date such amount is distributed to such Lender until the date repaid.

(b)Apportionment and Application.

(i)           So long as no Application Event has occurred and is continuing and except as otherwise provided herein, including with respect to Defaulting Lenders, all principal and interest payments received by Agent shall be apportioned ratably among the Lenders (according to the unpaid principal

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balance of the Obligations to which such payments relate held by each Lender) entitled to such payments and all payments of fees and expenses received by Agent (other than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Obligation to which a particular fee or expense relates.  All payments to be made hereunder by Borrowers shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied, so long as no Application Event has occurred and is continuing, to repay the remaining Term Loan (which payments shall be applied against the Term Loan in the inverse order of maturity), and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law (subject to Section 2.4(b)(v), Section 2.4(d)(ii) and Section 2.4(e)).

(ii)           At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Agent in respect of the Obligations and all proceeds of Collateral received by Agent shall be applied as follows:

(A)first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to Agent under the Loan Documents, until paid in full,

(B)second, to pay any fees then due to Agent under the Loan Documents until paid in full,

(C)third, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid in full,

(D)fourth, ratably, to pay any fees (including any fees, premiums and penalties specified in Section 2.10) then due to any of the Lenders under the Loan Documents until paid in full,

(E)fifth, to pay interest due in respect of the Term Loan until paid in full,

(F)sixth, to pay the principal of the Term Loan (in the inverse order of maturity) until paid in full,

(G)seventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders to pay any other Obligations,

(H)eighth, ratably to pay any Obligations owed to Defaulting Lenders, and

(I)ninth, to Borrowers or such other Person entitled thereto under applicable law.

(iii)           In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment made by any Borrower to Agent and specified by such Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.

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(iv)           For purposes of Section 2.4(b)(ii), “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(v)           In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, then the terms and provisions of this Section 2.4 shall control and govern.

(c)Reduction of Commitments.

(i)           [Reserved].

(ii)           Termination of the Term Loan Commitments.  The Term Loan Commitments shall terminate upon the making of the Term Loan.

(d)Optional Prepayments.

(i)           [Reserved].

(ii)           Term Loan.  On any date occurring after the second anniversary of the Closing Date, Borrowers may, at any time and from time to time, upon at least 5 Business Days’ prior written notice to Agent (or such shorter period as the Required Lenders may agree to in their sole discretion), prepay the principal of the Term Loan, in whole or in part.  Each prepayment made pursuant to this Section 2.4(d)(ii) shall be (1) accompanied by the payment of accrued interest to the date of such payment on the amount prepaid and the payment of any premiums or penalties required by Section 2.10, and (2) in a minimum amount of $500,000, or the remaining balance of the Term Loan, if less.  Each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity.  Borrowers may not optionally prepay the Term Loan pursuant to this Section 2.4(d)(ii) at any time prior to the second anniversary of the Closing Date.

(e)Mandatory Prepayments.

(i)           [Reserved].

(ii)           Dispositions.  Within 3 Business Days of the date of receipt by Parent or any of its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or disposition by Parent or any of its Subsidiaries of assets (including casualty losses or condemnations but excluding (x) sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (e), (i), (j), (l), (m) or (n) of the definition of Permitted Dispositions and (y) any single sale or disposition (including any casualty losses or condemnations) or series of related sales or dispositions for which the aggregate amount of Net Cash Proceeds received from such sales or dispositions or series of related sales or dispositions does not exceed $50,000), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of such Net Cash Proceeds (including condemnation awards and payments in lieu thereof) received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received exceeds $2,500,000 in the aggregate during the term of this Agreement; provided that, so long as (A) no Default or Event of Default shall have occurred and is continuing or would result therefrom, (B) Administrative Borrower shall have given Agent prior written notice of Borrowers’ intention to apply such Net Cash Proceeds to the costs of replacement of the properties or assets that are the subject of such sale or disposition or the cost of purchase or construction of other assets (other than Current Assets) useful in the business of Parent or its Subsidiaries, (C) the Net Cash Proceeds are held in a Deposit Account in which Agent has a perfected first-priority security interest (subject to Permitted Liens), and (D) Parent or its Subsidiaries, as applicable, complete such replacement, purchase, or construction within 180 days after

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the initial receipt of such Net Cash Proceeds, then the Loan Party whose assets were the subject of such disposition shall have the option to apply such monies to the costs of replacement of the assets that are the subject of such sale or disposition or the costs of purchase or construction of other assets useful in the business of such Loan Party unless and to the extent that such applicable period shall have expired without such replacement, purchase, or construction being made or completed, in which case, any amounts remaining in the Deposit Account referred to in clause (C) above shall be paid to Agent and applied in accordance with Section 2.4(f)(ii); provided, further, however, notwithstanding the foregoing, at Parent’s option, Parent may temporarily pay down outstanding amounts drawn under the ABL Credit Agreement with such Net Cash Proceeds (without a permanent reduction in commitments) other than Net Cash Proceeds from Term Priority Collateral prior to the application of such Net Cash Proceeds in accordance with the preceding clause (D) so long as Agent shall have received, prior to any such pay down, evidence satisfactory to the Required Lenders that ABL Agent has established a dollar-for-dollar reserve against the US Borrowing Base or the Canadian Borrowing Base, as applicable, in an amount equal to such Net Cash Proceeds and has agreed to make a loan under the ABL Credit Agreement in an aggregate principal amount equal to the amount of such Net Cash Proceeds so applied or apply such amounts upon the occurrence of the applicable events as required by the terms of this Section 2.4(e)(ii) and Section 2.4(f).  Nothing contained in this Section 2.4(e)(ii) shall permit Parent or any of its Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 6.4.

(iii)           Extraordinary Receipts.  Within 3 Business Days of the date of receipt by Parent or any of its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.

(iv)           Indebtedness and Equity Issuances .  Within 3 Business Days of the date of incurrence or issuance by Parent or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness) or issuance of Equity Interests (other than Excluded Issuances), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such incurrence or issuance.  The provisions of this Section 2.4(e)(iv) shall not be deemed to be implied consent to any such incurrence or issuance otherwise prohibited by the terms of this Agreement.

(v)           Excess Cash Flow.  Within 10 days of delivery to Agent of audited annual financial statements pursuant to Section 5.1, or, if such financial statements are not delivered to Agent on the date such statements are required to be delivered pursuant to Section 5.1, within 10 days after the date such statements were required to be delivered to Agent pursuant to Section 5.1, Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to (x) 75% of the Excess Cash Flow of Parent and its Subsidiaries for such fiscal year minus (y) any voluntary prepayment of the Term Loan made during such fiscal year.

(vi)           Change of Control.  Borrowers shall immediately prepay the outstanding Obligations in the event that a Change of Control shall have occurred.

(vii)           Waivable Mandatory Prepayments.  Anything contained herein to the contrary notwithstanding, in the event Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Term Loan pursuant to this Section 2.4(e), not less than 2 two Business Days prior to the date (the “Required Prepayment Date”) on which Borrowers are required to make such Waivable Mandatory Prepayment, Administrative Borrower shall notify Agent of the amount of such prepayment, and Agent will promptly thereafter notify each Lender of the amount of such Lender’s Pro

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Rata Share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount.  Each such Lender may exercise such option by giving written notice to Administrative Borrower and Agent of its election to do so on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Lender that does not notify Administrative Borrower and Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option).  On the Required Prepayment Date, Borrowers shall pay to Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (A) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such option, to prepay the Term Loans of such Lenders (which prepayment shall be applied to prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f)(ii)) and (B) to the extent of any excess, to Borrowers for working capital and general corporate purposes.

(f)Application of Payments.

(i)           Any prepayments required pursuant to Section 2.4(e) shall be preceded by irrevocable written notice delivered to Agent by 11:00 A.M., New York City time, not less than three (3) Business Days prior to the date of such prepayment, specifying the underlying reason for the mandatory prepayment and the amount of the same.

(ii)           Subject to Section 2.4(f)(iii), each prepayment pursuant to Section 2.4(d) or Section 2.4(e) shall (A) so long as no Application Event shall have occurred and be continuing, be applied, to the outstanding principal amount of the remaining Term Loan until paid in full, and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(ii).  Each such prepayment of the Term Loan shall be applied against the remaining installments of principal of the Term Loan in the inverse order of maturity (for the avoidance of doubt, any amount that is due and payable on the Maturity Date shall constitute an installment).

(iii)           With respect to any mandatory prepayment required by Section 2.4(e)(ii): (A) if the proceeds are from any sale or disposition of, or insurance or any condemnation, taking or other casualty with respect to, any ABL Priority Collateral, such proceeds shall be applied (x) first, to the ABL Obligations, to the extent required by the ABL Credit Agreement (as in effect on the date hereof) until paid in full (but, for the avoidance of doubt, without a permanent reduction in commitments, unless required by the terms of the ABL Credit Agreement), and (y) second, to the principal of the Term Loan in the inverse order of maturity, until paid in full; and (B) if the proceeds are from the sale or disposition of, or insurance or any condemnation, taking or other casualty with respect to, any other assets of the Loan Parties not described in subclause (A), such proceeds shall be applied to the principal of the Term Loan in the inverse order of maturity, until paid in full.

2.5[Reserved].

2.6Interest Rate:  Rate, Payments, and Calculations.

(a)Interest Rate.  Except as provided in Section 2.6(c), all Obligations that have been charged to the Loan Account pursuant to the terms hereof shall bear interest at a rate per annum equal to the LIBOR Rate plus 9.75%.

(b)[Reserved].

(c)Default Rate.  Upon the occurrence and during the continuation of an Event of Default and at the election of Agent at the direction of the Required Lenders, all Obligations shall bear interest at a per annum rate equal to three (3) percentage points above the per annum rate otherwise applicable thereunder.

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(i)[Reserved].

(d)Payment.  All interest, and all fees payable hereunder or under any of the other Loan Documents and all costs and expenses payable hereunder or under any of the other Loan Documents shall be due and payable, in arrears, on the first day of each quarter at any time that Obligations are outstanding, except as otherwise provided herein.  Each Borrower hereby authorizes Agent, from time to time without prior notice to such Borrower, to charge all interest, fees, costs, expenses and other amounts payable hereunder or under any of the other Loan Documents when due and payable to the Loan Account.

(e)Computation.  Interest shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed.  For the purposes of the Interest Act (Canada), the yearly rate of interest to which any rate calculated on the basis of a period of time different from the actual number of days in the year (360 days, for example) is equivalent is the stated rate multiplied by the actual number of days in the year (365 or 366 days) and divided by the number of days in the shorter period (360 days, in the example).

(f)Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  Each Borrower and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, that, anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7Crediting Payments; Clearance Charge.  The receipt of any payment item by Agent shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to Agent’s Account or unless and until such payment item is honored when presented for payment.  Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly.  Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into Agent’s Account on a Business Day on or before 11:00 a.m. (New York time).  If any payment item is received into Agent’s Account on a non-Business Day or after 11:00 a.m. (New York time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.8Designated Account.  Agent is authorized to make any advance of the Term Loan in accordance with this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d).  Borrowers agree to establish and maintain the Designated Account for the purpose of receiving the proceeds of the Term Loan requested by Borrowers and made by the Lenders hereunder.  Unless otherwise agreed by Agent and Borrowers, any Term Loan requested by Borrowers and made by the Lenders hereunder shall be made to the Designated Account.

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2.9Maintenance of Loan Account; Statements of Obligations.  Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with the Term Loan made by the Lenders to Borrowers or for Borrowers’ account and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses.  In accordance with Section 2.7, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account.  Agent shall make available to Borrowers quarterly statements regarding the Loan Account, including the principal amount of the Term Loan interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after Agent first makes such a statement available to Borrowers, Borrowers shall deliver to Agent written objection thereto describing the error or errors contained in such statement.

2.10Fees.

(a)Closing Fee.  Borrowers shall pay to Agent for the account of the Lenders a closing fee in an amount equal to $1,500,000, which fee shall be due and payable in full on the Closing Date.

(b)Agent Fees.  Borrowers shall timely pay to Agent such fees and expenses as are required under the Agent Fee Letter.

(c)Prepayment Premium.  If Borrowers have sent (i) a notice of voluntary prepayment of the Term Loan pursuant to Section 2.4(d)(ii) or (ii) a notice of termination of this Agreement pursuant to Section 3.5 of this Agreement, then on the date set forth as the date of prepayment or termination in such notice, Borrowers shall pay to Agent, in cash, the Applicable Prepayment Premium.  In addition, in the event of the termination of this Agreement and repayment of the Obligations at any time prior to the third anniversary of the Closing Date for any other reason, including (A) acceleration of the Obligations after the occurrence and during the continuation of an Event of Default, (B) foreclosure and sale of, or collection of, Collateral, (C) sale of Collateral in any Insolvency Proceeding, or (D) restructure, reorganization, or compromise of the Obligations by the confirmation of a plan of reorganization or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lenders or profits lost by the Lenders as a result of such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lenders, Borrowers shall pay to Agent, in cash, the Applicable Prepayment Premium, measured as of the date of such termination.

2.11[Reserved].

2.12Special Provisions Applicable to LIBOR Rate.

(i)           In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation or application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to each other Lender, and interest upon the Term Loan of such Lender thereafter shall accrue interest at the Reference Rate, until such Lender determines that it would no longer be unlawful or impractical to do so.

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(ii)           For purposes of this Section 2.12, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith are deemed to have been enacted and become effective after the date of this Agreement.

(iii)           Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate.

2.13Capital Requirements.

(a)If, after the date hereof, any Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital or reserve requirements for banks or bank holding companies, or any change in the interpretation, implementation, or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s obligations hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify Administrative Borrower and Agent thereof.  Following receipt of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 30 days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error).  In determining such amount, such Lender may use any reasonable averaging and attribution methods.  Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided, that, (A) no Borrower shall be required to compensate a Lender pursuant to this Section for any reductions in return incurred more than 180 days prior to the date that such Lender notifies Administrative Borrower of such law, rule, regulation or guideline giving rise to such reductions and of such Lender’s intention to claim compensation therefor and (B) if such claim arises by reason of the adoption of or change in any law, rule, regulation or guideline that is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.  For purposes of this Section 2.13(a), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Basel Committee on Banking Supervision (of any successor or similar authority), the Bank for International Settlements and (in each case) all rules, regulations, orders, requests, guidelines or directives in connection therewith are deemed to have been enacted and become effective after the date of this Agreement.

(b)If any Lender requests additional or increased costs referred to in Section 2.12 or amounts under Section 2.13(a) or sends a notice under Section 2.12(i) relative to changed circumstances (any such Lender, an “Affected Lender”), then such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.12 or Section 2.13(a), as applicable, or would eliminate the illegality or impracticality of determining the LIBOR Rate and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it.  Borrowers agree to pay all reasonable out-of-pocket costs and

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expenses incurred by such Affected Lender in connection with any such designation or assignment.  If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.12 or Section 2.13(a), as applicable, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.12 or Section 2.13(a), as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.12 or Section 2.13(a), as applicable, or indicates that it is no longer unlawful or impractical to determine the LIBOR Rate, may seek a substitute Lender acceptable to the Required Lenders to purchase the Obligations owed to such Affected Lender and such Affected Lender’s Commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and Commitments, pursuant to an Assignment and Acceptance Agreement, and upon such purchase by the Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of this Agreement and such Affected Lender shall cease to be a “Lender” for purposes of this Agreement.

2.14Joint and Several Liability of Borrowers

.

(a)Each Borrower is accepting joint and several liability for the Obligations hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b)Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.14), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.

(c)If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation until such time as all of the Obligations are paid in full.

(d)The Obligations of each Borrower under the provisions of this Section 2.14 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.14(d)) or any other circumstances whatsoever.

(e)Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement).  Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent

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or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower.  Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.14 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.14, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.14 shall not be discharged except by performance and then only to the extent of such performance.  The Obligations of each Borrower under this Section 2.14 shall not be diminished or rendered unenforceable by any bankruptcy, insolvency, winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Agent or Lender.

(f)Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.  Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents.  Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g)The provisions of this Section 2.14 are made for the benefit of Agent, each member of the Lender Group, and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Agent, any member of the Lender Group, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy.  The provisions of this Section 2.14 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.14 will forthwith be reinstated in effect, as though such payment had not been made.

(h)Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash.  Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or any member of the Lender Group hereunder are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization, winding up, arrangement, or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

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(i)Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash.  If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b).

2.15Accordion.

(a)At the option of Borrowers (but subject to the conditions set forth in clause (b) below), upon at least ten (10) Business Days’ prior written notice to Agent (or such shorter time period as Agent and the Required Lenders may agree), the Term Loan Amount may be increased by an amount in the aggregate for all such increases of the Term Loan Amount not to exceed the Available Increase Amount (each such increase, an “Increase”).  Agent shall, upon receipt of such written request from the Borrowers, invite each Lender to increase its Pro Rata Share of the Term Loan Amount (it being understood that no Lender shall be obligated to increase its Pro Rata Share of the Term Loan Amount) in connection with a proposed Increase at the interest rate proposed by Borrowers.  Each Lender shall respond to such request within five (5) Business Days (or such shorter time period as Agent and the Required Lenders may agree) of receipt thereof, and if sufficient Lenders do not agree to increase their Pro Rata Share of the Term Loan Amount in connection with such proposed Increase, then Agent (upon the direction of the Required Lenders) or Borrowers may invite any prospective lender to become a Lender in connection with a proposed Increase (subject to the consent of the Required Lenders (not to be unreasonably withheld, delayed or conditioned)).  Any Increase shall be in an amount of at least $5,000,000 and integral multiples of $1,000,000 in excess thereof.  In no event may the Term Loan Amount be increased pursuant to this Section 2.15 on more than 3 occasions in the aggregate for all such Increases.

(b)Each of the following shall be conditions precedent to any Increase of the Term Loan Amount and the making of the additional portion of the Term Loan (each, an “Additional Portion of the Term Loan” and collectively, the “Additional Portions of the Term Loan”) in connection therewith:

(i)The proceeds of such Additional Portion of the Term Loan shall be used by Borrowers solely to finance the purchase consideration (or a portion thereof) in connection with a Permitted Acquisition.

(ii)Agent or Borrowers have obtained the commitment of one or more Lenders (or other prospective lenders) satisfactory to the Required Lenders and Borrowers to provide the applicable Increase and any such Lenders (or prospective lenders), Borrowers, and Agent (upon the direction of the Required Lenders) have signed a joinder agreement to this Agreement (an “Increase Joinder”), in form and substance satisfactory to Agent, to which such Lenders (or prospective lenders), Borrowers, and Agent are party.

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(iii)Borrowers have delivered to Agent and the Required Lenders updated pro forma Projections (after giving effect to the applicable Increase) for Parent and its Subsidiaries evidencing (A) that on a pro forma basis after giving effect to the applicable Increase, the Secured Leverage Ratio of Parent and its Subsidiaries as of the end of the fiscal quarter most recently ended as to which financial statements were required to be delivered pursuant to this Agreement was at least 0.25 to 1.00 less than the maximum Secured Leverage Ratio permitted pursuant to Section 7(c) for such fiscal quarter and (B) compliance on a pro forma basis with Section 7 for the 4 fiscal quarters (on a quarter-by-quarter basis) immediately following the proposed date of the applicable Increase.

(iv)Borrowers shall have agreed with the Lenders (or prospective lenders) to the making the Additional Portion of the Term Loan with respect to the interest rate applicable to the Additional Portion of the Term Loan (which interest rate may be higher than, equal to, or lower than the interest rate applicable to the Term Loan set forth in this Agreement immediately prior to the date of the making of such Additional Portion of the Term Loan (the date of the effectiveness of the making of such Additional Portion of the Term Loan,  the “Increase Date”)) and shall have notified Agent and the Required Lenders as to the amount of such interest rate.  Any Increase Joinder may, with the consent of the Required Lenders, Borrowers and the Lenders or prospective lenders agreeing to the proposed Increase, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate to effectuate the provisions of this Section 2.15 (including any amendment necessary to effectuate the interest rate for the  Additional Portion of the Term Loan).  Anything to the contrary contained herein notwithstanding, if the total yield (calculated for both the Additional Portion of the Term Loan and the existing Term Loan, including the upfront fees, any interest rate floors and any original issue discount shared with all providers of such Additional Portion of the Term Loan without taking into account any fluctuations in the LIBOR Rate in respect of any such Additional Portion of the Term Loan) exceeds the total yield for the existing Term Loan by 0.25% or more, the interest rate for the existing Term Loan shall be increased so that the total yield in respect of such Additional Portion of the Term Loan is not more than 0.25% higher than the total yield for the existing Term Loan.

(v)Each of the representations and warranties of Parent or its Subsidiaries contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality or Material Adverse Change in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality or Material Adverse Change in the text thereof) as of such earlier date).

(vi)No Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result immediately from the making thereof.

(c)The principal amount of each Additional Portion of the Term Loan shall be repaid in consecutive installments each payable not more frequently than on a quarterly basis and each in an amount equal to or less than  (i) 5.00% per annum of the initial principal amount of such Additional Portion of the Term Loan, in the case of each such installment required to be made on or prior to the date that is the first anniversary of the Closing Date and (ii) 15.00% per annum of the initial principal amount of such Additional Portion of the Term Loan, in the case of each such installment required to be made during the period after the date that is the first anniversary of the Closing Date and up to and including the date that is the third anniversary of the Closing Date.  The outstanding unpaid principal

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balance and all accrued and unpaid interest on each Additional Portion of the Term Loan shall be due and payable on the earlier of (A) the Maturity Date, and (B) the date of the acceleration of such Additional Portion of the Term Loan in accordance with the terms hereof.  Any principal amount of such Additional Portion of the Term Loan that is repaid or prepaid may not be reborrowed.  All principal of, interest on, and other amounts payable in respect of each Additional Portion of the Term Loan shall constitute Obligations hereunder.

(d)Unless otherwise specifically provided herein, all references in this Agreement and any other Loan Document to the Term Loan shall be deemed, unless the context otherwise requires, to include any Additional Portion of the Term Loan made pursuant to the increased Term Loan Amount pursuant to this Section 2.15.

(e)The Term Loan and the Term Loan Amount established pursuant to this Section 2.15 shall constitute the Term Loan and Term Loan Amount under, and shall be entitled to all the benefits afforded by this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests created by the Loan Documents.  Borrowers shall take any actions reasonably required by Agent (or the Required Lenders) to ensure and demonstrate that the Liens and security interests granted by the Loan Documents continue to be perfected under the Code and the PPSA or otherwise after giving effect to the establishment of any such new Term Loan Amount.

3.   CONDITIONS; TERM OF AGREEMENT.

3.1Conditions Precedent to the Initial Extension of Credit.  The obligation of each Lender to make its initial extension of credit provided for hereunder is subject to the fulfillment, to the satisfaction of each of the conditions precedent set forth on Schedule 3.1.

3.2[Reserved].

3.3Maturity.  This Agreement shall continue in full force and effect for a term ending on November 15, 2016 (the “Maturity Date”).  The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and upon notice by Agent to Administrative Borrower or any other Loan Party upon the occurrence and during the continuation of an Event of Default.

3.4Effect of Maturity.  On the Maturity Date, all of the Obligations immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the Obligations in full.  No termination of the obligations of the Lender Group (other than payment in full of the Obligations) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations have been paid in full.  When all of the Obligations have been paid in full, Agent (upon the direction of the Required Lenders) will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and liens previously filed by Agent and Loan Parties shall execute and deliver to Agent a release of Agent and Lenders in form and substance satisfactory to Agent and the Required Lenders.

3.5Early Termination by Borrowers.  Borrowers have the option, at any time at any time after the second anniversary of the Closing Date, upon 5 Business Days’ prior written notice to Agent, to terminate this Agreement by repaying to Agent all of the Obligations in full in accordance with the provisions of Section 2 (which, for the avoidance of doubt, shall include any prepayment fees required by Section 2.10).

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3.6Conditions Subsequent. The obligation of the Lender Group (or any member thereof) to continue to maintain the Term Loan (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of the conditions subsequent set forth on Schedule 3.6 (the failure by Borrowers to so perform or cause to be performed such conditions subsequent as and when required by the terms thereof (unless such date is extended, in writing, by the Required Lenders, which the Required Lenders may do without obtaining the consent of the other members of the Lender Group), shall constitute an immediate Event of Default).

4.   REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Loan Party makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date, and such representations and warranties shall survive the execution and delivery of this Agreement.  Unless otherwise indicated, references in this Article 4 to the “Loan Parties” refer, (i) prior to the consummation of the Merger, solely to Parent, Colt Finance, Acquisition Sub, Colt Canada, CDTS and Colt Netherlands and (ii) after the consummation of the Merger, to Parent, Colt Finance, Acquisition Sub, Colt Canada, CDTS, Colt Netherlands, New Colt and Colt’s Manufacturing.

4.1Due Organization and Qualification; Subsidiaries.

(a)Each Loan Party (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any jurisdiction where the failure to be so qualified could reasonably be expected to result in a Material Adverse Change, (iii) has all requisite power and authority to own and operate its material properties, to carry on its material business as now conducted and as proposed to be conducted and (iv) has all requisite power and authority to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby.

(b)Set forth on Schedule 4.1(b) are the authorized Equity Interests of each Loan Party and each direct Subsidiary of such Loan Party, by class, and a description of the number of shares of each such class that are issued and outstanding, in each case, as of the Closing Date.  Other than as described on Schedule 4.1(b), there are no subscriptions, options, warrants, or calls relating to any shares of any Borrower’s or Subsidiary’s Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument.  No Borrower nor any Subsidiary of Borrowers is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Equity Interests or any security convertible into or exchangeable for any of its Equity Interests.

(c)All of the outstanding Equity Interests of each Subsidiary of a Loan Party have been validly issued and are fully paid and, except with respect to the shares of Colt Canada, non-assessable.

(d)Neither Borrowers nor any of their Subsidiaries are subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of any Loan Party’s Equity Interests or any security convertible into or exchangeable for any such Equity Interests.

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4.2Due Authorization; No Conflict.

(a)As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Loan Party.

(b)As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party do not and will not (i) violate any provision of any material federal, provincial, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, (ii) violate any provisions of the Governing Documents of any Loan Party or its Subsidiaries, (iii) conflict with, result in a material breach of, or constitute (with due notice or lapse of time or both) a material default under any Material Contract of any Loan Party or its Subsidiaries, (iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (v) require any approval of any holders of Equity Interests of a Loan Party or, except as set forth on Schedule 4.2, any approval or consent of any Person under any Material Contract of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect.

4.3Governmental Consents.  Except as set forth on Schedule 4.3, the execution, delivery, and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the Closing Date.

4.4Binding Obligations; Perfected Liens.

(a)Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(b)Agent’s Liens are validly created Liens.  Agent’s Liens will be perfected, first priority Liens, subject as to priority only to the Permitted Liens that have priority by operation of law or unless otherwise permitted hereby, upon (i) in the case of all Collateral in which a security interests may be perfected by filing a financing statements under the Code or the PPSA, as applicable, the filing of the UCC financing statement or PPSA financing statement, as applicable, naming such Borrower or Guarantor as “debtor” and Agent as “secured party” in the filing offices set forth opposite such Borrower’s or such Guarantor’s name on Schedule 4.4(b), (ii) with respect to any deposit account, securities account, commodity account, securities entitlement or commodity contract, the execution of a Control Agreement, (iii) in the case of U.S. or Canadian copyrights, trademarks and patents to the extent that UCC financing statements or PPSA financing statements, as applicable, may be insufficient to establish the rights of a secured party as to certain parties, the recording of the appropriate filings in the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office, as applicable, (iv) in the case of letter-of-credit rights that are not supporting obligations (as defined in the Code), the execution by the issuer or any nominated person of an agreement granting control to Agent over such letter-of-credit rights, and (v) in the case of electronic chattel paper, the completion of steps necessary to grant control to Agent over such electronic chattel paper.

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4.5Title to Assets; No Encumbrances.  Each of the Loan Parties and its Subsidiaries has (a) good and marketable title to (in the case of fee interests in Real Property), (b) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (c) good and marketable title to (in the case of all other personal property), all of their respective assets or property necessary to conduct its business or used in the ordinary course of business.  All of such assets are free and clear of Liens except for Permitted Liens.

4.6Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims; Locations of Inventory and Equipment.

(a)The name (within the meaning of the Code or PPSA, as applicable) and jurisdiction of organization of each Loan Party and each of its Subsidiaries is set forth on Schedule 4.6(a) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement).

(b)The chief executive offices of each Loan Party and each of its Subsidiaries are located at the addresses indicated on Schedule 4.6(b) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement).

(c)Each Loan Party’s and each of its Subsidiaries’ tax identification numbers and organizational identification numbers, if any, are identified on Schedule 4.6(c) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement).

(d)As of the Closing Date, no Loan Party and no Subsidiary of a Loan Party holds any commercial tort claims that exceed $50,000 or more in any one case or $100,000 or more in the aggregate, except as set forth on Schedule 4.6(d).

(e)Each Loan Party’s Inventory and Equipment (other than (x) vehicles, Inventory and Equipment out for repair or in-transit, (y) Inventory and Equipment owned by Persons other than Loan Parties or having an aggregate book value of less than $50,000 and (z) Inventory consigned pursuant to the DCAM Consignment described in clause (b) of the definition of Permitted Dispositions) is located only at the locations identified on Schedule 4.6(e).

4.7Litigation.

(a)There are no actions, suits, or proceedings pending or, to the knowledge of any Loan Party, after due inquiry, threatened in writing against a Loan Party or any of its Subsidiaries that either individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.

(b)Schedule 4.7 sets forth a complete and accurate description, with respect to each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably be expected to result in liabilities in excess of, $50,000 that, as of the Closing Date, is pending or, to the knowledge of any Loan Party, after due inquiry, threatened against a Loan Party or any of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings, (ii) the nature of the dispute that is the subject of such actions, suits, or proceedings, (iii) the procedural status, as of the Closing Date, with respect to such actions, suits, or proceedings, and (iv) whether any liability of the Loan Parties’ and their Subsidiaries in connection with such actions, suits, or proceedings is covered by insurance.

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4.8Compliance with Laws.  No Loan Party nor any of its Subsidiaries (a) is in violation of any applicable material laws, rules, regulations, executive orders, or codes (including Environmental Laws) in any material respect or (b) is subject to or in default in any material respect with respect to any material final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign.

4.9No Material Adverse Change.  All historical financial statements relating to the Loan Parties and their Subsidiaries that have been delivered by any Borrower to Agent have been prepared in accordance with GAAP (except (x) in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments and (y) as set forth on Schedule 4.9) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended.  Since December 31, 2012, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Change.

4.10Solvency; Fraudulent Transfer.

(a)After giving effect to the Closing Date Transactions, each Loan Party is Solvent.

(b)No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with either the Closing Date Transactions or the Post-Closing Restructuring Transactions with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party.

4.11Employee Benefits.

(a)Except as set forth on Schedule 4.11, no Loan Party, none of their Subsidiaries, nor any of their ERISA Affiliates maintains or contributes to any Pension Plan.

(b)(i) Each Loan Party and each of the ERISA Affiliates has complied in all material respects with the terms of ERISA, the IRC and all other applicable laws regarding each Employee Benefit Plan, (ii) no material liability to the PBGC (other than for the payment of current premiums which are not past due) by any Loan Party or ERISA Affiliate has been incurred or is reasonably expected by any Loan Party or ERISA Affiliate to be incurred with respect to any Pension Plan, (iii) no Loan Party nor any of its Subsidiaries maintains, sponsors, administers, contributes to, participates in or has any material liability in respect of any Specified Canadian Pension Plan, nor has any such Person ever maintained, sponsored, administered, contributed or participated in any Specified Canadian Pension Plan, (iv) the Canadian Pension Plans are duly registered under the Income Tax Act (Canada) and any other applicable laws which require registration have been administered in accordance with the Income Tax Act (Canada) and such other applicable law and no event has occurred which could reasonably be expected to cause the loss of such registered status, (v) all obligations of the Loan Parties and their Subsidiaries (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Specified Canadian Pension Plans and the funding agreements therefor have been performed on a timely basis, and (vi) all contributions or premiums required to be made or paid by the Loan Parties and their Subsidiaries to the Specified Canadian Pension Plans have been made on a timely basis in accordance with the terms of such plans and all applicable laws.

(c)Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the IRC has received a favorable determination letter from the Internal Revenue Service or an application for such letter is currently being processed by the Internal Revenue Service.  To the best knowledge of each Loan Party and the ERISA Affiliates after due inquiry, nothing has occurred which would reasonably be expected to prevent, or cause the loss of, such qualification.

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(d)No Notification Event which could reasonably be expected to result in any material liability to any Loan Party or ERISA Affiliate exists or has occurred in the past six (6) years.

4.12Environmental Matters.  Except as set forth on Schedule 4.12:

(a)The operation of the business of, and each of the properties owned or operated by, each Loan Party are in compliance with all Environmental Laws and each Loan Party holds and is in compliance with all Environmental Permits required under Environmental Law, except where any such non-compliance with Environmental Law or failure to hold or comply with such Environmental Permits individually or in the aggregate could not reasonably be expected to result in a Material Adverse Change.

(b)No Environmental Action is pending, or to each Loan Party’s knowledge is threatened, against a Loan Party, any predecessor in interest or any facilities that may have received Hazardous Materials generated by any Loan Party or any predecessor in interest.

(c)No Environmental Action has been asserted, or to each Loan Party’s knowledge is threatened, against a Loan Party, any predecessor in interest or any facilities that may have received Hazardous Materials generated by any Loan Party or any predecessor in interest.

(d)There has been no Release of Hazardous Materials and there are no Hazardous Materials present in violation of Environmental Law at any properties currently, or to the knowledge of any Loan Party, formerly owned or operated by any Loan Party or any predecessor in interest, or at any disposal or treatment facility that received Hazardous Materials generated by any Loan Party or a predecessor in interest, which individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.

(e)No property now, or to the knowledge of any Loan Party, formerly owned or operated by a Loan Party has been used as treatment or disposal site for any Hazardous Material.

(f)No Loan Party has received written notice that an Environmental Lien has attached to any revenues or to any assets or to any property owned or operated by a Loan Party.

(g)No Environmental Law regulates, or requires notification to a Governmental Authority of the Closing Date Transactions or the Post-Closing Restructuring Transactions.

(h)To the knowledge of each Loan Party, there are no facts, conditions or circumstances, including any contractual obligations, that could reasonably be expected to result in an Environmental Action or Environmental Liabilities asserted against a Loan Party or which would require a Loan Party to perform a Remedial Action, which individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.

(i)The Loan Parties have made available to Lenders true and complete copies of all material environmental reports, audits, and investigations  in any Loan Party’s possession or under its reasonable control related to each Real Property and the operations of business of the Loan Parties.

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4.13Intellectual Property.  Except as set forth on the Perfection Certificate dated as of the Closing Date:

(a)Each Loan Party owns, licenses or otherwise has the right to use all Intellectual Property that is necessary for the operation of its business, without infringement upon or conflict with the rights of any other Person with respect thereto.

(b)To the knowledge of the Loan Parties, no Loan Party nor any of its agents or representatives has engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate any of the Loan Party’s material Intellectual Property or hinder its enforcement, which could reasonably be expected to materially impair the value of such Intellectual Property.

(c)None of the Loan Parties’ registered Intellectual Property that is material to the operation of a Loan Party’s business is currently involved in any reexamination, reissue, interference proceeding before any patent office or patent authority, including the United States Patent and Trademark Office and the Canadian Intellectual Property Office, or any similar proceeding, and no such proceedings are pending.

(d)All of the Loan Parties’ Intellectual Property identified in the Perfection Certificate is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, and, to the knowledge of the Loan Parties, is valid and enforceable.

(e)Other than Permitted Liens, all rights with respect to the Intellectual Property owned by each Loan Party are free of all Liens and are fully assignable by the Loan Parties to any Person, without payment, consent of any Person or other condition or restriction.

(f)(i) No claim has been asserted in writing and is pending by any Person challenging or questioning the use of any of the Loan Parties’ Intellectual Property, or the validity or effectiveness of any such Intellectual Property, and (ii) no claim has been asserted in writing and is pending by any Person challenging or questioning the use of any material Intellectual Property owned by any of the Loan Parties, or the validity or effectiveness of any such material Intellectual Property.  Each Loan Party has made or performed all filings, recordings and other acts and has paid all material maintenance fees, annuities and any other required fees and taxes, as deemed necessary by such Loan Party in its reasonable business judgment, to maintain and protect its interest in all material Intellectual Property owned by such Loan Party in full force and effect.

(g)To the knowledge of the Loan Parties, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon or conflicts with any rights owned by any other Person.  No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Loan Parties, threatened, except for such infringements and conflicts which could not reasonably be expected to have a Material Adverse Change.

4.14Leases.  Except as set forth on Schedule 4.14, each Loan Party and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating, and, subject to Permitted Protests, all of such material leases are valid and subsisting and no material default beyond any applicable cure period by the applicable Loan Party or its Subsidiaries exists under any of them.

4.15Deposit Accounts and Securities Accounts.  Set forth on Schedule 4.15 is a listing of all of the Loan Parties’ and their Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.

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4.16Complete Disclosure.  All factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement or the other Loan Documents, and all other such factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender will be, true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided.  The Projections delivered to the Lenders on June 29, 2013, represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered, of the Loan Parties’ and their Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to the Lenders (it being understood that such Projections are subject to uncertainties and contingencies, many of which are beyond the control of the Loan Parties and their Subsidiaries, that no assurances can be given that such Projections will be realized, and that actual results may differ in a material manner from such Projections).

4.17Material Contracts.  Each Material Contract is not in default due to the action or inaction of the applicable Loan Party or any of its Subsidiaries.

4.18Patriot Act; etc.  To the extent applicable, each Loan Party is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act of 2001) (the “Patriot Act”), and (c) the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and the regulations promulgated thereunder.  No part of the proceeds of the loans made hereunder will be used by any Loan Party or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.19Indebtedness.  Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to the Closing Date (other than unsecured Indebtedness outstanding immediately prior to the Closing Date with respect to any one transaction or a series of related transactions in an amount not to exceed $50,000, provided that all such Indebtedness, in the aggregate, shall not exceed $250,000) that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.

4.20Payment of Taxes.  All federal and other material tax returns and reports of each Loan Party and its Subsidiaries required to be filed by any of them have been timely filed, and all Taxes shown

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on such tax returns to be due and payable and all governmental assessments, fees and other charges upon a Loan Party and its Subsidiaries and upon their respective assets, income, businesses and franchises that are due and payable have been paid when due and payable, except to the extent the validity of such Taxes shall be the subject of a Permitted Protest.  No Loan Party knows of any proposed tax assessment (other than those with respect to which the aggregate potential tax liability is less than $100,000) against a Loan Party or any of its Subsidiaries that is not the subject of a Permitted Protest.

4.21Margin Stock.  No Loan Party nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds of the Term Loan made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve.

4.22Governmental Regulation.  No Loan Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable.  No Loan Party nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

4.23OFAC.  No Loan Party nor any of its Subsidiaries is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC.  No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  No proceeds of any loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

4.24Employee and Labor Matters.  Except as set forth on Schedule 4.24, there is (a) no unfair labor practice complaint pending or, to the knowledge of Borrowers, threatened against Parent or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or, to the knowledge of Borrowers, threatened against Parent or its Subsidiaries which arises out of or under any collective bargaining agreement, (b) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in writing against Parent or its Subsidiaries, (c) to the knowledge of Borrowers, after due inquiry, no union representation question existing with respect to the employees of Parent or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of Parent or its Subsidiaries, or (d) any liability or obligation incurred by Parent or any of its Subsidiaries under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied.  The hours worked and payments made to employees of Parent or its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  All material payments due from Parent or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Parent, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.

4.25Amended ABL Loan Documents.  Borrowers have delivered or made available to the Lenders true and correct copies of the ABL Loan Documents.  The transactions contemplated by the ABL

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Loan Documents will be, contemporaneously with the making of the Term Loan hereunder, consummated in accordance with their respective terms and all of the representations and warranties of Parent or its Subsidiaries in the ABL Loan Documents are true and correct in all material respects as of the Closing Date or, to the extent that any such representation or warranty relates solely to an earlier date, as of such earlier date.

4.26Target Acquisition Documents.

(a)Parent has delivered to the Lenders complete and correct copies of the Target Acquisition Documents, including all schedules and exhibits thereto.  None of Parent, New Colt or Acquisition Sub is in default in the performance or compliance with any provisions thereof, the performance or compliance of which is material to the interests of the Lenders.

(b)As of the Closing Date, the Target Acquisition has been consummated in all material respects, in accordance with all applicable laws.  As of the Closing Date, all requisite approvals by Governmental Authorities having jurisdiction over Parent, New Colt, Acquisition Sub and the stockholder representatives party to the Target Acquisition Documents, with respect to the Target Acquisition, have been obtained, except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Lenders.  As of the Closing Date, after giving effect to the transactions contemplated by the Target Acquisition Documents, Parent will have good title to the Equity Interests of New Colt acquired pursuant to the Target Acquisition Agreement, free and clear of all Liens other than Permitted Liens.

4.27[Reserved].

4.28Use of Proceeds.  Borrowers will use the proceeds of the Term Loan made hereunder (a) on the Closing Date to finance the Target Acquisition and to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby and (b) thereafter, consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve).

4.29Common Enterprise.  The Loan Parties make up a related organization of various entities constituting a single economic and business enterprise so that the Loan Parties share an identity of interests such that any benefit received by any one of them benefits the others.  The Loan Parties render services to or for the benefit of certain of the other Loan Parties and purchase or sell and supply goods to or from or for the benefit of certain of the others.  Certain of the Loan Parties have the same chief executive office, certain common officers and directors and generally do not provide consolidating financial statements to creditors.

4.30Specified Equipment Lease Documents.  As of the date hereof, (a) Administrative Borrower has delivered to the Lenders true, correct and complete copies of all material Specified Equipment Lease Documents and (b) the aggregate unpaid amount of all obligations owing by Parent under the Specified Equipment Lease Documents equals $1,672,028.

4.31Senior Note Indenture.  All Obligations, including, without limitation, those to pay principal of and interest (including post-petition interest) on the Term Loan and fees and expenses in connection therewith, constitute Indebtedness (under and as defined in the Senior Note Indenture) that is permitted under Section 3.2(b)(2) of the Senior Note Indenture.  Parent acknowledges that Agent and the Lenders are entering into this Agreement, and extending their Commitments, in reliance upon this Section 4.31.

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4.32Insurance.  The Loan Parties keep their respective properties adequately insured and maintains (a) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law (including, without limitation, against larceny, embezzlement or other criminal misappropriation).  Schedule 4.32 sets forth a list of all insurance maintained by the Loan Parties on the Closing Date.

4.33Centre of Main Interests and Establishments.  Each Dutch Loan Party has its “centre of main interests” (as that term is used in Article 3(7) of the Council of the European Union Regulation No. 1346/2000 as Insolvency Proceeding (the “Regulation”) in its jurisdiction of incorporation.  The Dutch Loan Parties do not have an establishment (as that term is used in Article 2(h) of the Regulation) in any jurisdiction other than The Netherlands.

4.34Tax Status.  No notice under Section 36 of the Tax Collection Act (Invorderingswet 1990) has been given by any Dutch Loan Party.

5.   AFFIRMATIVE COVENANTS.

Each Loan Party covenants and agrees that, until payment in full of the Obligations, the Loan Parties shall and shall cause each of their Subsidiaries to comply with each of the following:

5.1Financial Statements, Reports, Certificates.  Loan Parties shall deliver to Agent, with copies to each Lender, each of the financial statements, reports, and other items set forth on Schedule 5.1 no later than the times specified therein.  In addition, Parent agrees that it shall not change its fiscal year.  In addition, Parent agrees to maintain a system of accounting that enables Parent to produce financial statements in accordance with GAAP.

5.2Collateral Reporting.  Provide Agent (and if so requested by Agent or the Required Lenders, with copies for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified therein.

5.3Existence.  Except as otherwise permitted under Section 6.3 or Section 6.4, at all times maintain and preserve in full force and effect (a) its existence, (b) all rights and franchises, licenses and permits related to any Intellectual Property that are necessary or otherwise material to the conduct of its business as currently conducted, unless otherwise consented to by Agent, and (c) all other rights and franchises, licenses and permits that are necessary or otherwise material to the conduct of the business of Parent and its Subsidiaries; provided, however, that no Loan Party or any of its Subsidiaries shall be required to preserve any such right or franchise, licenses or permits under clause (c) if such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person.

5.4Maintenance of Properties.  Maintain and preserve all of its assets that are necessary or useful in the proper conduct of its business in good working order and condition, except for ordinary wear, tear, and casualty and Permitted Dispositions.

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5.5Taxes.  Cause all Taxes imposed, levied, or assessed against any Loan Party or its Subsidiaries, or any of their respective assets or in respect of any of its income, businesses, or franchises to be paid in full when due (taking into account any valid and effective extension for payment thereof), except (a)  to the extent that the validity of such Tax shall be the subject of a Permitted Protest or (b) delinquent Taxes outstanding in an aggregate amount not to exceed $100,000 at any one time.

5.6Insurance.  Each Loan Party shall, at such Loan Party’s expense, (a) maintain insurance respecting each Loan Party’s assets wherever located, covering liabilities, losses or damages as are customarily are insured against by other Persons engaged in same or similar businesses and similarly situated and located.  All such policies of insurance shall be with financially sound and reputable insurance companies reasonably acceptable to the Required Lenders (it being agreed that, as of the Closing Date, the insurance companies identified on Schedule 4.32 are acceptable to the Required Lenders) and in such amounts as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably satisfactory to the Required Lenders (it being agreed that the amount, adequacy, and scope of the policies of insurance of the Loan Parties in effect as of the Closing Date are acceptable to the Required Lenders and it being further agreed and understood that with respect to insurance in respect of director and officer liability, the amount, adequacy and scope of the policies of such insurance shall be determined in the sole discretion of Parent).  All property insurance policies covering the Collateral are to be made payable to Agent for the benefit of Agent and the Lenders, as their interests may appear, in case of loss, pursuant to a standard loss payable endorsement with a standard noncontributory “lender” or “secured party” clause and are to contain such other provisions as Agent or the Required Lenders may reasonably require to fully protect the Lenders’ interest in the Collateral and to any payments to be made under such policies (and any payments received by Agent shall be applied by Agent or otherwise returned to Borrowers in accordance with the provisions set forth in this Agreement).  All certificates of property and general liability insurance are to be delivered to Agent, with the loss payable (but only in respect of Collateral) and additional insured endorsements (other than directors and officers policies and workers compensation) in favor of Agent and shall provide for not less than 30 days (10 days in the case of non-payment) prior written notice to Agent of the exercise of any right of cancellation.  If any Loan Party fails to maintain such insurance, Agent (upon the direction of the Required Lenders) shall arrange for such insurance, but at such Loan Party’s expense and without any responsibility on Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims.  Borrowers shall give Agent prompt notice of any loss exceeding $50,000 covered by any Loan Party’s casualty or business interruption insurance.  Upon the occurrence and during the continuance of an Event of Default, Agent (upon the direction of the Required Lenders) shall have the sole right to file claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

5.7Inspection.  Permit Agent and the Lenders and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to conduct appraisals and valuations, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times (during normal business hours) and intervals as Agent (upon the direction of the Required Lenders) shall designate and, so long as no Default or Event of Default exists and is continuing, with reasonable prior notice to Administrative Borrower all at such times and intervals as Agent (upon the direction of the Required Lenders) shall request, all at Borrower’s expense; provided, that, as to such examinations and appraisals of Intellectual Property of the Loan Parties, unless an Event of Default exists or has occurred and is continuing, no more than one (1) examination and one (1) appraisal of Intellectual Property in any twelve (12) month period shall be at the expense of Borrowers.

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5.8Compliance with Laws.  Comply with the requirements of all applicable material laws, rules, regulations, and orders of any Governmental Authority in all material respects.

5.9Environmental.

(a)To the extent applicable, comply with all requirements pursuant to and within the timeframes set forth in Connecticut’s Transfer Act (Conn. Gen. Stat. §22a-134, et seq.) as a result of any prior transactions and the Closing Date Transactions, including but not limited to retaining a Licensed Environmental Professional and completing all required filings, authorizations, approvals, notifications, site investigations, and remediation.  The Loan Parties shall provide Agent with copies of all material documents filed with, and material responses from, the Connecticut Department of Environmental Protection, with respect to Connecticut’s Transfer Act.

(b)Keep any property either owned or operated by any Loan Party free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens.

(c)Comply, and use reasonable efforts to cause all tenants and other Persons who may come upon any property owned, leased or operated by a Loan Party to comply, with all Environmental Laws in all material respects and provide to Agent documentation of such compliance which Agent reasonably requests.

(d)Maintain and comply in all material respects with all Environmental Permits required under applicable Environmental Laws.

(e)Take all commercially reasonable steps to prevent any Release of Hazardous Materials in violation of Environmental Law at, on or migrating from the any property owned, leased or operated by the Loan Parties.

(f)Undertake or cause to be undertaken any and all Remedial Actions in response to any Environmental Claim, Release of Hazardous Materials in violation of Environmental Law or violation of Environmental Law, to the extent required by Environmental Law or any Governmental Authority and to repair or remedy any environmental condition or impairment to the Real Property consistent with its current use and, upon request of Agent or the Required Lenders, provide Agent with copies of all data, information and reports generated in connection therewith as Agent or the Required Lenders may request.

(g)Promptly, but in any event within 5 Business Days of its receipt thereof, (i) provide Agent with written notice of any of the following:  (A) any Release of which any Loan Party has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Loan Party; (B) written notice that an Environmental Lien has been filed against any of the real or personal property of any Loan Party, (C) commencement of any Environmental Action or written notice that an Environmental Action will be filed against any Loan Party that such Loan Party reasonably estimates liability in excess of $50,000; (D) material violation of Environmental Laws in, at, on, under or from any part of the Real Property or any improvements constructed thereon; and (E) discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Real Property that could reasonably be expected to cause such Real Property or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws; and (ii) provide such other documents and information as reasonably requested by Agent in relation to any matter pursuant to this Section 5.9(g);

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(h)At the request of the Required Lenders or Agent (at the direction of the Required Lenders) upon the Required Lenders’ sole determination that a Release of Hazardous Materials in excess of a reportable quantity or a violation of Environmental Law may have occurred at, onto or from the Real Property, or upon an Event of Default, the Loan Parties shall provide to Agent and the Lenders, within thirty (30) calendar days after such request, at the sole expense of the Loan Parties, a Phase I Report for any of the Real Property prepared by an environmental consulting firm acceptable to the Required Lenders and, if recommended by the Phase I Report, a Phase II environmental site assessment report .  Without limiting the generality of the foregoing, if the Required Lenders determine at any time that a risk exists that any requested Phase I Report and Phase II report will not be provided within the time referred to above, Agent and/or the Required Lenders may retain an environmental consulting firm to prepare such reports at the sole expense of the Loan Parties, and the Loan Parties shall provide reasonable access to Agent and/or the Required Lenders, such firm and any agents or representatives to their respective properties to undertake such Phase I or Phase II environmental site assessment.

5.10[Reserved].

5.11Formation of Subsidiaries.  At any time that any Loan Party forms any direct or indirect Subsidiary or acquires any direct Subsidiary after the Closing Date, such Loan Party shall (a) within 30 days of such formation or acquisition (or such later date as permitted by the Required Lenders in their sole discretion) cause any such new Subsidiary to provide to Agent a Guaranty and a joinder to the applicable Security Documents, together with such other security documents (including mortgages with respect to any Real Property owned in fee of such new Subsidiary with a fair market value of at least $200,000), as well as appropriate financing statements (and with respect to all property subject to a mortgage, fixture filings), all in form and substance reasonably satisfactory to the Required Lenders (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary); provided, that, a Guaranty or a joinder to the applicable Security Documents, and such other security documents shall not be required to be provided to Agent if the costs to the Loan Parties of providing such Guaranty, executing any such Security Documents or perfecting the security interests created thereby are unreasonably excessive (as determined by the Required Lenders in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the security or guarantee afforded thereby, (b) within 30 days of such formation or acquisition (or such later date as permitted by the Required Lenders in their sole discretion) provide to Agent a pledge agreement (or an addendum to the applicable Security Document) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary reasonably satisfactory to the Required Lenders; provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such other pledge are unreasonably excessive (as determined by the Required Lenders in consultation with Borrowers) in relation to the benefits of Agent and Lenders of the security afforded thereby, and (c) within 30 days of such formation or acquisition (or such later date as permitted by the Required Lenders in their sole discretion) provide to Agent all other documentation reasonably requested by Agent or the Required Lenders (including policies of title insurance or other documentation with respect to all Real Property owned in fee and subject to a mortgage).

5.12Further Assurances.  At any time upon the reasonable request of Agent or the Required Lenders, execute or deliver to Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel

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and all other documents (the “Additional Documents”) that Agent or the Required Lenders may reasonably request in form and substance reasonably satisfactory to Agent and the Required Lenders, to create, perfect, and maintain Agent’s Liens in all of the assets of Parent and its Subsidiaries (other than Excluded Property but, for the avoidance of doubt, including any Intellectual Property and other Collateral located in jurisdictions outside the United States or Canada) (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Parent or its Subsidiaries after the Closing Date with a fair market value in excess of $200,000, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents; provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such documents are unreasonably excessive (as determined by the Required Lenders in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the benefits afforded thereby.  To the maximum extent permitted by applicable law, if any Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time following the request to do so, such Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name, as applicable, and authorizes Agent to file such executed Additional Documents in any appropriate filing office.  In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as Agent or the Required Lenders may reasonably request from time to time (a) in connection with any merger, amalgamation, consolidation, or reorganization permitted under Section 6.3, delivery to Agent of the agreements and documentation set forth in Section 5.11 above, or (b) to ensure that the Obligations are guarantied by the Guarantors and are secured by substantially all of the assets of the Loan Parties (subject to exceptions and limitations contained in the Loan Documents).

5.13Lender Meetings.  On a quarterly basis, at the request of the Required Lenders and upon reasonable prior notice, hold a meeting (at a mutually agreeable location and time or, at the option of Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed, among other things, the financial results of Parent and the financial condition of Parent and its Subsidiaries and the projections presented for the current fiscal year of Parent.

5.14Material Contracts.  Contemporaneously with the delivery of each Compliance Certificate pursuant to Section 5.1, provide Agent with copies of (a) each Material Contract entered into since the delivery of the previous Compliance Certificate, and (b) each material amendment or modification of any Material Contract entered into since the delivery of the previous Compliance Certificate.

5.15Locations of Inventory and Equipment.  Keep each Loan Parties’ Inventory and Equipment (other than (x) vehicles, Inventory and Equipment out for repair or in-transit, (y) Inventory and Equipment owned by Persons other than Loan Parties or having an aggregate book value of less than $50,000 and (z) Inventory consigned pursuant to the DCAM Consignment described in clause (b) of the definition of Permitted Dispositions) only at the locations identified on Schedule 4.6(e); provided, that, any Borrower may amend Schedule 4.6(e) so long as such amendment occurs by written notice to Agent not less than 10 days after the date on which such Inventory or Equipment is moved to such new location.

5.16Compliance with ERISA and the IRC.  In addition to and without limiting the generality of Section 5.8, (a) comply in all material respects with applicable provisions of ERISA and the IRC with respect to all Employee Benefit Plans, (b) without the prior written consent of the Required Lenders, not take any action or fail to take action the result of which could reasonably be expected to  result in a Loan Party or ERISA Affiliate incurring a material liability to the PBGC or to a Multiemployer Plan (other than  to pay contributions or premiums payable in the ordinary course), (c) not participate in any prohibited transaction that could reasonably be expected to result in a material civil penalty, excise

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tax, fiduciary liability or correction obligation under ERISA or the IRC, and (d) furnish to Agent upon the Required Lenders’ written request such additional information about any Employee Benefit Plan for which any Loan Party or ERISA Affiliate could reasonably expect to incur any material liability.  With respect to each Pension Plan (other than a Multiemployer Plan) except as could not reasonably be expected to result in material liability to the Loan Parties, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to ERISA.

5.17Canadian Employee Benefits.

(a)           Cause the Canadian Pension Plans to be duly registered under the Income Tax Act (Canada) and any other applicable laws which require registration and cause such Canadian Pension Plans to be administered in accordance with the Income Tax Act (Canada) and such other applicable law and maintain such registered status.

(b)           Cause each Loan Party and its Subsidiaries to perform its obligations (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Canadian Pension Plans and cause the funding agreements therefor to be performed on a timely basis.

(c)           Cause all contributions or premiums required to be made or paid by the Loan Parties and their Subsidiaries to the Canadian Pension Plans to be made or paid on a timely basis in accordance with the terms of such plans and all applicable laws.

5.18Post-Closing Restructuring Transactions.

(a)If the Loan Parties consummate the Post-Closing Restructuring Transactions, the Loan Parties agree that each of the following conditions precedent shall be satisfied (the date on which such conditions are satisfied, is hereinafter referred to as the “Post-Closing Restructuring Effective Date”):

(i)On or before the Post-Closing Restructuring Effective Date, Parent shall have delivered to the Lenders complete and correct copies of the Post-Closing Restructuring Documents, including all schedules and exhibits thereto, in each case, certified by the Secretary of Parent.  The execution, delivery and performance of each of the Post-Closing Restructuring Documents shall have been duly authorized by all necessary action by each of the parties thereto.  Each Post-Closing Restructuring Document shall be the legal, valid and binding obligation of each of the parties thereto, enforceable against such parties in accordance with its terms, in each case, except (A) as may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights and (B) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.  None of the parties to the Post-Closing Restructuring Documents shall be in default in the performance or compliance with any provisions thereof, the performance or compliance of which is material to the interests of the Lenders.

(ii)No Default or Event of Default shall have occurred and be continuing on the Post-Closing Restructuring Effective Date, nor shall either result immediately from the consummation of the Post-Closing Restructuring Transactions.

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(iii)Agent shall have received a certificate from a Responsible Officer of Parent certifying that the conditions set forth in this Section 5.18(a) have been satisfied.

6.   NEGATIVE COVENANTS.

Each Loan Party covenants and agrees that, until payment in full of the Obligations, the Loan Parties will not and will not permit any of their Subsidiaries to do any of the following:

6.1  Indebtedness.  Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except for Permitted Indebtedness.

6.2  Liens.  Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.

6.3Restrictions on Fundamental Changes.

(a)Enter into any merger, amalgamation, consolidation, reorganization, or recapitalization, or reclassify its Equity Interests except for mergers, consolidations and amalgamations (i) between US Loan Parties, (ii) between Canadian Loan Parties, (iii) between Dutch Loan Parties, provided that, a Borrower is the surviving entity of such merger, amalgamation or consolidation, (iv) between Subsidiaries of Parent which are not Loan Parties and (v) between Guarantors to the extent required for a Permitted Acquisition; provided, that, nothing in this Section 6.3 or in Section 6.5 shall restrict or prohibit Colt Canada from registering as a limited liability company under the laws of the Province of Nova Scotia, Canada (Colt Canada currently being an unlimited liability company) or from continuing its certificate of amalgamation under the laws of another Canadian provincial or federal jurisdiction, so long as Colt Canada otherwise complies with the provisions of Section 6.5 concerning change of corporate name, if applicable, and Section 5.12.

(b)Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except for (i) the liquidation or dissolution of non-operating Subsidiaries of Parent with nominal assets and nominal liabilities or (ii) the liquidation or dissolution of a Loan Party (other than Borrowers) or any of Borrowers’ wholly-owned Subsidiaries so long as all of the assets (including any interest in any Equity Interests) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is not liquidating or dissolving, or

(c)Suspend or terminate all or a substantial portion of its or their business, except as permitted pursuant to clause (a) or (b) above or in connection with the transactions permitted pursuant to Section 6.4.

(d)Notwithstanding the foregoing, nothing in Section 6.3 or 6.5 shall restrict or prohibit the Loan Parties from consummating (i) the Target Acquisition on the Closing Date in accordance with the provisions of the Target Acquisition Documents or (ii) to the extent permitted pursuant to Section 5.17, the Post-Closing Restructuring Transactions in accordance with the provisions of the Post-Closing Restructuring Documents.

6.4Disposal of Assets.  Convey, sell, lease, license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any assets or Equity Interests of Parent or its Subsidiaries, except for Permitted Dispositions or transactions expressly permitted by Section 6.3 or 6.11.

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6.5Change Name.  Change the name, organizational identification number, jurisdiction of organization or organizational identity of any Loan Party; provided, that, any Loan Party may change its name so long as such Loan Party gives written notice to Agent of such change within ten (10) days following such change.

6.6Nature of Business.  Make any change in the nature of its or their business as presently conducted on the Closing Date or acquire any properties or assets that are not reasonably related to the conduct of such business activities; provided, that, the foregoing shall not be construed to prohibit Parent and its Subsidiaries from engaging in any business that is reasonably related or ancillary to its or their business.

6.7Certain Payments of Debt and Amendments.

(a)Make any payment, prepayment, redemption, retirement, defeasance, purchase or sinking fund payment or other acquisition for value of any of its Indebtedness or make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any Indebtedness as a result of any asset sale, change of control issuance and sale of debt and equity securities or similar event, or giving notice of any notice with respect to any of the foregoing, other than the Indebtedness hereunder, under the other Loan Documents, or under the ABL Loan Documents (including, without limitation, by way of depositing money or securities with the trustee therefor before the date required for the purpose of paying any portion of such Indebtedness when due), or otherwise set aside or deposit or invest any sums for such purpose, except that:

(i)The Loan Parties may make regularly scheduled payments of principal and interest in respect of Indebtedness permitted under clause (p) of the definition of “Permitted Indebtedness” as and when due in respect of such Indebtedness in accordance with the terms thereof;

(ii)Borrowers and Guarantors may make payments in respect of Indebtedness permitted under clause (b), (c), (g) or (p) of the definition of “Permitted Indebtedness,” in each case with proceeds of Refinancing Indebtedness as permitted in the definition of the term “Permitted Indebtedness”;

(iii)all Loan Parties may make optional prepayments and redemptions of Indebtedness solely with the proceeds of the issuance and sale of Qualified Equity Interests of Parent that constitutes an Excluded Issuance (as described in clause (d) of the definition thereof); provided, that, as of the date of any such prepayment or redemption, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing;

(iv)Borrowers and Guarantors may make optional prepayments and redemptions of Indebtedness not otherwise expressly provided for in this Section 6.7 (other than Indebtedness owed to Specified Loan Parties unless agreed to in writing by the Required Lenders) in an aggregate amount not exceeding $2,500,000 during the term of this Agreement; provided, that, immediately before and after giving effect to any such payment, (x) the Secured Leverage Ratio is less than 1.00:1.00 and (y) no Event of Default shall exist or have occurred and be continuing;

(v)Parent and its Subsidiaries may make optional prepayments of Permitted Intercompany Advances to the extent permitted by the Intercompany Subordination Agreement; provided, that, (x) so long as on and as of the date of any such prepayment, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing and (y) unless agreed to in writing by the Required Lenders, optional prepayments by a Loan Party of Permitted Intercompany Advances owing to a Specified Loan Party shall not exceed $500,000 in aggregate principal amount during the term of this Agreement;

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(vi)as to payments in respect of any other Permitted Indebtedness not subject to the provisions above in this Section 6.7, Borrowers and Guarantors may make payments of regularly scheduled principal and interest or other mandatory prepayments as and when due in respect of such Indebtedness in accordance with the terms thereof (and in the case of Indebtedness that has been contractually subordinated in right of payment to the Obligations or subject to an intercreditor agreement with Agent solely to the extent such payment is permitted at such time under the subordination and/or intercreditor terms and conditions set forth therein or applicable thereto);

(b)Borrowers shall not, and shall not permit any of their Subsidiaries, directly or indirectly, to amend, modify, or change (or permit the amendment, modification or other change in any manner of) any of the terms or provisions of:

(i)(x) any agreements, documents or instruments in respect of any subordinated indebtedness except to the extent permitted under any intercreditor or subordination agreement applicable thereto and (y) Indebtedness permitted pursuant to clause (w), to the extent not prohibited under the ABL Intercreditor Agreement;

(ii)the certificate of incorporation, memorandum and articles of association, certificate of formation, limited liability agreement, limited partnership agreement or other organizational documents of any Loan Party, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or its Subsidiaries in any material respect and do not adversely affect in any material respect the ability of a Loan Party to be in compliance with the terms hereof or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interests of Agent or Lenders in any material respect;

(iii)any of the Specified Equipment Lease Documents in a manner which increases, or could reasonably be expected to increase, the aggregate unpaid amount of obligations owing by Parent under the Specified Equipment Lease Documents (whether by entering into additional lease schedules or otherwise); provided, that, Parent shall promptly deliver to Agent copies of any amendment, modification or other change to any of the Specified Equipment Lease Documents;

(iv)any of the Target Acquisition Documents, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or its Subsidiaries in any material respect and do not adversely affect in any material respect the ability of a Loan Party to be in compliance with the terms hereof or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interests of Agent or Lenders in any material respect;

(v)any of the Restructuring Documents, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or its Subsidiaries in any material respect and do not adversely affect in any material respect the ability of a Loan Party to be in compliance with the terms hereof or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interests of Agent or Lenders in any material respect; and

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(vi)the Management Agreement, the Consulting Agreement or any other agreement listed on Schedule 6.12(d) except with the prior written consent of the Required Lenders.

6.8Senior Note Indenture; Secured Debt Cap.

(a)           Incur (under and as defined in the Senior Note Indenture) or suffer to exist any Indebtedness (under and as defined in the Senior Note Indenture) pursuant to Section 3.2(b)(1) of the Senior Note Indenture other than (i) Indebtedness under this Agreement and the other Loan Documents and (ii) Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents.

(b)           Permit the amount of the Senior Note Indenture Secured Debt Cap with respect to the Loan Parties at any time to be less than the aggregate outstanding principal amount of the Term Loan plus all Advances, Swing Line Loans, Letter of Credit Usage and Overadvances (as such terms are defined in the ABL Credit Agreement).

6.9Restricted Payments.  Declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:

(a)           Parent and each Subsidiary may declare and make dividend payments or other distributions payable in the Equity Interests of such Person (other than Disqualified Equity Interests);

(b)           any Subsidiary of Parent may make Restricted Payments described in Section 6.12(f);

(c)           any Subsidiary of Parent may pay or make distributions to Parent that are used to make substantially contemporaneous payments to, and Parent may make payments to, repurchase or redeem Equity Interests and options to purchase Equity Interests of Parent held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of Parent pursuant to any management equity subscription agreement, employee agreement or stock option agreement or other agreement with such officer, director or employee or former officer, director or employee; provided, that, (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (ii) the aggregate cash consideration paid for all such payments, repurchases or redemptions shall not in any fiscal year of Parent exceed $250,000;

(d)           Parent may repurchase its Equity Interests to the extent such repurchase is deemed to occur upon (i) the non-cash exercise of stock options to the extent such Equity Interests represents a portion of the exercise price of such options and (ii) the withholding of a portion of such Equity Interests to pay taxes associated therewith, and the purchase of fractional shares of Equity Interests of Parent or any Subsidiary arising out of stock dividends, splits or combinations or business combinations;

(e)           for each taxable year ending after the Closing Date with respect to which Parent is treated as a partnership or a disregarded entity for U.S. federal income tax purposes, Parent may make distributions, advances or other payments to each owner of its Equity Interests, in an amount equal to the product of (i) the portion of Parent’s “taxable income” (as modified below) allocable to such member for such year and (ii) the highest combined marginal federal, state and/or local income tax rate applicable to any such owner for such year; provided, that, for purposes of this clause (e), Parent’s “taxable income” for any year shall be computed (A) with

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respect to any taxable year (or portion thereof) through and including Parent’s fiscal quarter ending June 30, 2013, without any deduction for any interest expense for such year attributable to any indebtedness of Parent used to finance distributions (as determined in accordance with Treasury Regulation Section 1.163-8T) or any indebtedness treated as having refinanced any such indebtedness, or any other interest expense incurred by Parent, that, in each case, is not treated as deductible or federal income tax purposes by each holder of Equity Interests issued by Parent, and (B) with respect to any taxable year, whether ended prior to or after the Closing Date, by including any increases to taxable income for such year as a result of any tax examination, audit or other adjustment; and

(f)           any Subsidiary of Parent may pay dividends or other distributions to a Loan Party (including, without limitation, distributions to a Loan Party upon the reduction of capital (by whatsoever name called, including paid in capital, paid up capital or stated capital) of such Subsidiary).

6.10Accounting Methods.  Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP or as permitted under Section 1.2).

6.11Investments.  Directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment, except for Permitted Investments.

6.12Transactions with Affiliates.  Directly or indirectly, enter into or permit to exist any transaction with any Affiliate (including, without limitation, any transaction to purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliates of Parent or any of its Subsidiaries), except for:

(a)           any employment or compensation arrangement or agreement, employee benefit plan or arrangement, officer or director indemnification agreement or any similar arrangement or other compensation arrangement entered into by Parent or any of its Subsidiaries in the ordinary course of business and payments, issuance of securities or awards pursuant thereto, and including the grant of stock options, restricted stock, stock appreciation rights, phantom stock awards or similar rights to employees and directors in each case approved by the Board of Directors of such Parent or such Subsidiary, provided, that, such transactions are not otherwise prohibited by this Agreement;

(b)           transactions exclusively between the Loan Parties, provided, that, such transactions are not otherwise prohibited by this Agreement;

(c)           transactions permitted under Section 6.3, or 6.9 hereof;

(d)           any agreement as in effect as of the Closing Date and listed on Schedule 6.12(d), as each such agreement may be amended, modified, supplemented, extended or renewed from time to time with the prior written consent of the Required Lenders;

(e)           (x) fees payable by Parent to Sciens Management LLC and Sciens Institutional Services LLC and (y) the reimbursement by Parent of Sciens Management LLC and Sciens Institutional Services LLC of reasonable and customary out-of-pocket expenses of Sciens Management LLC and Sciens Institutional Services LLC incurred in the ordinary course of business in connection with the businesses of Parent and its Subsidiaries, solely to the extent required by terms of the Management Agreement and the Consulting Agreement, in an aggregate amount in respect of subclauses (x) and (y) not to exceed $1,000,000 in the aggregate in any fiscal year of Parent; provided, that, as of the date of any such payment and after giving effect thereto, no Default or Event of Default, in each case, pursuant to Section 8.1, shall exist or have occurred and be continuing;

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(f)           the payment of reasonable and customary (i) fees and reasonable out-of-pocket expenses paid to and (ii) indemnities provided on behalf of, the directors of Parent or any Subsidiary; provided that, in the case of the preceding clause (i) only, the aggregate amount of such payments shall not exceed $250,000 in any fiscal year;

(g)           transactions with customers, clients, suppliers, joint venture partners (other than joint ventures with Sponsor or any of its Affiliates), or purchasers of, or sellers of goods or services to, a Loan Party, in each case, that are Affiliates of the Loan Parties; provided, that (i) any such transaction is made in the ordinary course of business of the Loan Parties and is in compliance with the terms of this Agreement and (ii) any such transaction is on terms that are no less favorable to Parent or the relevant Subsidiary than those that could have been obtained at the time of such transactions in a comparable transaction by Parent or such Subsidiary with an unrelated person; and

(h)           any transaction or series of related transactions involving aggregate payments or the transfer of assets or provisions or services (other than any transactions with Sciens Capital Management), in each case, solely to the extent that (i) the value of any single such transaction (or series of related transactions) does not exceed $50,000 in the aggregate, (ii) the value of all such transactions does not exceed $500,000 in the aggregate during the term of this Agreement, (iii) any such transaction is made pursuant to the reasonable requirements of Parent’s or such Subsidiary’s business (as the case may be) and (iv) any such transaction is upon fair and reasonable terms no less favorable to Parent or such Subsidiary than Parent or such Subsidiary would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.

6.13Use of Proceeds.  Use the proceeds of any loan made hereunder for any purpose other than (a) on the Closing Date to finance the Target Acquisition and to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby and (b) thereafter, consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve).

6.14Limitation on Issuance of Equity Interests.  Except for the issuance or sale of Qualified Equity Interests of Parent and the issuances or sales of Equity Interests by a Loan Party to another Loan Party pursuant to the Post-Closing Restructuring Transactions, issue or sell or enter into any agreement or arrangement for the issuance or sale of any of its Equity Interests.

6.15[Reserved].

6.16Specified Canadian Pension Plans.  (i) Maintain, sponsor, administer, contribute to, participate in or assume or incur any liability in respect of any Specified Canadian Pension Plan, or (ii) acquire an interest in any Person if such Person sponsors, administers, contributes to, participates in or has any liability in respect of, any Specified Canadian Pension Plan, unless the obligation to pay any deficit under any such Specified Canadian Pension Plan would not have priority under applicable law over any Liens created by the Security Documents.

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6.17Sale Leaseback Transactions.  Create, incur or suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to exist, any obligations as lessee for the payment of rent for any real or personal property in connection with any sale and leaseback transaction.

6.18Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries.  Create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of any Loan Party (a) to pay dividends or to make any other distribution on any shares of Equity Interests of such Subsidiary owned by any Loan Party or any of its Subsidiaries, (b) to pay or prepay or to subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries, (c) to make loans or advances to any Loan Party or any of its Subsidiaries or (d) to transfer any of its property or assets to any Loan Party or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing; provided, however, that nothing in any of clauses (a) through (d) of this Section 6.18 shall prohibit or restrict compliance with:

(i)           this Agreement and the other Loan Documents;

(ii)           the ABL Credit Agreement and the other ABL Loan Documents;

(ii)           the Senior Note Indenture;

(iv)           any applicable law, rule or regulation (including, without limitation, applicable currency control laws and applicable state corporate statutes restricting the payment of dividends in certain circumstances);

(v)           in the case of clause (d), customary restrictions on the subletting, assignment or transfer of any specified property or asset set forth in a lease, license, asset sale agreement or similar contract for the conveyance of such property or asset; or

(vi)           in the case of clause (d), any agreement, instrument or other document evidencing a Permitted Lien (or the Indebtedness secured thereby) from restricting on customary terms the transfer of any property or assets subject thereto.

6.19Limitations on Negative Pledges.Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement, instrument, deed, lease or other arrangement that prohibits, restricts or imposes any condition upon the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, or that requires the grant of any security for an obligation if security is granted for another obligation, except the following:  (a) this Agreement and the other Loan Documents, (b) the ABL Credit Agreement and the other ABL Loan Documents, (c) the Senior Note Indenture, (d) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by Section 6.1 of this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (e) any customary restrictions and conditions contained in agreements relating to the sale or other disposition of assets or of a Subsidiary pending such sale or other disposition; provided that such restrictions and conditions apply only to the assets or Subsidiary to be sold or disposed of and such sale or disposition is permitted hereunder and (f) customary provisions in leases restricting the assignment or sublet thereof.  Notwithstanding the foregoing, the limitations set forth in this Section 6.19 shall not be any more restrictive than permitted pursuant to Sections 3.4 and  3.6 of the Senior Note Indenture to the extent in effect.

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6.20Employee Benefits.

(a)Terminate, or permit any ERISA Affiliate to terminate, any Pension Plan in a manner, or take any other action with respect to any Pension Plan, which could reasonably be expected to result in any material liability of any Loan Party or ERISA Affiliate to the PBGC.

(b)Fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Pension Plan, agreement relating thereto or applicable Law, any Loan Party or ERISA Affiliate is required to pay if such failure could reasonably be expected to result in a Material Adverse Change.

(c)Permit to occur, or allow any ERISA Affiliate to permit to occur, any failure to satisfy the minimum funding standards under section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan which exceeds $1,000,000 with respect to all Pension Plans in the aggregate.

(d)Except as could not reasonably be expected to have a material liability, acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to a Loan Party or with respect to any ERISA Affiliate if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (i) any Pension or (ii) any Multiemployer Plan.

(e)Contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan not set forth on Schedule 4.11.

(f)Amend, or permit any ERISA Affiliate to amend, a Pension Plan resulting in a material increase in current liability such that a Loan Party or ERISA Affiliate is required to provide security to such Plan under the IRC.

7.   FINANCIAL COVENANTS.

Parent and each Borrower covenants and agrees that, until payment in full of the Obligations, Parent and each Borrower will comply with each of the following covenants:

(a)           Minimum EBITDA.  Achieve Consolidated EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Amount	Applicable Period
$40,000,000	For the 4 quarter period ending September 30, 2013
$40,000,000	For the 4 quarter period ending December 31, 2013
$40,000,000	For the 4 quarter period ending March 31, 2014

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Applicable Amount	Applicable Period
$40,000,000	For the 4 quarter period ending June 30, 2014
$40,000,000	For the 4 quarter period ending September 30, 2014
$40,000,000	For the 4 quarter period ending December 31, 2014
$40,000,000	For the 4 quarter period ending March 31, 2015
$42,500,000	For the 4 quarter period ending June 30, 2015
$42,500,000	For the 4 quarter period ending September 30, 2015
$45,000,000	For the 4 quarter period ending December 31, 2015
$45,000,000	For the 4 quarter period ending March 31, 2016
$50,000,000	For the 4 quarter period ending June 30, 2016
$50,000,000	For the 4 quarter period ending September 30, 2016

(b)           Fixed Charge Coverage Ratio.  Have a Fixed Charge Coverage Ratio, measured on a quarter-end basis, of at least the applicable ratio set forth in the following table for the applicable period set forth opposite thereto:

Applicable Ratio	Applicable Period
0.90:1.00	For the 4 quarter period ending September 30, 2013
0.90:1.00	For the 4 quarter period ending December 31, 2013
0.90:1.00	For the 4 quarter period ending March 31, 2014
0.90:1.00	For the 4 quarter period ending June 30, 2014

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Applicable Ratio	Applicable Period
0.90:1.00	For the 4 quarter period ending September 30, 2014
0.90:1.00	For the 4 quarter period ending December 31, 2014
0.90:1.00	For the 4 quarter period ending March 31, 2015
0.90:1.00	For the 4 quarter period ending June 30, 2015
0.95:1.00	For the 4 quarter period ending September 30, 2015
0.95:1.00	For the 4 quarter period ending December 31, 2015
0.95:1.00	For the 4 quarter period ending March 31, 2016
0.95:1.00	For the 4 quarter period ending June 30, 2016
0.95:1.00	For the 4 quarter period ending September 30, 2016

(c)           SecuredLeverage Ratio.  Have a Secured Leverage Ratio, measured on a quarter-end basis, of not greater than the applicable ratio set forth in the following table for the applicable period set forth opposite thereto:

Applicable Ratio	Applicable Period
1.20:1.00	For the 4 quarter period ending September 30, 2013
1.20:1.00	For the 4 quarter period ending December 31, 2013
1.20:1.00	For the 4 quarter period ending March 31, 2014
1.20:1.00	For the 4 quarter period ending June 30, 2014

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Applicable Ratio	Applicable Period
1.20:1.00	For the 4 quarter period ending September 30, 2014
1.10:1.00	For the 4 quarter period ending December 31, 2014
1.10:1.00	For the 4 quarter period ending March 31, 2015
1.00:1.00	For the 4 quarter period ending June 30, 2015
1.00:1.00	For the 4 quarter period ending September 30, 2015
1.00:1.00	For the 4 quarter period ending December 31, 2015
0.90:1.00	For the 4 quarter period ending March 31, 2016
0.90:1.00	For the 4 quarter period ending June 30, 2016
0.80:1.00	For the 4 quarter period ending September 30, 2016

(d)           Capital Expenditures.  Make Capital Expenditures (excluding the amount, if any, of Capital Expenditures made with Net Cash Proceeds reinvested pursuant to the proviso in Section 2.4(e)(ii) and Capital Expenditures made from the proceeds of any Excluded Issuances (as defined in clause (c)(ii) of the definition thereof) measured on a quarter-end basis, of less than or equal to the applicable amount set forth in the following table for the applicable period set forth opposite thereto; provided, however, notwithstanding the foregoing, for each of the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015, the Loan Parties shall be permitted to make such Capital Expenditures in each such quarter in an amount that is the greater of (i) $10,000,000 less the actual amount of such Capital Expenditures made in the immediately preceding 3 quarter period and (ii) $2,500,000:

Applicable Amount	Applicable Period
$12,000,000	For the 4 quarter period ending September 30, 2013
$12,000,000	For the 4 quarter period ending December 31, 2013
$12,000,000	For the 4 quarter period ending March 31, 2014

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Applicable Amount	Applicable Period
$12,000,000	For the 4 quarter period ending June 30, 2014
$12,000,000	For the 4 quarter period ending September 30, 2014
$12,000,000	For the 4 quarter period ending December 31, 2014
$10,000,000	For the 4 quarter period ending March 31, 2015
$10,000,000	For the 4 quarter period ending June 30, 2015
$10,000,000	For the 4 quarter period ending September 30, 2015
$10,000,000	For the 4 quarter period ending December 31, 2015
$10,000,000	For the 4 quarter period ending March 31, 2016
$10,000,000	For the 4 quarter period ending June 30, 2016
$10,000,000	For the 4 quarter period ending September 30, 2016

8.   EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

8.1           If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations;

8.2           If any Loan Party or any of its Subsidiaries:

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(a)           fails to perform or observe any covenant or other agreement contained in any of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if any Borrower or any other Loan Party is not in good standing in its jurisdiction of organization), 5.6, 5.7 (solely if any Borrower refuses to allow Agent or its representatives or agents to visit such Borrower’s properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss such Borrower’s affairs, finances, and accounts with officers and employees of such Borrower), 5.11, 5.13, or 5.16 of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 6 of the Security Agreement; or

(b)           fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of 10 days after the earlier of (i) the date on which such failure shall first become known to a Responsible Officer of any Loan Party or (ii) the date on which written notice thereof is given to Administrative Borrower by Agent;

8.3           If one or more judgments, orders, or awards for the payment of money involving an aggregate amount of $1,000,000, or more (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a) there is a period of 30 consecutive days at any time after the entry of any such judgment, order, or award during which (1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (2) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced upon such judgment, order, or award;

8.4           If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries;

8.5           If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief shall have been issued or entered therein;

8.6           If a Loan Party or any of its Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of the business affairs of Parent and its Subsidiaries, taken as a whole;

8.7           If there is (a) a default in respect of one or more agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to a Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount of $1,000,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder, (b) a default in respect of one or more Material Contracts or (c) a default in respect of or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party involving an aggregate amount of $1,000,000 or more;

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8.8           If any warranty, representation, certificate, statement, or Record made herein or in any other Loan Document or delivered in writing to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

8.9           If the obligation of any Guarantor under the applicable Guaranty ceases to be in full force and effect;

8.10           If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent of Permitted Liens which are permitted purchase money Liens or the interests of lessors under Capital Leases, first priority Lien on Collateral covered thereby having an aggregate book value in excess of $100,000, except (a) as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement or (b) as the result of an action or failure to act on the part of Agent;

8.11           (a) The occurrence of any damage to, or loss, theft or destruction of, any Collateral having an aggregate book value in excess of $500,000 (exclusive of any damage to Collateral covered by insurance pursuant to which the insurer has not denied coverage) if (i) the proceeds of such insurance are not received by the Loan Parties within 120 days of such occurrence and (ii) such Collateral is not repaired and/or replaced within 150 days of such occurrence or (b) any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than 15 consecutive days, the cessation or substantial curtailment of material revenue producing activities of the Loan Parties, taken as a whole;

8.12           The loss, suspension or revocation of, or failure to renew, any material license or permit now held or hereafter acquired by any Loan Parties;

8.13           (a) The indictment (or an indictment threatened in writing) of any Loan Party (or any executive officer thereof acting in such capacity as an executive officer and not in his or her personal capacity) under any criminal statute, or (b) commencement of, or commencement threatened in writing of, criminal or civil proceedings against any Loan Party (or any executive officer thereof acting in such capacity as an executive officer and not in his or her personal capacity), solely to the extent that pursuant to such indictment, statute or proceedings, the penalties or remedies sought or available in connection therewith include forfeiture to any Governmental Authority of any material portion of the property of the Loan Parties, taken as a whole;

8.14           The validity or enforceability of any Loan Document shall at any time for any reason  (other than solely as the result of an action or failure to act on the part of Agent) be declared to be null and void, or a proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that such Loan Party or its Subsidiaries has any liability or obligation purported to be created under any Loan Document;

8.15           If any Loan Party ceases to have the right to use, or the Loan Parties are not in possession and control of, a material amount of the Specified Government Property;

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8.16           (a) The occurrence of an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, which could reasonably be expected to result in liability in excess of $1,000,000; (b) the imposition of any liability in excess of $1,000,000 under Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any of its ERISA Affiliates, (c) the occurrence of a nonexempt prohibited transaction under Section 406 or 407 of ERISA for which any Loan Party may be directly or indirectly liable and which is reasonably expected to result in a liability to any Loan Party in excess of $1,000,000, (d)  receipt from the Internal Revenue Service of notice of the failure of any Employee Benefit Plan to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Employee Plan to fail to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code or (e) the imposition of any lien on any of the rights, properties or assets of any Loan Party or any of its ERISA Affiliates, in either case pursuant to Title IV of ERISA, and which lien secures a liability in excess of $1,000,000;

8.17           An event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Effect with respect to the Loan Parties and their Subsidiaries;

8.18           A Dutch Loan Party gives notice under Section 36(2) of the 1990 Tax Collection Act (Invorderingswet 1990); or

8.19           A Change of Control shall occur.

9.   RIGHTS AND REMEDIES.

9.1Rights and Remedies.  Upon the occurrence and during the continuation of an Event of Default, Agent, upon the instruction of the Required Lenders, shall (in each case under clause (a) by written notice to Administrative Borrower), in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

(a)           declare the Obligations, whether evidenced by this Agreement or by any of the other Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower;

(b)           [Reserved]; and

(c)           exercise all other rights and remedies available to Agent or the Lenders under the Loan Documents or applicable law.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to any Borrower or any other Person or any act by the Lender Group, and the Obligations, inclusive of all accrued and unpaid interest thereon and all fees and all other amounts owing under this Agreement or under any of the other Loan Documents, shall automatically and immediately become due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by each Loan Party.

9.2Remedies Cumulative.  The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative.  The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, the PPSA, by law, or in equity.  No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver.  No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

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9.3Appointment of a Receiver.  Upon the occurrence and during the continuance of an Event of Default, Agent (upon the direction of the Required Lenders) shall seek the appointment of a receiver, interim receiver, manager or receiver and manager (a “Receiver”) under the laws of Canada or any province thereof to take possession of all or any portion of the Collateral of any Loan Party or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a Receiver without the requirement of prior notice or a hearing.  Any such Receiver shall, to the extent permitted by law, so far as concerns responsibility for his/her acts, be deemed to be an agent of such Loan Party and not Agent and the Lenders, and Agent and the Lenders shall not be in any way responsible for any misconduct, negligence or non-feasance on the part of any such Receiver, or his/her servants or employees, absent the gross negligence, willful misconduct or bad faith of the Agent or the Lenders as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  Subject to the provisions of the instrument appointing him/her, any such Receiver shall have power to take possession of Collateral of any Loan Party, to preserve Collateral of such Loan Party or its value, to carry on or concur in carrying on all or any part of the business of such Loan Party and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of Collateral of such Loan Party.  To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including a Loan Party, enter upon, use and occupy all premises owned or occupied by a Loan Party wherein Collateral of such Loan Party may be situated, maintain Collateral of a Loan Party upon such premises, borrow money on a secured or unsecured basis and use Collateral of a Loan Party directly in carrying on such Loan Party’s business or as security for loans or advances to enable the Receiver to carry on such Loan Party’s business or otherwise, as such Receiver shall, in its discretion, determine.  Except as may be otherwise directed by Agent (upon the direction of the Required Lenders), all money received from time to time by such Receiver in carrying out his/her appointment shall be received in trust for and paid over to Agent.  Every such Receiver may, in the discretion of the Required Lenders, be vested with all or any of the rights and powers of Agent and the Lenders.  Agent (upon the direction of the Required Lenders) shall, either directly or through its nominees, exercise any or all powers and rights given to a Receiver by virtue of the foregoing provisions of this paragraph.

10.   WAIVERS; INDEMNIFICATION.

10.1Demand; Protest; etc.   Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which such Borrower may in any way be liable.

10.2The Lender Group’s Liability for Collateral.  Each Borrower hereby agrees that:  (a) so long as Agent complies with its obligations, if any, under the Code and the PPSA, the Lender Group shall not in any way or manner be liable or responsible for:  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers, other than any such loss or damage resulting from the gross negligence, willful misconduct or bad faith of the Agent or any member of the Lender Group, as finally determined by a court of competent jurisdiction.

10.3Indemnification.  Borrowers shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations,

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proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys (limited to one U.S. counsel to Agent-Related Persons and one U.S. counsel to Lender-Related Persons, one Canadian counsel to Agent-Related Persons and one Canadian counsel to Lender-Related Persons, one Dutch counsel to Agent-Related Persons and one Dutch counsel to Lender-Related Persons and any local or regulatory counsel to Agent-Related Persons and Lender-Related Persons reasonably selected by Agent, one additional counsel for the Lenders (taken as a whole) if an Event of Default has occurred and is continuing and, if the interests of any Agent-Related Person or Lender-Related Person are distinctly and disproportionately affected, one additional counsel for such affected Person), experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (promptly upon demand of Agent but in any event not later than 5 days of demand therefor by Agent irrespective of (1) the provisions of Section 17.10 hereof and (2) whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Parent’s and its Subsidiaries’ compliance with the terms of the Loan Documents (provided, however, that the indemnification in this clause (a) shall not extend to (i) disputes solely between or among the Lenders or (ii) disputes solely between or among the Lenders and their respective Affiliates; it being understood and agreed that the indemnification in this clause (a) shall extend to Agent (but not the Lenders) relative to disputes between or among Agent (in its capacity as such) on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any Environmental Liabilities, Environmental Action or Remedial Action, including any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by Parent or any of its Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”); provided, that, no Borrower shall be obligated to indemnify any Indemnified Person under this Section 10.3 for any Taxes (except Taxes that represent claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, disbursements, etc., arising solely from any non-Tax claim), which shall be governed solely by Section 16.  The foregoing to the contrary notwithstanding, no Borrower shall have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence, willful misconduct or bad faith of such Indemnified Person or its officers, directors, employees, attorneys, or agents.  This provision shall survive the termination of this Agreement and the repayment of the Obligations.  If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which any Borrower was required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto.

11.   NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile.  In the case of notices or demands to Loan Parties or Agent, as the case may be, they shall be sent to the respective address set forth below:

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If to Loan Parties:	Colt Defense LLC 547 New Park Avenue West Hartford, CT  06110 Attn: Jeffrey Grody Fax No. (860) 244-1442 Phone: (860) 232-4489 Email: jgrody@colt.com
with copies to:	Cahill Gordon & Reindel LLP 80 Pine Street New York, New York  10005 Attn:  William J. Miller, Esq. Fax No.: (212) 269-5420 Phone: (212) 701-3036 Email: wmiller@cahill.com and Cahill Gordon & Reindel LLP 80 Pine Street New York, New York  10005 Attn:  Josiah M. Slotnik, Esq. Fax No.: (212) 378-2925 Phone: (212) 701-3637 Email: jslotnik@cahill.com
If to Agent:	Cortland Capital Market Services LLC 225 W. Washington Street, 21st Floor Chicago, Illinois 60606 Fax No. (312) 376-0751 Attn: Ryan Morick Phone: (312) 564-5072 Email: ryan.morick@cortlandglobal.com Attn: Beata Konopko Phone: (312) 564- 5080 Email: beata.konopko@cortlandglobal.com
with copies to:	Holland & Knight LLP 131 S. Dearborn Street, 30th Floor Chicago, Illinois 60603 Attn: Joshua M. Spencer Fax No. (312) 578-6666 Phone: (312) 715-5709 Email: joshua.spencer@hklaw.com
and to:	The Initial Lenders and their counsel referred to on Schedule C-1

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Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party.  All notices or demands sent in accordance with this Section 11, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient) and (c) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment).

12.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a)THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES.

(b)THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE OF NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c)TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

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(d)SUBJECT TO THE LAST SENTENCE OF THIS SECTION (D) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS  LOCATED IN THE COUNTY OF NEW YORK AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

13.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1Assignments and Participations.

(a)Any Lender may at any time assign to one or more other Lenders or other entities (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of the Obligations at the time owing to it), provided, that, any such assignment shall be subject to the following conditions:

(i)The aggregate amount of the principal outstanding balance of the Obligations of the assigning Lender subject to such assignment shall be not less than $1,000,000, unless the Required Lenders otherwise consent, except that such minimum amount shall not apply to (A) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender or a Related Fund or (B) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $1,000,000 or (C) in the case of an assignment of the entire remaining amount of the assigning Lender’s Obligations at the time owing to it;

(ii)Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(iii)The consent of the Required Lenders shall be required for any assignment, other than any assignment to a Lender, an Affiliate of a Lender or a Related Fund:

(iv)The parties to each assignment shall execute and deliver to the Agent an Assignment and Acceptance (in the form of Exhibit A-1), together with a processing fee of $3,500, provided, that Agent may, in its discretion, elect to reduce or waive such processing fee in the case of any assignment, and the assignee, if it is not a Lender, shall deliver to the Agent an administrative questionnaire in a form satisfactory to Agent.

(v)No such assignment shall be made to (A) a Loan Party or an Affiliate of a Loan Party, (B) any Defaulting Lender or any of its Subsidiaries or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or one of its Subsidiaries, (C) a natural Person or (D) so long as no Default or Event of Default has occurred and is continuing at the time of such assignment, any Disqualified Lender.  For the avoidance of doubt, in the case of the preceding clause (D), an assigning Lender (x) shall be entitled conclusively, and shall be fully permitted, to rely upon the representation made by an Assignee, pursuant to Section 3(c) of the

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Assignment and Acceptance between such assigning Lender and such Assignee, that such Assignee is not a Disqualified Lender and (y) shall have no liability under this Agreement or any other Loan Document as a result of making such assignment to such Assignee if such representation shall have been untrue or incorrect unless, in either case, such assigning Lender has actual knowledge that such Assignee is a Disqualified Lender at the time of such assignment.

(vi)Borrowers and Agent may continue to deal solely and directly with a Lender in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (B) such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance and Agent has notified the assigning Lender of its receipt thereof in accordance with this Section 13.1(a) and the satisfaction of the other conditions herein.

(b)From and after the date that Agent has recorded the assignment in the Register and Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a).

(c)By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

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(d)Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee.

(e)Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decreases the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, and (v) all amounts payable (other than with respect to Section 16) by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.  The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Loan Parties, the Collections of Loan Parties, the Collateral, or otherwise in respect of the Obligations.  For the avoidance of doubt, a Participant shall be entitled to the benefits of Section 16 (subject to the requirements and limitations therein, including the requirements under Section 16.2 and the provisions of Section 14.2) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to this Section 13.1.  No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

(f)In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9, disclose all documents and information which it now or hereafter may have relating to Parent and its Subsidiaries and their respective businesses.

(g)Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

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(h)Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Term Loan (and the principal amount thereof and stated interest thereon) held by such Lender (each, a “Registered Loan”).  A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s).  Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary.

(i)In the event that a Lender sells participations in the Registered Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Registered Loans held by it (and the principal amount (and stated interest thereon) of the portion of such Registered Loans that is subject to such participations) (the “Participant Register”).  A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide).  Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.

(j)Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register in the extent it has one) available for review by Borrowers from time to time as Borrowers may reasonably request.

(k)In order to comply with the Dutch Financial Supervision Act (Wet op het financieel toezicht), the amount transferred under this Section 13.1 shall include an outstanding portion of at least EUR 100,000 (or its equivalent in other currencies) per Lender or such other amount as may be required from time to time by the Dutch Financial Supervision Act (or implementing legislation) or if less, the new Lender shall confirm in writing to Borrower that it is a professional market party within the meaning of the Dutch Financial Supervision Act.

13.2Successors.  This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and notice thereof to Agent and any prohibited assignment shall be absolutely void ab initio.  No consent to assignment by the Lenders shall release any Borrower from its Obligations.  A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and no consent or approval by any Borrower is required in connection with any such assignment.

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14.   AMENDMENTS; WAIVERS.

14.1Amendments and Waivers.

(a)No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by any Loan Party therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following:

(i)increase the amount of or extend the expiration date of any Commitment of any Lender,

(ii)postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(iii)reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except (y) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders), and (z) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii)),

(iv)amend, modify, or eliminate this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(v)amend, modify, or eliminate Section 15.11,

(vi)release Agent’s Lien in and to any of the Collateral, except as permitted by Section 15.11,

(vii)amend, modify, or eliminate the definition of “Required Lenders” or “Pro Rata Share,”

(viii)contractually subordinate any of Agent’s Liens, except as permitted by Section 15.11,

(ix)release any Borrower or any Guarantor from any obligation for the payment of money or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents, except in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents,

(x)amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or (ii) or Section 2.4(f),

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(xi)amend, modify, or eliminate the definition of Term Loan Amount, or

(xii)amend, modify, or eliminate any of the provisions of Section 13.1(a) to permit a Loan Party or an Affiliate of a Loan Party to be permitted to become an Assignee.

(b)No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive (i) any of the terms or provisions of Section 2.10, without the written consent of the Required Lenders and Borrowers, and (ii) any provision of Section 15 pertaining to Agent, or any other rights or duties of Agent under this Agreement or the other Loan Documents, without the written consent of Agent, Borrowers and the Required Lenders.  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, the consent of Loan Parties and Lenders shall not be required for the exercise by Agent of any of its rights under this Agreement in accordance with the terms of this Agreement.

(c)Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, elimination, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of any Loan Party, shall not require consent by or the agreement of any Loan Party, and (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender other than any of the matters governed by Section 14.1(a)(ii) and (iii).

14.2Replacement of Certain Lenders

.

(a)If (i) any action to be taken by the Lender Group or Agent hereunder requires the consent, authorization, or agreement of all Lenders or all Lenders affected thereby and if such action has received the consent, authorization, or agreement of the Required Lenders but not of all Lenders or all Lenders affected thereby, or (ii) any Lender makes a claim for compensation under Section 16 and such Lender has declined to designate a different lending office, then Borrowers or Agent, upon at least 5 Business Days’ prior irrevocable notice, may permanently replace any Lender that failed to give its consent, authorization, or agreement (a “Holdout Lender”) or any Lender that made a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders, and the Holdout Lender or Tax Lender, as applicable, shall have no right to refuse to be replaced hereunder.  Such notice to replace the Holdout Lender or Tax Lender, as applicable, shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

(b)Prior to the effective date of such replacement, the Holdout Lender or Tax Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender or Tax Lender, as applicable, being repaid in full its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but including all interest, fees and other amounts that may be due in payable in respect thereof and its existing rights to payment pursuant to Section 16).  If the Holdout Lender or Tax Lender, as applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Holdout Lender or Tax Lender, as applicable, and irrespective of whether Agent executes and delivers such Assignment and Acceptance, the Holdout Lender or Tax Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Holdout Lender or Tax Lender, as applicable, shall be made in accordance with the terms of Section 13.1.  Until such time as one or more Replacement Lenders shall have acquired all of the Obligations and the other rights and obligations of the Holdout Lender or Tax Lender, as applicable, hereunder and under the other Loan Documents, the Holdout Lender or Tax Lender, as applicable, shall remain obligated to make the Holdout Lender’s or Tax Lender’s, as applicable, Pro Rata Share of Term Loan.

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14.3No Waivers; Cumulative Remedies.  No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof.  No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated.  No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by each Loan Party of any provision of this Agreement.  Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

15.   AGENT; THE LENDER GROUP.

15.1Appointment and Authorization of Agent.  Each Lender hereby designates and appoints Cortland as its agent under this Agreement.  The other Loan Documents and the ABL Intercreditor Agreement and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and the ABL Intercreditor Agreement and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document and the ABL Intercreditor Agreement, together with such powers as are reasonably incidental thereto.  Agent agrees to act as agent for and on behalf of the Lenders on the conditions contained in this Section 15.  Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties.  Each Lender hereby further authorizes Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral.  Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents.  Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Parent and its Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) exclusively receive, apply, and distribute the Collections of Parent and its Subsidiaries as provided in the Loan Documents, (d) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Parent and its Subsidiaries, (e) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Parent or its Subsidiaries, the Obligations, the Collateral, the Collections of Parent and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (f) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

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15.2Delegation of Duties.  Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

15.3Liability of Agent.  None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Parent or any of its Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Parent or its Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any Lenders to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Parent or its Subsidiaries.

15.4Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent.  Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable.  If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5Notice of Default or Event of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or any Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.”  Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual

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knowledge.  If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default.  Each Lender shall be solely responsible for giving any notices to its Participants, if any.  Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, however, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

15.6Credit Decision.  Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Parent and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender.  Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.  Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of any Borrower or any other Person party to a Loan Document.  Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.  Each Lender acknowledges that Agent does not have any duty or responsibility, either initially or on a continuing basis to provide such Lender with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement.

15.7Costs and Expenses; Indemnification.  Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise.  Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Parent and its Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders.  In the event Agent is not reimbursed for such costs and expenses by Parent or its Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable share thereof.  Whether or not the transactions contemplated hereby are consummated, each of the Lenders, on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that, no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities

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resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an extension of credit hereunder.  Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any costs or out-of-pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers.  The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8Agent in Individual Capacity.  Cortland and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide bank products to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Parent and its Subsidiaries and Affiliates and any other Person party to any Loan Document as though Cortland were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group.  The other members of the Lender Group acknowledge that, pursuant to such activities, Cortland or its Affiliates may receive information regarding Borrowers or their Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them.  The terms “Lender” and “Lenders” may include Cortland in its individual capacity.

15.9Successor Agent.  Agent may resign as Agent upon 30 days (10 days if an Event of Default has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the Required Lenders) and Administrative Borrower (unless such notice is waived by Administrative Borrowers).  If Agent resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default has occurred and is continuing) the consent of Administrative Borrower (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a successor Agent for the Lenders.  If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Administrative Borrower and with the consent of the Required Lenders, a successor Agent.  In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  If no successor Agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

15.10Lender in Individual Capacity.  Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide bank products to, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Parent and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group.  The other members of the Lender Group acknowledge that, pursuant to

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such activities, such Lender and its respective Affiliates may receive information regarding Parent or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Parent or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

15.11Collateral Matters.

(a)The Lenders hereby irrevocably authorize Agent, upon the direction of the Required Lenders, to release, or subordinate, any Lien on any of the Collateral (i) upon payment and satisfaction of all of the Obligations, or (ii) constituting property being sold or disposed of if Administrative Borrower or any Loan Party certifies to Agent and the Required Lenders that the sale or disposition is made in compliance with Section 6.4 (and Agent and the Required Lenders may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Loan Party did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (iv) having a value in the aggregate in any twelve (12) month period of less than $2,500,000, and to the extent Agent (at the direction of the Required lenders) may release its Lien on any such Collateral pursuant to the sale or other disposition thereof, such sale or other disposition shall be deemed consented to by the Lenders, or (v) if required or permitted under the terms of any of the other Loan Documents, including any intercreditor agreement, or (vi) constituting property leased to a Loan Party under a lease that has expired or is terminated, or (vii) subject to Section 14.1 and the Security Documents, if the release is approved, authorized or ratified in writing by the Required Lenders.  Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent’s authority to release or subordinate any such Liens on particular types or items of Collateral pursuant to this Section 15.11; provided, that, (1) Agent shall not be required to execute any document necessary to evidence such release or subordination on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release or subordination shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released or subordinated) upon (or obligations of Borrower in respect of) all interests retained by any Loan Party, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.  The Lenders further hereby irrevocably authorize Agent, upon the direction of the Required Lenders, to subordinate any Lien granted to or held by Agent under any Loan Document to the holder of any Permitted Lien on such property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

(b)The Loan Parties and the Lenders hereby irrevocably authorize Agent, upon the instruction of the Required Lenders, to (A) consent to, credit bid or purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code or other bankruptcy laws, including under Section 363 of the Bankruptcy Code, (B) credit bid or purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the Code or the PPSA, including pursuant to Sections 9-610 or 9-620 of the Code, or (C) credit bid or purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any other sale or foreclosure conducted by Agent (whether by judicial action or otherwise) in accordance with applicable law.  In connection with any such credit bid or purchase, the Obligations owed to the Lenders shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not unduly delay the ability of Agent to credit bid or purchase at

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such sale or other disposition of the Collateral and, if such claims cannot be estimated without unduly delaying the ability of Agent to credit bid, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the asset or assets purchased by means of such credit bid) and the Lenders whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the asset or assets so purchased (or in the Equity Interests of the acquisition vehicle or vehicles that are used to consummate such purchase).

(c)Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by a Loan Party or is cared for, protected, or insured or has been encumbered, or that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or that any particular items of Collateral meet the eligibility criteria applicable in respect thereof or whether to impose, maintain, reduce, or eliminate any particular reserve hereunder or whether the amount of any such reserve is appropriate or not, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

15.12Restrictions on Actions by Lenders; Sharing of Payments.

(a)Each of the Lenders agrees that it shall not, without the express written consent of the Required Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of the Required Lenders, set off against the Obligations, any amounts owing by such Lender to Parent or its Subsidiaries or any deposit accounts of Parent or its Subsidiaries now or hereafter maintained with such Lender.  Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by the Required Lenders, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against any Borrower or any Guarantor or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b)If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

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15.13Agency for Perfection.  Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code or in accordance with the PPSA or the Securities Transfer Act of any applicable jurisdictions in Canada can be perfected by possession or control.  Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent and the Required Lenders thereof, and, promptly upon Agent’s request (upon the direction of the Required Lenders) therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.14Payments by Agent to the Lenders.  All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent.  Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

15.15Concerning the Collateral and Related Loan Documents.  Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents.  Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

15.16Collateral Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information.

(a)By becoming a party to this Agreement, each Lender:

(i)is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each collateral report respecting Parent or its Subsidiaries (each, a “Report”) delivered in accordance with Section 5.2, and Agent shall so furnish each Lender with such Reports,

(ii)expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(iii)expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Parent and its Subsidiaries and will rely significantly upon Parent’s and its Subsidiaries’ books and records, as well as on representations of each Borrower’s personnel,

(iv)agrees to keep all Reports and other material, non-public information regarding Parent and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.9, and

(v)without limiting the generality of any other indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the

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indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

(b)In addition to the foregoing: (i) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Parent or any Subsidiary of Parent to Agent that has not been contemporaneously provided by Parent or its Subsidiaries to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (ii) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Parent or its Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of such Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Parent or its Subsidiaries, Agent promptly shall provide a copy of same to such Lender and (iii) any time that Agent renders to any Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

15.17Agent May File Proofs of Claim.

(a)In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of any Obligations shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrowers) shall be entitled and empowered, upon the direction of the Required Lenders, by intervention in such proceeding or otherwise:

(i)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders and Agent and their respective agents and counsel and all other amounts due Lenders and Agent allowed in such judicial proceeding; and

(ii)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, interim receiver, receiver and manager, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent and, in the event that Agent and the Required Lenders shall consent to the making of such payments directly to Lenders, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent.

(b)Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.

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15.18Several Obligations; No Liability.  Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder, shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis in accordance with such Lender’s percentage of the Term Loan outstanding.  Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender.  Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender.  Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group.  No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for such Lender or on its behalf, nor to take any other action on behalf of such Lender hereunder or in connection with the financing contemplated herein.

15.19Appointment for the Province of Québec.  Without prejudice to Section 15.1 above, each member of the Lender Group hereby appoints Agent as the person holding the power of attorney (fondé pouvoir) of the Lender Group as contemplated under Article 2692 of the Civil Code of Québec, to enter into, to take and to hold on their behalf, and for their benefit, any deed of hypothec (“Deed of Hypothec”) to be executed by any of the Borrowers or Guarantors granting a hypothec pursuant to the laws of the Province of Québec (Canada) and to exercise such powers and duties which are conferred thereupon under such deed.  All of the Lender Group hereby additionally appoints Agent as agent, mandatary, custodian and depositary for and on behalf of the Lender Group (a) to hold and to be the sole registered holder of any bond (“Bond”) issued under the Deed of Hypothec, the whole notwithstanding any other applicable law, and (b) to enter into, to take and to hold on their behalf, and for their benefit, a bond pledge agreement (“Pledge”) to be executed by such Borrower or such Guarantor pursuant to the laws of the Province of Québec and creating a pledge of the Bond as security for the payment and performance of, inter alia, the Obligations.  In this respect, (i) Agent as agent, mandatary, custodian and depositary for and on behalf of the Lender Group, shall keep a record indicating the names and addresses of, and the pro rata portion of the obligations and indebtedness secured by the Pledge, owing to each of the members of the Lender Group for and on behalf of whom the Bond is so held from time to time, and (ii) each of the members of the Lender Group will be entitled to the benefits of any property or assets charged under the Deed of Hypothec and the Pledge and will participate in the proceeds of realization of any such property or assets.  Agent, in such aforesaid capacities shall (A) upon the direction of the Required Lenders have the sole and exclusive right and authority to exercise, except as may be otherwise specifically restricted by the terms hereof, all rights and remedies given to Agent with respect to the property or assets charged under the Deed of Hypothec and Pledge, any other applicable law or otherwise, and (B) benefit from and be subject to all provisions hereof with respect to the Agent mutatis mutandis, including, without limitation, all such provisions with respect to the liability or responsibility to and indemnification by the Lender Group, the Borrowers or the Guarantors.  The execution prior to the date hereof by Agent of any Deed of Hypothec, Pledge or other security documents made pursuant to the laws of the Province of Québec (Canada) is hereby ratified and confirmed.  The constitution of Agent as the Person holding the power of attorney (fondé de pouvoir), and of Agent, as agent, mandatary, custodian and depositary with respect to any bond that may be issued and pledged from time to time to Agent for the benefit of the Lender Group, shall be deemed to have been ratified and confirmed by each Person accepting an assignment of, a participation in or an arrangement in respect of, all or any portion of any of the Lender Group’s rights and obligations under this Agreement by the execution of an assignment, including an Assignment and Acceptance Agreement or other agreement pursuant to which it becomes such assignee or participant, and by each successor Agent by the execution of an assignment agreement or other agreement, or by the compliance with other formalities, as the case may be, pursuant to which it becomes a successor Agent hereunder.

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15.20Dutch Parallel Debts.

(a)Each Loan Party undertakes with Agent to pay to Agent its Dutch Parallel Debt.

(b)Each Dutch Parallel Debt is a separate and independent obligation and shall not constitute Agent and any Finance Party as joint creditors (hoofdelijk schuldeisers) of any Underlying Debt.

(c)If any Underlying Debt is avoided or reduced other than (i) as a result of payment to, or recovery or discharge by, the Finance Party to which the Underlying Debt is owed or (ii) otherwise with the consent of such Finance Party, the amount of the Dutch Parallel Debt corresponding to such Underlying Debt shall be equal to the amount which such Underlying Debt would have had if the avoidance or reduction had not occurred.

(d)No Loan Party may pay any Dutch Parallel Debt other than at the instruction of, and in the manner determined by, Agent (at the direction of the Required Lenders).

(e)Any payment made, or amount recovered, in respect of a Loan Party’s Dutch Parallel Debs shall reduce the Underlying Debt owed to a Finance Party by the amount which that Finance Party has received out of that payment or recovery under the Loan Documents.

(f)Notwithstanding any provision to the contrary in any Loan Document, in relation to the Dutch Parallel Debt and any Dutch Security Documents, Agent shall act in its own name and not as agent of any Lender (but always for the benefit of the Required Lenders and the other Finance Parties in accordance with the provisions of the Loan Documents).

16.   WITHHOLDING TAXES.

16.1No Setoff; Payments.

(a)All payments made by any Loan Party under any Loan Document will be made without setoff, counterclaim or other defense.  In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes unless deduction or withholding of any Taxes is required under applicable law.  If any deduction or withholding of any Tax is required by law, the applicable withholding agent shall make such deduction or withholding and shall timely pay to the relevant Governmental Authority such amounts in accordance with applicable law.  To the extent such Tax is an Indemnified Tax, the applicable Loan Party shall pay such additional amounts as may be necessary so that, after such required deduction or withholding of Indemnified Tax (including any Indemnified Tax on the additional amounts payable under this Section 16.1), the amount payable to the affected Agent or Lender (as applicable) by any Loan Party is equal to same amount that would have been so payable had no such deduction or withholding of Indemnified Tax been required under applicable law.

(b)The Loan Parties shall indemnify each Agent or Lender (as applicable), within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes on the additional amounts payable under this Section 16.1) payable or paid by such Agent or Lender or required to be withheld or deducted from a payment to such Agent or Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to Administrative Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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(c)Administrative Borrower will furnish to Agent as promptly as possible after payment by any Loan Party of any Tax in respect of any payment made by any Loan Party under any Loan Document is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by Loan Parties or other evidence reasonably satisfactory to the Required Lenders.

(d)The Loan Parties agree to pay any present or future stamp, value added or documentary Taxes, intangible, recording or any other similar property Taxes that arise from any payment made hereunder or from the execution, delivery, performance, recordation, or filing of, or otherwise with respect to this Agreement or any other Loan Document.

16.2Exemptions.

(a)If a Lender is entitled to claim an exemption or reduction from U.S. withholding tax, such Lender agrees with and in favor of Agent, to deliver to Administrative Borrower and Agent one of the following before receiving its first payment under the Loan Documents:

(i)In the case of a Lender claiming an exemption from U.S. withholding tax pursuant to the portfolio interest exception, (A) a statement of the Lender, substantially in the form of Exhibit D-1, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of the IRC (a “U.S. Tax Compliance Certificate”), and (B) an original, properly completed and executed IRS Form W-8BEN;

(ii)in the case of a Lender claiming an exemption from, or reduction of, U.S. federal withholding tax under a U.S. tax treaty, a properly completed and executed copy of IRS Form W-8BEN;

(iii)an original, properly completed and executed copy of IRS Form W-8ECI;

(iv)to the extent a Lender is not the beneficial owner, a properly completed and executed copy of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Lender is a partnership and one or more direct or indirect partners of such Lender are claiming the portfolio interest exemption, such Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct and indirect partner;

(v)a properly completed and executed copy of any other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, U.S. withholding or backup withholding tax; or

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(vi)if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by the Administrative Borrower or Agent as may be necessary for Administrative Borrower and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under Section 1471 through 1474 of the IRC or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (vi), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(b)Each Lender shall provide new forms (or successor forms) upon the expiration, invalidity or obsolescence of any previously delivered forms and shall promptly notify Administrative Borrower and Agent in writing of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(c)If a Lender is entitled to claim an exemption from, or reduction of, withholding or backup withholding tax in a jurisdiction other than the United States, such Lender agrees with and in favor of Agent and Administrative Borrower to deliver to Administrative Borrower and Agent at the times reasonably requested by Agent or Administrative Borrower such forms or other information reasonably requested by Administrative Borrower or Agent as will permit exemption from, or reduction of, withholding or backup withholding tax, but only if such Lender or such Participant (i) is legally eligible to deliver such forms and (ii) in such Lender’s reasonable judgment delivery of such forms or other information does not subject such Lender to any material unreimbursed cost or expense or does not materially prejudice the legal or commercial position of such Lender.  Each Lender shall provide new forms (or successor forms) or information upon the expiration, invalidity or obsolescence of any previously delivered forms or information and to promptly notify Administrative Borrower and Agent in writing of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(d)Each Borrower agrees that each Participant shall be entitled to the benefits of this Section 16 with respect to its participation in any portion of the Commitments and the Obligations so long as such Participant complies with the obligations set forth in this Section 16 (including the requirements under this Section 16.2) subject to the provisions of Section 14.2, in each case, with respect thereto as if it were a Lender.

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16.3Lender Indemnification.  Each Lender shall severally indemnify the Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so in accordance with Section 16.1), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 13.1(i) relating to the maintenance of a Participant Register and (iii) any non-Indemnified Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 16.3.

16.4Refunds.  If Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 16, it shall pay over such refund to Borrowers (but only to the extent of payments made, or additional amounts paid, by any Loan Party under this Section 16 with respect to Taxes giving rise to such a refund), net of all out-of-pocket expenses of Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such a refund); provided, that the Loan Parties, upon the request of Agent or such Lender, agree to repay the amount paid over to the Loan Parties (plus any penalties, interest or other charges, imposed by the relevant Governmental Authority in respect thereof) to Agent or such Lender in the event Agent or such Lender is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 16.4, in no event will Agent or a Lender be required to pay any amount to the Loan Parties pursuant to this Section 16.4 the payment of which would place Agent or such Lender in a less favorable net after-tax position than Agent or such Lender would have been in if the tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such tax had never been paid. This Section 16.4 shall not be construed to require Agent or any Lender to make available its tax returns (or any other confidential  information which it in good faith deems confidential) to any Borrower or any other Person.

17.   GENERAL PROVISIONS.

17.1Effectiveness.  This Agreement shall be binding and deemed effective when executed by each Loan Party, Agent, and each Lender whose signature is provided for on the signature pages hereof.

17.2Section Headings.  Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

17.3Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or any Loan Party, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

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17.4Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

17.5[Reserved].

17.6Debtor-Creditor Relationship.  The relationship between the Lenders and Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor.  No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.

17.7Counterparts; Electronic Execution.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.  The foregoing shall apply to each other Loan Document mutatis mutandis.

17.8Revival and Reinstatement of Obligations.  If the incurrence or payment of the Obligations by any Borrower or any Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be asserted, or declared, to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code (or under any bankruptcy or insolvency laws of Canada, including the BIA, the CCAA and the Winding-Up and Restructuring Act (Canada)) relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys’ fees of the Lender Group related thereto, the liability of Borrowers or Guarantors automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

17.9Confidentiality.

(a)Agent and Lenders each individually (and not jointly or jointly and severally) agree that non-public information regarding Parent and its Subsidiaries, their operations, assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except:  (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group and to employees, directors and officers of any member of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know” basis in connection with this Agreement and the transactions contemplated hereby and on a confidential basis, (ii) to Subsidiaries and Affiliates of any member of the Lender Group, provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to

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the terms of this Section 17.9, (iii) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided that (x) prior to any disclosure under clause (iii) or (iv), the disclosing party agrees to provide Administrative Borrower with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Administrative Borrower pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure under clause (iii) or (iv) shall be limited to the portion of the Confidential Information as may be required by such regulatory authority, statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, provided, that, (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide Administrative Borrower with prior written notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior written notice to Administrative Borrower pursuant to the terms of the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders or the Lender Group Representatives), (viii) in connection with any assignment, participation  or pledge of any Lender’s interest under this Agreement, provided that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information hereunder subject to the terms of this Section, (ix) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, that, prior to any disclosure to any Person (other than any Loan Party, Agent, any Lender, any of their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation involving any Person (other than any Borrower, Agent, any Lender, any of their respective Affiliates, or their respective counsel), the disclosing party agrees to provide Administrative Borrower with prior written notice thereof, and (x) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor remedy under this Agreement or under any other Loan Document.

(b)Anything in this Agreement to the contrary notwithstanding, Agent (upon the direction of the Required Lenders) may disclose information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services or for its marketing materials, with such information to consist of deal terms and other information customarily found in such publications or marketing materials and may otherwise use the name, logos, and other insignia of Borrowers and the Loan Parties and the Commitments provided hereunder in any “tombstone,” press releases, or other advertisements, on its website or in other marketing materials of Agent.

17.10Lender Group Expenses.  Borrowers agree to pay any and all Lender Group Expenses promptly upon demand therefor by Agent.  Borrowers agree that their respective obligations contained in this Section 17.10 shall survive payment or satisfaction in full of all other Obligations.

17.11Survival.  All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any loan or any fee or any other amount payable under this Agreement is outstanding.

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17.12Patriot Act.  Each Lender that is subject to the requirements of the Patriot Act hereby notifies Borrowers that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender to identify each Borrower in accordance with the Patriot Act.  In addition, if Agent is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for the Loan Parties and (b) OFAC/PEP searches and customary individual  background checks for the Loan Parties’ senior management and key principals, and each Borrower agrees to cooperate in respect of the conduct of such searches and further agrees that the reasonable costs and charges for such searches shall constitute Lender Group Expenses hereunder and be for the account of such Borrower.

17.13Integration.  This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

17.14Administrative Borrower as Agent for Borrowers.

(a)Each Borrower hereby irrevocably appoints and constitutes Parent (“Administrative Borrower”) as its agent and attorney-in-fact to request and receive Term Loans pursuant to this Agreement and the other Loan Documents from Agent or any Lender in the name or on behalf of such Borrower.  Agent and Lenders may disburse the Term Loans to such bank account of Administrative Borrower or a Borrower or otherwise make such Term Loans to a Borrower as Administrative Borrower may designate or direct, without notice to any other Borrower or Guarantor.  Notwithstanding anything to the contrary contained herein, Agent (upon the direction of the Required Lenders) may at any time and from time to time require that Term Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

(b)Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 17.14.  Administrative Borrower shall ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the account of Parent shall be paid to or for the account of such Borrower.

(c)Each Borrower and Guarantor hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

(d)Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes to have been made by such Borrower or Guarantor, as the case may be, and shall be binding upon and enforceable against such Borrower or Guarantor to the same extent as if made directly by such Borrower or Guarantor.

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(e)No resignation or termination of the appointment of Administrative Borrower as agent as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to Agent.  If the Administrative Borrower resigns under this Agreement, Borrowers shall be entitled to appoint a successor Administrative Borrower (which shall be a Borrower).  Upon the acceptance of its appointment as successor Administrative Borrower hereunder, such successor Administrative Borrower shall succeed to all the rights, powers and duties of the retiring Administrative Borrower and the term “Administrative Borrower” shall mean such successor Administrative Borrower and the retiring or terminated Administrative Borrower’s appointment, powers and duties as Administrative Borrower shall be terminated.

17.15Currency Indemnity.  If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any of the other Loan Documents, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due under this Agreement or under any of the other Loan Documents in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the exchange rate at which Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency prevailing on the Business Day before the day on which judgment is given.  In the event that there is a change in the rate of exchange rate prevailing between the Business Day before the day on which the judgment is given and the date of receipt by Agent of the amount due, Borrowers will, on the date of receipt by Agent, pay such additional amounts, if any, as may be necessary to ensure that the amount received by Agent on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by Agent is the amount then due under this Agreement or such other of the Loan Documents in the Currency Due.  If the amount of the Currency Due which Agent is able to purchase is less than the amount of the Currency Due originally due to it, Borrowers and Guarantors shall indemnify and save Agent harmless from and against loss or damage arising as a result of such deficiency.  If the amount of the Judgment Currency which Agent is able to purchase is greater than the amount of the Judgment Currency original due it, Agent agrees, so long as no Event of Default has occurred and is continuing, to return the amount of any excess to Borrowers (or to any other Person who may be entitled thereto under applicable law).  The indemnity contained herein shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Loan Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Agent from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any of the other Loan Documents or under any judgment or order.

17.16Anti-Money Laundering Legislation.

(a)Each Loan Party acknowledges that, pursuant to the Proceeds of Crime Money Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” laws, under the laws of Canada (collectively, including any guidelines or orders thereunder, “AML Legislation”), Agent and Lenders may be required to obtain, verify and record information regarding each Loan Party, its respective directors, authorized signing officers, direct or indirect shareholders or other Persons in control of such Loan Party, and the transactions contemplated hereby.  Administrative Borrower shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or Agent, or any prospective assign or participant of a Lender or Agent, necessary in order to comply with any applicable AML Legislation, whether now or hereafter in existence.

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(b)If Agent has ascertained the identity of any Loan Party or any authorized signatories of any Loan Party for the purposes of applicable AML Legislation, then the Agent:

(i)shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and the Agent within the meaning of applicable AML Legislation; and

(ii)shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.

(c)Notwithstanding the provisions of this Section and except as may otherwise be agreed in writing, each Lender agrees that Agent has no obligation to ascertain the identity of the Loan Parties or any authorized signatories of the Loan Parties on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from the Loan Parties or any such authorized signatory in doing so.

17.17Quebec Interpretation.  For all purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec, (a) “personal property” shall include “movable property,” (b) “real property” shall include “immovable property,” (c) “tangible property” shall include “corporeal property,” (d) “intangible property” shall include “incorporeal property,” (e) “security interest,” “mortgage” and “lien” shall include a “hypothec,” “prior claim” and a “resolutory clause,” (f) all references to filing, registering or recording under the Code or PPSA shall include publication under the Civil Code of Quebec, (g) all references to “perfection” of or “perfected” liens or security interest shall include a reference to an “opposable” or “set up” lien or security interest as against third parties, (h) any “right of offset,” “right of setoff” or similar expression shall include a “right of compensation,” (i) “goods” shall include corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall include a “mandatary,” (k) “construction liens” shall include “legal hypothecs,” (l) “joint and several” shall include solidary, (m) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault,” (n) “beneficial ownership” shall include “ownership on behalf of another as mandatary,” (o) “easement” shall include “servitude,” (p) “priority” shall include “prior claim,” (q) “survey” shall include “certificate of location and plan,” and (r) “fee simple title” shall include “absolute ownership”.

17.18New Colt and its Subsidiaries.  By their execution of this Credit Agreement, each of New Colt, as successor-in-interest by merger to Acquisition Sub, and its Subsidiaries, hereby (i) confirms that each representation and warranty contained in Section 4 of the Credit Agreement is true and correct as they relate to New Colt and each of its Subsidiaries as of the effective date of this Agreement after giving effect to the Merger, (ii) grants and ratifies and confirms to Agent, for the benefit of the Lender Group, a continuing security interest in all of its right, title, and interest in all currently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by New Colt and each of its Subsidiaries of its covenants and duties under the Loan Documents, which Lien in and to the Collateral shall attach to all Collateral without further action on the part of Agent, New Colt or any such Subsidiary, (iii) agrees that from and after the effective date of this Agreement it shall be a Loan Party under the Loan Agreement and shall be bound by all of the provisions thereof, and (iv) agrees that it shall comply with and be subject to all the terms, conditions, covenants, agreements and obligations set forth therein.  Each of New Colt and its Subsidiaries hereby agrees that each reference to a “Loan Party” or the “Loan Parties” in the Credit Agreement and the other Loan Documents shall include New Colt and its Subsidiaries.  New Colt and each of its Subsidiaries acknowledges that it has received a copy of the Credit Agreement and the other Loan Documents and that it has read and understands the terms thereof.

[Signature pages to follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

COLT DEFENSE LLC, as a Borrower

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

COLT FINANCE CORP., as a Borrower

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

NEW COLT ACQUISITION CORP., as a Borrower,

which on the Closing Date shall be merged with and into

New Colt Holding Corp.

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

NEW COLT HOLDING CORP., as a Borrower

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

COLT’S MANUFACTURING COMPANY, LLC,

as a Borrower

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

COLT DEFENSE TECHNICAL SERVICES LLC, as a

Guarantor

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

[Signature Page to Term Loan Agreement]

COLT CANADA CORPORATION, as a Borrower

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

[Signature Page to Term Loan Agreement]

COLT INTERNATIONAL COÖPERATIEF U.A., as a

Guarantor

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Authorized representative

By:  /s/ Jeffrey G. Grody

       Name:  Jeffrey G. Grody

       Title:    Authorized representative

[Signature Page to Term Loan Agreement]

CORTLAND CAPITAL MARKET SERVICES LLC,

as Agent

By:  /s/ Emily Ergang Pappas

       Name:  Emily Ergang Pappas

       Title:    Associate Counsel

[Signature Page to Term Loan Agreement]

Schedule A-1

Agent’s Account

Bank Name: BMO Harris Bank N.A.

ABA # xxx-xxx-xxx

Account Name:  Cortland Capital Market Services

Account Number:  xxxxxxx

Reference:  Colt, Attention: Ryan Morick

or such other account as Agent may designate from time to time.

Schedule A-2

Authorized Persons

Gerald R. Dinkel

Scott B. Flaherty

Schedule D-1

Designated Account

Beneficiary Bank:	Bank of America
Bank name:	Bank of America
City:	West Hartford, CT 06110
Identification Code:	Swift: xxxxxxxx
Identification Code:	ABA: xxxxxxxxx
Beneficiary:	Colt Defense LLC
Account number:	xxxx-xxxx-xxxx

Schedule L-1

Exclusive Intellectual Property and other Intangible Licenses

Parent

1.   Consolidated License Agreement, dated February 8, 1984 between Her Majesty The Queen In Right of Canada and Colt’s Manufacturing Company, Inc., as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

New Colt Holding Corp./Colt’s Manufacturing Company LLC

1.   License Agreement, dated February 11, 2010, between Rampant Classic and New Colt Holding Corp.

2.   Master License Agreement, dated January 28, 2000, between New Colt Holding Corp. and Cybergun S.A., formerly known as 3P S.A. (Les Trois Pylons), as amended February 17, 2006 and April 20, 2010.

3.   License Agreement, dated December 1, 2009, between New Zealand Mint Limited and New Colt Holding Corp., as amended September 24, 2010 and November 5, 2010 and as assigned by Antiquus Aurum Limited (formerly New Zealand Mint Limited) July 16, 2012.

4.   License Agreement (Knives), dated June 14, 2007, between New Colt Holding Corp. and Smoky Mountain Knife Works, Inc., as amended January 29, 2011.

5.   License Agreement, dated March 26, 2009, between Carl Walther GmbH and New Colt Holding Corp, as amended November 11, 2009.

6.   License Agreement, dated July 18, 2008, between Carl Walther GmbH and New Colt Holding Corp., as amended December 10, 2008, January 5, 2009 and March 27, 2009.

7.   License Agreement, dated April 27, 1965, between Colt Industries Inc. and the National Brewing Company.

8.   Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd & Sportwaffen GmbH.

9.   License Agreement, dated December 19, 2003, between Colt Defense LLC and New Colt Holding Corp.

10.   Match Target License Agreement, dated on or about December 19, 2003 (but effective January 1, 2004), between Colt’s Manufacturing Company LLC and Colt Defense LLC.

11.   Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

12.   Settlement Agreement, dated as of January 12, 1998, among New Colt Holding Corporation, Colt’s Manufacturing Company, Inc. and Jimlar Corporation.

13.   Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

2

Schedule P-1

Permitted Investments

None.

Schedule P-2

Permitted Liens

Liens on cash collateral securing Letters of Credit:

Issuer	Beneficiary	LC Number	Amount Outstanding as of 5/26/2013	Maturity Date
J.P. Morgan	Connecticut Department of Environmental Protection	TFTS-851474	$211,127	6/4/2014
J.P. Morgan	National Bank of Egypt	TFTS-841076	$9,091	1/31/2014
J.P. Morgan	National Bank of Egypt	TFTS-839429	$7,343	4/30/2013
J.P. Morgan	National Bank of Egypt	TFTS-887528	$11,984	1/31/2014
J.P. Morgan	State Bank of India	TFTS-907450	$809,625	6/6/2016
Interaudi Bank	QHQ Armed Forces- UAE	SLC-0017/SS/05	$461,585	12/30/2013

Schedule P-3

Permitted Holders

1.           Sciens Management L.L.C. and its Affiliates.

2.           Members of management of the Parent who on the Closing Date (x) are holders of Equity Interests of the Parent or (y) have options to obtain Equity Interests of the Parent.

Schedule S

Security Documents

I.  Canadian Security Documents

1.  Canadian Security Agreement, dated as of July 12, 2013, by Colt Canada and Colt Netherlands in favor of Agent.

2.  Canadian Patent Security Agreement, dated as of July 12, 2013, by Colt Canada in favor of Agent.

3.  Charge/Mortgage, dated as of July 12, 2013, by Colt Canada in favor of Agent

II.  Dutch Security Documents

1.  Deed of Pledge of Membership Interests (Second Ranking), dated as of July 12, 2013, between Colt Defense and CDTS as Pledgors, Agent as Pledgee and Colt Netherlands as Cooperative.

2.  Deed of Pledge of Accounts (Second Ranking), dated as of July 12, 2013, between Colt Netherlands as Pledgor and Agent as Pledgee.

3.  Charged Account Control Deed, dated as of July 12, 2013, among Colt Netherlands, Agent and Bank of America, N.A.

III.  US Security Documents

1.  General Continuing Guaranty, dated as of July 12, 2013, by CDTS and Colt Netherlands in favor of Agent.

2.  Security Agreement, dated as of July 12, 2013, by each Loan Party in favor of Agent.

3.  Copyright Security Agreement, dated as of July 12, 2013, by New Colt, Parent and Colt’s Manufacturing in favor of Agent.

4.  Trademark Security Agreement, dated as of July 12, 2013, by New Colt, Parent and Colt’s Manufacturing in favor of Agent.

5.  Patent Security Agreement, dated as of July 12, 2013, by New Colt, Parent, Colt’s Manufacturing and Colt Canada in favor of Agent.

Schedule 1.1

As used in the Agreement, the following terms shall have the following definitions:

“ABL Agent” means Wells Fargo Capital Finance, LLC, and its permitted successors and assigns.

“ABL Credit Agreement” means that Credit Agreement, dated as of September 29, 2011, entered into by, among others, the Loan Parties and ABL Agent, as amended, supplemented, modified, restated, renewed, refinanced or replaced, except to the extent prohibited by the ABL Intercreditor Agreement.

“ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the date hereof, entered into between Agent and ABL Agent, as amended and in effect from time to time.

“ABL Lenders” means the lenders from time to time party to the ABL Credit Agreement.

“ABL Loan Documents” means each “Loan Document” as defined in the ABL Credit Agreement, as amended, supplemented, modified, restated, renewed, refinanced or replaced, except to the extent prohibited by the ABL Intercreditor Agreement.

“ABL Obligations” means the Obligations as such term is defined in the ABL Credit Agreement.

“ABL Priority Collateral” has the meaning specified therefor in the ABL Intercreditor Agreement.

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.

“Accounting Changes” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions).

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity Interests are acquired by Parent or its Subsidiaries in a Permitted Acquisition; provided, however, that such Indebtedness (a) was in existence prior to the date of such Permitted Acquisition, and (b) was not acquired, assumed or incurred in connection with, or in contemplation of, such Permitted Acquisition.

“Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase or other acquisition (whether by means of a merger, consolidation, amalgamation or otherwise) by a Person or its Subsidiaries of at least a majority of the Equity Interests of any other Person having ordinary voting power for the election of directors or other members of the governing body of such other Person.

“Acquisition Sub” has the meaning assigned to such term in the Recitals.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the Agreement.

“Additional Portion of the Term Loan” and “Additional Portions of the Term Loan” have the respective meanings specified therefor in Section 2.15 of the Agreement.

“Administrative Borrower” has the meaning specified therefor in Section 17.14 of the Agreement.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Equity Interests of such Person, by contract, or otherwise; provided, however, that, for purposes of Section 6.12 of the Agreement: (a) any Person which owns directly or indirectly 10% or more of the Equity Interests of such Person having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each current and former (within the 5 year period prior to the Closing Date) officer and/or director (or comparable manager) of a Loan Party or Sponsor shall be deemed to be an Affiliate of such a Loan Party, (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person and (d) any Person that is a current or former (within the 5 years period prior to the Closing Date) partner, member or principal (or any employee acting in any such capacity) of any Loan Party or a consultant (other than any consultants, financial advisors and/or other third party service providers of nationally recognized standing) of Sponsor shall be deemed to be an Affiliate of a Loan Party.

“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent Fee Letter” means that certain letter agreement of even date herewith among the Borrowers and the Agent.

“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1 as the Agent’s Account.

“Agent’s Liens” means the Liens granted by Parent or its Subsidiaries to Agent under the Loan Documents.

“Agreement” means the Term Loan Agreement to which this Schedule 1.1 is attached.

“AML Legislation” has the meaning specified in Section 17.16 of the Agreement.

“Annualized” means, with respect to the calculation of any amount at the end of any four (4) fiscal quarter period ending September 30, 2013, December 31, 2013 or March 31, 2014, the following: (i) with respect to fiscal quarter ended September 30, 2013, the aggregate amount at the end of such fiscal quarter multiplied by 4, (ii) with respect to fiscal quarter ended December 31, 2013, the aggregate amount at the end of the two consecutive fiscal quarters ended December 31, 2013 multiplied by 2, and (iii) with respect to fiscal quarter ended March 31, 2014, the aggregate amount at the end of the three consecutive fiscal quarters ended March 31, 2014 multiplied by 4/3.

“Application Event” means the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Agent (at the direction of the Required Lenders) to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(ii) of the Agreement.

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“Applicable Prepayment Premium” means, as of any date of determination, an amount equal to (a) during the period on and after the Closing Date up to and including the third anniversary of the Closing Date, 2.00% times the outstanding principal balance of the Term Loan to be prepaid on such date (or if the Term Loan is being prepaid in full, the outstanding principal balance of the Term Loan on the date immediately prior to the date of determination) and (b) thereafter, zero.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1.

“Authorized Person” means any one of the individuals identified on Schedule A-2, as such schedule is updated from time to time by written notice from Administrative Borrower to Agent.

“Available Increase Amount” means, as of any date of determination, an amount equal to the result of (a) $25,000,000 minus (b) the aggregate principal amount of Increases to the Term Loan Amount previously made pursuant to Section 2.15 of the Agreement.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.

“BIA” means the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules, regulations and interpretations thereunder or related thereto.

“Board of Directors” means, as to any Person, the board of directors (or comparable managers) of such Person or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

“Borrower” and “Borrowers” shall have the meanings assigned to such terms in the Recitals of this Agreement.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of New York, except that, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

“Canadian Loan Party” and “Canadian Loan Parties” means, individually and collectively, Colt Canada and any other Loan Party organized under the laws of Canada or any province or territory thereof.

“Canadian Pension Plan” means any plan, program or arrangement that is a pension plan for the purposes of any applicable pension benefits legislation or any tax laws of Canada or a Province thereof, whether or not registered under any such laws, which is maintained or contributed to by, or to which there is or may be an obligation to contribute by, any Borrower or any Guarantor in respect of any Person’s employment in Canada with such Borrower or such Guarantor.

“Canadian Security Documents” means (a) each document identified on Schedule S to the Agreement (as such schedule may be amended or supplemented by Agent to add additional Canadian Security Documents in connection with the Loan Documents) and (b) any other documents governed by the laws of Canada or any province or territory thereof under which a Lien is granted to Agent.

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“Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed.

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued or fully guaranteed by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the full amount maintained with any such other bank is insured by the Federal Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank satisfying the requirements of clause (d) of this definition or recognized securities dealer having combined capital and surplus of not less than $250,000,000, having a term of not more than seven days, with respect to securities satisfying the criteria in clauses (a) or (d) above, (g) debt securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the criteria described in clause (d) above, and (h) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (g) above; provided, that, in the case of any Foreign Subsidiary, “Cash Equivalents” of such Foreign Subsidiary shall also include direct obligations of the sovereign country (or any agency thereof which is backed by the full faith and credit of such sovereign country) in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such foreign country (or any agency thereof); provided, further, in the case of any Foreign Subsidiary that is not a Loan Party, “Cash Equivalents” of such Foreign Subsidiary shall also include securities and other investments held by such Foreign Subsidiary in the ordinary course of business which are substantially similar to the assets described in clauses (a) through (g) above.

“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement,  merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

“CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules, regulations and interpretations thereunder or related thereto.

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“Change of Control” means:

(a)           prior to the first public offering of common stock of Parent, the Permitted Holders cease to be the “beneficial owner” (as defined in Rules 13 d-3 and 13 d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power of the Equity Interests of Parent then outstanding, whether as a result of the issuance of securities of Parent, any merger, consolidation, liquidation or dissolution of the Parent, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (a) and clause (b) below, the Permitted Holders shall be deemed to beneficially own any the Equity Interests holding voting power of an entity (the “specified entity”) held by any other entity (the “parent entity”) so long as (x) the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Equity Interests of the parent entity) or (y) no “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), beneficially owns, directly or indirectly, a larger percentage of the voting power of the Equity Interests of the parent entity than the Permitted Holders;

(b)           on the date of or after the first public offering of common stock of Parent, any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the beneficial owner (as defined in Rules 13 d-3 and 13 d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Equity Interests of Parent or any of its direct or indirect parent entities (or their successors by merger, consolidation or purchase of all or substantially all of their assets);

(c)           the Continuing Directors shall cease for any reason to constitute a majority of the Board of Directors of Parent then in office;

(d)           except as otherwise expressly permitted herein, Parent shall cease to be the direct or indirect holder and owner of one hundred (100%) percent of the Equity Interests of the other Loan Parties; or

(e)           a “Change of Control” under (and as defined in) the Senior Note Indenture or the ABL Credit Agreement.

“Closing Date” means the date of the making of the Term Loan under the Agreement.

“Closing Date Transactions” means, collectively, the transactions contemplated by the Loan Documents, the Target Acquisition Documents (including, without limitation, the Merger) and the ABL Loan Documents, as amended in connection with each of the foregoing.

“Code” means the New York Uniform Commercial Code, as in effect from time to time.

“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by Parent or its Subsidiaries in or upon which a Lien is granted by such Person in favor of Agent or the Lenders under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, freight forwarder, or other Person in possession of, having a Lien upon, or having rights or interests in Parent’s or its Subsidiaries’ books and records, Equipment, or Inventory, in each case, in form and substance satisfactory to Agent and the Required Lenders.

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“Collateral Assignment” means the Collateral Assignment of Target Acquisition Documents, dated as of the date hereof, and in form and substance satisfactory to the Required Lenders, made by, Parent, Acquisition Sub and New Colt in favor of Agent.

“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, cash proceeds of asset sales, rental proceeds, and tax refunds).

“Commitment” means, with respect to each Lender, its Term Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments, as the context requires.

“Compliance Certificate” means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Administrative Borrower to Agent.

“Confidential Information” has the meaning specified therefor in Section 17.9(a) of the Agreement.

“Consolidated EBITDA” shall mean, as to any Person and its Subsidiaries, for any period, the amount equal to (without duplication): (a) the Consolidated Net Income of such Person and its Subsidiaries for such period determined in accordance with GAAP, plus (b) as to such Person and its Subsidiaries, each of the following (in each case to the extent deducted in the calculation of Consolidated Net Income for such period (in accordance with GAAP): (i) the Interest Expense for such period, (ii) all Taxes of such Person and its Subsidiaries paid or accrued in accordance with GAAP for such period, including any Permitted Tax Distributions, (iii) depreciation and amortization (including, but not limited to, imputed interest and deferred compensation) for such period, all in accordance with GAAP, (iv) extraordinary, unusual or non-recurring charges, expenses or losses that are incurred outside the ordinary course of business, other than contract start-up costs and losses; provided, however, in the case of the Loan Parties, the aggregate amount added back to Consolidated EBITDA pursuant to this clause (iv) shall not exceed for any period $1,000,000, (v) other non-cash charges, expenses or losses and (vi) costs and expenses in connection with this Transaction in an aggregate amount not exceeding $2,500,000.

“Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, that, (a) except to the extent included pursuant to the foregoing clause and except to the extent necessary to reflect Consolidated Net Income on a pro forma basis as provided herein, the net income of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated or amalgamated with such Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or by any of its Subsidiaries shall be excluded; and (b) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to such Person or to any other Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary shall be excluded, other than any distribution or dividend actually received in cash by such Person or its Subsidiaries, (c) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors or employees shall be excluded, (d) any impairment charges or asset writeoffs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded, (e) any after tax effect of income (loss) from early extinguishment of Indebtedness or Hedge Agreements or other derivative instruments or any currency translation gains and losses related to

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currency remeasurements of Indebtedness, and any net loss or gain resulting from hedging transactions for currency exchange risk shall be excluded, (f) any extraordinary non-cash gain or loss shall be excluded, (g) an amount equal to the Permitted Tax Distributions in respect of such period shall be included as though such amounts had been paid as income taxes directly by such Person for such period, and (h) the cumulative effect of a change in accounting principles shall be excluded.  For the purpose of this definition, net income excludes any gain together with any related Taxes for such gain realized upon the sale or other disposition of any assets outside of the ordinary course of business or of any Equity Interests of such Person or a Subsidiary of such Person.

“Consulting Agreement” means the Consulting Services Agreement, dated as of July 12, 2013, by and between Parent and Sciens Institutional Services LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Institutional Services LLC to provide certain consulting services.

“Continuing Director” means (a) any member of the Board of Directors of Parent who was a director (or comparable manager) on the Closing Date, after giving effect to the execution and delivery of this Agreement and the other transactions contemplated hereby to occur on such date, and (b) any individual who becomes a member of the Board of Directors of Parent after the Closing Date if such individual was approved, appointed or nominated for election to the Board of Directors by either the Permitted Holders or a majority of the Continuing Directors.

“Control Agreement” means a control agreement, in form and substance satisfactory to Agent and the Required Lenders, executed and delivered by Parent or one of its Subsidiaries, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).

“Copyright Security Agreement” has the meaning specified therefor in the Security Agreement.

“Cortland” means Cortland Capital Market Services LLC, a Delaware limited liability company.

“Covered Claims” shall have the meaning given to such term in the Litigation Management Agreement, dated as of July 12, 2013, by and among, Parent, New Colt, Colt’s Manufacturing, and each of the Stockholder Representatives signatory thereto, as in effect on the Closing Date.

“Currency Due” has the meaning specified in Section 17.15 of the Agreement.

“Current Assets” means, as at any date of determination, the total assets of Parent and its Subsidiaries (other than cash and Cash Equivalents) which may properly be classified as current assets on a consolidated balance sheet of Parent and its Subsidiaries in accordance with GAAP, excluding any increase in Current Assets in respect to any Excluded Issuances.

“Current Liabilities” means, as at any date of determination, the total liabilities of Parent and its Subsidiaries which may properly be classified as current liabilities (other than the current portion of the Term Loan or the ABL Obligations) on a consolidated balance sheet of Parent and its Subsidiaries in accordance with GAAP.

“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

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“Defaulting Lender” means any Lender that (a) has failed to fund any amounts required to be funded by it under the Agreement on the date that it is required to do so under the Agreement, (b) notified Administrative Borrower, Agent, or any Lender in writing that it does not intend to comply with all or any portion of its funding obligations under the Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under the Agreement or under other agreements generally (as determined by the Required Lenders) under which it has committed to extend credit, (d) failed, within 1 Business Day after written request by Agent, to confirm that it will comply with the terms of the Agreement relating to its obligations to fund any amounts required to be funded by it under the Agreement, (e) otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it under the Agreement on the date that it is required to do so under the Agreement, or (f) (i) becomes or is insolvent or has a parent company that has become or is insolvent or (ii) becomes the subject of a bankruptcy or Insolvency Proceeding, or has had a receiver, interim receiver, receiver and manager, conservator, trustee, or custodian or appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or Insolvency Proceeding, or has had a receiver, interim receiver, receiver and manager, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“Designated Account” means the Deposit Account of Administrative Borrower identified on Schedule D-1.

“Deposit Account” means any deposit account (as that term is defined in the Code).

“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof) or upon the happening of any event or condition:

(a)           matures or is mandatorily redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;

(b)           is convertible or exchangeable at the option of the holder thereof for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interest and cash in lieu of fractional shares of such Equity Interests); or

(c)           is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interest and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof;

in each case, on or prior to the date that is 91 days after the Maturity Date; provided, that, an Equity Interest that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after repayment in full in cash of all of the Obligations and the termination of the Commitments.

“Disqualified Lender” means any of the Persons listed on Schedule E-1.

“Dollars” or “$” means lawful currency of United States of America.

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“Domestic Subsidiary” means any direct or indirect Subsidiary of a Loan Party other than a Foreign Subsidiary.

“Dutch Guaranty” means a general continuing guaranty of the Obligations executed and delivered by Colt Netherlands in favor of Agent, for the benefit of Agent and the Lenders, in form and substance satisfactory to Agent and the Required Lenders, as amended, modified, restated and/or supplemented from time to time.

“Dutch Loan Party” and “Dutch Loan Parties” means, individually and collectively, Colt Netherlands and any other Loan Party organized under the laws of the Netherlands.

“Dutch Parallel Debt” means, in relation to an Underlying Debt (and subject to clause (c) of Section 15.20), an obligation to pay to Agent an amount equal to (and in the same currency as) the amount of that Underlying Debt.

“Dutch Security Documents” means (a) each document identified on Schedule S to the Agreement (as such schedule may be amended or supplemented by Agent to add additional Dutch Security Documents in connection with the Loan Documents) and (b) any other documents governed by Dutch law under which security rights are granted to Agent.

“Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within the preceding six (6) years has been sponsored, maintained or contributed to by any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA Affiliate has, or has had at any time within the preceding six (6) years, any liability, contingent or otherwise.

“Employee Litigation Escrow Fund” shall have the meaning given to such term in the Escrow Agreement, dated as of July 12, 2013, by and among Parent, the Stockholder Representatives signatory thereto and Bank of America, as escrow agent, as in effect on the Closing Date.

“Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, investigation, judicial or administrative proceeding, judgment, or other written communication from any Governmental Authority, or any third party alleging violations by or liabilities of any Loan Party under any Environmental Laws, including those relating to Releases of Hazardous Materials (a) from any assets, properties, or businesses of Parent, any Subsidiary of Parent or any of their predecessors in interest, (b) from adjoining properties or businesses or (c) from or onto any facilities which received Hazardous Materials generated any Loan Party or any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on Parent or its Subsidiaries, relating to protection of the environment, or human health or safety, including without limitation, those relating to the generation, storage, treatment or disposal of Hazardous Materials, in each case as amended from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses (including monies paid in settlement), damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any Remedial Action, Release or threated Release of Hazardous Materials, any violation of Environmental Law, or any Environmental Action.

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“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“Environmental Permit” means any permit, registration, certificate, qualification, approval, identification number, license or other authorization required under or issued pursuant to any applicable Environmental Law or by any Governmental Entity pursuant to its authority under Environmental Law.

“Equipment” means equipment (as that term is defined in the Code).

“Equity Interests” shall mean, with respect to any Person, all of the shares, interests, participations or other equivalents (however designated) of such Person’s capital stock or general partnership, limited partnership, limited liability company or other equity, ownership or profit interests at any time outstanding, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), but excluding any interests in phantom equity plans and any debt security that is convertible into or exchangeable for such shares, and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statutes, and all regulations and guidance promulgated thereunder.  Any reference to a specific section of ERISA shall be deemed to be a reference to such section of ERISA and any successor statutes, and all regulations and guidance promulgated thereunder.

“ERISA Affiliate” means each entity, trade or business (whether or not incorporated) that together with a Loan Party or a Subsidiary would be (or has been) treated as a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the IRC.  ERISA Affiliate shall include any Subsidiary of any Loan Party.

“Event of Default” has the meaning specified therefor in Section 8 of the Agreement.

“Excess Availability” has the meaning ascribed to such term in the ABL Credit Agreement as in effect of the date hereof.

“Excess Cash Flow” means, for any fiscal year of Parent and its Subsidiaries, (a) Consolidated EBITDA, minus (b) the sum of (i) the cash portion of Interest Expense paid during such fiscal period, (ii) the cash portion of income taxes paid during such period, (iii) an amount equal to the amount of tax distributions actually made in accordance with Section 6.9(e) of the Agreement during such period, (iv) all scheduled principal payments made in respect of the Term Loan during such period (excluding any payments made with the proceeds of Excluded Issuances), (v) the aggregate amount of all prepayments of Indebtedness of Parent or its Subsidiaries (other than (w) prepayments of the Term Loan and other Obligations hereunder during such period, (x) prepayments of any other Indebtedness subordinated to the Obligations during such period, (y) prepayments of Indebtedness made with proceeds of Excluded Issuances during such period and (z) prepayments of Indebtedness in respect of any revolving credit facility during such period to the extent there is not an equivalent permanent reduction in commitments thereunder), (vi) transaction expenses of Parent and its Subsidiaries incurred in connection with the Transactions (to the extent paid within 12 months after the Closing Date) in an aggregate amount not to exceed $4,000,000 during the term of the Agreement, solely to the extent such expenses, fees, costs and

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charges are actually paid in cash, (vii) the cash portion of Capital Expenditures made during such period (net of (x) any Capital Expenditures funded with proceeds of Excluded Issuances, (y) any proceeds reinvested in accordance with the proviso to Section 2.4(e)(ii) of the Agreement, and (z) any proceeds of related financings with respect to such expenditures made during such period), (viii) the excess, if any, of Net Working Capital at the end of such period over Net Working Capital at the beginning of such period (or, if the difference results in an amount less than zero, minus the excess, if any, of Net Working Capital at the beginning of such period over Net Working Capital at the end of such period) and (ix) any extraordinary, unusual or nonrecurring fees, costs, expenses, losses or charges to the extent added back to Consolidated EBITDA during such period, plus (c) tax refunds received by Parent and its Subsidiaries during such period.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

“Excluded Issuances” means (a) the issuance of Qualified Equity Interests of the Parent to directors, officers and employees of the Parent and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors of the Parent and permitted under this Agreement), (b) in the event that Parent or any of its Subsidiaries forms any Subsidiary in accordance with the terms hereof, the issuance by such Subsidiary of Qualified Equity Interests to Parent or such Subsidiary, as applicable, (c) the issuance of Qualified Equity Interests of Parent in order to finance (i) the purchase consideration (or a portion thereof) in connection with a Permitted Acquisition or an Investment permitted under clause (w)(ii) of the definition of Permitted Investments, (ii) Capital Expenditures permitted under this Agreement, and/or (iii) so long as no Default or Event of Default shall have occurred and be continuing, for working capital purposes of Parent and its Subsidiaries (other than for the prepayment of Indebtedness permitted under Section 6.7(a)(iii)), (d) the issuance of Qualified Equity Interests of Parent in order to fund the prepayment of Indebtedness permitted under Section 6.7(a)(iii) and (e) the issuance of Qualified Equity Interests by a Subsidiary of Parent to its parent or member in connection with the contribution by such parent or member to such Subsidiary of the proceeds of an issuance described in clauses (a) through (e) above, but solely to the extent that (i) in the case of clauses (a) through (e) above, prior to the issuance of any such Qualified Equity Interests, Administrative Borrower has provided Agent with written notice of Borrowers’ intention to apply the proceeds of such Qualified Equity Interests in accordance with clause (a), (b), (c), (d) or (e) above, and (ii) in the case of clauses (c)(i), (c)(ii) and (d) above, the use of the proceeds of such issuance or sale of Qualified Equity Interests occurs substantially contemporaneously with the issuance or sale of such Qualified Equity Interests.

“Excluded Property” has the meaning specified in the Security Agreement or the Canadian Security Agreement, as the case may be.

“Extraordinary Receipts” means any payments in cash received by Parent or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of (a) proceeds of judgments, proceeds of settlements, or other consideration of any kind received in connection with any cause of action or claim, (b) indemnity payments (other than to the extent such indemnity payments are immediately payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, (c) foreign, federal, state or local tax refunds, (d) pension plan reversions, and (e) any purchase price adjustment received in connection with any purchase agreement, including the Target Acquisition Agreement, in each case, after deducting therefrom, to the extent applicable, taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such event, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

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“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the IRC as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with).

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it.

“Finance Party” means Agent or any Lender.

“Fixed Charge Coverage Ratio” means, for any Person and its Subsidiaries with respect to any date of determination, the ratio of (a) the amount equal to (1) Consolidated EBITDA of such Person and its Subsidiaries on a consolidated basis, as of the end of a fiscal quarter for the immediately preceding period of four (4) consecutive fiscal quarters for which Agent has received financial statements, less (2) Capital Expenditures of such Person and its Subsidiaries during such period to the extent not financed by a third party, less (3) any Permitted Tax Distributions; provided, that, solely for purposes of calculating the Fixed Charge Coverage Ratio, the amount of Permitted Tax Distributions shall not include the amount accrued and paid for the fiscal quarter ending June 30, 2013 and the amount of any Permitted Tax Distribution for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized, to (b) Fixed Charges of such Person and its Subsidiaries for such period.

“Fixed Charges” means, as to any Person and its Subsidiaries, on a consolidated basis, with respect to any period, the sum of, without duplication, (a) all Interest Expense paid in cash during such period, plus (b) all regularly scheduled (as determined at the beginning of the respective period) principal payments of Indebtedness for borrowed money, and regularly scheduled (as determined at the beginning of the respective period) payments related to Indebtedness with respect to Capital Leases (and without duplicating in items (a) and (b) of this definition, the cash interest component with respect to Indebtedness under Capital Leases) and, in each case, to the extent there is an equivalent reduction in the commitments thereunder in the case of any revolving credit facility, plus (c) all taxes paid (but, not the amount of any Permitted Tax Distributions) by such Person and its Subsidiaries in cash during such period, plus (d) all Restricted Payments (other than Permitted Tax Distributions) made by such Person and its Subsidiaries during such period pursuant to the Agreement; provided, that, in the case of clauses (a), (b) and (c), the amounts for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized.

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date herewith, in form and substance satisfactory to Agent and the Required Lenders, executed and delivered by each Loan Party, Agent, and ABL Agent.

“Foreign Lender” means any Lender or Participant that is not a United States person within the meaning of IRC Section 7701(a)(30).

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“Foreign Security Documents” means each Canadian Security Document, each Dutch Security Document and each other security document entered into by a Foreign Subsidiary of Parent in favor of Agent.

“Foreign Subsidiary” means a Subsidiary of a Loan Party organized or incorporated under the laws of a jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied; provided, that, all calculations relative to liabilities shall be made without giving effect to Statement of Financial Accounting Standards No. 159.

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

“Governmental Authority” means any federal, state, provincial, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

“Guarantors” has the meaning assigned to such term in the Recitals.

“Guaranty” means each guaranty, including the Dutch Guaranty, executed by the Guarantors (or any Guarantor) in favor of Agent, for the benefit of the Lender Group, in form and substance satisfactory to the Required Lenders, and as may be amended or otherwise modified from time to time.

“Hazardous Materials” means, regardless of amount or quantity, (a) any element, compound, substance or chemical that is defined or listed in, or otherwise classified or regulated pursuant to, any Environmental Laws as a contaminant, pollutant, “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form and polychlorinated biphenyls.

“Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.

“Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.

“IFRS” means the International Financial Reporting Standards.

“Increase” has the meaning specified therefor in Section 2.15 of the Agreement.

“Increase Date” has the meaning specified therefor in Section 2.15 of the Agreement.

“Increase Joinder” has the meaning specified therefor in Section 2.15 of the Agreement.

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“Indebtedness” as to any Person means (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial products, (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (f) all obligations of such Person owing under Hedge Agreements (which amount shall be calculated based on the amount that would be payable by such Person if the Hedge Agreement were terminated on the date of determination), (g) any Disqualified Equity Interests such Person, and (h) any obligation of such Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (g) above.  For purposes of this definition, (i) the amount of any Indebtedness represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Indebtedness, (ii) the amount of any Indebtedness described in clause (d) above shall be the lower of the amount of the obligation and the fair market value of the assets of such Person securing such obligation and (iii) any earn­out obligation of a Person shall not constitute Indebtedness for the purposes of calculating any of the financial covenants in Section 7 until such obligation constitutes a liability on the balance sheet of such Person.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the Agreement.

“Indemnified Taxes” means any Taxes now or hereafter imposed by any Governmental Authority with respect to any payments by any Loan Party under any Loan Document; provided, however, that Indemnified Taxes shall exclude (i) any Tax imposed on the net income (including any branch profits Taxes) and any franchise or similar Taxes in lieu thereof, in each case imposed by the jurisdiction (or by any political subdivision or taxing authority thereof) in which Agent, such Lender or such Participant is organized or in which Agent’s, such Lender’s or such Participant’s principal office or applicable lending office is located or as a result of any other present or former connection between Agent, such Lender or such Participant and the jurisdiction (or political subdivision or taxing authority thereof) imposing the Tax (other than any such connection arising solely from Agent, such Lender or such Participant having executed, delivered, become a party to, or performed its obligations or received payment under, or enforced its rights or remedies under the Agreement or any other Loan Document); (ii) Taxes resulting from a Lender’s or a Participant’s failure to comply with the requirements of Section 16.2(a), (b) or (c) of the Agreement, (iii) any U.S. federal withholding Taxes that would be imposed on amounts payable to a Foreign Lender based upon the applicable withholding rate in effect at the time such Foreign Lender acquires its interest in the applicable Obligation or Commitment (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled to receive additional amounts pursuant to Section 16.1 of the Agreement with respect to such withholding Tax immediately prior to such assignment or change in lending office and (iv)  any U.S. federal withholding Taxes imposed under FATCA.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code, the CCAA or the BIA or under any other provincial, state or federal bankruptcy or insolvency law or any bankruptcy or insolvency law of any other applicable jurisdiction, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

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“Intellectual Property” means all domestic and foreign rights, title and interest in the following:  (i) inventions, discoveries and ideas, whether patentable or not, and all patents, registrations and applications therefor, including without limitation divisions, continuations, continuations-in-part and renewal applications; (ii) published and unpublished works of authorship, whether copyrightable or not, copyrights therein and thereto and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; (iii) trademarks, service marks, trade names, trade dress, brand names, Internet domain names, logos, symbols, and other indicia of origin, all applications and registrations for all of the foregoing, and all goodwill associated therewith and symbolized thereby, including without limitation all extensions, modifications and renewal of the same; (iv) confidential and proprietary information, trade secrets and know-how, including, without limitation, TDPs, formulae, processes, compounds, drawings, designs, industrial designs, blueprints, surveys, reports, manuals, operating standards and customer lists; (v) software and contract rights relating to computer software programs, in whatever form created or maintained; and (vi) all other intellectual property rights or proprietary rights and claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing throughout the world, including, without limitation, rights to recover for past, present and future violations thereof and any and all products and proceeds of the foregoing.

“Intercompany Subordination Agreement” means an intercompany subordinated note executed and delivered by the Loan Parties and the other parties thereto, the form and substance of which is satisfactory to the Required Lenders.

“Interest Expense” means, for any period, as to any Person, as determined in accordance with GAAP, the amount equal to total interest expense of such Person and its Subsidiaries on a consolidated basis for such period, whether paid or accrued (including the interest component of any Capital Lease for such period), and in any event, including, without limitation, (a) discounts in connection with the sale of any Accounts, (b) bank fees, commissions, discounts and other fees and charges in each case owed with respect to letters of credit, banker’s acceptances or similar instruments or any factoring, securitization or similar arrangements, (c) interest payable by addition to principal or in the form of property other than cash and any other interest expense not payable in cash, and (d) the costs or fees for such period associated with Hedge Agreements to the extent not otherwise included in such total interest expense; provided, that, for purposes of the determination of Consolidated EBITDA, Interest Expense shall include, to the extent treated as interest in accordance with GAAP, all non-cash amounts in connection with borrowed money (including paid-in-kind interest).

“Inventory” means inventory (as such term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business), or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

“IP Reporting Certificate” means an IP reporting certificate substantially in the form of Exhibit I-1 executed and delivered by the Loan Parties to Agent.

“IRC” means the Internal Revenue Code of 1986, as amended.

“Judgment Currency” has the meaning specified in Section 17.15 of the Agreement.

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“Lender” has the meaning set forth in the preamble to the Agreement, and shall also include any other Person made a party to the Agreement pursuant to the provisions of Section 13.1 of the Agreement and “Lenders” means each of the Lenders or any one or more of them.

“Lender Group” means each of the Lenders and Agent, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by Parent or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) reasonable and documented out-of-pocket fees or charges paid or incurred by Agent and each Lender in connection with the Lender Group’s transactions with Parent or its Subsidiaries under any of the Loan Documents, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and PPSA and UCC searches and including searches with the patent and trademark office, or the copyright office, or similar searches with respect to the Canadian Loan Parties and the Dutch Loan Parties), filing, recording, publication, appraisal (including periodic collateral appraisals to the extent of the fees and charges (and up to the amount of any limitation) contained in the Agreement), real estate surveys, real estate title policies and endorsements, and environmental audits, (c) Agent’s customary fees and charges (as adjusted from time to time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise) or with respect to the establishment of electronic collateral reporting systems, together with any reasonable and documented out-of-pocket costs and expenses incurred in connection therewith, (d) reasonable and documented out-of-pocket charges paid or incurred by Agent resulting from the dishonor of checks payable by or to any Loan Party, (e) reasonable out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) [reserved], (g) reasonable and documented out-of-pocket costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with Parent or any of its Subsidiaries, (h) Agent’s and each Lender’s reasonable and documented costs and expenses (including reasonable attorneys fees) incurred in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging), syndicating, or amending the Loan Documents, and (i) Agent’s and each Lender’s reasonable and documented costs and expenses (including reasonable attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning Parent or any of its Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.

“Lender Group Representatives” has the meaning specified therefor in Section 17.9 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“LIBOR Rate” means a per annum rate equal to the greater of (a) a per annum rate equal to the 3 month per annum rate appearing on Macro*World’s (https://capitalmarkets.mworld.com; the “Service”) Page BBA LIBOR - USD (or on any successor or substitute page of such Service or any successor to or substitute for such Service) 2 Business Days prior to the commencement of the requested interest period, adjusted by the reserve percentage prescribed by governmental authorities as determined by Agent which determination shall be conclusive in the absence of manifest error and (b) 1.00% per annum.

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“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, hypothec, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

“Loan Account” has the meaning specified therefor in Section 2.9 of the Agreement.

“Loan Documents” means the Agreement, each Canadian Security Document, the Collateral Assignment, the Control Agreements, any Copyright Security Agreement, each Dutch Security Document, the Flow of Funds Agreement, each Guaranty, the Intercompany Subordination Agreement, any Mortgage, any Patent Security Agreement, the Security Agreement, any Trademark Security Agreement, any other Security Document, any UCC Filing Authorization Letter, any note or notes executed by Borrower in connection with the Agreement and payable to any member of the Lender Group, any letter of credit application entered into by any Borrower in connection with the Agreement, and any other agreement entered into, now or in the future, by Parent or any of its Subsidiaries in connection with the Agreement.

“Loan Party” means Borrower or any Guarantor.

“Management Agreement” means the letter agreement, dated as of July 9, 2007, by and between Parent and Sciens Management, LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Management, LLC to provide certain investment banking, corporate and strategic advisory services.

“Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

“Material Adverse Change” means (a) a material adverse change in the business, operations, assets, condition (financial or otherwise) or prospects of Parent and its Subsidiaries, taken as a whole, (b) a material impairment of Parent’s and its Subsidiaries ability to perform their obligations under the Loan Documents to which they are parties or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of Agent’s Liens with respect to the Collateral as a result of an action or failure to act on the part of Parent or its Subsidiaries.

“Material Contract” means (i) the Senior Note Indenture, (ii) each ABL Loan Document, (iii) each Target Acquisition Document, (iv) each Post-Closing Restructuring Document, (v) any contract or agreement (other than a Loan Document, ABL Loan Document, Target Acquisition Document or Post-Closing Restructuring Document) of any Loan Party involving monetary liability of or to Parent or its Subsidiaries in excess of $2,000,000 in any fiscal year of Parent and (vi) each other contract or agreement, the loss of which could reasonably be expected to result in a Material Adverse Change.

“Maturity Date” has the meaning specified therefor in Section 3.3 of the Agreement.

“Merger” means the merger of Acquisition Sub with and into New Colt, with New Colt as the surviving corporation.

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“Moody’s” has the meaning specified therefor in the definition of “Cash Equivalents”.

“Mortgage Policy” has the meaning specified therefor in Schedule 3.1.

“Mortgages” means, individually and collectively, one or more mortgages, deeds of trust, deeds to secure debt, charges or debentures executed and delivered by Parent or its Subsidiaries in favor of Agent, in form and substance satisfactory to Agent and the Required Lenders, that encumber the Real Property Collateral.

“Multiemployer Plan” means any multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or ERISA Affiliate has an obligation to contribute or has any liability, contingent or otherwise or could be assessed withdrawal liability assuming a complete withdrawal from any such multiemployer plan.

“Net Cash Proceeds” means:

(a)  with respect to any sale or disposition by Parent or any of its Subsidiaries of assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of Parent or its Subsidiaries, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such sale or disposition, (iii) taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such sale or disposition, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction; and (iv) all amounts that are set aside as a reserve (A) for adjustments in respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to the extent such reserve is required by GAAP, and (C) for the payment of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition, to the extent that in each case the funds described above in this clause (iv) are (x) deposited into escrow with a third party escrow agent or set aside in a separate Deposit Account that is subject to a Control Agreement in favor of Agent and (y) paid to Agent as a prepayment of the applicable Obligations in accordance with Section 2.4(e) of the Agreement at such time when such amounts are no longer required to be set aside as such a reserve; and

(b)  with respect to the issuance or incurrence of any Indebtedness by Parent or any of its Subsidiaries, or the issuance by Parent or any of its Subsidiaries of any Equity Interests, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of Parent or such Subsidiary in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such issuance or incurrence, (ii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary in connection with such issuance or incurrence, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

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“Net Working Capital” means, as of any date of determination, Current Assets as of such date minus Current Liabilities as of such date.

“Notification Event” means (a) the occurrence of a “reportable event” described in Section 4043 of ERISA for which the 30-day notice requirement has not been waived by applicable regulations issued by the PBGC, (b) the withdrawal of any Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC or any Pension Plan or Multiemployer Plan administrator, (e) any other event or condition that would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, (f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any Employee Benefit Plan, (g) the partial or complete withdrawal of any Loan Party or ERISA Affiliate from a Multiemployer Plan (other than any withdrawal that would not constitute an Event of Default under Section 8.16 of the Agreement), (h) any event or condition that results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate or to appoint a trustee to administer a Multiemployer Plan under ERISA, (i) any Pension Plan being in “at risk status” within the meaning of IRC Section 430(i), (j) any Multiemployer Plan being in “endangered status” or “critical status” within the meaning of IRC Section 432(b) or the determination that any Multiemployer Plan is or is expected to be insolvent or in reorganization within the meaning of Title IV of ERISA, (k) with respect to any Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial cessation of operations within the meaning of ERISA Section 4062(e), (l) the failure of any Pension Plan to meet the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA), in each case, whether or not waived, (m) the filing of an application for a waiver of the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to any Pension Plan, (n) the failure to make by its due date a required payment or contribution with respect to any Pension Plan or Multiemployer Plan, or (o) any event that results in or could reasonably be expected to result in a liability by a Loan Party or ERISA Affiliate pursuant to Title IV of ERISA.

“Obligations” means all loans, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), all amounts charged to the Loan Account pursuant to the Agreement, premiums, liabilities, obligations (including indemnification obligations), fees (including the fees provided in Section 2.10), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, covenants, and duties of any kind and description owing by any Loan Party pursuant to or evidenced by the Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrower is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents.  Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

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“Originating Lender” has the meaning specified therefor in Section 13.1(e) of the Agreement.

“Parent” has the meaning specified therefor in the preamble to the Agreement.

“Participant” has the meaning specified therefor in Section 13.1(e) of the Agreement.

“Participant Register” has the meaning set forth in Section 13.1(i) of the Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Security Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.18 of the Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV or Section 302 of ERISA or Sections 412 or 430 of the Code and which is sponsored, maintained, or contributed to by any Loan Party or ERISA Affiliate or with respect to which any Loan Party or ERISA Affiliate has any liability, contingent or otherwise.

“Perfection Certificate” means the Perfection Certificate delivered to Agent and the Lenders on the Closing Date, as such certificate may be updated pursuant to Section 6(k) of the Security Agreement, which certificate provides information with respect to the assets of each Loan Party.

“Permitted Acquisition” means any Acquisition to the extent that each of the following conditions shall have been satisfied:

(a)           as of the date of such Permitted Acquisition and immediately after giving effect thereto, no Default or Event of Default shall exist or shall have occurred and be continuing,

(b)           (i) the daily average Excess Availability for the thirty (30) day period immediately preceding and, as projected on a pro forma basis (after giving effect to such Permitted Acquisition) for the thirty (30) day period immediately following, such Permitted Acquisition shall not be less than $20,000,000, and (ii) as of the date of such Permitted Acquisition and immediately after giving effect thereto, Excess Availability shall not be less than $20,000,000,

(c)           Agent shall have received not less than ten (10) days’ prior written notice of such Permitted Acquisition, together with such information with respect thereto as the Required Lenders shall request,

(d)           the aggregate amount of the consideration (including any deferred purchase price payment, indemnification payment, purchase price adjustment, earn out or similar payment) for any single Acquisition shall not exceed $20,000,000 and for all acquisitions shall not exceed $50,000,000 during the term of the Agreement,

(e)           the Acquisition shall be with respect to an operating company or division or line of business that engages in a line of business substantially similar, reasonably related or incidental to the business that Borrowers are engaged in,

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(f)           the Board of Directors of the Person to be acquired shall have duly approved such Acquisition and such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition will violate applicable law,

(g)           Parent has provided Agent with a certificate of the chief financial officer of Parent supported by financial statements and reasonably detailed calculations and certifying that on a pro forma basis, the Loan Parties and their Subsidiaries (i) would have been in compliance with the financial covenants in Section 7 for the four fiscal quarter period ended immediately prior to the proposed date of consummation of such Acquisition and (ii) are projected to be in compliance with the financial covenants in Section 7 for the four fiscal quarter period ending immediately after the proposed date of consummation of such Acquisition,

(h)           the assets being acquired are located within the United States or Canada, or the Person whose Equity Interests are being acquired is organized in a jurisdiction located within the United States or Canada, except if the aggregate amount(s) of consideration payable in respect of assets located outside the United States or Canada or Equity Interests of a Person organized in a jurisdiction outside the United States or Canada (including deferred purchase price payments, indemnity payments, purchase price adjustments, earn-outs or similar payments) do not exceed $10,000,000 during the term of the Agreement,

(i)           the subject assets or Equity Interests, as applicable, are being acquired directly by Parent or one of its Subsidiaries that is a Loan Party and, in connection therewith, such Parent or the applicable Loan Party shall have complied with Section 5.11 or 5.12, as applicable, of the Agreement, and

(j)           Administrative Borrower shall have provided Agent with evidence satisfactory to the Required Lenders that each of the conditions contained in this definition have been satisfied.

“Permitted Disposition” means:

(a)           sales, abandonment, or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business,

(b)           sales of Inventory to buyers in the ordinary course of business and the consignment of Inventory to the Government of the United Mexican States in the ordinary course of business pursuant to a written agreement (the “DCAM Consignment”); provided, that, the maximum value of Inventory at the Government of the United Mexican States at any one time shall not exceed $1,000,000,

(c)           the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents,

(d)           the non-exclusive licensing or sublicensing of Intellectual Property or other general intangibles (other than the exclusive licenses in effect on the Closing Date as set forth on Schedule L-1) and licenses, leases or subleases of other property (in each case other than Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real Property as defined in the ABL Credit Agreement), in each case, in the ordinary course of business and so long as any such transaction shall not: (i) materially interfere with the business of Parent and its Subsidiaries, (ii) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (iii) have a material and adverse effect on the value  of such Intellectual Property, or (iv) otherwise adversely limit or interfere in any respect with the use of any such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

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(e)           the granting of Permitted Liens,

(f)           the sale or discount, in each case without recourse, of Accounts arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

(g)           any involuntary loss, damage or destruction of property,

(h)           any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property;

(i)           the leasing or subleasing of assets of Parent or its Subsidiaries (other than Accounts and Inventory) in the ordinary course of business,

(j)           the sale or issuance of Equity Interests by any Subsidiary of Parent to a Loan Party,

(k)           the non-exclusive licensing or sublicensing of Intellectual Property pursuant to manufacturing license agreements or technical assistance agreements with certain foreign governments, or otherwise in accordance with the International Traffic in Arms Regulations, in each case so long as any such transaction does not:  (i) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (ii) have a material and adverse effect on the value of such Intellectual Property, or (iii) otherwise adversely limit or interfere with the use of such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

(l)           the making of a Restricted Payment that is expressly permitted to be made pursuant to the Agreement,

(m)           the making of a Permitted Investment,

(n)           the sale or other disposition of property by a Loan Party to another Loan Party, and

(o)           sales or other dispositions of assets of Parent and its Subsidiaries not otherwise subject to the provisions set forth in this definition, provided, that, as to any such sale or other disposition, each of the following conditions is satisfied:

(i)         such transaction does not involve the sale or other disposition of any Intellectual Property, Equity Interest in any Subsidiary or of Accounts or Inventory; and

(ii)          the aggregate amount of such dispositions does not exceed $1,000,000 during any fiscal year.

“Permitted Holder” means the Persons listed on Schedule P-3 to the Agreement.

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“Permitted Indebtedness” means:

(a)           Indebtedness evidenced by the Agreement or the other Loan Documents,

(b)           Indebtedness set forth on Schedule 4.19 and any Refinancing Indebtedness in respect of such Indebtedness,

(c)           Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness,

(d)           endorsement of instruments or other payment items for deposit,

(e)           Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds, completion guarantee and similar obligations; (ii) unsecured guarantees arising with respect to customary indemnification obligations to purchasers in connection with Permitted Dispositions; and (iii) unsecured guarantees with respect to Indebtedness of Parent or one of its Subsidiaries, to the extent that the Person that is obligated under such guaranty would have been permitted to incur such underlying Indebtedness,

(f)           unsecured Indebtedness of Parent or its Subsidiaries that is incurred on the date of the consummation of a Permitted Acquisition solely for the purpose of consummating such Permitted Acquisition so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii) such unsecured Indebtedness does not mature prior to the date that is 180 days after the Maturity Date, (iii) the terms of such Indebtedness do not permit Parent or such Subsidiary to make any cash interest payment prior to the Maturity Date and (iv) no amortization payments are required prior to the Maturity Date,

(g)           Acquired Indebtedness in an amount not to exceed $4,000,000 outstanding at any one time, and any Refinancing Indebtedness in respect of such Indebtedness,

(h)           Indebtedness incurred in the ordinary course of business under performance, surety, statutory, and appeal bonds,

(i)           Indebtedness to finance premiums for property, casualty, liability, or other insurance to Parent or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance,

(j)           the incurrence by Parent or its Subsidiaries of Indebtedness under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with Parent’s and its Subsidiaries’ operations and not for speculative purposes,

(k)           Indebtedness incurred in respect of credit cards, credit card processing services, debit cards, stored value cards, purchase cards (including so-called “procurement cards” or “P-cards”), or treasury or Cash Management Services, in each case, incurred in the ordinary course of business,

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(l)           unsecured Indebtedness of Parent owing to former employees, officers, or directors (or any spouses, ex-spouses, or estates of any of the foregoing) incurred in connection with the repurchase by Parent of the Equity Interests of Parent that has been issued to such Persons, so long as (i) no Default or Event of Default has occurred and is continuing or would result from the incurrence of such Indebtedness, (ii) such Indebtedness is subordinated to the Obligations on terms and conditions acceptable to the Required Lenders and (iii) the aggregate amount of all such Indebtedness outstanding at any one time does not exceed $500,000,

(m)           Indebtedness of Parent or its Subsidiaries arising pursuant to Permitted Intercompany Advances,

(n)           Indebtedness arising from (i) agreements of Parent or a Subsidiary providing for adjustment of purchase price, earnout payments or similar obligations, in each case incurred or assumed in connection with a Permitted Acquisition, other than guarantees of Indebtedness incurred by any Person in connection with a Permitted Acquisition, to the extent that the aggregate amount of all such Indebtedness outstanding at any one time does not exceed $1,000,000, or (ii) agreements of Parent or a Subsidiary providing for indemnification and similar obligations, in each case incurred or assumed in connection with a Permitted Acquisition or a Permitted Disposition, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary,

(o)           Indebtedness consisting of Permitted Investments,

(p)           Indebtedness evidenced by the Senior Note Indenture in an aggregate outstanding principal amount not to exceed $250,000,000, and any Refinancing Indebtedness in respect of such Indebtedness,

(q)           [reserved],

(r)           Indebtedness incurred by Parent or its Subsidiaries in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self-insurance obligations, performance, bid surety and similar bonds and completion guarantees (not for borrowed money), in each case in the ordinary course of business,

(s)           Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, that such Indebtedness is extinguished with ten Business Days of incurrence,

(t)           [reserved];

(u)           [reserved];

(v)           other unsecured Indebtedness in an aggregate principal amount not to exceed $1,000,000 at any time outstanding; and

(w)           Indebtedness evidenced by the ABL Credit Agreement and any refinancings thereof in an aggregate principal amount not to exceed $50,000,000 any time outstanding.

“Permitted Intercompany Advances” means loans (a) made by a Loan Party that is not a Specified Loan Party to another Loan Party that is not a Specified Loan Party and (b) made by a Loan Party that is not a Specified Loan Party to a Specified Loan Party; provided, that, (i) in the case of clauses (a) and (b), Agent shall have received an Intercompany Subordination Agreement as duly authorized, executed and delivered by the parties to any such loans and (ii) in the case of clause (b) only, the aggregate amount of all such loans does not exceed $500,000 at any time outstanding unless otherwise agreed to in writing by the Required Lenders.

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“Permitted Investments” means:

(a)           (i)  Investments in cash and Cash Equivalents of any Loan Party,

(b)           Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business,

(c)           advances made in connection with purchases of goods or services in the ordinary course of business,

(d)           Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of any Loan Party or any of its Subsidiaries,

(e)           Investments owned by any Loan Party or any of its Subsidiaries on the Closing Date and set forth on Schedule P-1,

(f)           guarantees permitted under the definition of “Permitted Indebtedness,”

(g)           Permitted Intercompany Advances,

(h)           Equity Interests or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to any Loan Party or any of its Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims,

(i)           deposits of cash made in the ordinary course of business to secure performance of operating leases,

(j)           Permitted Acquisitions,

(k)           Investments resulting from entering into agreements relative to Indebtedness that is permitted under clause (j) of the definition of “Permitted Indebtedness,”

(l)           Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition,

(m)           [reserved],

(n)           the endorsement of instruments for collection or deposit in the ordinary course of business,

(o)           deposits of cash for leases, utilities, worker’s compensation and similar matters in the ordinary course of business,

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(p)           receivables owing to Parent or any of its Subsidiaries if created or acquired in the ordinary course of business consistent with current practices as of the date hereof,

(q)           loans and advances by Parent and its Subsidiaries to directors, officers and employees of Parent and its Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $250,000 at any time outstanding,

(r)           stock or obligations issued to Parent and its Subsidiaries by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to Parent and its Subsidiaries in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person, provided, that, the original of any such stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon the Required Lenders’ request, together with such stock power, assignment or endorsement by Parent and its Subsidiaries as the Required Lenders may request,

(s)           Investments constituting Restricted Payments permitted by Section 6.9 of the Agreement,

(t)           Investments made as a result of the receipt of non-cash consideration from a Permitted Disposition,

(u)           Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan in an amount not to exceed the amount of compensation expense recognized by Parent and its Subsidiaries in connection with such plans,

(v)           solely to the extent constituting Investments, purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business, and

(w)           (i) other Investments in an aggregate outstanding amount not to exceed $500,000 at any time and (ii) other Investments not constituting Permitted Acquisitions made solely with the proceeds of any Excluded Issuances (as described in clause (c)(i) of the definition thereof); provided, that, as of the date of and such Investment and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.

“Permitted Liens” means:

(a)           Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b)           Liens for unpaid Taxes that either (i) are not yet delinquent, or (ii) for which the underlying Taxes are the subject of Permitted Protests,

(c)           judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default under Section 8.3 of the Agreement,

(d)           Liens set forth on Schedule P-2; provided, however, that to qualify as a Permitted Lien, any such Lien described on Schedule P-2 shall only secure the Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof,

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(e)           any interest or title of a lessor, sublessor or licensor in or to any asset (other than Accounts or Inventory) under any lease, sublease or license entered into by Parent or its Subsidiaries in the ordinary course of business and covering only such asset,

(f)           purchase money Liens or the interests of lessors under Capital Leases, in each case, as to assets or property, other than Accounts or Inventory, to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as (i) such Lien attaches only to the asset or property purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was incurred to acquire the asset or property purchased or acquired or any Refinancing Indebtedness in respect thereof,

(g)           Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,

(h)           Liens on cash deposited to secure Parent’s and its Subsidiaries’ obligations in connection with worker’s compensation or other unemployment insurance,

(i)           Liens on cash deposited to secure Parent’s and its Subsidiaries’ obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money,

(j)           Liens on cash deposited to secure Parent’s and its Subsidiaries’ reimbursement obligations with respect to surety or appeal bonds obtained in the ordinary course of business,

(k)           with respect to any Real Property, encumbrances, ground leases, easements or reservations of, or rights of others (including any reservations, limitations, provisos and conditions expressed in any original grant from the Crown with respect of any Real Property owned by Colt Canada) for, licensees, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) in each case as to the use of Real Property or Liens on Real Property incidental to the conduct of the business of Parent or its Subsidiaries or to the ownership of its Real Property that (in each case) do not individually or in the aggregate materially adversely affect the value of any such Real Property or materially impair, or interfere with, the use or operation of such Real Property,

(l)           non-exclusive licenses of Intellectual Property to the extent permitted under clause (k) of the definition of Permitted Disposition, in the ordinary course of business,

(m)           Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement Liens only encumber those assets that secured the original Indebtedness,

(n)           rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business,

(o)           Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of “Permitted Indebtedness”,

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(p)           Liens in favor of customs, revenue or other tax authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods,

(q)           Liens on any cash earnest money deposits made by Parent or any of its Subsidiaries in connection with any letter of intent or purchase agreement with respect to an acquisition or disposition of assets not prohibited by the terms of the Agreement,

(r)           [reserved],

(s)           any Lien existing on any asset or a Person existing at the time such Person becomes a Subsidiary after the date of the Agreement; provided, that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other assets of Parent or any Subsidiary (other than proceeds of such asset), (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and Refinancing Indebtedness in respect thereof, (iv) neither (x) the aggregate outstanding principal amount of the obligations secured thereby nor (y) the aggregate fair market value (determined as of the date such Person becomes a Subsidiary) of the assets subject thereto exceeds (as to Parent and all Subsidiaries) $1,000,000 at any one time, and (v) such Lien shall not extend or attach to any Inventory or Accounts,

(t)           Liens arising from precautionary Code financing statement filings regarding operating leases entered into by Parent and its Subsidiaries in the ordinary course of business,

(u)           Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business, including Inventory consigned pursuant to the DCAM Consignment described in clause (b) of the definition of Permitted Dispositions,

(v)           [reserved],

(w)           Liens securing Permitted Indebtedness pursuant to clause (g) of the definition or “Permitted Indebtedness”; provided, that, such Liens shall be subordinated to the Liens securing the Obligations pursuant to an intercreditor agreement, in form and substance satisfactory to the Required Lenders, duly executed and delivered by each holder of such Liens and acknowledged by each grantor of such Liens,

(x)           with respect to any Real Property, minor survey exceptions, minor encumbrances, ground leases, easements or reservations or, or rights of others for, licenses, rights-of-way servitudes, sewers, restrictive consents, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) which (in each case) were not incurred in connection with Indebtedness and which do not individually or in the aggregate materially adversely affect the value of such Real Property or materially impair, interfere with, the use or operation of such Real Property,

(y)           leases, subleases, licenses or sublicenses to the extent permitted by clause (d) of the definition of “Permitted Dispositions”,

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(z)           any Lien securing Indebtedness permitted by clause (u) of the definition of “Permitted Indebtedness”; provided, that, such Lien is subordinated to the Lien securing the Obligations pursuant to an intercreditor agreement which shall be in form and substance satisfactory to the Required Lenders,

(aa)           Liens securing Permitted Indebtedness pursuant to clause (w) of the definition or “Permitted Indebtedness”, provided that such Liens are subject to the terms of the ABL Intercreditor Agreement; and

(bb) any Lien arising out of a prejudgment remedy to the extent ordered by the court overseeing any Covered Claim, including any prejudgment writ of attachment, solely to the extent that each of the following conditions have been satisfied, as certified by Parent within three (3) Business Days of the date any such prejudgment remedy is ordered by such Court: (i) the allocated amount available for satisfaction of such Covered Claim in the Employee Litigation Escrow Fund (the “Allocated Escrow”) shall not be less than the amount specified in such prejudgment writ of attachment (collectively, the “Claim Amount”), (ii) the Employee Litigation Escrow Fund shall be valid and in full force and effect at all times that such Covered Claim is secured by such Lien, (iii) to the extent the Claim Amount exceeds the Allocated Escrow, the Loan Parties shall have posted bonds, cash collateral or other financial assurances acceptable to such Court sufficient to satisfy the amount specified in such prejudgment writ of attachment (the “Additional Security”), and (iv) such Lien shall be junior to the Liens securing the Obligations pursuant to applicable law.

Notwithstanding anything to the contrary contained in any of the Loan Documents, Permitted Liens shall not include any Liens on assets of any Loan Party which secure any Indebtedness or other obligations of any Foreign Subsidiary, except (x) as permitted by clauses (a) and (w) of the definition of “Permitted Liens,” or (y) as consented to in writing by the Required Lenders.

“Permitted Protest” means the right of Parent or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), Taxes, or rental payment, provided that (a) a reserve or provision with respect to such obligation is established on Parent’s or its Subsidiaries’ books and records in such amount as is required under GAAP and (b) such Lien or other obligations are being contested in good faith by appropriate proceedings diligently conducted and such proceedings operate to stay the enforcement of such Lien or any Lien securing any such obligations.

“Permitted Purchase Money Indebtedness” means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $1,000,000.

“Permitted Tax Distributions” means, for any period, the amount of tax distributions that the Loan Parties are permitted to make, and actually make, to Parent’s equityholders pursuant to Section 6.9(e) of the Agreement.

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, Governmental Authorities or otherwise.

“Post-Closing Restructuring Documents” means each of the agreements, instruments and other documents entered into to consummate the Post-Closing Restructuring Transactions.

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“Post-Closing Restructuring Effective Date” has the meaning specified therefor in Section 5.17(a).

“Post-Closing Restructuring Certificate” the certificate of Parent (in form and substance satisfactory to the Required Lenders), dated as of the Closing Date, describing the transactions in respect of the restructuring of the Loan Parties’ corporate and capital structure after the Closing Date.

“Post-Closing Restructuring Transactions” means the restructuring transactions described in the Post-Closing Restructuring Certificate

“PPSA” means the Personal Property Security Act (Ontario), the Civil Code of Québec or any other applicable  Canadian Federal or Provincial statute pertaining to the granting, perfecting, priority or ranking of security interests, liens, hypothecs on personal property, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time.  References to sections of the PPSA shall be construed to also refer to any successor sections.

“Pro Rata Share” means, as of any date of determination: with respect to a Lender’s obligation to make all or a portion of the Term Loan and right to receive payments of principal, interest, fees, costs, and expenses with respect thereto, the percentage obtained by dividing (a) the outstanding principal amount of the Term Loan owed to such Lender, by (b) the aggregate outstanding principal amount of the Term Loan.

“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

“Qualified Equity Interests” means and refers to any Equity Interests issued by Parent (and not by one or more of its Subsidiaries) that are not Disqualified Equity Interests.

“Real Property” means any estates or interests in real property now owned or hereafter acquired by Parent or its their Subsidiaries and the improvements thereto.

“Receiver” has the meaning specified therefore in Section 9.3 of the Agreement.

“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“Reference Rate” means, for any period, the greatest of (a) 1.0% per annum, (b) the Federal Funds Rate plus 0.50% per annum and (c) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Agent) or any similar release by the Federal Reserve Board (as determined by Agent).  Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective.

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“Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness so long as:

(a)           Agent shall have received not less than five (5) Business Days’ prior written notice of the intention to incur such Refinancing Indebtedness, which notice shall set forth in reasonable detail satisfactory to the Required Lenders, the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as the Required Lenders  may request,

(b)           promptly upon the Required Lenders’ request, Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto,

(c)           the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a final maturity equal to or greater than the Weighted Average Life to Maturity and the final maturity, respectively, of the Indebtedness being extended, refinanced, replaced, or substituted for,

(d)           the Refinancing Indebtedness shall rank in right of payment no more senior than, and be at least subordinated (if subordinated) to, the Obligations as the Indebtedness being extended, refinanced, replaced or substituted for,

(e)           the Refinancing Indebtedness shall not include terms and conditions with respect to Borrower or any Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole,

(f)           such Indebtedness incurred by Borrower or any Guarantor shall be at rates and with fees or other charges that are commercially reasonable,

(g)           the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Indebtedness so extended, refinanced, replaced or substituted for (plus the amount of reasonable refinancing fees and expenses incurred in connection therewith outstanding on the date of such event), and

(h)           if the Indebtedness being extended, refinanced, replaced or substituted for is secured by any assets, the Refinancing Indebtedness shall not be secured other than by such assets, provided, that, such security interests (if any) with respect to the Refinancing Indebtedness shall have a priority no more senior than, and be at least as subordinated, if subordinated (on terms and conditions substantially similar to the subordination provisions applicable to the Indebtedness so extended, refinanced, replaced or substituted for or as is otherwise acceptable to the Required Lenders) as the security interest with respect to the Indebtedness so extended, refinanced, replaced or substituted for.

“Register” has the meaning set forth in Section 13.1(h) of the Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(h) of the Agreement.

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

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“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials or violations of Environmental Law, in each case as required by Environmental Laws or Governmental Authority.

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement.

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Availability” means that Excess Availability exceeds $15,000,000.

“Required Lenders” means, at any time, (a) Lenders whose aggregate Pro Rata Shares exceed 50.0% and (b) each Initial Lender (and its Related Funds) identified on Schedule C-1 to the Agreement, so long as such Initial Lender (including its Related Funds) holds not less than 10.0% of the aggregate outstanding principal amount of the Term Loan.

“Required Prepayment Date” has the meaning specified therefor in Section 2.4(e)(vii) of the Agreement.

“Responsible Officer” means any chief executive officer, president, senior vice president, executive vice president, chief operating officer, chief financial officer, chief accounting officer, general counsel, treasurer or other similar officer of any Borrower.

“Restricted Payment” means to the declaration or payment of any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests of Parent or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or on account of any return of capital to Parent or such Subsidiary’s stockholders, partners or members (or the equivalent Person thereof), or payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of Parent or any of its Subsidiaries, or any setting apart of funds or property for any of the foregoing.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated Nationals maintained by OFAC.

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“S&P” has the meaning specified therefor in the definition of “Cash Equivalents”.

“SEC” means the United States Securities and Exchange Commission and any successor thereto.

“Securities Account” means a securities account (as that term is defined in the Code).

“Secured Funded Indebtedness” means, as of any date of determination, all Indebtedness for borrowed money or letters of credit of Parent, determined on a consolidated basis in accordance with GAAP, including, in any event, but without duplication, with respect to Parent and its Subsidiaries, the Indebtedness under the ABL Loan Documents, the Term Loan and the amount of their Capitalized Lease Obligations.

“Secured Leverage Ratio” means, as of any date of determination the ratio of (a) the amount of Borrower’s Secured Funded Indebtedness as of such date, to (b) Consolidated EBITDA for the 4 fiscal quarter period ended as of such date.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Security Agreement” means a security agreement, dated as of even date with the Agreement, in form and substance satisfactory to Agent and the Required Lenders, executed and delivered by  the US Loan Parties to Agent.

“Security Documents” means any Canadian Security Document, any Dutch Security Document, any other Foreign Security Document, any US Security Document, and any other security document entered into by a Loan Party in favor of Agent.

“Senior Note Indenture” means the Indenture, dated as of November 10, 2009, by and among Parent, Colt Finance Corp. and Wilmington Trust FSB, as trustee with respect to 8.75% Senior Notes due 2017.

“Senior Note Indenture Secured Debt Cap” means, on any date, the maximum principal amount of all Advances, Swing Line Loans, Letter of Credit Usage and Overadvances (as such terms are defined in the ABL Intercreditor Agreement), plus the Term Loan permitted to be incurred by the Loan Parties in accordance with, and without contravening Section 3.2(b)(2) of the Senior Note Indenture and remain outstanding on a fully secured basis pursuant to clause (1) of the definition of “Permitted Liens” (as defined in the Senior Note Indenture) in accordance with Section 3.6 of the Senior Note Indenture.

“Solvent” means, at any time with respect to any Person, that at such time such Person  (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

“Specified Canadian Pension Plan” means any Canadian Pension Plan which contains a “defined benefit provision,” as defined in subsection 147.1(1) of the Income Tax Act (Canada).

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“Specified Equipment Lease Documents” means, collectively, the Master Lease Agreement Number 16293-90000, dated January 16, 2007, between Banc of America Leasing & Capital, LLC or its successors and assigns and Parent, together with all schedules thereto, and all agreements, documents and instruments evidencing or otherwise related thereto, as the same now exist or may hereafter be amended, supplemented or otherwise modified.

“Specified Government Property” means any and all property loaned, leased or otherwise provided to a Loan Party pursuant to or in connection with a Specified Government Property Loan Agreement.

“Specified Government Property Loan Agreement” means, individually and collectively, (a) the Loan Agreement, executed on or about May 27, 2009, between Colt Canada and Department of National Defence (Canada), and (b) any other agreement between any Loan Party and the national government of Canada or any of its agencies or instrumentalities pursuant to which the national government of Canada or any of its agencies or instrumentalities lends, leases or otherwise provides goods to a Loan Party to be used by a Loan Party for purposes of performing work pursuant to a supply or similar agreement between a Loan Party and the national government of Canada or any of its agencies or instrumentalities.

“Specified Loan Party” means any Loan Party (a) that is not formed, organized and/or incorporated under the laws of the United States of America, any state thereof, the District of Columbia, Canada (or any province or territory thereof) or the Netherlands and (b) for which Agent has provided notice to Administrative Borrower that such Loan Party is a Specified Loan Party.

“Specified Transaction” means (i) any Investment permitted under this Agreement that results in a Person becoming a Subsidiary,  (ii) any Permitted Acquisition, (iii) any sale, disposition or transfer that results in a Subsidiary ceasing to be a Subsidiary of the Parent or any, in each case, whether by merger, consolidation, amalgamation or otherwise, (iv) any incurrence or repayment of Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility or line of credit, unless such Indebtedness has been permanently repaid and has not been replaced), or (iv) any other transaction that by the terms of this Agreement requires any financial ratio (or component definition) to be calculated on a pro forma basis.

“Sponsor” means Sciens Management, LLC.

“Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the Equity Interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

“Target Acquisition” means the acquisition by Parent of all or substantially all of the equity interests of New Colt on the Closing Date.

“Target Acquisition Agreement” means that certain Agreement and Plan of Merger, dated as of July 12, 2013, by and among Parent, Acquisition Sub, New Colt, and Donald E. Zilkha and Edward L. Koch, as Stockholder Representatives, with respect to the Target Acquisition.

“Target Acquisition Documents” means the Target Acquisition Agreement, together with all other documents and agreements entered into in connection with the Target Acquisition.

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.

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“Taxes” means any taxes, levies, imposts, duties, assessments or other similar charges now or hereafter imposed by any Governmental Authority, and all interest, penalties or similar liabilities with respect thereto.

“Technical Data Package” or “TDP” means data that is used in the production of firearms or accessories for firearms, including, but not limited to, engineering drawings, three dimensional CAD models, associated lists, material specifications, product specifications, tooling and gauging, including associated drawings and models, assembly instructions, fixtures, including associated drawings, engineering change information, previous revision information, process specifications and standards, as may be revised from time to time.

“Term Loan” means, collectively, the loans made pursuant to Section 2.2 and Section 2.15 of the Agreement.

“Term Loan Amount” means $50,000,000.00.

“Term Loan Commitment” means, for any Lender, its obligation to make a portion of the Term Loan in the principal amount shown on Schedule C-1 of the Agreement.

“Term Note” means a promissory note of Borrower payable to the order of a Lender in substantially the form of Exhibit B-1 of the Agreement, evidencing indebtedness of Borrower to each Lender pursuant to the Term Loan.

“Term Priority Collateral” has the meaning specified therefor in the ABL Intercreditor Agreement.

“Trademark Security Agreement” has the meaning specified therefor in the Security Agreement.

“UCC Filing Authorization Letter” means a letter duly executed by each Loan Party authorizing Agent to file appropriate financing statements on Form UCC-1 in such office or offices as may be necessary or, in the opinion of Agent or the Required Lenders, desirable to perfect the security interests purported to be created by each US Security Document.

“Underlying Debt” means, in relation to a Loan Party and at any given time, each Obligation (whether present or future, actual or contingent) owing by such Loan Party to a Finance Party under the Loan Documents (including, for the avoidance of doubt, any change or increase in those obligations pursuant to or in connection with any amendment or supplement or restatement or novation of any Loan Document, in each case whether or not anticipated as of the date of this Agreement) excluding that Loan Party’s Dutch Parallel Debt.

“United States” means the United States of America.

“US Dollar Equivalent” means at any time (a) as to any amount denominated in US Dollars, the amount thereof at such time, and (b) as to any amount denominated in any other currency, the equivalent amount in US Dollars calculated by Agent in good faith at such time using the exchange rate in effect on the Business Day of determination.

“US Dollars,” “US$” and “$” shall each mean lawful currency of the United States of America.

“US Loan Party” and “US Loan Parties” means, individually and collectively, each Loan Party organized under the laws of the United States.

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“US Security Documents” means the Security Agreement, any Copyright Security Agreement, any Patent Security Agreement, any Trademark Security Agreements, any Mortgage, and each other document identified on Schedule S (as such schedule may be amended or supplemented by Agent to add additional US Security Documents in connection with in connection with the Loan Documents), and such other mortgages, debentures, charges, pledges, security agreements, joinder agreements, documents and instruments as may be required by Agent.

“VAT” means Value Added Tax imposed in Canada (including Goods and Services Tax, Harmonized Sales Tax and Quebec Sales Tax).

“VCOC Letter” means the letter agreement, dated as of the date hereof, by and among the Lenders and the Loan Parties, relating to the qualification of each Lender’s Term Loan as a venture capital operating company investment.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the Agreement.

“Waivable Mandatory Prepayment” has the meaning specified therefor in Section 2.4(e)(vii) of the Agreement.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (c) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (d) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

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Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided for in the Agreement is subject to the fulfillment, to the satisfaction of each Lender (the making of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:

(a)           the Closing Date shall occur on or before July 12, 2013;

(b)           Agent shall have received a UCC Filing Authorization Letter, duly executed by each Loan Party authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents;

(c)           Agent shall have received evidence that appropriate financing statements have been duly filed in such office or offices as may be necessary or, in the opinion of the Required Lenders, desirable to perfect the Agent’s Liens in and to the Collateral;

(d)           Agent shall have received each of the following documents, in form and substance satisfactory to the Required Lenders, duly executed, and each such document shall be in full force and effect:

(i)         this Agreement,

(ii)        each Guaranty,

(iii)       the Security Agreement, together with each related Copyright Security Agreement, Patent Security Agreement and Trademark Security Agreement,

(iv)       the Canadian Security Documents (other than the Charge/Mortgage by Colt Canada in favor of Agent),

(v)        the Dutch Security Documents,

(vi)       the Collateral Assignment,

(vii)      the Flow of Funds Agreement,

(viii)     the Intercompany Subordination Agreement,

(ix)        a Collateral Access Agreement with respect to the following location: 545 and 547 New Park Avenue, West Hartford, CT 06110,

(x)         the ABL Intercreditor Agreement,

(xi)        a letter, in form and substance satisfactory to Agent, from Bank of America, N.A., as the lender (the “Existing Lender”) under the Loan Agreement, dated as of September 21, 2009 (as amended prior to the date hereof, the “Existing Credit Facility”), to Agent respecting the amount necessary to repay in full all of the obligations of Colt’s Manufacturing owing under the Existing Credit Facility and to  obtain a release of all of the Liens existing in favor of the Existing Lender in and to the assets of Colt’s Manufacturing, together with termination statements and other documentation evidencing the termination by the Existing Lender of its Liens in and to the properties and assets of Colt’s Manufacturing,

(xii)         a completed Perfection Certificate dated the Closing Date and executed by an Authorized Officer of each Loan Party, together with all attachments contemplated thereby, and

(xiii)        the VCOC Letter;

(e)           Agent shall have received a certificate from the Secretary of each Loan Party (i) attesting to (among other things) the resolutions of such Loan Party’s Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which such Loan Party is a party, (ii) authorizing specific officers of such Loan Party to execute the same, (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party and (iv), in respect of the Dutch Loan Party, attesting to the resolution of the general meeting of members approving the execution and the terms of, and the transactions contemplated by, the Loan Documents to which it is a party;

(f)           Agent shall have received a certificate from a Responsible Officer of Parent certifying that the conditions set forth in Section 3.1 of the Agreement have been satisfied;

(g)           Agent shall have received copies of each Loan Party’s Governing Documents, as amended, modified, or supplemented on or prior to the Closing Date, which Governing Documents shall be (i) certified by the Secretary of such Loan Party, (ii) with respect to Governing Documents of each Loan Party that are charter documents, certified as of a recent date (not more than 30 days prior to the Closing Date) by the appropriate governmental official and (iii), in respect of the Dutch Loan Party, a copy of its constitutional documents (including, a recent extract from the Dutch Trade Register (handelsregister) relating to it in Dutch and English) and a certified copy of its members register;

(h)           Agent shall have received a certificate of status with respect to each Loan Party, where applicable, dated a recent date (not more than 10 days prior to the Closing Date), such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Loan Party, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction;

(i)           Agent shall have received certificates of status with respect to each Loan Party, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Loan Party) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Loan Party is in good standing in such jurisdictions (to the extent the applicable jurisdiction provides such a certificate);

(j)           Agent shall have received (i) an opinion of Cahill, Gordon & Reindel LLP, counsel to the Loan Parties, (ii) an opinion of Miller Thomson LLP and Stewart McKelvey, Canadian counsel to the Loan Parties, and  (iii) an opinion of Loyens & Loeff N.V., Dutch counsel to the Loan Parties, in each case, in form and substance satisfactory to the Required Lenders;

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(k)           Agent shall have received a set of Projections of Parent for the four (4) year period ending December 31, 2017;

(l)           Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement to the extent invoiced on or before the Closing Date;

(m)           Agent shall have received lien, tax and judgment search results for the jurisdiction of organization of each Borrower and each Guarantor, and tax and judgment search results for the jurisdiction of the chief executive office of each Borrower and each Guarantor and all jurisdictions in which material assets of Borrowers and Guarantors are located;

(n)           (i) the Target Acquisition Documents shall be substantially in the form of such documents previously delivered to Agent prior to the Closing Date or subject to subsequent waivers, modifications or amendments thereto that are not (individually or in the aggregate) materially adverse to the interests of the Lenders in their capacities as such, (ii) all necessary legal and regulatory approvals with respect to the Target Acquisition shall have been obtained to the extent required by the Target Acquisition Documents, (iii) the Target Acquisition shall have been consummated on the Closing Date in accordance with the terms and conditions of the Target Acquisition Agreement (including with respect to the payment of the purchase price), (iv) Parent shall own the Stock of New Colt free and clear of all Liens other than Permitted Liens, (v) no covenants, conditions, or other terms of the Target Acquisition Agreement shall have been waived, modified, or amended other than with the consent of the Required Lenders other than waivers, modifications, or amendments which would not be (individually or in the aggregate) materially adverse to the interests of the Lenders in their capacities as such and (vi) the Merger shall have been consummated in accordance with the Target Acquisition Agreement and Agent shall have received evidence satisfactory to the Required Lenders that the certificate of merger evidencing the Merger has been filed with, and accepted by, the applicable Governmental Authority;

(o)           (i) all conditions precedent to the effectiveness of the ABL Loan Documents, as amended in connection with the Loan Documents, the Target Acquisition Documents and the Restructuring Documents, in each case,  shall have been satisfied and (ii) such ABL Loan Documents, as amended, shall be subject to the terms of the ABL Intercreditor Agreement;

(p)           Agent shall have received a solvency certificate, in form and substance satisfactory to the Required Lenders, certifying as to the solvency of each of the Loan Parties after giving effect to the Merger and the other transactions contemplated to occur under the Loan Documents on the date hereof (and after giving effect to any rights of contribution and subrogation of the Loan Parties);

(q)           Borrowers shall have the Required Availability under the ABL Credit Agreement after giving effect to the extensions of credit thereunder and the payment of all fees and expenses required to be paid by Borrowers on the Closing Date under ABL Credit Agreement or the other ABL Loan Documents;

(r)           Parent and each of its Subsidiaries shall have received all governmental and third party approvals (including shareholder approvals, Hart-Scott-Rodino clearance and other consents) necessary or advisable in connection with this Agreement and the other Loan Documents, as well as the transactions contemplated thereby, which shall all be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Loan Documents;

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(s)           Agent shall have received copies of each of the Material Contracts, together with a certificate of a Responsible Officer of Parent, certifying that true, correct, and complete copies thereof have been delivered or made available to Agent;

(t)           completion of Patriot Act searches, OFAC/PEP searches and customary individual background checks for the Loan Parties and the Loan Parties’ senior management, the results of which are satisfactory to Agent and the Required Lenders;

(u)           the corporate, capital and legal structure of the Loan Parties, both before and after the merger, shall be acceptable to the Lenders;

(v)           no Material Adverse Change shall have occurred and be continuing since December 31, 2012, and no defaults or events of default beyond any applicable cure period under any agreement evidencing or relating to any material debt or any Material Contract of Borrowers or Guarantors shall exist;

(w)           Agent shall have received the Post-Closing Restructuring Certificate duly executed by Parent; and

(x)           Agent shall have received applicable tax forms (i.e. W-9, W-8BEN, etc.) for each Borrower.

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Schedule 3.6

(a)Within 3 Business Days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion), Agent shall have received (i) the Charge/Mortgage with respect to the Real Property owned by Colt Canada located at 1036 Wilson Avenue, Kitchener, ON, Canada N2C 1J3, duly executed by Colt Canada in favor of Agent and other Canadian Security Documents reasonably requested by Agent related thereto and (ii) a mortgagee title insurance policy (or a marked commitment to issue the same) for such Real Property covered by the Charge/Mortgage issued by a title insurance company satisfactory to the Required Lenders in an amount satisfactory to the Required Lenders assuring the Required Lenders that such Charge/Mortgage on the Real Property covered thereby is a valid and enforceable first priority mortgage Lien on such Real Property Collateral free and clear of all defects and encumbrances except Permitted Liens, and such mortgage policy otherwise shall be in form and substance satisfactory to the Required Lenders (it being understood that a mortgage policy consistent in form and substance with the mortgage policies with respect to the mortgage in favor of the ABL Agent under the ABL Credit Agreement shall be satisfactory).

(b)Within 5 Business Days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion) Agent shall have received certificates of insurance, together with the endorsements thereto, as are required by Section 5.6 of the Agreement, the form and substance of which shall be satisfactory to the Required Lenders.

(c)Within 30 days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion), Agent shall have received Control Agreements with respect to each Securities Account and Deposit Account of the Loan Parties (other than Excluded Accounts) to the extent required by, or otherwise delivered pursuant to, the ABL Loan Documents.

(d)Within 30 days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion), Agent shall have received credit card acknowledgments with respect to each credit card agreement with each of the Loan Parties’ credit card processors to the extent delivered pursuant to the ABL Loan Documents.

(e)Within 30 days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion), Agent shall have received a Collateral Access Agreement with respect to each of the following locations: (i) 1099 Shady Lane, Kissimee, FL 34744, (ii) Suite N-44, West Jefryn Boulevard, Deer Park, NY 11729 and (iii) 1660 Tech Avenue, Unit 4, Mississauga, Ontario, Canada.

(f)Within 30 days of the Closing Date (or such longer period as the Required Lenders may agree to in their sole discretion), Agent shall have received evidence that Borrowers have filed the necessary documents with the United States Patent and Trademark Office and the United States Copyright Office to change all intellectual property registered in the name of “Colt’s Manufacturing Company Inc.” to “Colt’s Manufacturing Company LLC”.

Schedule 4.1(b)

Capitalization of Loan Parties

Equity Interests of Loan Parties (other than Colt Defense LLC) as of closing:

Current Legal Entity Owned	No. of Shares/Interest Authorized	No. of Shares/Interest Issued	No. of Shares/Interest Outstanding	Record Owner	Certificate No.	Percent of each Class of Shares owned
Colt Finance Corp.	1,000	1,000	1,000	Colt Defense LLC	1	100%
Colt Canada Corporation	100	99	100	Colt International Coöperatief U.A.	2	99%
	100	1	100	Colt International Coöperatief U.A.	4	1%
Colt Defense Technical Services LLC	N/A	N/A	N/A	Colt Defense LLC	N/A	100%
Colt International Coöperatief U.A.	N/A	N/A	N/A	Colt Defense LLC (99%) and Colt Defense Technical Services LLC (1%)	N/A	100%

New Colt Acquisition Corp.	1000	1000	1000	Colt Defense LLC	1	100%
New Colt Holding Corp.	1000	1000	1000	Colt Defense LLC	M-1	100%
Colt’s Manufacturing Company LLC	N/A	N/A	N/A	New Colt Holding Corp.	N/A	100%

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Equity Interests of Loan Party Colt Defense LLC as of closing:

Current Legal Entity Owned	No. of Shares/Interest Authorized	No. of Shares/Interest Issued	No. of Shares/Interest Outstanding	Record Owner	Percent of each Class of Shares owned
Colt Defense LLC	N/A	60,213.137	60,213.137	Colt Defense Holding LLC	45.556%
Colt Defense LLC	N/A	30,228.186	30,228.186	Colt Defense Holding III L.P.	22.870%1
Colt Defense LLC	N/A	12,221.799	12,221.799	CSFB SP III Investments, L.P.	9.247%
Colt Defense LLC	N/A	10,505.293	10,505.293	CDH II LLC	7.948%
Colt Defense LLC	N/A	7,698.471	7,698.471	William M. Keys	5.825%
Colt Defense LLC	N/A	1,511.815	1,511.815	James R. Battaglini	1.144%
Colt Defense LLC	N/A	1,344.892	1,344.892	Jeffrey J. Grody	1.018%
Colt Defense LLC	N/A	1,576.447	1,576.447	Colt Defense Employee Plan Holding Corp.	1.193%
Colt Defense LLC	N/A	1,069.408	1,069.408	Orpheus Holdings LLC	0.809%
Colt Defense LLC	N/A	958.343	958.343	Joyce M. Rubino	0.725%
Colt Defense LLC	N/A	763.862	763.862	Archer Diversified Investments, LLC	0.578%

 

1 Colt Defense Holding III L.P. has an option to acquire 17,314.218 Common Units prior to December 31, 2013.

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Current Legal Entity Owned	No. of Shares/Interest Authorized	No. of Shares/Interest Issued	No. of Shares/Interest Outstanding	Record Owner	Percent of each Class of Shares owned
Colt Defense LLC	N/A	706.516	706.516	Richard Nadeau	0.535%
Colt Defense LLC	N/A	549.256	549.256	Michael P. Reissig	0.416%
Colt Defense LLC	N/A	458.317	458.317	STF LLC	0.347%
Colt Defense LLC	N/A	434.901	434.901	Donald W. Young	0.329%
Colt Defense LLC	N/A	412.577	412.577	John F. Young	0.312%
Colt Defense LLC	N/A	337.514	337.514	Kevin J. Brown	0.255%
Colt Defense LLC	N/A	307.789	307.789	John M. Magouirk	0.233%
Colt Defense LLC	N/A	307.789	307.789	John B. Ibbotson	0.233%
Colt Defense LLC	N/A	174.960	174.960	Carlton S. Chen	0.132%
Colt Defense LLC	N/A	129.310	129.310	Brener International Group, LLC	0.098%
Colt Defense LLC	N/A	87.665	87.665	Thomas C. Moore	0.066%
Colt Defense LLC	N/A	52.239	52.239	Cirque Investments LLC	0.040%
Colt Defense LLC	N/A	52.000	52.000	Z. Clifton Dameron IV	0.039%
Colt Defense LLC	N/A	44.000	44.000	Alexander Loucopoulos	0.033%

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Current Legal Entity Owned	No. of Shares/Interest Authorized	No. of Shares/Interest Issued	No. of Shares/Interest Outstanding	Record Owner	Percent of each Class of Shares owned
Colt Defense LLC	N/A	27.440	27.440	Glen R. Johnson	0.021%
Total:	1,000,000 Common Units (including 18,878 “Class B Common Units”); 250,000 Preferred Units	132,173.926	132,173.926		100.00%

Options issued for shares of Equity Interests in Colt Defense LLC:

Name	Number of Options	Exercise Price
Gerald R. Dinkel	6,957	$100.00
Scott B. Flaherty	2,854	$100.00
George Casey	300	$100.00
J. Michael Magouirk	500	$100.00
Leslie Striedel	600	$288.78
Ronald Belcourt	400	$288.78
Kevin Green	300	$288.78

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Schedule 4.2

Due Authorization; No Conflict

1.Master Lease Agreement dated January 14, 2009 by and between Banc of America Leasing & Capital, LLC and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  Banc of America is providing a temporary standstill with respect to the Master Lease Agreement and has consented to the change of control associated with the merger to that extent.

2.Master Lease Agreement dated November 9, 2007 by and between General Electric Capital Corporation and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  The Master Lease Agreement with General Electric Capital Corporation is being paid off and terminated concurrent with closing of the merger.

3.Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd-und & Sportwaffen GmbH ("Merkel").  Merkel has consented to the change of control associated with the merger and continuation of this agreement thereafter.

4.Loan Agreement, dated September 21, 2009, between Bank of America, N.A. and Colt’s Manufacturing Company LLC, as amended February 24, 2010, September 22, 2010, November 1, 2011 and February 8, 2012, and related exhibits, schedules, ancillary agreements and other documents.  The available credit under the Loan Agreement has not been utilized and the Loan Agreement will be terminated concurrent with closing of the merger.

5.Truck Lease and Service Agreement, dated January 9, 1998, between Colts Manufacturing Company LLC and Ryder Truck Rental, Inc., D.B.A. Ryder Transportation Services.  Ryder has consented to the change of control associated with the merger and continuation of this agreement thereafter.

Schedule 4.3

Governmental Authorities that will be notified post closing:

U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”)-ITAR Section 122.4 (22 C.F.R. §122.4) requires notifying DDTC of changes of ownership, officers, directors, and empowered officials to keep import and export registration information current.

U.S Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”)- 27 C.F.R. §478.54 requires notifying ATF regarding changes of control and responsible persons to keep Federal Firearms License and associated information current.

Colt Defense LLC will be required to comply with the Connecticut Transfer Act (Conn. Gen. Stat. §22a-134, et seq.) post closing.  (see also Schedule 4.12 regarding notices/filings under the Connecticut Transfer Act)

Schedule 4.4(b)

UCC/PPSA Filing Jurisdictions

Delaware for Colt Defense LLC, Colt Finance Corp., Colt Defense Technical Services LLC, New Colt Acquisition Corp., New Colt Holding Corp., and Colt’s Manufacturing Company LLC

District of Columbia for Colt Canada Corporation and Colt International Coöperatief U.A.

Nova Scotia, Canada for Colt Canada Corporation, Colt International Coöperatief U.A., Colt Defense LLC and New Colt Holding Corp.

Ontario, Canada for Colt Canada Corporation, Colt International Coöperatief U.A., Colt Defense LLC and New Colt Holding Corp.

Schedule 4.6(a)

Jurisdiction of Organization

Company	Jurisdiction of Organization	Jurisdictions of Foreign Qualification
Colt Defense LLC	Delaware	Connecticut
Colt Finance Corp.	Delaware	None
Colt Defense Technical Services LLC	Delaware	None
New Colt Holding Corp.	Delaware	Connecticut
Colt’s Manufacturing Company LLC	Delaware	Connecticut; Florida
Colt Canada Corporation	Nova Scotia, Canada	Ontario, Canada
Colt International Coöperatief U.A.	Netherlands	None
New Colt Acquisition Corp.	Delaware	None

Schedule 4.6(b)

Chief Executive Offices

Company	Chief Executive Offices	Chief Executive Offices post-close
Colt Defense LLC	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Finance Corp.	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Defense Technical Services LLC	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
New Colt Holding Corp.	545 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt’s Manufacturing Company LLC	545 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Canada Corporation	1036 Wilson Avenue, Kitchener, Ontario Canada N2C 1J32	1036 Wilson Avenue, Kitchener, Ontario Canada N2C 1J3
New Colt Acquisition Corp.	547 New Park Avenue West Hartford, CT 06110	N/A
Colt International Coöperatief U.A.	Fred. Roeskestraat 123 1076 EE Amsterdam, the Netherlands	Fred. Roeskestraat 123 1076 EE Amsterdam, the Netherlands

 

2 Chief executive officers and some records reside at 547 New Park Avenue, West Hartford, CT 06110.

Schedule 4.6(c)

Organizational Identification Numbers

Company	US Federal Tax Identification Number	Organizational Identification Number
Colt Defense LLC	32-0031950	3570211
Colt Finance Corp.	27-1237687	4743005
Colt Canada Corporation	98-0435534	3102045
Colt Defense Technical Services LLC	46-0538809	5111679
New Colt Holding Corp.	13-3786913	2413625
Colt’s Manufacturing Company LLC	42-1589139	2206122
New Colt Acquisition Corp.	90-0998380	5251079

Company	Canadian Business Number
Colt Defense LLC	N/A
Colt Finance Corp.	N/A
Colt Canada Corporation	84378 5270 (Business Number) 84378 5270 RT0001 (GST/HST) 84378 5270 RP0001 (payroll) 84378 5270 TE0001 (employer | health tax) 84378 5270 RN0001 (excise tax) 84378 5270 RC0002 (corporate | income tax)

Company	Netherlands Business Number
Colt International Coöperatief U.A.	56651317

Schedule 4.6(d)

Commercial Tort Claims

Company	Description of Commercial Tort Claim
Colt Defense LLC Colt Finance Corp. Colt Canada Corporation Colt Defense Technical Services LLC Colt International Coöperatief U.A. New Colt Acquisition Corp.	None
New Colt Holding Corp Colt Manufacturing Company LLC	None

Schedule 4.7

Litigation

Claims against Parent and Colt Canada

Parties	Nature of dispute	Procedural status	Insurance coverage
Douglas Burnside Claim against Colt Canada.	On April 17, 2012, Colt Canada learned of a claim asserted against it in the Ontario Superior Court of Justice by an employee, Douglas Burnside, seeking damages for emotional and physical distress allegedly sustained in the course of his employment by Colt Canada.  Colt Canada believes the claim against it has no merit and it intends to contest this case vigorously.	Colt Canada has retained counsel to represent it in connection with this claim and has referred it to its employment practices insurance carrier.	Colt Canada believes that it has coverage for this claim, subject to a self-insured retention of $100,000.
Claim of Jean-Charles Baillargeon against Colt Canada.	In December 2012, Colt Canada was sued by a former employee, Jean-Charles Baillargeon, in connection with his termination by Colt Canada during 2012.  Baillargeon is seeking damages of $100,000, plus interests, costs and other unspecified damages. Colt Canada believes the claims against it have no merit and it intends to contest this case vigorously.	Colt Canada has retained counsel to represent it in this case.	Colt Canada believes it has coverage for this claim, subject to a self-insured retention of $100,000.

Chen and Alpert Claims against Parent (Carlton Chen and Merrick Alpert).	In October 2012, two former executives of Colt’s Manufacturing, Carlton Chen and Merrick Alpert, each filed suit against Colt’s Manufacturing and certain other parties in connection with the termination of their employment by Colt’s Manufacturing. The two lawsuits seek unspecified damages.  Each of the plaintiffs recently filed amended complaints.  Neither of the amended complaints alleges facts that would give rise to any liability on the part of Parent to either of these individuals and it is unaware of any basis of liability. Parent believes the plaintiffs’ claims against it have no merit and it intends to contest these cases vigorously.	Parent has retained counsel to represent it in these cases.  Each of the plaintiffs recently filed amended complaints.  Parent was named as a defendant in the original complaints and in the amended complaints. Discovery is proceeding. Trial is scheduled for September, 2014.	Parent believes that it has partial coverage for these two lawsuits, subject to a self-insured retention of $250,000, but the carrier has thus far denied coverage.
Carlton Chen CHRO Claim against Parent (the “Chen Discrimination Claim”).	On April 8, 2013, Chen filed a related discrimination claim with the Connecticut Commission on Human Rights and Opportunities (“CHRO”) and the federal Equal Employment Opportunities Commission (“EEOC”) against many of the same defendants, including Parent.  The Chen Discrimination Claim seeks unspecified damages.  The Chen Discrimination Claim does not allege facts that would give rise to any liability on the part of Parent and it is unaware of any basis of liability. Parent believes the plaintiff’s claims against it have no merit and it intends to contest this case vigorously.	The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.	Parent believes this claim is covered by its EPL insurance subject to a self-insured retention.

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Claims against Colt’s Manufacturing/New Colt

Parties	Nature of dispute	Procedural status	Insurance coverage
Chen and Alpert Claims (Carlton Chen and Merrick Alpert).	Claims by terminated former executives based on theories of breach of contract, fraudulent inducement/misrepresentation, promissory estoppel, tortious inducement to breach of contract, breach of implied covenant of good faith and fair dealing, and violations of the Connecticut unfair trade practices act.	Discovery is proceeding. Trial scheduled for September, 2014.	Insurance carrier is defending the matters, but is currently refusing to indemnify Colt’s Manufacturing.
Unfair Labor Practice Charge -Florida (by Union).	Claim that Colt’s Manufacturing breached its collective bargaining agreement with the union and the National Labor Relations Act by announcing its intent to open a satellite plant in Florida.	Arbitration scheduled for September	No insurance.
Value Line Grievance (by Union).	Grievance alleging that Colt’s Manufacturing breached its collective bargaining agreement with the Union by entering a contract to have rifles manufactured in another location. Colt’s Manufacturing voluntarily discontinued having the rifles manufactured after approximately 5 months.	The Union continues to press the matter and it is currently at the pre-arbitration stage.	No insurance.
Carlton Chen CHRO Matter.	Charge filed against Colt’s Manufacturing and several of its employees with the Connecticut Commission on Human Rights and Opportunities by dismissed former executive alleging discrimination on the basis of race.	The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.	Colt’s Manufacturing believes this claim is covered by its EPL insurance subject to a self-insured retention.

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Lawsuit by City of Gary, Indiana. Lawsuit filed by the City of Gary against Colt’s Manufacturing and a number of other firearms manufacturers based on a theory of “negligent distribution.” The plaintiff municipality has failed to pursue the matter for approximately 3 years and Colt’s Manufacturing’s attorney advises that the City is likely to voluntarily withdraw the case. Cost of defense is being covered by insurance.

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Schedule 4.9

GAAP

Effective January 1, 2012, Colt’s Manufacturing modified the post-retirement health care coverage it provides to certain retired employees in a manner that, among other things, eliminated the cap on benefits for certain retirees.  Colt’s Manufacturing believes that its obligations under the modified coverage are appropriately reflected in its Audited Financial Statements (as defined in the Target Acquisition Agreement) in accordance with GAAP.   

Schedule 4.11

Pension Plans

Colt Defense LLC Pension Plans:

Colt Defense LLC Salaried Retirement Income Plan

Colt Defense LLC Bargaining Unit Employees’ Pension Plan

Colt Canada Corporation Pension Plans:

None.

Colt’s Manufacturing Company LLC Pension Plans:

Colt’s Manufacturing Company LLC Salaried Retirement Income Plan

Colt’s Manufacturing Company LLC Bargaining Unit Employees’ Pension Plan

Schedule 4.12

Environmental Matters

1.   This transaction will require filing of the following forms with the Connecticut Department of Energy and Environmental Protection under the Connecticut Transfer Act within ten calendar (10) days after the closing:

a.   Property Transfer Program - Form III

b.   Environmental Condition Assessment Form (ECAF)

c.   Fee Payment Form

Schedule 4.14

Leases

Entity	Secured Party	Type of Collateral	Master Lease #	Schedule
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	001
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	002
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	003
Colt’s Manufacturing Company LLC	General Electric Credit Corp, as assignee of General Electric Credit Corp of Tennessee	Equipment	5863151-003	---

Schedule 4.15

Deposit Accounts and Securities Accounts

Company	Bank or Broker	Address	Account No.	Account Type
Colt Defense LLC	Bank of America	PO Box 27025	xxxxxxxxx	Concentration Account
Colt Defense LLC	Bank of America	Richmond, VA 23261-7025	xxxxxxxxx	Controlled Disbursement Account
Colt Defense LLC	Bank of America	PO Box 27025	xxxxxxxxx	Payroll Account
Colt Defense Technical Services LLC	Bank of America	Richmond, VA 23261-7025	xxxxxxxxx	Concentration Account
Colt International Cooperatief U.A.	Bank of America	PO Box 27025	xxxxxxxxx	Concentration Account
Colt Defense LLC	JPMorgan Chase	Richmond, VA 23261-7025	xxxxxxxxx	Liquid MMDA for India Bid Bond
Colt Defense LLC	Interaudi Bank	PO Box 27025	xxxxxxxxx	Collateral for a Letter of Credit
Colt Canada Corporation	Bank of America	Richmond, VA 23261-7025	xxxxxxxxx	Colt Canada Corp. USD
Colt Canada Corporation	Bank of America	26 Elmfield Rd	xxxxxxxxx	Colt Canada Corp. CAD
Colt Canada Corporation	Bank of America	Bromley, Kent	xxxxxxxxx	Colt Canada Corp. AP CAD
Colt Canada Corporation	Bank of America	CT51SD England	xxxxxxxxx	Colt Canada Corp. AP USD
Colt Canada Corporation	Bank of America	Northeast Market	xxxxxxxxx	Colt Canada Corp. AP Euro
Colt Canada Corporation	Bank of America	PO Box 659754	xxxxxxxxx	Colt Canada Corp. AR Euro
Colt’s Manufacturing Company LLC	Bank of America	San Antonio, TX 78265-9754	xxxxxxxxx	Accounts Payable
Colt’s Manufacturing Company LLC	Bank of America	19 East 54th Street	xxxxxxxxx	Payroll
Colt’s Manufacturing Company LLC	Bank of America	New York, NY 10022	xxxxxxxxx	Concentration Account
Colt’s Manufacturing Company LLC	Merrill Lynch, Pierce, Fenner & Smith Inc.	200 Front Street W	xxxxxxxxx	Prime Money Market Fund

Schedule 4.19

Permitted Indebtedness

Colt Defense and Colt Canada Corporation Letters of Credit:

Issuer	Beneficiary	LC Number	Amount Outstanding as of 5/26/2013	Maturity Date
J.P. Morgan	Connecticut Department of Environmental Protection	TFTS-851474	$211,127	6/4/2014
J.P. Morgan	National Bank of Egypt	TFTS-841076	$9,091	1/31/2014
J.P. Morgan	National Bank of Egypt	TFTS-839429	$7,343	4/30/2013
J.P. Morgan	National Bank of Egypt	TFTS-887528	$11,984	1/31/2014
J.P. Morgan	State Bank of India	TFTS-907450	$809,625	6/6/2016
Interaudi Bank	QHQ Armed Forces- UAE	SLC-0017/SS/05	$461,585	12/30/2013
Sultan International Holdings	2004-1024  UAE/GHQ Warranty	OLG-080041024	$593,650	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG081202946	$29,580	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG-081202943	$1,820	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG-081101466	$38,613	6/29/2013

Colt’s Manufacturing Letters of Credit:

Bank of America National Union Fire Insurance Co. of Pittsburgh, PA, et al. 68095875 $325,000 04/08/2014

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Other Indebtedness:

Purchase and Sale Agreement among CF Intellectual Property Limited Partnership, the Connecticut Developmental Authority, and New Colt Holding Corp., dated as of August 22, 1994, under which, among other things, New Colt Holding Corp. is obligated to pay to Anthony Autorino, as assignee of the rights thereunder, 50% of the “non-firearms” licensing revenues, up to a total of $2,500,000.00, as outlined in the Purchase and Sale Agreement.  New Colt Holding Corp.’s remaining obligation under this Purchase and Sale Agreement is $1,140,272.88.

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Schedule 4.24

Labor matters

(a)           Labor matters

Parent

1.   The collective bargaining agreement to which Parent and Colt’s Manufacturing are parties provides procedures for the assertion of grievances by the Union or employees and for their disposition within the respective companies in the ordinary course of business via interaction between representatives of management and the Union.  No outside arbitrator or other official or tribunal is involved in the disposition of these matters.

2.   Grievances in Arbitration:

Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt Defense LLC, Case 12 300 00060 13, before the American Arbitration Association

3.   Grievances in Pre Arbitration:

Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt Defense LLC, Grievance 2013-036

Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt Defense LLC, Grievance 2013-037

Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt Defense LLC, Grievance 2013-067

Colt Canada Corporation-None

Colt’s Manufacturing Company LLC

1.   Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt’s Manufacturing, Company LLC et al., 34-CA-077421, before the U.S. National Labor Relations Board.

2.   Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt’s Manufacturing, Company LLC et al., 34-CA-070991, before the U.S. National Labor Relations Board

3.   Demand for arbitration by claimant UAW Local 376 against Colt's Manufacturing Company LLC, et al.

4.   Grievance in Pre Arbitration:

Amalgamated Local 376, United Automobile, Aerospace & Agricultural Implement Workers of America v. Colt’s Manufacturing Company LLC, Grievance 2013-015

5.   See Schedule 4.7.

(b) None

(c) None

(d) None

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Schedule 4.32

Insurance

COLT DEFENSE LLC and Subsidiaries

POLICY NO.	COVERAGE AND LOCATION	INSURANCE COMPANY	AMOUNT INSURED	DEDUCTIBLE/SIR	Policy Period
GPP004738101	General Liability	Arch Specialty Insurance Company	$1,000,000 Each Occurrence	$250,000 Self Insured Retention - Each Occurrence or Offense	12/07/2012 -12/07/2013
			$1,000,000 Personal & Advertising Injury	Defense Costs erode the SIR
			$2,000,000 General Aggregate Limit
			$2,000,000 Products/Completed Operations Aggregate Limit
			$50,000 damage to rented Premises
			Defense Costs are in Addition to the Limits
WC015684254	Workers Compensation and Employers Liability	Commerce & Industry insurance Company	Workers Compensation - Statutory		12/07/2012 -12/07/2013
WC015684255	Workers Compensation and Employers Liability - CA	National Union Fire Insurance Company	Employers Liability:		surcharges
		of Pittsburgh	$1,000,000 Bodily Injury by Accident - Each Accident
			$1,000,000 Each Employee Bodily Injury by Disease
			Stop Gap (ND,OH,WA,WY)
			$1,000,000 Bodily Injury by Accident - Each Accident
			$1,000,000 Each Employee Bodily Injury by Disease

CA0934874	Business Automobile Liability	National Union Fire Insurance Company	$1,000,000 Combined Single Limit		12/07/2012 -12/07/2013
		of Pittsburgh	$10,000 Medical Payments - Each Person Insured
			Personal Injury Protection - Rejection /Basic Benefits by State
			Uninsured / Underinsured Motorists - Policy Limits where Possible
			Physical Damage Hired & Owned Vehicles	$1,000 Comprehensive & Collision
PHFD37577327 001	Foreign Package	ACE American Insurance Company	INTERNATIONAL GENERAL LIABILITY		12/7/2012 - 12/7/2015
			$1,000,000 General Aggregate	NIL for International Liability except Employee Benefits Liability; $1,000
			Not Covered Products/Completed Operations Aggregate
			$1,000,000 Personal/Advertising Injury Limit
			$1,000,000 Each Occurrence Bodily Injury
			$10,000 Medical Expense Limit
			$1,000,000/$1,000,000 Employee Benefits Liability (Each claim/aggregate)
			INTERNATIONAL AUTO LIABILITY
			$1,000,000 Liability Coverage
			$25,000 Hired Auto Physical Damage – Each Accident
			$25,000 Hired Auto Physical Damage – Any one policy period
			INTERNATIONAL WORKERS COMPENSATION
			US National - State of Hire Benefits
			Third Country Nationals - Country of Origin Benefits

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			Local Nationals – EL Only
			EMPLOYERS LIABILITY
			$1,000,000 Bodily Injury by Accident (Each Employee)
			$1,000,000 Bodily Injury by Disease (Each Employee)
			$1,000,000 Bodily Injury by Disease (Policy Limit)
			Executive Assistance Services
			$1,000,000 Policy Limit for Medical Assistance Services
			PERSONAL PROPERTY
			$20,000 Personal Property at Unnamed Locations (except while in Transit)	$1,000 Property deductible
			$20,000 Personal Property in Transit
XSC2058511213	Excess Liability - Lead	Catlin Specialty Insurance Company	$5,000,000 Each Occurrence		12/07/2012 -12/07/2013
			$5,000,000 Aggregate
CXA98HU12	Excess Liability	Aspen Specialty Insurance Company	$5,000,000 Each Occurrence		12/07/2012 -12/07/2013
			$5,000,000 General Aggregate
			$5,000,000 Products / Completed Operations Aggregate
NYALL12-2544	Transit	Allianze Ins. Co.	$10,000,000 Any One Conveyance	$10,000 Per Occurrence	12/31/2012 - 12/31/2013
PLS13769806	Environmental	Chartis Specialty Insurance Company	$1,000,000 Each Incident/$2,000,000 Aggregate	$25,000 Each Incident	12/1/2012-12/1/2013
14363020	Executive Risk Package (D&O, EPLI, Crime & Fiduciary)	National Union Fire Insurance Company	$18,000,000 Total limits. $15M D&O/EPL, $3M Fiduciary, $2M Crime	$50,000 D&O, 100,000 EPL, $50,000 Fiduciary, $25,000 Crime	12/1/2012-12/1/2013

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82230579	D&O Side A	Federal Insurance Company	$15,000,000 Each Claim/Policy Period	Excess of Underlying $15,000,000 D&O only	12/1/2012-12/1/2013
GA0692	Special Contingency Risk	Great American Ins Co.	$10,000,000 Per Insured Event		12/1/2011 - 12/1/2014
31375428	Property	Westport Insurance Corporation	Policy Limit $182,288,000	$25,000 for each Occurrence insured against by this policy except where noted below.	12/7/2012 - 12/7/2013
			Sublimts	Boiler and Machinery	(two-year agreement)
			$25,000,000 Earth Movement	$50,000 PD and 2 times the Applicable Actual Daily Value - TE
			$25,000,000 Flood	Earth Movement - Combined PD& TE
			$1,000,000 Accounts Receivable	The amount to be deducted for each Occurrence as insured against by the Earth Movement Endorsement shall be the sum of $100,000 for all other Locations covered under the Earth Movement Endorsement where physical loss or damage occurs or TE loss ensures
			Policy limit Boiler and Machinery	Flood Deductibles(s)
			$1,000,000 Contingent Business Interruption and contingent Extra Expense Combined in the aggregate per Occurrence.	Flood - Combined PD & TE
			$1,000,000 contingent Liability From Operation Building Laws (DICC)	The amount to be deducted for each Occurrence as insured against by the Flood Endorsement shall be the sum of the greater of the stated Basic Deductible(s) or $100,000 for all other Locations covered under the Flood Endorsement where physical loss or damage occurs or TE loss ensues.

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$1,000,000 Debris Removal ( Lesser of 25% of the combined amount of direct physical damage and Time Element Loss payable at the location where the damage occurs or limit Shown)

$500,000 Electronic Data Processing Media Valuation

$500,000 Errors and Omissions

$1,000,000 Expediting Expenses

$1,000,000 Exhibition, Exposition, Fair or Trade Show

$5,000,000 Extended Period of Indemnity (Lesser of Actual Loss Sustained for 365  Consecutive Days or Limit Shown)

$5,000,000 Extra Expense

$500,000 Fine Arts

$100,000 Fire Department Service Charges

$5,000,000 Ingress or Egress (Lesser of Limit shown or Actual Loss Sustained for 30 consecutive Days from the date of the physical loss or damage referred to in the provision)

$5,000,000 Interruption by Civil Authority ( Lesser of limit shown or Actual Loss Sustained for 365 Consecutive Days form the date of the physical loss or damage referred to the provision)

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			$1,000,000 Leasehold Interest
			$1,000,000 Miscellaneous Unnamed Locations
			$250,000 Mold Resulting from Covered Cause of Loss - Per Occurrence and in the annual aggregate
			$1,000,000 New Acquired Property
			$2,500,000 Off Premises Power, Including T&D lines (1 mile) Property Damage and Time Element Combined
			$50,000 Pollutant cleanup & Removal per Occurrence and Annual Aggregate
			$5,000,000 Property in the Course of Construction
			$100,000 Professional Fees
			$500,000 Research and Development Costs
			$1,000,000 Rent Insurance
			$1,000,000 Royalties
			$1,000,000 Soft Costs
			$1,000,000 Temporary Removal of Property
			$500,000 Transit
			$1,000,000 Valuable Papers and Records
31375428	Property - Colt Canada	Westport Insurance Corporation	US$5,000,000 Building		12/7/2012 - 12/7/2013
			US$12,000,000  Personal Property
			US$500,000 Fine Arts
			US$8,000,000 Stock
			US$6,263,000 Business Income
			USD 1,270,000 Extra Expense
6741129556	Automobile - Colt Canada	Aviva Insurance Company of Canada	CAD$2,000,000 Combined Single Limit		5/20/2013 - 5/20/2014
			Physical Damage - Actual Cash Value	$1,000 per accident

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Colt’s Manufacturing Company LLC

Coverage	Insurance Company	Term	Premium/Tax	Policy Number	Other Notes	Broker
Commercial General Liability/Products Liability	Lexington Insurance Company	1/7/2013- 1/7/2014	Prem Tax	#20720822	Financed thru US Premium	Graham
Umbrella Liability	Lexington Insurance Company	1/7/2013- 1/7/2014	Prem Tax	#23917690	Financed thru US Premium	Graham
Commercial Property	Liberty Mutual Fire Insurance Company	3/1/2013- 3/1/2014	Prem	YU2-L9L-540052-013		Graham
Workers Compensation & Employers Liability	National Union Fire Ins Co of Pittsburg, PA	3/1/2013- 3/1/2014		#25052476		Graham
	Large Deductible Plan $150,000 per accident $950,000 Annual Aggregate Ded		Fixed Costs Est Surcharges Claims Handling Loss Fund Pay In		AIG will not offer a Guaranteed Cost Program at this time Add'l requirement: Standby L/C was required for policy year for $325,000 and was opened w/BOA on 4/13/13
Business Auto	National Union Fire Ins Co of Pittsburg, PA	3/10/2013 3/10/2014	Prem	#939800		Graham
Ocean Cargo/Inland Transit	National Union Fire Ins Co of Pittsburg, PA	3/1/2013- 3/1/2014	Prem	#51764726		Graham
D&O / EPL	National Union Fire Ins Co of Pittsburg, PA	12/31/12- 12/31/13	Prem	#15896195		Wells Fargo
D&O Excess Side A	Federal Insurance Company	12/31/12- 12/31/13	Prem	#82255280		Wells Fargo

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Schedule 5.1

Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth set forth below at the following times in form satisfactory to the Required Lenders:

as soon as available, but in any event within 30 days after the end of each fiscal month during each of Parent’s fiscal years (or, in the case of each fiscal month ending on the last day of a fiscal quarter, within 45 days after the end of such fiscal quarter)	(a)  (i) an unaudited consolidated balance sheet, income statement, statement of stockholders’ equity, and statement of cash flow covering Parent’s and its Subsidiaries’ operations during such period, and (ii) a comparison against the corresponding figures for the corresponding period of the prior fiscal year of Parent, and projections for Parent, in each case, certified by the chief financial officer of Parent and including a corresponding discussion and analysis of results from management, and (b)  a Compliance Certificate.
as soon as available, but in any event within 45 days after the end of each fiscal quarter during each of Parent’s fiscal years	(c)  (i) an unaudited consolidated balance sheet, income statement, statement of stockholders’ equity, and statement of cash flow covering Parent’s and its Subsidiaries’ operations during such period, and (ii) a comparison against the corresponding figures for the corresponding period of the prior fiscal year of Parent, and projections for Parent, in each case, certified by the chief financial officer of Parent and including a corresponding discussion and analysis of results from management, (d)  a Compliance Certificate, and (e)  a report listing all agreements (and summaries thereof) entered into and/or transactions consummated between any Loan Party and any of its Affiliates that are not Loan Parties during the prior fiscal quarter.
within 30 days prior to the beginning of each of Parent’s fiscal years	(f)  an annual business and financial plan of Parent and its Subsidiaries in form and substance (including as to scope and underlying assumptions) satisfactory to the Required Lenders for such succeeding fiscal year of Parent and its Subsidiaries, and certified by the chief financial officer of Parent.
as soon as available, but in any event within 90 days after the end of each of Parent’s fiscal years	(g)  (i) consolidated financial statements of Parent and its Subsidiaries for each such fiscal year of Parent, audited by independent certified public accountants acceptable to the Required Lenders and certified, without any qualifications (including any (A) “going concern” or like qualification or exception, or (B) qualification or exception as to the scope of such audit), by such accountants prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of stockholders’ equity, and statement of cash flow and, if prepared, such accountants’ letter to management), (ii) a comparison against the corresponding figures for the prior fiscal year of Parent, and projections for Parent and (iii) a corresponding discussion and analysis of results from management, and (h)  a Compliance Certificate.

as soon as available, but in any event within 30 days after the start of each of Parent’s fiscal years,	(i)  copies of Parent’s Projections, in form (including as to scope and underlying assumptions) satisfactory to the Required Lenders, for such fiscal year of Parent prepared on a monthly basis, certified by the chief financial officer of Parent as being such officer’s good faith estimate of the financial performance of Parent and its Subsidiaries during the period covered thereby.
if and when filed by Borrowers,	(j)  Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (k)  any other filings made by Parent or its Subsidiaries with the SEC, and (l)  any other information that is provided by Parent to its shareholders generally; provided, that, for the avoidance of doubt, the Loan Parties are not required to provide any information to the extent that the provision thereof would, in the reasonable opinion of counsel (including in-house counsel), (x) result in a conflict of interest to Parent’s potential interest in refinancing the Obligations or (y) violate any attorney-client privilege.
as soon as available, but in any event within 5 Business Days after the delivery thereof,	(m)  copies of all notices, reports and other information delivered by Parent and each of its Subsidiaries to their respective Boards of Directors provided, that, for the avoidance of doubt, the Loan Parties are not required to provide any information to the extent that the provision thereof would, in the reasonable opinion of counsel (including in-house counsel), (x) result in a conflict of interest to Parent’s potential interest in refinancing the Obligations or (y) violate any attorney-client privilege.
as soon as available, but in any event within 5 Business Days after each meeting of the Board of Directors of Parent and each of its Subsidiaries	(n) copies of all reports, minutes, consents and other information or documents relating to such meeting of the Board of Directors to the extent not previously delivered pursuant to clause (l) above provided, that, for the avoidance of doubt, the Loan Parties are not required to provide any information to the extent that the provision thereof would, in the reasonable opinion of counsel (including in-house counsel), violate any attorney-client privilege.
promptly, but in any event within 2 days after any Loan Party has knowledge of any event or condition that constitutes a Default or an Event of Default,	(o)  notice of such event or condition and a statement of the curative action that any Loan Party proposes to take with respect thereto.
promptly after the commencement thereof, but in any event within 2 days after the service of process with respect thereto on Parent or any of its Subsidiaries,	(p)  notice of all actions, suits, or proceedings brought by or against Parent or any of its Subsidiaries before any Governmental Authority which reasonably could be expected to result in a Material Adverse Change.

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promptly, but in any event within 2 days after a Responsible Officer of any Borrower has knowledge thereof,

(q)  notice of the cancellation, termination or other loss of any Material Contract (other than termination due to the completion of performance of such Material Contract), (r)  notice of a default or event of default or notice of reservation of rights under the ABL Loan Documents, (s)  notice of a default or event of default or notice of reservation of rights under the Senior Note Indenture, (t)  notice of a default or event of default under the Specified Equipment Lease Documents, and (u)  notice that any Specified Government Property Loan Agreement has been terminated, or any rights of any Loan Party under any Specified Government Property Loan Agreement has been terminated.

upon the request of Agent or the Required Lenders,

(v)  any other information reasonably requested relating to the financial condition of Parent or its Subsidiaries.

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Schedule 5.2

Provide Agent (with copies for each Lender) with each of the documents set forth below at the following times in form satisfactory to the Required Lenders:

Monthly (no later than the 20th day of each fiscal month) or, if an Event of Default exists or Excess Availability is less than $13,000,000, weekly (no later than Wednesday of the immediately succeeding week), and solely to the extent required to be delivered to ABL Agent in accordance with the terms of the ABL Credit Agreement as then in effect

(a)  an Account roll-forward with supporting details supplied from sales journals, collection journals, credit registers and any other records, (b)  notice of all claims, offsets, or disputes asserted by Account Debtors with respect to Borrowers’ Accounts, (c)  Inventory system/perpetual reports specifying the cost of each Borrower’s Inventory, by category and location, (d)  a Borrowing Base Certificate, (e)  a detailed aging of Borrower’s Accounts, together with a reconciliation and supporting documentation for any reconciling items noted, (f)  a detailed calculation of those Accounts of Borrower that are not eligible for the Borrowing Base, (g)  a detailed Inventory system/perpetual report together with a reconciliation to Borrower’s general ledger accounts, (h)  a detailed calculation of Inventory categories of Borrower that are not eligible for the Borrowing Base, (i)  a summary aging, by vendor, of Borrower’s accounts payable and any book overdraft and an aging, by vendor, of any held checks, (j)  a detailed report regarding Borrower’s cash and Cash Equivalents, (k)  a monthly Account roll-forward, in a format acceptable to the Required Lenders in their sole discretion, tied to the beginning and ending account receivable balances of Borrower’s general ledger, (l)  a detailed report of advance payments made by an Account Debtor to Borrower, and (m)  a detailed report of amounts that may be recouped by an Account Debtor (whether for excess profits or otherwise) with respect to Borrowers.

Monthly (no later than the 20th day of each fiscal month)

(n)  a reconciliation of trade accounts payable of Borrowers’ general ledger accounts to its monthly financial statements.

Quarterly (no later than the 45th day after the end of each of parent’s fiscal quarters)	(o)  a report regarding Borrowers’ accrued, but unpaid, ad valorem taxes, (p)  a report of the backlog of orders received by Borrower from its customers, (q)  a report of offset commitments and industrial cooperation agreements, including Borrower’s liabilities in connection therewith, and (r)  an IP Reporting Certificate.
Upon request by Agent or the Required Lenders	(s)  such other reports as to the Collateral or the financial condition of Parent and its Subsidiaries, as the Required Lenders may reasonably request (including, without limitation, information and documents relating to offset commitments or industrial cooperation agreements and the unpaid amount of all obligations owing by Parent under the Specified Equipment Lease Documents).

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Schedule 6.12(d)

Agreements with Affiliates

This Schedule 6.12(d) does not change and/or modify in any way any limitation set forth in Section 6.9(c) or Section 6.12(e) or (f) of the Agreement.

Letter Agreement, between Colt Defense LLC and Sciens Management LLC, dated as of July 9, 2007.

License Agreement, between Colt Defense LLC and New Colt Holding Corp., dated as of December 19, 2003.

Colt Canada is the exclusive contractor under a license dated February 8, 1984 from Colt Defense LLC to the Crown of Canada for the manufacture sales and support of C-10 Canadian Forces Small Bore Rifle, Colt M16 Rifle, Carbine and various 5.56 mm model configurations, parts and spares to certain foreign governments, as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

Services Agreement—2012, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated July 1, 2012, as amended by Section 8 of Amendment of Commercial Rifle MOU, dated April 26, 2013.

Match Target License Agreement, between Colt’s Manufacturing Company LLC and Colt Defense LLC, dated as of December 19, 2003.

Memorandum of Understanding Regarding Distribution of Colt Law Enforcement and Commercial Rifles, dated May 1, 2011, as amended April 26, 2013.

Amendment of Commercial Rifle MOU, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated April 26, 2013.

Collective Bargaining Agreement, among Colt Defense LLC and Colt’s Manufacturing Company LLC and Amalgamated Local No. 378 and United Automobile, Aerospace, and Agricultural Implement Workers of America – UAW, dated April 1, 2012.

First Amended and Restated Sublease Agreement, between CMC and Colt Defense LLC, dated October 26, 2005, as amended effective October 26, 2012 (See Section 5.11 of Services Agreement—2012) and May 1, 2013 (See Section 8 of Amendment of Commercial Rifle MOU) (Formal sublease not yet documented).

Firearms Licensing Agreement, dated September 28, 1994, between New Colt Holding Corp. and Colt’s Manufacturing Company, Inc.

Amended and Restated Trademark License Agreement, dated April 30, 2002, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

Manufacturing License Agreement, between Colt Canada Corporation and Colt Defense LLC dated as of November 10, 2005, for the Canadian manufacture of automatic and semi-automatic rifles and carbines to .50 caliber inclusive, and 40 mm grenade launchers, as amended by Amendment 1, dated as of March 25, 2008; Amendment 1A, dated as of August 25, 2008; and Amendment 2, dated as of November 11, 2008.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Dennis Veilleux.

Letter Agreement, dated October 11, 2012, between Dennis Veilleux and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Veilleux’s February 29, 2012 change in control agreement, as amended,  (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter and (iii) his October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Joyce Rubino.

Letter Agreement, dated October 11, 2012, between Joyce Rubino and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Ms. Rubino’s February 29, 2012 change in control agreement, as amended,   (ii) the provisions relating to change in control and termination of her employment or severance benefits in her February 15, 2012 amended and restated employment letter and (iii) her October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Jim Tipton.

Letter Agreement, dated October 11, 2012, between Jim Tipton and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Tipton’s February 29, 2012 change in control agreement, as amended,  and (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter.

Employment Agreement, dated May 21, 1998, between Colt’s Manufacturing Company LLC and Carlton S. Chen.

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Carlton S. Chen claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and is currently the subject of litigation.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Merrick Alpert.

Merrick Alpert claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and  is currently the subject of litigation.

Option Agreement, dated as of July 12, 2013, between Colt’s Manufacturing Company LLC, Colt Archive Properties LLC, Donald E. Zilkha and John P. Rigas.

Services Agreement, dated  as of July 12, 2013, between Colt Defense LLC, Colt Archive Properties LLC, and Colt’s Manufacturing Company LLC.

Letter of Resignation of Donald E. Zilkha, dated July 12, 2013.

Letter of Resignation of William M. Keys, dated July 12, 2013.

Letter of Resignation of John R. Torell III, dated July 12, 2013.

Letter of Resignation of Abraham Klip, dated July 12, 2013.

Letter of Resignation of David Roth, dated July 12, 2013.

Letter of Resignation of Edward L. Koch, dated July 12, 2013.

Letter of Resignation of Donald Young, dated July 12, 2013.

Agreement and Mutual Release, dated February 15, 2013, by and among New Colt Holding Corp., Colt's Manufacturing Company LLC and William M. Keys.

Amended and Restated Agreement and Mutual Release, dated as of July 12, 2013, by and among New Colt Holding Corp., Colt’s Manufacturing Company LLC, William M. Keys and Donald Zilkha and Edward L. Koch III, as Stockholder Representatives under the Merger Agreement.

Assignment and Assumption Agreement, between Colt Defense LLC and Sciens International Holdings 3 Ltd., dated as of June 5, 2013.

Amended and Restated Limited Liability Company Agreement, of Colt Defense LLC dated as of June 12, 2003 reflecting the amendments adopted as of July 9, 2007, August 11, 2011, March 2012, and June 28, 2013.

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Limited Liability Company Interests Purchase Agreement, between Colt Defense LLC, Colt Defense Holding III L.P., and the other purchasers thereunder, dated June 13, 2013.

Consulting Services Agreement, between Colt Defense LLC and Sciens Institutional Services LLC, dated July 12, 2013.

Net Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 26, 2005.

Amendment of Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 25, 2012.

Employee Leasing Agreement, between Colt Defense LLC and Colt Security LLC, effective January 1, 2009.

Commitment of Colt’s Manufacturing Company LLC to William M. Keys as expressed in minutes of Board Meeting of New Colt Holding Corp. and Colt’s Manufacturing Company LLC on January 11, 2013.

Employment Agreement, dated as of October 4, 2010, between Gerald R. Dinkel and Colt Defense LLC.

Amendment of Employment Agreement, dated as of March 20, 2013 between Gerald R. Dinkel and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Gerald R. Dinkel and Colt Defense LLC.

Employment Agreement, dated as of February 1, 2011, between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between J.  Michael Magouirk and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between George W. Casey Jr. and Colt Defense LLC.

Separation Agreement, between James R. Battaglini and Colt Defense LLC dated as of August 25, 2011.

Engagement Letter, dated as of December 1, 2010 between Leslie S. Striedel and Colt Defense LLC.

Letter agreement, dated as of May 22, 2012 between Leslie S. Whicher and Colt Defense LLC.

Letter agreement, dated as of August 30, 2005, between Jeffrey Grody and Colt Defense LLC.

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Letter agreement, dated as of August 28, 2003, between J.  Michael Magouirk and Colt Defense LLC.

Colt Defense LLC Advisory Agreement, between Colt Defense LLC and George W. Casey Jr., dated December 16, 2011.

Solely for disclosure purposes only, Parent pays directors’ fees to members of its Governing Board who are not employees of Parent or Sponsor in the amount of $40,000 per year.   Currently, Gen. George Casey, Lord Guthrie of Craigiebank and Philip Wheeler receive such fees.  All members of the Governing Board recieve reimbursement of reasonable expenses incurred in the performance of their duties as members of the Governing Board.

Limited Liability Company Agreement of Colt’s Manufacturing Company LLC, dated as of June 12, 2003.

Indemnification Agreement, among New Colt Holding Corp., New Colt’s Manufacturing Company, Inc., and Colt Defense LLC, dated as of November 4, 2002.

Non-Disclosure Agreement, between Colt Defense LLC and New Colt Holding Corp. dated August 15, 2012.

Release Agreement, between Sciens Management LLC and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. 2 and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. and William M. Keys, dated February 15, 2013.

Release Agreement, between John P. Rigas and William M. Keys, dated February 15, 2013.

Release Agreement, between Daniel Standen and William M. Keys, dated February 15, 2013.

Release Agreement, between Donald E. Zilkha and William M. Keys, dated February 15, 2013.

Director and Officers Liability Insurance.

Letter Agreement, between New Colt Holding Corp. and William M. Keys, dated July 12, 2013.

Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

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EX-10.2

Exhibit 10.2

Execution

AMENDMENT NO. 4 TO CREDIT AGREEMENT

AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of July 12, 2013 (this “Amendment No. 4”), is by and among Wells Fargo Capital Finance, LLC, a Delaware limited liability company, as agent for the Lenders (as hereinafter defined) pursuant to the Credit Agreement as defined below (in such capacity, together with its successors and assigns, and any replacement, in such capacity, “Agent”), the parties to the Credit Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”), Colt Defense LLC, a Delaware limited liability company (“Parent”), Colt Canada Corporation, a Nova Scotia corporation (“Canadian Borrower” and, together with Parent, each individually an “Existing Borrower” and collectively, “Existing Borrowers”), Colt Finance Corp., a Delaware corporation (“Colt Finance”), Colt Defense Technical Services LLC, a Delaware limited liability company (“CDTS”), Colt International Coöperatief U.A., a cooperative formed under Dutch law (“Dutch Holdings” and, together with Colt Finance and CDTS, each individually an “Existing Guarantor” and collectively, “Existing Guarantors”), New Colt Acquisition Corp., a Delaware corporation (“Acquisition Sub”), which on the Amendment No. 4 Effective Date will be merged with and into New Colt Holding Corp. (with New Colt as hereinafter defined as the surviving corporation), a Delaware corporation (“New Colt” and, together with Acquisition Sub and Existing Guarantors, each individually a “Guarantor” and collectively, “Guarantors”), and Colt’s Manufacturing Company LLC, a Delaware limited liability company (“CMC” and together with Existing Borrowers, each individually, a “Borrower” and collectively, “Borrowers”).

W I T N E S S E T H :

WHEREAS, Agent, Lenders, Existing Borrowers and Existing Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) may make loans and advances and provide other financial accommodations to Existing Borrowers as set forth in the Credit Agreement dated as of September 29, 2011, by and among Agent, Lenders, Borrowers and Guarantor, as amended by Amendment No. 1 to Credit Agreement and Waiver, dated as of February 24, 2012, Amendment No. 2 to Credit Agreement and Consent, dated as of March 22, 2013, Amendment No. 3 to Credit Agreement and Consent, dated as of June 19, 2013, and Amendment No. 4 (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, restructured, refinanced or replaced, the “Credit Agreement”) and the other Loan Documents;

WHEREAS, Acquisition Sub, Parent and New Colt and certain stockholder representatives are parties to the Agreement and Plan of Merger, dated as of July 12, 2013 (the “Acquisition Agreement”), pursuant to which Acquisition Sub will merge with and into New Colt with New Colt as the surviving entity (the “Merger”);

WHEREAS, in connection with the Merger, Borrowers have advised that (a) the Borrowers and Guarantors will enter into the Acquisition Documents (as hereinafter defined) and (b) Acquisition Sub will receive a term loan from the lenders under the Term Loan Agreement (as hereinafter defined) in the principal amount of $50,000,000 on the terms and conditions set forth in the Term Loan Agreement, dated July 12, 2013 among Parent, certain affiliates of Parent, the lenders party hereto and Cortland Capital Market Services LLC as agent;

WHEREAS, Borrowers and Guarantors have advised that (a) upon the effectiveness of the Acquisition, Borrowers have requested that CMC will be joined to the existing financing arrangements as a Borrower and New Colt and Acquisition Sub be joined to the existing financing arrangements as Guarantors and (b) within ninety (90) days after the Merger, the Loan Parties will consummate the Post-Closing Restructuring Transactions;

WHEREAS, in connection with the foregoing, Borrowers and Guarantors have requested certain amendments be made to the Credit Agreement and Agent and Lenders are willing to make such amendments, subject to the terms and conditions set forth herein; and

WHEREAS, by this Amendment No. 4, Agent, Lenders, Borrowers and Guarantor intend to evidence such amendments;

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

1.Definitions.

(a)Additional Definitions.  Schedule 1.1 of the Credit Agreement is hereby amended to include, in addition and not in limitation, each of the following definitions:

(i)“ABL Priority Collateral” shall have the meaning set forth in the Intercreditor Agreement.

(ii)“Acquisition” means the acquisition by Parent of all of the equity interests of New Colt on the Amendment No. 4 Effective Date.

(iii)“Acquisition Agreement” means that certain Agreement and Plan of Merger, dated as of July 12, 2013, by and among Parent, Acquisition Sub, New Colt, Donald E. Zilkha and Edward L. Koch III as stockholder representatives with respect to the Merger.

(iv)“Acquisition Documents” means the Acquisition Agreement, together with all other documents and agreements entered into in connection with the Merger.

(v)“Acquisition Sub” means New Colt Acquisition Corp., a Delaware corporation, which on the Amendment No. 4 Effective Date will merge with and into New Colt with New Colt as the surviving entity.

(vi)“Amendment No. 4” shall mean this Amendment No. 4 to Credit Agreement by and among Parent, Colt Canada, Colt Finance, CDTS, Dutch Holdings, Acquisition Sub, CMC, New Colt, Agent and Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, restructured, refinanced or replaced.

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(vii)“Amendment No. 4 Effective Date” means the date on which all conditions precedent to Amendment No. 4 have been satisfied.

(viii)“Annualized” means, with respect to the calculation of any amount at the end of any four (4) fiscal quarter period ending September 30, 2013, December 31, 2013 or March 31, 2014, the following: (i) with respect to fiscal quarter ended September 30, 2013, the aggregate amount at the end of such fiscal quarter multiplied by 4, (ii) with respect to fiscal quarter ended December 31, 2013, the aggregate amount at the end of the two consecutive fiscal quarters ended December 31, 2013 multiplied by 2, and (iii) with respect to fiscal quarter ended March 31, 2014, the aggregate amount at the end of the three consecutive fiscal quarters ended March 31, 2014 multiplied by 4/3.

(ix)“Certificate of Merger” means the Certificate of Merger executed by Acquisition Sub and New Colt with respect to the Merger and duly filed with the Secretary of State of the State of Delaware.

(x)“Closing Date Transactions” means, collectively, the transactions contemplated by the Loan Documents, the Acquisition Documents (including, without limitation, the Merger) and the Term Loan Documents, as amended in connection with each of the foregoing.

(xi)“CMC” means Colt’s Manufacturing Company LLC, a Delaware limited liability company.

(xii)“Collateral Assignment” means the Collateral Assignment of Acquisition Documents, dated as of the date hereof, and in form and substance reasonably satisfactory to Agent, made by Parent, Acquisition Sub and New Colt in favor of Agent.

(xiii) “Consulting Agreement” means the Consulting Services Agreement, dated as of July 12, 2013, by and between Parent and Sciens Institutional Services LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Institutional Services LLC to provide certain consulting services.

(xiv)“Covered Claims” shall have the meaning given to such term in the Litigation Management Agreement, dated as of July 12, 2013, by and among, Parent, New Colt, Colt’s Manufacturing, and each of the Stockholder Representatives (as defined therein) signatory thereto, as in effect on the Closing Date.

(xv)“Excluded Issuance” means means (a) the issuance of Qualified Equity Interests of the Parent to directors, officers and employees of the Parent and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors of the Parent and permitted under this Agreement), (b) in the event that Parent or any of its Subsidiaries forms any Subsidiary in accordance with the terms hereof, the issuance by such Subsidiary of Qualified Equity Interests to Parent or such Subsidiary, as applicable, (c) the issuance of Qualified Equity Interests of Parent in order to finance (i) the purchase consideration (or a portion thereof) in connection with a Permitted Acquisition or an Investment permitted under clause (w)(ii) of the definition of Permitted Investments, (ii) Capital

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Expenditures permitted under this Agreement, and/or (iii) so long as no Default or Event of Default shall have occurred and be continuing, for working capital purposes of Parent and its Subsidiaries (other than for the prepayment of Indebtedness permitted under Section 6.7(a)(iii)), (d) the issuance of Qualified Equity Interests of Parent in order to fund the prepayment of Indebtedness permitted under Section 6.7(a)(iii) and (e) the issuance of Qualified Equity Interests by a Subsidiary of Parent to its parent or member in connection with the contribution by such parent or member to such Subsidiary of the proceeds of an issuance described in clauses (a) through (e) above, but solely to the extent that (i) in the case of clauses (a) through (e) above, prior to the issuance of any such Qualified Equity Interests, Administrative Borrower has provided Agent with written notice of Borrowers’ intention to apply the proceeds of such Qualified Equity Interests in accordance with clause (a), (b), (c), (d) or (e) above, and (ii) in the case of clauses (c)(i), (c)(ii) and (d) above, the use of the proceeds of such issuance or sale of Qualified Equity Interests occurs substantially contemporaneously with the issuance or sale of such Qualified Equity Interests.

(xvi)“Employee Litigation Escrow Fund” shall have the meaning given to such term in the Escrow Agreement, dated as of July 12, 2013, by and among Parent, the Stockholder Representatives (as defined therein) signatory thereto and Bank of America, as escrow agent, as in effect on the Closing Date.

(xvii)“Extraordinary Receipts” means any payments in cash received by Parent or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of (a) proceeds of judgments, proceeds of settlements, or other consideration of any kind received in connection with any cause of action or claim, (b) indemnity payments (other than to the extent such indemnity payments are immediately payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, (c) foreign, federal, state or local tax refunds, (d) pension plan reversions, and (e) any purchase price adjustment received in connection with any purchase agreement, including the Acquisition Agreement, in each case, after deducting therefrom, to the extent applicable, taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such event, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

(xviii)“Intercreditor Agreement” means the Intercreditor Agreement, dated as of July 12, 2013, by and between Agent and Term Loan Agent, as acknowledged and agreed to by Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(xix)“IP Reporting Certificate” means an IP reporting certificate substantially in the form of Exhibit I-1 executed and delivered by the Loan Parties to Agent.

(xx)“Management Agreement” means the letter agreement, dated as of July 9, 2007, by and between Parent and Sciens Management, LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Management, LLC to provide certain investment banking, corporate and strategic advisory services.

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(xxi)“Merger” means the merger of Acquisition Sub with and into New Colt with New Colt as the surviving entity.

(xxii)“Merger Effective Time” means the effective time of the Merger as set forth in the Certificate of Merger.

(xxiii) “Net Cash Proceeds” means (a)  with respect to any sale or disposition by Parent or any of its Subsidiaries of assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of Parent or its Subsidiaries, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents, (B) Indebtedness assumed by the purchaser of such asset and (C) Indebtedness owing under the Term Loan Documents) which is required to be, and is, repaid in connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such sale or disposition, (iii) taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such sale or disposition, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction; and (iv) all amounts that are set aside as a reserve (A) for adjustments in respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to the extent such reserve is required by GAAP, and (C) for the payment of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within thirty (30) days after, the date of such sale or other disposition, to the extent that in each case the funds described above in this clause (iv) are (x) deposited into escrow with a third party escrow agent or set aside in a separate Deposit Account that is subject to a Controlled Account Agreement in favor of Agent and (y) paid to Agent as a prepayment of the applicable Obligations in accordance with Section 2.4(e) of the Agreement at such time when such amounts are no longer required to be set aside as such a reserve; and (b)  with respect to the issuance or incurrence of any Indebtedness by Parent or any of its Subsidiaries, or the issuance by Parent or any of its Subsidiaries of any Equity Interests, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of Parent or such Subsidiary in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such issuance or incurrence, (ii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary in connection with such issuance or incurrence, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

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(xxiv)“New Colt” means New Colt Holding Corp., a Delaware corporation.

(xxv)“Permitted Tax Distribution” means, for any period, the amount of tax distributions that the Loan Parties are permitted to make, and actually make, to Parent’s equityholders pursuant to Section 6.9(e) of this Agreement.

(xxvi)“Post-Closing Restructuring Certificate” means the certificate of Parent (in form and substance satisfactory to the Agent), dated as of the Amendment No. 4 Effective Date, describing the transactions in respect of the restructuring of the Loan Parties’ corporate and capital structure after the Amendment No. 4 Effective Date.

(xxvii)“Post-Closing Restructuring Documents” means each of the agreements, instruments and other documents entered into to consummate the Post-Closing Restructuring Transactions.

(xxviii)“Post-Closing Restructuring Effective Date” has the meaning specified therefor in Section 5.17(a).

(xxix)“Post-Closing Restructuring Transactions” means the restructuring transactions described in the Post-Closing Restructuring Certificate.

(xxx) “Specified Loan Party” means any Loan Party (a) that is not formed, organized and/or incorporated under the laws of the United States of America, any state thereof, the District of Columbia, Canada (or any province or territory thereof) or the Netherlands and (b) for which Agent has provided notice to Administrative Borrower that such Loan Party is a Specified Loan Party.

(xxxi)“Term Loan Agent” shall mean Cortland Capital Market Services LLC and its successors and assigns, including any successor or replacement agent under the Term Loan Agreement.

(xxxii)“Term Loan Agreement” shall mean the Term Loan Agreement, dated as of July 12, 2013, by and among Term Loan Agent, Term Loan Lenders, Parent and certain of its affiliates, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced in accordance with the terms of the Intercreditor Agreement.

(xxxiii)“Term Loan Debt” shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrowers and Guarantors to Term Loan Agent and Term Loan Lenders, including principal, interest, charges, fees, premiums, indemnities, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under the Term Loan Documents.

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(xxxiv)“Term Loan Documents” shall mean, collectively, the following (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, in each case in accordance with the terms of the Intercreditor Agreement): (a) the Term Loan Agreement; and (b) all other agreements, documents and instruments at any time executed and/or delivered by any Borrower or Guarantor with, to or in favor of Term Loan Agent or any Term Loan Lender in connection therewith or related thereto; sometimes being referred to herein individually as a “Term Loan Document”.

(xxxv)“Term Loan Lenders” shall mean the lenders under the Term Loan Agreement and their respective successors and assigns.

(xxxvi)“Term Priority Collateral” shall have the meaning set forth in the Intercreditor Agreement.

(xxxvii)“Transactions” means, collectively, the Closing Date Transactions and the Post-Closing Restructuring Transactions.

(b)Amendments to Definitions.

(i)Collateral.  The definition of “Collateral” is hereby amended by adding the following proviso at the end thereof immediately prior to the period:

(ii)“; provided, that, the Collateral shall not include the Keys Additional Employee Litigation Escrow Fund, Stockholder Representative Escrow Fund, Purchase Price Escrow Fund, General Escrow Fund and Employee Litigation Escrow Fund (as each such term is defined in the Acquisition Agreement) and in each case, together with all accounts in which such funds are held pursuant to the Acquisition Agreement”.

(iii)Compliance Period.  The definition of “Compliance Period” is hereby amended by deleting each reference therein to “$9,000,000” and substituting “$11,000,000” therefor.

(iv)Consolidated EBITDA.  The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Consolidated EBITDA” shall mean, as to any Person and its Subsidiaries, for any period, the amount equal to (without duplication): (a) the Consolidated Net Income of such Person and its Subsidiaries for such period determined in accordance with GAAP, plus (b) as to such Person and its Subsidiaries, each of the following (in each case to the extent deducted in the calculation of Consolidated Net Income for such period in accordance with GAAP): (i) the Interest Expense for such period, (ii) all Taxes of such Person and its Subsidiaries paid or accrued in accordance with GAAP for such period, including any Permitted Tax Distributions, (iii) depreciation and amortization (including, but not limited to, imputed interest and deferred compensation) for such period, all in accordance with GAAP, (iv) extraordinary, unusual or non-recurring charges, expenses or losses that are incurred outside the ordinary course of business, other than contract start-up costs and losses; provided, however, in the case of the Loan Parties, the aggregate amount added back to Consolidated EBITDA pursuant to this clause (iv) shall not exceed for any period $1,000,000, (v) other non-cash charges, expenses or losses and (vi) costs and expenses in connection with this Transaction in an aggregate amount not exceeding $2,500,000.”

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(v)Consolidated Net Income.  The definition of “Consolidated Net Income” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, that, (a) except to the extent included pursuant to the foregoing clause and except to the extent necessary to reflect Consolidated Net Income on a pro forma basis as provided herein, the net income of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated or amalgamated with such Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or by any of its Subsidiaries shall be excluded; and (b) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to such Person or to any other Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary shall be excluded, other than any distribution or dividend actually received in cash by such Person or its Subsidiaries, (c) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors or employees shall be excluded, (d) any impairment charges or asset writeoffs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded, (e) any after tax effect of income (loss) from early extinguishment of Indebtedness or Hedge Agreements or other derivative instruments or any currency translation gains and losses related to currency remeasurements of Indebtedness, and any net loss or gain resulting from hedging transactions for currency exchange risk shall be excluded, (f) any extraordinary non-cash gain or loss shall be excluded, (g) an amount equal to the Permitted Tax Distributions in respect of such period shall be included as though such amounts had been paid as income taxes directly by such Person for such period, and (h) the cumulative effect of a change in accounting principles shall be excluded.  For the purpose of this definition, net income excludes any gain together with any related Taxes for such gain realized upon the sale or other disposition of any assets outside of the ordinary course of business or of any Equity Interests of such Person or a Subsidiary of such Person.”

(vi)Eligible Accounts.

(A)Clause (c) of the definition of “Eligible Accounts” in Section 1.1 of the Credit Agreement is hereby deleted and “[Reserved]” substituted therefor.

(B)Clause (j)(i) of the definition of “Eligible Accounts” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following immediately before the “,” at the end thereof:

“; except that with respect to each of Sports South, LLC and Bass Pro Group LLC, Accounts owing by such Account Debtors exceed 30% of all Eligible Accounts; provided, that, in the Permitted Discretion of Agent, if the creditworthiness of either Sports South, LLC or Bass Pro Group LLC adversely changes, Agent may reduce such percentage applicable to such Account Debtor to 10%”

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(vii)Eligible Inventory.  Clause (n) of the definition of “Eligible Inventory” in Section 1.1 of the Credit Agreement is hereby amended by deleting the reference to “7,500,000” therein and substituting “$8,500,000” therefor.

(viii)Fixed Charge Coverage Ratio.  The definition of “Fixed Charge Coverage Ratio” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Fixed Charge Coverage Ratio” means, for any Person and its Subsidiaries with respect to any date of determination, the ratio of (a) the amount equal to (1) Consolidated EBITDA of such Person and its Subsidiaries on a consolidated basis, as of the end of a fiscal quarter for the immediately preceding period of four (4) consecutive fiscal quarters for which Agent has received financial statements, less (2) Capital Expenditures of such Person and its Subsidiaries during such period to the extent not financed by a third party, less (3) any Permitted Tax Distributions; provided, that, solely for purposes of calculating the Fixed Charge Coverage Ratio, the amount of Permitted Tax Distributions shall not include the amount accrued and paid for the fiscal quarter ending June 30, 2013 and the amount of any Permitted Tax Distribution for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized, to (b) Fixed Charges of such Person and its Subsidiaries for such period.”

(ix)Fixed Charges.  The definition of “Fixed Charges” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Fixed Charges” means, as to any Person and its Subsidiaries, on a consolidated basis, with respect to any period, the sum of, without duplication, (a) all Interest Expense paid in cash during such period, plus (b) all regularly scheduled (as determined at the beginning of the respective period) principal payments of Indebtedness for borrowed money, and regularly scheduled (as determined at the beginning of the respective period) payments related to Indebtedness with respect to Capital Leases (and without duplicating in items (a) and (b) of this definition, the cash interest component with respect to Indebtedness under Capital Leases) and, in each case, to the extent there is an equivalent reduction in the commitments thereunder in the case of any term credit facility, plus (c) if the sum of the Canadian Letter of Credit Usage plus the aggregate outstanding principal amount of Canadian Advances in each case on the last day of such period exceeds the Canadian Borrowing Base (without giving effect to Canadian Fixed Asset Availability) on the last day of such period, an amount equal to the product of (i) the aggregate amount of reductions in Canadian Fixed Asset Availability during such period and (ii) an amount equal to (A) such excess divided by (B) the Canadian Fixed Asset Availability on the last day of such period, plus (d) if the sum of the US Letter of Credit Usage plus the aggregate outstanding principal amount of US Advances in each case on the last day of such period exceeds the US Borrowing Base (without giving effect to US Equipment Availability) on the last day of such period, an amount equal to the product of (i) the aggregate amount of reductions in US Equipment Availability during such period and (ii) an amount equal to (A) such excess divided by (B) the US Equipment Availability on the last day of such period, plus (e) all taxes paid or tax distributions made to members or shareholders (other than Permitted Tax Distributions) by such Person and its Subsidiaries in cash during such period, plus (f) all Restricted Payments (other than Permitted Tax Distributions) made by such Person and its Subsidiaries during such period pursuant to the Agreement; provided, that, in the case of clauses (a), (b) and (e), the amounts for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized.”

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(x)Guarantors.  The definition of “Guarantors” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Guarantors” means (a) Colt Finance Corp., a Delaware corporation, (b) Colt Defense Technical Services, LLC, a Delaware limited liability company, (c) New Colt Holding Corp., a Delaware corporation, (d) New Colt Acquisition Corp., a Delaware corporation, (which will merge with and into New Colt Holding Corp. on the Amendment No. 4 Effective Date with New Colt Holding Corp. as the surviving entity), (e) Colt International Coöperatief U.A., a cooperative formed under Dutch law, and (f) any other Person that becomes a guarantor under the Agreement after the Amendment No. 4 Effective Date; and “Guarantor” means any one of them.”

(xi)Loan Documents.  The definition of “Loan Documents” in Section 1.1 of the Credit Agreement is hereby amended by deleting “any Trademark Security Agreement” and replacing it with “any Trademark Security Agreement, the Intercreditor Agreement, the Collateral Assignment,”.

(xii)Material Contracts.  The definition of “Material Contracts” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Material Contract” means (i) the Senior Note Indenture, (ii) each Term Loan Document, (iii) each Acquisition Document, (iv) each Post-Closing Restructuring Document, (vi) any contract or agreement (other than a Loan Document, Term Loan Document, Acquisition Document or Post-Closing Restructuring Document) of any Loan Party involving monetary liability of or to Parent or its Subsidiaries in excess of $2,000,000 in any fiscal year of Parent and (v) each other contract or agreement, the loss of which could reasonably be expected to result in a Material Adverse Change.”

(xiii)Permitted Disposition.  The definition of “Permitted Disposition” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

“Permitted Disposition” means:

(a) sales, abandonment, or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business,

(b) sales of Inventory to buyers in the ordinary course of business and the consignment of Inventory to the Government of the United Mexican States in the ordinary course of business pursuant to a written agreement (the “DCAM Consignment”); provided, that, the maximum value of Inventory at the Government of the United Mexican States at any one time shall not exceed $1,000,000

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(c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents,

(d) the non-exclusive licensing or sublicensing of Intellectual Property or other general intangibles (other than the exclusive licenses in effect on the Amendment No. 4 Effective Date as set forth on Schedule L-1) and licenses, leases or subleases of other property (in each case other than Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real Property), in each case, in the ordinary course of business and so long as any such transaction shall not: (i) materially interfere with the business of Parent and its Subsidiaries, (ii) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (iii) have a material and adverse effect on the value  of such Intellectual Property, or (iv) otherwise adversely limit or interfere in any respect with the use of any such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of Accounts arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property;

(i) the leasing or subleasing of assets of Parent or its Subsidiaries (other than Accounts and Inventory) in the ordinary course of business,

(j) the sale or issuance of Equity Interests by any Subsidiary of Parent to a Loan Party,

(k) the non-exclusive licensing or sublicensing of Intellectual Property pursuant to manufacturing license agreements or technical assistance agreements with certain foreign governments, or otherwise in accordance with the International Traffic in Arms Regulations, in each case so long as any such transaction does not:  (i) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (ii) have a material and adverse effect on the value of such Intellectual Property, or (iii) otherwise adversely limit or interfere with the use of such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

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(l) the making of a Restricted Payment that is expressly permitted to be made pursuant to the Agreement,

(m) the making of a Permitted Investment,

(n) the sale or other disposition of property by a Loan Party to another Loan Party, and

(o) sales or other dispositions of assets of Parent and its Subsidiaries not otherwise subject to the provisions set forth in this definition, provided, that, as to any such sale or other disposition, each of the following conditions is satisfied:

(i) such transaction does not involve the sale or other disposition of any Intellectual Property, Equity Interest in any Subsidiary or of Accounts or Inventory; and

(ii) the aggregate amount of such dispositions does not exceed $1,000,000 during any fiscal year.

(xiv)Permitted Indebtedness. The definition of “Permitted Indebtedness” in Section 1.1 of the Credit Agreement is hereby amended by (A) replacing the period following clause (v) with “; and” and (B) adding the following new clause (w) at the end of such definition:

“(w)  Indebtedness evidenced by the Term Loan Documents in an aggregate outstanding principal amount not to exceed $50,000,000, and any Refinancing Indebtedness in respect of such Indebtedness”

(xv)Permitted Intercompany Advances. The definition of “Permitted Intercompany Advances” in Section 1.1 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“Permitted Intercompany Advances” means loans (a) made by a Loan Party that is not a Specified Loan Party to another Loan Party that is not a Specified Loan Party and (b) made by a Loan Party that is not a Specified Loan Party to a Specified Loan Party; provided, that, (i) in the case of clauses (a) and (b), Agent shall have received an Intercompany Subordination Agreement as duly authorized, executed and delivered by the parties to any such loans and (ii) in the case of clause (b) only, the aggregate amount of all such loans does not exceed $500,000 at any time outstanding unless otherwise agreed to in writing by the Agent.”

(xvi)Permitted Investments. The definition of “Permitted Investments” in Section 1.1 of the Credit Agreement is hereby amended by (A) replacing the period following clause (v) with “; and” and (B) replacing clause (w) and inserting a new clause (x) as follows at the end of such definition:

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“(w) other Investments in an aggregate outstanding amount not to exceed $500,000 at any time and (ii) other Investments not constituting Permitted Acquisitions made solely with the proceeds of any Excluded Issuances (as described in clause (c)(i) of the definition thereof; provided, that, as of the date of and such Investment and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; and

(x) the Merger in accordance with the terms of the Acquisition Agreement on the Amendment No. 4 Effective Date; provided, that, before and immediately after effect to the Merger (i) no Default or Event of Default shall exist before or immediately after giving effect thereto, and (ii) the Excess Availability shall not be less than $15,000,000 as of the date of the Merger and immediately after giving effect thereto.”

(xvii)Permitted Liens.  The definition of “Permitted Liens” in Section 1.1 of the Credit Agreement is hereby amended by (A) inserting the following at the end of clause (u) thereof “including inventory consigned pursuant to the DCAM Consignment described in clause (b) of the definition of Permitted Dispositions”, (B) replacing the period following clause (z) with “; and” and (C) adding the following at the end of such definition:

“(aa) Liens of Term Loan Agent to secure the Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness, provided, that, such liens shall at all times be subject to the terms of the Intercreditor Agreement; and

(bb) any Lien arising out of a prejudgment remedy to the extent ordered by the court overseeing any Covered Claim, including any prejudgment writ of attachment, solely to the extent that each of the following conditions have been satisfied, as certified by Parent within three (3) Business Days of the date any such prejudgment remedy is ordered by such Court: (i) the allocated amount available for satisfaction of such Covered Claim in the Employee Litigation Escrow Fund (the “Allocated Escrow”) shall not be less than the  mount specified in such prejudgment writ of attachment (collectively, the “Claim Amount”), (ii) the Employee Litigation Escrow Fund shall be valid and in full force and effect at all times that such Covered Claim is secured by such Lien, (iii) to the extent the Claim Amount exceeds the Allocated Escrow, the Loan Parties shall have posted bonds, cash collateral or other financial assurances acceptable to such Court sufficient to satisfy the amount specified in such prejudgment writ of attachment (the “Additional Security”), and (iv) such Lien shall be junior to the Liens securing the Obligations pursuant to applicable law; provided, that, Agent, in its Permitted Discretion, shall be permitted to implement reserves with respect to any such Liens arising from any prejudgment remedy in respect of the Covered Claims, including a prejudgment writ of attachment, as set forth in Section 2.1(d)(v) hereof.

Notwithstanding anything to the contrary contained in any of the Loan Documents, Permitted Liens shall not include any Liens on assets of any Loan Party which secure any Indebtedness or other obligations of any Foreign Subsidiary, except (x) as permitted by clause (a) of the definition of Permitted Liens and liens arising in respect of Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness, (y) as consented to in writing by the Required Lenders or (z) Liens on assets of Canadian Loan Parties may secure Indebtedness and other obligations of Canadian Loan Parties to the extent permitted by Section 6.1 or 6.2 of the Agreement.”

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(xviii)Senior Note Indenture Secured Cap. The definition of “Senior Note Indenture Secured Cap” is hereby deleted and the following substituted therefor:

“Senior Note Indenture Secured Debt Cap” means, on any date, the maximum principal amount of all Advances, Swing Loans, Letter of Credit Usage and Overadvances, plus the Term Loan Debt permitted to be incurred by the Loan Parties in accordance with, and without contravening, Section 3.2(b)(2) of the Senior Note Indenture and remain outstanding on a fully secured basis pursuant to clause (1) of the definition of “Permitted Liens” (as defined in the Senior Note Indenture) in accordance with Section 3.6 of the Senior Note Indenture.”

(xix)Underlying Issuer.  The definition of “Underlying Issuer” is hereby deleted and the following substituted therefor:

“Underlying Issuer” means Wells Fargo or one of its Affiliates, and solely with respect to Canadian Underlying Letters of Credit, Toronto Dominion Bank.”

(xx)US Borrowers.  The definition of “US Borrowers” is hereby deleted and the following substituted therefor:

“US Borrowers” means, collectively, (a) Colt Defense LLC, a Delaware limited liability company, (b) Colt’s Manufacturing Company LLC, a Delaware limited liability company and (c) any other person that after the Amendment No. 4 Effective Date becomes a US Borrower under the Agreement; and “Borrower” means any one of them.”

(c)Interpretation.  For purposes of this Amendment No. 4, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement as amended by this Amendment No. 4.

2.Section 1.6 (Pro Forma and Other Calculations).  Article 1 is hereby amended by inserting the following Section 1.6 at the end of such Article:

“1.6.  Pro Forma and Other Calculations.

(a) Notwithstanding anything to the contrary herein, financial ratios and tests, including Consolidated EBITDA and the Fixed Charge Coverage Ratio shall be calculated in the manner prescribed by this Section 1.6; provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.6, when calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, each as applicable, for purposes of Section 7 (other than for the purpose of determining pro forma compliance with Section 7) the events described in this Section 1.6 that occurred subsequent to the end of the applicable period shall not be given pro forma effect.  In addition, whenever a financial ratio or test is to be calculated on a pro forma basis, the reference to “four consecutive fiscal quarters” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended four consecutive fiscal quarters for which Agent has received or is required to have received financial statements (it being understood that for purposes of determining pro

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forma compliance with Section 7, if no four consecutive fiscal quarters with an applicable level cited in Section 7 has passed, the applicable level shall be the level for the four consecutive fiscal quarters cited in such section with an indicated level).  For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating Consolidated EBITDA, the Fixed Charge Coverage Ratio, as applicable, for purposes of Section 7 (other than for the purpose of determining pro forma compliance with such Section to the extent referenced in such Section or another Section), each of which shall be based on the financial statements delivered to Agent pursuant to Section 5.1, as applicable, for the relevant period.

(b) For purposes of calculating any financial ratio or test, Specified Transactions (including, with any incurrence or repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.6) that have been made (i) during the applicable period or (ii) if applicable as described in clause (a) above, subsequent to such period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable period.  If, since the beginning of any applicable period, any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Parent or any of its Subsidiaries since the beginning of such period as a result of a Specified Transaction that would have required adjustment pursuant to this Section 1.6, then such financial ratio or test shall be calculated to give pro forma effect thereto in accordance with this Section 1.6.

(c) Whenever pro forma effect is to be given to any Specified Transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Parent, and any adjustments that would be required to be included in a Registration Statement on Form S-1 in accordance with Article 11 of Regulation S-X promulgated under the Securities Act; provided, however, that, without  the prior written consent of the Agent, no such pro forma calculations shall include any cost savings, operating expense reductions, synergies or other similar items.

(d) In the event that (x) Parent or any Subsidiary of Parent incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and not replaced), or (y) Parent or any Subsidiary of Parent issues, repurchases or redeems Disqualified Equity Interests, in each case, included in the calculations of any financial ratio or test, (i) during the applicable period or (ii) subsequent to the end of the applicable period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, or such issuance or redemption of Disqualified Equity Interests, in each case to the extent required, as if the same had occurred on the last day of the applicable period (except in the case of Consolidated EBITDA and the Fixed Charge Coverage Ratio (or similar ratio), in which case such incurrence, assumption, guarantee, redemption, repayment, retirement or extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests will be given effect, as if the same had occurred on the first day of the applicable

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period).  Notwithstanding the foregoing or any other provision contained in the Loan Documents, with respect to the repayment or redemption of Indebtedness with the proceeds of an Excluded Issuance, such repayment or redemption shall be disregarded for all purposes under this Agreement, including the calculation of any financial covenants or ratios and, for the avoidance of doubt, Sections 7, until Parent has delivered the financial information required under Section 5.1 for the first full fiscal quarter of Parent ending after the fiscal quarter in which such repayment or redemption was made.

(e) If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of Consolidated EBITDA or the Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest hedging arrangements applicable to such Indebtedness permitted by this Agreement).  Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Responsible Officer of the Parent to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent or Subsidiary may designate.

3.Section 2.1 (Revolver Advances).  Section 2.1(d) is hereby amended by (a) deleting the “and” in clause (iii) thereof, (b) deleting the “.” at the end of clause (iv) thereof and inserting the following:

“and (v) reserves with respect to any Liens arising from any prejudgment attachments in respect of the Covered Claims as set forth in clause (bb) of the definition of Permitted Liens in Schedule 1.1 hereto.”

4.Section 2.4 (Payments; Reduction of Commitments; Prepayments).  Section 2.4(e) is hereby amended by deleting“(ii) [Reserved]” and replacing it with the following:

“(ii) Dispositions.  Within 3 Business Days of the date of receipt by Parent or any of its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or disposition by Parent or any of its Subsidiaries of assets (including casualty losses or condemnations but excluding sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (e), (i), (j), (l), (m) or (n) of the definition of Permitted Dispositions), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including condemnation awards and payments in lieu thereof) received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received exceeds $2,500,000 in the aggregate during the term of this Agreement; provided that, so long as (A) no Default or Event of Default shall have occurred and is continuing or would result therefrom, (B) Administrative Borrower shall have given Agent prior written notice of Borrowers' intention to apply such Net Cash Proceeds to the costs of replacement of the properties or assets that are the subject of such sale or disposition or the cost of purchase or construction of other assets (other than current assets) useful in the business of Parent or its Subsidiaries, (C) the Net Cash Proceeds of ABL

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Priority Collateral (or upon payment in full of the Term Loan Debt and termination of the Term Loan Agreement, any Collateral) are held in a Deposit Account in which Agent has a perfected first-priority security interest (subject to Permitted Liens), and (D) Parent or its Subsidiaries, as applicable, complete such replacement, purchase, or construction within one hundred and eighty (180) days after the initial receipt of such Net Cash Proceeds, then the Loan Party whose assets were the subject of such disposition shall have the option to apply such monies to the costs of replacement of the assets that are the subject of such sale or disposition or the costs of purchase or construction of other assets useful in the business of such Loan Party unless and to the extent that such applicable period shall have expired without such replacement, purchase, or construction being made or completed, in which case, any amounts remaining in the Deposit Account referred to in clause (C) above shall be paid to Agent and applied in accordance with Section 2.4(f).  Nothing contained in this Section 2.4(e)(ii) shall permit Parent or any of its Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 6.4.

(iii) Extraordinary Receipts.  Within three (3) Business Days of the date of receipt by Parent or any of its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.

(iv) Indebtedness and Equity Issuances .  Within 3 Business Days of the date of incurrence or issuance by Parent or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness) or issuance of Equity Interests (other than Excluded Issuances), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such incurrence or issuance.  The provisions of this Section 2.4(e)(iv) shall not be deemed to be implied consent to any such incurrence or issuance otherwise prohibited by the terms of this Agreement.

(v) Change of Control.  Borrowers shall immediately prepay the outstanding Obligations in the event that a Change of Control shall have occurred.

(vi) Waivable Mandatory Prepayments. Anything contained herein to the contrary notwithstanding, in the event Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Loans pursuant to this Section 2.4(e), not less than two (2) Business Days prior to the date (the “Required Prepayment Date”) on which Borrowers are required to make such Waivable Mandatory Prepayment, Administrative Borrower shall notify Agent of the amount of such prepayment, and Agent will promptly thereafter notify Lenders of the Administrative Borrower’s request.  If on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Lender that does not notify Administrative Borrower and Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option) the Required Lenders have waived such prepayment, then Borrowers shall not be required to make such prepayment.”

5.Section 2.4 (Application of Payments).  Clause (f) of Section 2.4 is hereby amended by deleting “(ii) [Reserved]” and replacing it with the following:

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“(ii) Each prepayment pursuant to Section 2.4(e)(ii) shall, (A) in the case of Net Cash Proceeds of any sale or disposition of assets consisting of any ABL Priority Collateral, be applied, first, to the Obligations in the manner provided in Section 2.5(f)(v) and, second, to the Term Loan Debt to the extent provided in the Term Loan Documents and (B) in the case of Net Cash Proceeds of any sale or disposition of assets consisting of any Term Priority Collateral, be applied, first, to the Term Loan Debt to the extent provided in the Term Loan Documents, and, second, to the Obligations in the manner provided in Section 2.5(f)(v).

(iii) Each prepayment pursuant to Section 2.4(e)(iii) shall be applied (A) first, to the Obligations in the manner provided in Section 2.5(e)(v) and (B) second, to the Term Loan Debt to the extent provided in the Term Loan Documents.

(iv) Each prepayment pursuant to Sections 2.4(e)(iv) shall be applied, (A) first, to the Term Loan Debt to the extent provided in the Term Loan Documents, and, (B) second, to the Obligations in the manner provided in Section 2.5(f)(v).”

(v) Each prepayment of Obligations pursuant to Section 2.4(e)(ii), (iii) or (iv) shall, (A) so long as no Application Event shall have occurred and be continuing, be applied, first, ratably to the outstanding principal amount of the US Advances and Canadian Advances until paid in full, and second, to ratably cash collateralize the US Letters of Credit and Canadian Letters of Credit in an amount equal to 105% of the then outstanding US Letter of Credit Usage or Canadian Letter of Credit Usage, as applicable, and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(ii), (iii) or (iv)”.

6.Section 4.2 (Due Authorization, No Conflict).  Clause (v) of Section 4.2(b) of the Credit Agreement is hereby amended by inserting immediately after the phrase “require any approval of any holders of Equity Interests of a Loan Party” the following: “, except as set forth on Schedule 4.2,”.

7.Section 4.3 (Governmental Consents).  Section 4.3 is hereby amended by inserting “Except as set forth on Schedule 4.3,” at the beginning thereof.

8.Section 4.4 (Binding Obligations; Perfected Liens).  Section 4.4(b) of the Credit Agreement is hereby amended by inserting the following phrase immediately after the phrase “by operation of law” in the second sentence of Section 4.4(b): “and with respect to the Term Priority Collateral, subject to the terms of the Intercreditor Agreement”.

9.Section 4.7 (Litigation).  Section 4.7 of the Credit Agreement is hereby deleted and the following substituted therefor

“(a) Before and after giving effect to the Closing Date Transactions, there are no actions, suits, or proceedings pending or, to the knowledge of any Loan Party, after due inquiry, threatened in writing against a Loan Party or any of its Subsidiaries that either individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.

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(b)      Before and after giving effect to the Closing Date Transactions, Schedule 4.7 sets forth a complete and accurate description, with respect to each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably be expected to result in liabilities in excess of, $50,000 that, as of the Amendment No. 4 Effective Date, is pending or, to the knowledge of any Loan Party, after due inquiry, threatened against a Loan Party or any of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings, (ii) the nature of the dispute that is the subject of such actions, suits, or proceedings, (iii) the procedural status, as of the Amendment No. 4 Effective Date, with respect to such actions, suits, or proceedings, and (iv) whether any liability of the Loan Parties’ and their Subsidiaries in connection with such actions, suits, or proceedings is covered by insurance.”

10.Section 4.12 (Environmental Matters).  Section 4.12 of the Credit Agreement is hereby amended by as follows: (a) clause (c) is amended by deleting “and” at the end thereof, (b) replacing the “.” at the end of clause d with “; and”, and (c) inserting the following as a new clause (e): “(e) no Environmental Law regulates, or requires notification to a Governmental Authority of the Closing Date Transactions or the Post-Closing Restructuring Transactions.”

11.Section 4.9 (No Material Adverse Change).  Section 4.9 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“4.9 No Material Adverse Change.  All historical financial statements relating to the Loan Parties and their Subsidiaries that have been delivered by any Borrower to Agent have been prepared in accordance with GAAP (except (x) in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments and (y) as set forth on Schedule 4.9) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended.  Since December 31, 2012, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Change.”

12.Section 4.19 (Merger).  Section 4.19 of the Credit Agreement is hereby deleted and the following substituted therefor:

“4.19 Merger.

(a) The Loan Parties have delivered to Agent a complete and correct copy of the Acquisition Documents, including all schedules and exhibits thereto.  The execution, delivery and performance of each of the Acquisition Documents has been duly authorized by all necessary action on the part of each Loan Party who is a party thereto.  Each Acquisition Document is the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against each such Loan Party in accordance with its terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.  No Loan Party is in default in the performance or compliance with any provisions thereof.  All representations and warranties made by Loan Parties and the seller in the Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects.

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(b) As of the Amendment No. 4 Effective Date, the Merger has been consummated in all material respects, in accordance with all applicable laws.  As of the Amendment No. 4 Effective Date, all requisite approvals by Governmental Authorities having jurisdiction over Loan Parties and, to each Loan Party’s knowledge, the seller, with respect to the Merger, have been obtained (including filings or approvals required under the Hart-Scott-Rodino Antitrust Improvements Act), except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Agent or Lenders.  As of the Amendment No. 4 Effective Date, after giving effect to the transactions contemplated by the Acquisition Documents, the Loan Parties will have good title to the assets acquired pursuant to the Acquisition Agreement, free and clear of all Liens other than Permitted Liens. As of the Amendment No. 4 Effective Date, CMC is a wholly-owned subsidiary of New Colt.  The Merger Effective Time has occurred such that New Colt is a wholly-owned Subsidiary Parent. ”

13.Section 4.32 through 4.34 of Article IV.  Article IV of the Credit Agreement is amended by inserting the following Section at the end of such Article:

“4.32           Insurance.  The Loan Parties keep their respective properties adequately insured and maintains (a) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law (including, without limitation, against larceny, embezzlement or other criminal misappropriation).  Schedule 4.32 sets forth a list of all insurance maintained by the Loan Parties on the Amendment No. 4 Effective Date.

4.33.  Senior Note Indenture.  All Obligations, including, without limitation, those to pay principal of and interest (including post-petition interest) on all Advances, Swing Loans, Letter of Credit Usage and Overadvances and fees and expenses in connection therewith, constitute Indebtedness (under and as defined in the Senior Note Indenture) that is permitted under Section 3.2(b)(2) of the Senior Note Indenture.  Parent acknowledges that Agent and the Lenders are entering into this Agreement, and extending their Commitments, in reliance upon this Section 4.33.”

14.Section 5.1 (Financial Statements, Reports, Certificates).  Schedule 5.1 to the Credit Agreement is hereby amended by inserting at the end thereof the following rows:

promptly, but in any event within 2 days after a Responsible Officer of any Borrower has knowledge thereof,	(o)  notice of a default or event of default or notice of reservation of rights under the Term Loan Documents.
Quarterly (no later than the 45th day after the end of each of parent’s fiscal quarters)	(p)  an IP Reporting Certificate.

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15.Section 5.11 (Formation of Subsidiaries).  Section 5.11 of the Credit Agreement is hereby deleted and the following substituted therefor:

“5.11  Formation of Subsidiaries.  At any time that any Loan Party forms any direct or indirect Subsidiary or acquires any direct Subsidiary after the Amendment No. 4 Effective Date, such Loan Party shall (a) within thirty (30) days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) cause any such new Subsidiary to provide to Agent a Guaranty and a joinder to the Security Agreement and any other applicable Loan Documents, together with such other security documents (including mortgages with respect to any Real Property owned in fee of such new Subsidiary with a fair market value of at least $200,000) as well as appropriate financing statements (and with respect to all property subject to a mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary); provided, that, a Guaranty or a joinder to the Security Agreement and other applicable Loan Documents, and such other documents shall not be required to be provided to Agent if the costs to the Loan Parties of providing such Guaranty, executing the Security Agreement and other Loan Documents or perfecting the security interests created thereby are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the security or guarantee afforded thereby, (b) within thirty (30) days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide to Agent a pledge agreement (or an addendum to the Security Agreement or other applicable Loan Documents) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary reasonably satisfactory to the Agent provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such other pledge are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and Lenders of the security afforded thereby, and (c) within 30 days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide to Agent all other documentation reasonably requested by Agent (including policies of title insurance or other documentation with respect to all Real Property owned in fee and subject to a mortgage).”

16.Section 5.12 (Further Assurances).  Section 5.12 of the Credit Agreement is hereby deleted and the following substituted therefor:

“5.12  Further Assurances.  At any time upon the reasonable request of Agent execute or deliver to Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel and all other documents (the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and maintain Agent’s Liens in all of the assets of Parent and its Subsidiaries (other than Excluded Property) (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Parent or its Subsidiaries after

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the Amendment No. 4 Effective Date with a fair market value in excess of $200,000, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents; provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such documents are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the benefits afforded thereby.  To the maximum extent permitted by applicable law, if any Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time following the request to do so, such Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name, as applicable, and authorizes Agent to file such executed Additional Documents in any appropriate filing office.  In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as Agent may reasonably request from time to time (a) in connection with any merger, amalgamation, consolidation, or reorganization permitted under Section 6.3, delivery to Agent of the agreements and documentation set forth in Section 5.11 above, or (b) to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of the Loan Parties (subject to exceptions and limitations contained in the Loan Documents).”

17.Section 5.17 (Post-Closing Restructuring Transactions).  Article V is amended by inserting the following Section at the end of such Article:

“5.17. Post-Closing Restructuring Transactions.  If the Loan Parties consummate the Post-Closing Restructuring Transactions, the Loan Parties agree that each of the following conditions precedent shall be satisfied, in each case, as determined by Agent in its sole discretion (the date on which such conditions are satisfied, is hereinafter referred to as the “Post-Closing Restructuring Effective Date”):

(a)On or before the Post-Closing Restructuring Effective Date, Parent shall have delivered to Agent complete and correct copies of the Post-Closing Restructuring Documents, including all schedules and exhibits thereto, in each case, certified by the Secretary of Parent.  The execution, delivery and performance of each of the Post-Closing Restructuring Documents shall have been duly authorized by all necessary action by each of the parties thereto.  Each Post-Closing Restructuring Document shall be the legal, valid and binding obligation of each of the parties thereto, enforceable against such parties in accordance with its terms, in each case, except (i) as may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.  None of the parties to the Post-Closing Restructuring Documents shall be in default in the performance or compliance with any provisions thereof, the performance or compliance of which is material to the interests of the Lenders.  All representations and warranties made by the parties to the Post-Closing Restructuring Documents in the Post-Closing Restructuring Documents and in the certificates delivered in connection therewith shall be true and correct in all material respects.

(b)No Default or Event of Default shall have occurred and be continuing on the Post-Closing Restructuring Effective Date, nor shall either result immediately from the consummation of the Post-Closing Restructuring Transactions.

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(c) Agent shall have received a certificate from a Responsible Officer of Parent certifying that the conditions set forth above in this Section 5.17 have been satisfied.”

18.Section 6.3 (Restrictions on Fundamental Changes).  Section 6.3 is hereby amended by inserting the following clause (d) at the end of such Section:

“(d) Notwithstanding the foregoing, nothing in Section 6.3 or 6.5 shall restrict or prohibit the Loan Parties from consummating (i) the Acquisition on the Amendment No. 4 Effective Date in accordance with the provisions of the Acquisition Documents, or (ii) to the extent permitted pursuant to Section 5.17, the Post-Closing Restructuring Transactions in accordance with the provisions of the Post-Closing Restructuring Documents.”

19.Section 6.7 (Certain Payment of Debts and Amendments).  Section 6.7 of the Credit Agreement is hereby amended as follows:

(a)Clause (i) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

“(i) Loan Parties (A) may make regularly scheduled payments of principal and interest in respect of Indebtedness permitted under clause (p) of the definition of Permitted Indebtedness and other mandatory payments as and when due in respect of such Indebtedness in accordance with the terms thereof, and (B) may make regularly scheduled payments of principal and interest in respect of Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness and other mandatory payments as and when due in respect of such Indebtedness in accordance with the terms of the Term Loan Documents in effect as of the Amendment No. 4 Effective Date.”

(b)Clause (ii) of Section 6.7(a) is hereby amended by deleting the phrase “(g) or (p)” and substituting “(g), (p) or (w)” therefor.

(c)Clause (iii) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

“(iii)           all Loan Parties may make optional prepayments and redemptions of Indebtedness solely with the proceeds of the issuance and sale of Qualified Equity Interests of Parent that constitutes an Excluded Issuance (as described in clause (d) of the definition thereof); provided, that, as of the date of any such prepayment or redemption, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing;”

(d)Clause (v) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

“(v) Parent and its Subsidiaries may make optional prepayments of Permitted Intercompany Advances to the extent permitted by the Intercompany Subordination Agreement; provided, that, (x) so long as on and as of the date of any such prepayment, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing and (y) unless agreed to in writing by the Agent, optional prepayments by a Loan Party of Permitted Intercompany Advances owing to a Specified Loan Party shall not exceed $500,000 in aggregate principal amount during the term of this Agreement;”

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(e)Section 6.7(b) is hereby amended by (i) replacing “; and” at the end of clause (ii) with “;”, (b) replacing “.” at the end of clause (iii) with “; and”,  (iii) inserting the following at the end of such Section:

“(iv) the Term Loan Documents, except in accordance with the terms of the Intercreditor Agreement;

(v) any of the Acquisition Documents, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or its Subsidiaries in any material respect and do not adversely affect in any material respect the ability of a Loan Party to be in compliance with the terms hereof or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interests of Agent or Lenders in any material respect; and

(vi) the Management Agreement, the Consulting Agreement or any other agreement listed on Schedule 6.12(d) except with the prior written consent of the Agent.”

20.Section 6.9 (Restricted Payments).  Section 6.9 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“6.9 Restricted Payments.  Declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:

(a)Parent and each Subsidiary may declare and make dividend payments or other distributions payable in the Equity Interests of such Person (other than Disqualified Equity Interests);

(b)any Subsidiary of Parent may make Restricted Payments described in Section 6.12(f);

(c)any Subsidiary of Parent may pay or make distributions to Parent that are used to make substantially contemporaneous payments to, and Parent may make payments to, repurchase or redeem Equity Interests and options to purchase Equity Interests of Parent held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of Parent pursuant to any management equity subscription agreement, employee agreement or stock option agreement or other agreement with such officer, director or employee or former officer, director or employee; provided, that, (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (ii) the aggregate cash consideration paid for all such payments, repurchases or redemptions shall not in any fiscal year of Parent exceed $250,000;

(d)Parent may repurchase its Equity Interests to the extent such repurchase is deemed to occur upon (i) the non-cash exercise of stock options to the extent such Equity Interests represents a portion of the exercise price of such options and (ii) the withholding of a portion of such Equity Interests to pay taxes associated therewith, and the purchase of fractional shares of Equity Interests of Parent or any Subsidiary arising out of stock dividends, splits or combinations or business combinations;

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(e) for each taxable year ending after the Amendment No. 4 Effective Date with respect to which Parent is treated as a partnership or a disregarded entity for U.S. federal income tax purposes, Parent may make distributions, advances or other payments to each owner of its Equity Interests, in an amount equal to the product of (i) the portion of Parent’s “taxable income” (as modified below) allocable to such member for such year and (ii) the highest combined marginal federal, state and/or local income tax rate applicable to any such owner for such year; provided, that, for purposes of this clause (e), Parent’s “taxable income” for any year shall be computed (A) with respect to any taxable year (or portion thereof) through and including Parent’s fiscal quarter ending June 30, 2013, without any deduction for any interest expense for such year attributable to any indebtedness of Parent used to finance distributions (as determined in accordance with Treasury Regulation Section 1.163-8T) or any indebtedness treated as having refinanced any such indebtedness, or any other interest expense incurred by Parent, that, in each case, is not treated as deductible or federal income tax purposes by each holder of Equity Interests issued by Parent, and (B) with respect to any taxable year, whether ended prior to or after the Amendment No. 4 Effective Date, by including any increases to taxable income for such year as a result of any tax examination, audit or other adjustment; and

(f)any Subsidiary of Parent may pay dividends or other distributions to a Loan Party (including, without limitation, distributions to a Loan Party upon the reduction of capital (by whatsoever name called, including paid in capital, paid up capital or stated capital) of such Subsidiary).”

21.Section 6.12 (Transaction with Affiliates).

(a)Clause (d) of Section 6.12 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“(d) the payment of reasonable and customary (i) fees and reasonable out-of-pocket expenses paid to and (ii) indemnities provided on behalf of, the directors of Parent or any Subsidiary; provided that, in the case of the preceding clause (i) only, the aggregate amount of such payments shall not exceed $250,000 in any fiscal year;”

(b)Clause (f) of Section 6.12 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“(f) (x) fees payable by Parent to Sciens Management LLC and Sciens Institutional Services LLC and (y) the reimbursement by Parent of Sciens Management LLC and Sciens Institutional Services LLC of reasonable and customary out-of-pocket expenses of Sciens Management LLC and Sciens Institutional Services LLC incurred in the ordinary course of business in connection with the businesses of Parent and its Subsidiaries, solely to the extent required by terms of the Management Agreement and the Consulting Agreement, in an aggregate amount in respect of subclauses (x) and (y) not to exceed $1,000,000 in the aggregate in any fiscal year of Parent; provided, that, as of the date of any such payment and after giving effect thereto, no Default or Event of Default, in each case, pursuant to Section 8.1, shall exist or have occurred and be continuing;”

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22.Section 6.13 (Use of Proceeds).  Clause (b) of Section 6.13 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

“(b)(i) on the Amendment No. 4 Effective Date, and only after application of the proceeds of the Term Loan and the $9,000,000 in proceeds of an equity issuance received by Colt Defense from Colt Defense Holding III L.P. and other purchasers, pay a portion of the Merger Consideration (as such term is defined in the Acquisition Agreement) and pay transactional fees, costs and expenses incurred in connection with the transactions contemplated by the Acquisition Documents and the Loan Documents; and (ii) otherwise, consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve).”

23.Section 6.15 (Senior Note Indenture Secured Debt Cap).  Section 6.15 of the Credit Agreement is hereby deleted and the following substituted therefor:

“6.15 Senior Note Indenture Secured Debt Cap.

(a)Incur (under and as defined in the Senior Note Indenture) or suffer to exist any Indebtedness (under and as defined in the Senior Note Indenture) pursuant to Section 3.2(b)(1) of the Senior Note Indenture other than (i) Indebtedness under this Agreement and the other Loan Documents and (ii) Indebtedness under the Term Loan Agreement and the other Term Loan Documents as in effect on the Amendment No. 4 Effective Date.

(b)Permit the amount of the Senior Note Indenture Secured Debt Cap with respect to the Loan Parties at any time to be less than the aggregate outstanding principal amount of the Term Loan (as defined in the Term Loan Agreement) plus all Advances, Swing Loans, Letter of Credit Usage and Overadvances.

24.Section 15.15 (Concerning the Collateral and Related Loan Documents).  Section 15.15 is hereby amended by inserting “, the Intercreditor Agreement” immediately following the phrase “this Agreement” in the first sentence thereof.

25.Joinder of CMC as Borrower.  CMC (“New Borrower”) hereby expressly (i) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Credit Agreement applicable to the Borrowers and as applied such New Borrower, with the same force and effect as if New Borrower had originally executed and been an original Borrower signatory to the Credit Agreement, (ii) is deemed to make as to itself, and is in all respects bound by, all representations and warranties made by the Borrowers to Agent and Lenders set forth in the Credit Agreement, and (iii) assumes and agrees to be directly liable to Agent and Secured Parties for all Obligations under, contained in, or arising pursuant to the Credit Agreement to the same extent as if New Borrower had originally executed and had been an original Borrower signatory to the Credit Agreement.

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26.Joinder of New Colt and Acquisition Sub as Guarantors.  Each of New Colt and Acquisition Sub (each a “New Guarantor”) hereby expressly (i) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Credit Agreement applicable to each Guarantors and as applied to such New Guarantor with the same force and effect as if such New Guarantor had originally executed and been an original Guarantor signatory to the Credit Agreement, (ii) is deemed to make as to itself, and is in all respects bound by, all representations and warranties made by the Guarantors to Agent and Lenders set forth in the Credit Agreement, and (iii) assumes and agrees to be directly liable to Agent and Secured Parties for all Obligations under, contained in, or arising pursuant to the Credit Agreement to the same extent as if such New Guarantor had originally executed and had been an original Guarantor signatory, to the Credit Agreement.

27.Schedules and Exhibits to Credit Agreement.  Attached as Annex A to this Amendment No. 4 are the following schedules (inclusive of each New Borrower and New Guarantor) that replace, as of the Amendment No. 4 Effective Date, each corresponding schedule to the Credit Agreement and are deemed a part thereof for all purposes of the Credit Agreement: Schedule A-2 – Authorized Persons; Schedule D-1 – Designated Account; Schedule F-1 – Freight Forwarders; Schedule P-1 – Permitted Investments; Schedule P-2 – Permitted Liens; Schedule P-3 – Permitted Holders; Schedule 4.1(b) – Capitalization of Loan Parties; Schedule 4.4(b) – UCC Filing Jurisdictions; Schedule 4.6(a) – Jurisdiction of Organization; Schedule 4.6(b) – Chief Executive Offices; Schedule 4.6(c) – Organizational Identification Numbers; Schedule 4.6(d) – Commercial Tort Claims; Schedule 4.6(e) – Location of Assets; Schedule 4.11 – Benefit Plans; Schedule 4.12 – Environmental Matters; Schedule 4.13 – Intellectual Property; Schedule 4.15 – Deposit Accounts and Securities Accounts; Schedule 4.19 – Permitted Indebtedness, and; Schedule 6.12(e) – Agreements with Affiliates.  In addition, attached as Annex A hereto are the following new exhibit and schedules which are addended to the Credit Agreement and are deemed a part thereof for all purposes of the Credit Agreement: Exhibit I-1 – IP Reporting Certificate, Schedule L-1 – Exclusive Intellectual Property and other Intangible Licenses, Schedule 4.2 – Due Authorization; No Conflict, Schedule 4.3 – Governmental Consents, Schedule 4.7 – Litigation, 4.9– No Material Adverse Change and Schedule 4.32 – Insurance.  The Table of Contents shall be updated to reflect the new schedules and exhibit.

28.Representations and Warranties.  Each Borrower and Guarantor, jointly and severally, represents and warrants to Lender Group as follows:

(a)This Amendment No. 4 and each of the documents, instruments and agreements executed and delivered in connection herewith (collectively, with this Amendment No. 4, the “Amendment Documents”) has been duly authorized, executed and delivered by all necessary action of each Loan Party party thereto and constitutes the legal, valid and binding obligations of each such Borrower and such Guarantor party thereto enforceable against each Loan Party in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, moratorium or similar laws relating to or limiting creditors' rights generally;

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(b)The execution, delivery, and performance by each Loan Party of this Amendment and each other Amendment Document to which it is a party and the consummation of the transactions contemplated hereby and thereby do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the effective date hereof where the failure to obtain the foregoing has or could reasonably be expected to have a Material Adverse Change; and

(c)As to each Loan Party, the execution, delivery, and performance by such Loan Party of this Amendment No. 4 and each other Amendment Document to which it is a party and the transactions contemplated hereby and thereby do not and will not (i) violate any provision of federal, provincial, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, where such violation has or could reasonably be expected to have a Material Adverse Change, (ii) violate any provisions of the Governing Documents of any Loan Party or its Subsidiaries, (iii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Loan Party or its Subsidiaries where any such conflict, breach or default has or could individually or in the aggregate reasonably be expected to have a Material Adverse Effect,(iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (v) require any approval of any holders of Equity Interests of a Loan Party or any approval or consent of any Person under any Material Contract of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of Material Contracts, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to have a Material Adverse Change.

(d)Within ninety (90) days after the Amendment No. 4 Effective Date, each US Loan Party shall establish and maintain its cash management system with Wells Fargo and shall enter into Controlled Account Agreements with Agent, Term Loan Agent and Wells Fargo, in form and substance reasonably acceptable to Agent, in each case other than Excluded Accounts (as defined in the Security Agreement).

(e)No Default or Event of Default exists.

29.Amendment Fee.  In addition to all other fees, charges, interest and expenses payable by Borrowers to Agent and Lenders under the Credit Agreement and the other Loan Documents, Borrowers shall pay to Agent, for the ratable benefit of Lenders, an amendment fee of $35,000, which amount is fully earned and payable on the Amendment No. 4 Effective Date and may be charged directly to any loan account(s) of Borrowers maintained by Agent.

30.Conditions Precedent.  The amendments provided for herein and the joinder of Acquisition Sub and CMC as a Borrower and New Colt as a Guarantor as provided for herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Agent:

(a)Agent shall have received counterparts of this Amendment No. 4, duly authorized, executed and delivered by Existing Borrowers, Existing Guarantors, Acquisition Sub, New Colt, CMC and the Lenders;

28

(b)Agent shall have received, in form and substance reasonably acceptable to Agent, true, correct and complete copies of (i) all of the Term Loan Documents, as duly authorized, executed and delivered by the parties thereto, and (ii) all of the Acquisition Documents, as duly authorized, executed and delivered by the parties thereto;

(c)Agent shall have received a true and correct copy of each consent, waiver or approval (if any) to or of this Amendment No. 4, which Borrowers and Guarantors are required to obtain from any other Person, and such consent, approval or waiver (if any) shall be in form and substance reasonably satisfactory to Agent; and

(d)Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed by each party thereto, and each such document shall be in full force and effect:

(i)Intercreditor Agreement executed by Term Loan Agent, as acknowledged and consented to by Borrowers and Guarantors;

(ii)A joinder to the U.S. Security Agreement by New Colt, CMC and Acquisition Sub;

(iii)A joinder to the Guaranty by New Colt and Acquisition Sub;

(iv)Trademark Security Agreement by CMC in favor of Agent;

(v)Trademark Security Agreement by New Colt in favor of Agent;

(vi)A Supplemental Indenture, adding New Colt and CMC (each, a “New Loan Party”) as Guarantors under the Indenture dated November 10, 2009;

(vii)UCC financing statements filed with the Secretary of State of the State of Delaware with Agent, as secured party, and New Colt, as debtor;

(viii)UCC financing statements filed with the Secretary of State of the State of Delaware with Agent, as secured party, and CMC, as debtor;

(ix)UCC financing statements filed with the Secretary of State of the State of Delaware with Agent, as secured party, and Acquisition Sub, as debtor;

(x)Agent shall have received lien, tax and judgment search results for the jurisdiction of organization of CMC, New Colt and Acquisition Sub, the jurisdiction of the chief executive office of each such entity;

(xi)Opinion of Cahill Gordon & Reindel LLP, special US counsel for each New Loan Party;

29

(xii)Agent shall have completed a field review of the Records and such other information with respect to the Collateral of CMC as Agent may require to determine the amount of Advances available to Borrowers based on such Collateral (including, without limitation, current perpetual inventory records and/or roll-forwards of Accounts and Inventory of CMC through the date of closing and test counts of the Inventory in a manner satisfactory to Agent, together with such supporting documentation as may be necessary or appropriate, and other documents and information that will enable Agent to accurately identify and verify such Collateral), the results of which in each case shall be satisfactory to Agent.

(xiii)Certificates from the Secretary or similar officer or authorized representative of each New Loan Party (i) attesting to (among other things) the resolutions of such New Loan Party's Board of Directors or other governing board authorizing its execution, delivery, and performance of this Amendment and the transactions contemplated hereby, (ii) to the extent applicable, authorizing specific officers of such New Loan Party to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers or authorized representatives of such New Loan Party;

(xiv)Copies of each New Loan Party's Governing Documents, as amended, modified, or supplemented to the date hereof, certified by the Secretary or similar officer or authorized representative of such New Loan Party;

(xv)Agent shall have received certificates of status with respect to each New Loan Party, each dated within 30 days of the Amendment No. 4 Effective Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such New Loan Party) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such New Loan Party is in good standing in such jurisdictions;

(xvi)Not later than three (3) days prior to the date hereof, all documentation and other information requested with respect to each New Loan Party required by regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act; and

(xvii) share certificates, together with stock transfer powers in blank in respect thereof, representing one hundred (100%) percent of the issued and outstanding capital stock of New Colt.

(e)Agent shall have received evidence, reasonably satisfactory to it, that Colt Defense has received $9,000,000 in cash from Colt Defense Holding III L.P. and other purchasers as proceeds of the Equity Purchase;

(f)The Borrowers shall pay or reimburse the Agent all reasonable and documented out-of-pocket costs and expenses incurred in connection with this Amendment No. 4 and the other Amendment Documents;

(g)Agent shall have received in cash the amendment fee described in Section 12 hereof;

30

(h)the Post-Closing Restructuring Certificate executed by Parent;

(i)the Collateral Assignment executed by Parent, Acquisition Sub and New Colt;

(j)the Acquisition Documents shall be substantially in the form of such documents previously delivered to Agent prior to the Amendment No. 4 Effective Date or subject to subsequent waivers, modifications or amendments thereto that are not (individually or in the aggregate) materially adverse to the interests of the Lenders in their capacities as such, (ii) all necessary legal and regulatory approvals with respect to the Acquisition shall have been obtained to the extent required by the Acquisition Documents, (iii) the Acquisition shall have been consummated on the Amendment No. 4 Effective Date in accordance with the terms and conditions of the Acquisition Agreement (including with respect to the payment of the purchase price), (iv) Parent shall own the Stock of New Colt free and clear of all Liens other than Permitted Liens, (v) no covenants, conditions, or other terms of the Acquisition Agreement shall have been waived, modified, or amended other than with the consent of the Agent other than waivers, modifications, or amendments which would not be (individually or in the aggregate) materially adverse to the interests of the Lenders in their capacities as such;

(k)Agent shall have received (i) the Certificate of Merger which has been file-stamped by the Secretary of State of the State of Merger and (ii) reasonably satisfactory evidence that the Merger Effective Time has occurred (or will occur substantially contemporaneously with the Amendment No. 4 Effective Date); and

(l)no Default or Event of Default shall exist or have occurred and be continuing.

31.Conditions Subsequent.  Borrowers and Guarantors hereby agree that, in addition to all other terms, conditions and provisions set forth herein and in the other Loan Documents, Borrowers and Guarantors shall deliver or cause to be delivered to Agent each item set forth on Annex B (Conditions Subsequent) attached hereto, on or before the date applicable thereto set forth in Annex B.  Failure by Borrowers to so perform or cause to be performed such conditions subsequent as and when required by the terms thereof (unless such date is extended, in writing, by Agent in its sole discretion, which the Agent may do without obtaining the consent of the other members of the Lender Group) shall constitute an immediate Event of Default.

32.General.

(a)Effect of this Amendment.  Except as expressly provided herein, no other changes or modifications to the Loan Documents are intended or implied, and in all other respects the Loan Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the date hereof. 

31

(b)Governing Law.  THE VALIDITY OF THIS AMENDMENT NO. 4, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(c)Binding Effect.  This Amendment No. 4 shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties hereto.

(d)Counterparts, etc.  This Amendment No. 4 may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement.  Delivery of an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment No. 4.  Any party delivering an executed counterpart of this Amendment No. 4 by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Amendment No. 1 but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment No. 4.

[Signature Pages Follow]

32

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be duly executed and delivered by their authorized officers as of the day and year first above written.

BORROWERS

COLT DEFENSE LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

COLT CANADA CORPORATION

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

COLT’S MANUFACTURING COMPANY LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

GUARANTOR

COLT FINANCE CORP.

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

COLT DEFENSE TECHNICAL SERVICES LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

Amendment No. 4 to Credit Agreement (Colt)

COLT INTERNATIONAL COÖPERATIEF U.A.

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Authorised Representative

NEW COLT HOLDING CORP.

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

NEW COLT ACQUISITION CORP.

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

Amendment No. 4 to Credit Agreement (Colt)

AGENT AND LENDERS

WELLS FARGO CAPITAL FINANCE, LLC, as

Agent and as a Lender

By:  /s/ Willis Williams

       Name:  Willis Williams

       Title:    Authorized Signatory

WELLS FARGO CAPITAL FINANCE

CORPORATION CANADA, as a Lender

By:  /s/ Domenic Cosentino

       Name:  Domenic Cosentino

       Title:    Vice President

Amendment No. 4 to Credit Agreement (Colt)

Amendment No. 4

to

Credit Agreement

Annex A

Updated Exhibit and Schedules to Credit Agreement

See attached.

EXHIBIT I-1

FORM OF IP REPORTING CERTIFICATE1

The undersigned Responsible Officers of the Loan Parties hereby certify as of the date hereof on behalf of such Loan Parties in their capacity as officers of such Loan Parties and not in their individual capacities that the information in this IP Reporting Certificate is true, correct, and complete.

Set forth below is a list identifying all of the Copyrights for proprietary software that is material to generating revenue of any Loan Party, whether created or acquired before, on, or after the Closing Date. Such list sets forth such Copyrights sequentially based on the amount of revenue generated from licensing the corresponding software programs, starting from the software program that generates the highest amount of revenue to the software program that generates the least amount of revenue. Such list identifies which of the Copyrights in such proprietary software have been filed for registration with the United States Copyright Office or the Canadian Intellectual Property Office.

< List here, or attach separate schedule if needed >

 

1 All initially capitalized terms used herein without definition shall have the meanings ascribed thereto in that certain Credit Agreement, dated as of September 29, 2011, as amended by Amendment No. 1 to Credit Agreement and Waiver, dated as of February 24, 2012, and Amendment No. 2 to Credit Agreement and Consent, dated as of March 22, 2013, Amendment No. 3 to Credit Agreement and Consent, dated as of June 19, 2013, and Amendment No. 4 to Credit Agreement, dated as of July [__], 2013 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement") by and among COLT DEFENSE LLC, as Parent ("Parent"), COLT'S MANUFACTURING COMPANY LLC ("Colt's Manufacturing"), and COLT CANADA CORPORATION ("Colt Canada", and together with Parent and Colt's Manufacturing, each individually, a "Borrower" and, collectively, "Borrowers"), COLT FINANCE CORP. ("Colt Finance"), NEW COLT ACQUISITION CORP. ("Acquisition Sub"), which on the Closing Date shall be merged with and into, NEW COLT HOLDING CORP., (“New Colt”), with New Colt surviving such merger, COLT DEFENSE TECHNICAL SERVICES LLC ("CDTS"), and COLT INTERNATIONAL COÖPERATIEF U.A. ("Colt Netherlands" and, together with Colt Finance, Acquisition Sub, New Colt and CDTS and any other Guarantor party thereto from time to time, each individually a "Guarantor" and, collectively, "Guarantors"), the lenders identified on the signature pages thereof (each of such lenders, together with their respective successors and permitted assigns, are referred to thereinafter as a “Lender,” as that term is thereinafter further defined), and Wells Fargo Capital Finance LLC, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, "Agent"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

Set forth below is a description of all new Patents, Trademarks or Copyrights that are registered or the subject of pending applications for registrations with the United States Copyright Office or the Canadian Intellectual Property Office and patent or trademark applications filed with the United States Patent and Trademark Office, and of all Intellectual Property Licenses that are material to the conduct of such Grantor's business, in each case, which were acquired, registered, or for which applications for registration were filed by any Grantor during the prior quarter.

< List here, or attach separate schedule if needed >

Set forth below is a description of each statement of use or amendment to allege use filed during the prior quarter with respect to intent-to-use trademark applications.

< List here, or attach separate schedule if needed >

IN WITNESS WHEREOF, this IP Reporting Certificate is executed by each of the undersigned Responsible Officers, in his/her capacity as an officer of a Loan Party and not in an individual capacity, on behalf of the applicable Loan Party, this _______ day of _______________, 20____.

COLT DEFENSE LLC,

By:  __________________________

        Name:

        Title:

COLT FINANCE CORP.,

By:  __________________________

        Name:

        Title:

NEW COLT ACQUISITION CORP.,

By:  __________________________

        Name:

        Title:

NEW COLT HOLDING CORP.,

By:  __________________________

        Name:

        Title:

COLT’S MANUFACTURING COMPANY LLC,

By:  __________________________

        Name:

        Title:

COLT CANADA CORPORATION,

By:  __________________________

        Name:

        Title:

COLT DEFENSE TECHNICAL SERVICES

LLC,

By:  __________________________

        Name:

        Title:

COLT INTERNATIONAL COÖPERATIEF

U.A.,

By:  __________________________

        Name:

        Title:

Schedule A-2

Authorized Persons

Gerald R. Dinkel

Scott B. Flaherty

Schedule D-1

Designated Account

Beneficiary Bank:	Bank of America
Bank name:	Bank of America
City:	West Hartford, CT 06110
Identification Code:	Swift: XXXXXXXXX
Identification Code:	ABA: XXXXXXXXX
Beneficiary:	Colt Defense LLC
Account number:	XXXX-XXXX-XXXX

Schedule E-2

Existing Letters of Credit

None.

Schedule F-1

Freight Forwarders

See Schedule 4.6(e).

Schedule L-1

Exclusive Intellectual Property and other Intangible Licenses

Parent

1.   Consolidated License Agreement, dated February 8, 1984 between Her Majesty The Queen In Right of Canada and Colt’s Manufacturing Company, Inc., as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

New Colt Holding Corp./Colt’s Manufacturing Company LLC

1.   License Agreement, dated February 11, 2010, between Rampant Classic and New Colt Holding Corp.

2.   Master License Agreement, dated January 28, 2000, between New Colt Holding Corp. and Cybergun S.A., formerly known as 3P S.A. (Les Trois Pylons), as amended February 17, 2006 and April 20, 2010.

3.   License Agreement, dated December 1, 2009, between New Zealand Mint Limited and New Colt Holding Corp., as amended September 24, 2010 and November 5, 2010 and as assigned by Antiquus Aurum Limited (formerly New Zealand Mint Limited) July 16, 2012.

4.   License Agreement (Knives), dated June 14, 2007, between New Colt Holding Corp. and Smoky Mountain Knife Works, Inc., as amended January 29, 2011.

5.   License Agreement, dated March 26, 2009, between Carl Walther GmbH and New Colt Holding Corp, as amended November 11, 2009.

6.   License Agreement, dated July 18, 2008, between Carl Walther GmbH and New Colt Holding Corp., as amended December 10, 2008, January 5, 2009 and March 27, 2009.

7.   License Agreement, dated April 27, 1965, between Colt Industries Inc. and the National Brewing Company.

8.   Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd & Sportwaffen GmbH.

9.   License Agreement, dated December 19, 2003, between Colt Defense LLC and New Colt Holding Corp.

10.   Match Target License Agreement, dated on or about December 19, 2003 (but effective January 1, 2004), between Colt’s Manufacturing Company LLC and Colt Defense LLC.

11.   Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

12.   Settlement Agreement, dated as of January 12, 1998, among New Colt Holding Corporation, Colt’s Manufacturing Company, Inc. and Jimlar Corporation.

13.   Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

2

Schedule P-1

Permitted Investments

None.

Schedule P-2

Permitted Liens

Liens on cash collateral securing Letters of Credit:

Issuer	Beneficiary	LC Number	Amount Outstanding as of 5/26/2013	Maturity Date
J.P. Morgan	Connecticut Department of Environmental Protection	TFTS-851474	$211,127	6/4/2014
J.P. Morgan	National Bank of Egypt	TFTS-841076	$9,091	1/31/2014
J.P. Morgan	National Bank of Egypt	TFTS-839429	$7,343	4/30/2013
J.P. Morgan	National Bank of Egypt	TFTS-887528	$11,984	1/31/2014
J.P. Morgan	State Bank of India	TFTS-907450	$809,625	6/6/2016
Interaudi Bank	QHQ Armed Forces- UAE	SLC-0017/SS/05	$461,585	12/30/2013

Schedule P-3

Permitted Holders

1.           Sciens Management L.L.C. and its Affiliates.

2.           Members of management of the Parent who on the Closing Date (x) are holders of Equity Interests of the Parent or (y) have options to obtain Equity Interests of the Parent.

Schedule R-1

Real Property Collateral

Company	Location	Leasehold or Fee	Lessor or Mortgagee	Lease Term	Other Liens
Colt Canada Corporation	1036 Wilson Avenue, Kitchener, ON, Canada N2C 1J3	Fee	Wells Fargo Capital Finance Corporation Canada See Attachment 9(b)	N/A	N/A

Schedule 4.1(b)

Capitalization of Loan Parties

Equity Interests of Loan Parties (other than Colt Defense LLC) as of closing:

Current Legal Entity Owned	No. of Shares/Interest Authorized	No. of Shares/Interest Issued	No. of Shares/Interest Outstanding	Record Owner	Certificate No.	Percent of each Class of Shares owned
Colt Finance Corp.	1,000	1,000	1,000	Colt Defense LLC	1	100%
Colt Canada Corporation	100	99	100	Colt International Coöperatief U.A.	2	99%
	100	1	100	Colt International Coöperatief U.A.	4	1%
Colt Defense Technical Services LLC	N/A	N/A	N/A	Colt Defense LLC	N/A	100%
Colt International Coöperatief U.A.	N/A	N/A	N/A	Colt Defense LLC (99%) and Colt Defense Technical Services LLC (1%)	N/A	100%
New Colt Acquisition Corp.	1000	1000	1000	Colt Defense LLC	1	100%
New Colt Holding Corp.	1000	1000	1000	Colt Defense LLC	M-1	100%
Colt’s Manufacturing Company LLC	N/A	N/A	N/A	New Colt Holding Corp.	N/A	100%

Options issued for shares of Equity Interests in Colt Defense LLC:

Name	Number of Options	Exercise Price
Gerald R. Dinkel	6,957	$100.00
Scott B. Flaherty	2,854	$100.00
George Casey	300	$100.00
J. Michael Magouirk	500	$100.00
Leslie Striedel	600	$288.78
Ronald Belcourt	400	$288.78
Kevin Green	300	$288.78

2

Schedule 4.2

Due Authorization; No Conflict

1.Master Lease Agreement dated January 14, 2009 by and between Banc of America Leasing & Capital, LLC and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  Banc of America is providing a temporary standstill with respect to the Master Lease Agreement and has consented to the change of control associated with the merger to that extent.

2.Master Lease Agreement dated November 9, 2007 by and between General Electric Capital Corporation and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  The Master Lease Agreement with General Electric Capital Corporation is being paid off and terminated concurrent with closing of the merger.

3.Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd-und & Sportwaffen GmbH ("Merkel").  Merkel has consented to the change of control associated with the merger and continuation of this agreement thereafter.

4.Loan Agreement, dated September 21, 2009, between Bank of America, N.A. and Colt’s Manufacturing Company LLC, as amended February 24, 2010, September 22, 2010, November 1, 2011 and February 8, 2012, and related exhibits, schedules, ancillary agreements and other documents.  The available credit under the Loan Agreement has not been utilized and the Loan Agreement will be terminated concurrent with closing of the merger.

5.Truck Lease and Service Agreement, dated January 9, 1998, between Colts Manufacturing Company LLC and Ryder Truck Rental, Inc., D.B.A. Ryder Transportation Services.  Ryder has consented to the change of control associated with the merger and continuation of this agreement thereafter.

Schedule 4.3

Governmental Consents

Governmental Authorities that will be notified post closing:

U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”)-ITAR Section 122.4 (22 C.F.R. §122.4) requires notifying DDTC of changes of ownership, officers, directors, and empowered officials to keep import and export registration information current.

U.S Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”)- 27 C.F.R. §478.54 requires notifying ATF regarding changes of control and responsible persons to keep Federal Firearms License and associated information current.

Colt Defense LLC will be required to comply with the Connecticut Transfer Act (Conn. Gen. Stat. §22a-134, et seq.) post closing.  (see also Schedule 4.12 regarding notices/filings under the Connecticut Transfer Act)

Schedule 4.4(b)

UCC Filing Jurisdictions

Delaware for Colt Defense LLC, Colt Finance Corp., Colt Defense Technical Services LLC, New Colt Acquisition Corp., New Colt Holding Corp., and Colt’s Manufacturing Company LLC

District of Columbia for Colt Canada Corporation and Colt International Coöperatief U.A.

Schedule 4.6(a)

Jurisdiction of Organization

Company	Jurisdiction of Organization	Jurisdictions of Foreign Qualification
Colt Defense LLC	Delaware	Connecticut
Colt Finance Corp.	Delaware	None
Colt Defense Technical Services LLC	Delaware	None
New Colt Holding Corp.	Delaware	Connecticut
Colt’s Manufacturing Company LLC	Delaware	Connecticut; Florida
Colt Canada Corporation	Nova Scotia, Canada	Ontario, Canada
Colt International Coöperatief U.A.	Netherlands	None
New Colt Acquisition Corp.	Delaware	None

Schedule 4.6(b)

Chief Executive Offices

Company	Chief Executive Offices	Chief Executive Offices post-close
Colt Defense LLC	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Finance Corp.	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Defense Technical Services LLC	547 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
New Colt Holding Corp.	545 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt’s Manufacturing Company LLC	545 New Park Avenue West Hartford, CT 06110	547 New Park Avenue West Hartford, CT 06110
Colt Canada Corporation	1036 Wilson Avenue, Kitchener, Ontario Canada N2C 1J32	1036 Wilson Avenue, Kitchener, Ontario Canada N2C 1J3
New Colt Acquisition Corp.	547 New Park Avenue West Hartford, CT 06110	N/A
Colt International Coöperatief U.A.	Fred. Roeskestraat 123 1076 EE Amsterdam, the Netherlands	Fred. Roeskestraat 123 1076 EE Amsterdam, the Netherlands

 

2 Chief executive officers and some records reside at 547 New Park Avenue, West Hartford, CT 06110.

Schedule 4.6(c)

Organizational Identification Numbers

Company	US Federal Tax Identification Number	Organizational Identification Number
Colt Defense LLC	32-0031950	3570211
Colt Finance Corp.	27-1237687	4743005
Colt Canada Corporation	98-0435534	3102045
Colt Defense Technical Services LLC	46-0538809	5111679
New Colt Holding Corp.	13-3786913	2413625
Colt’s Manufacturing Company LLC	42-1589139	2206122
New Colt Acquisition Corp.	90-0998380	5251079

Company	Canadian Business Number
Colt Defense LLC	N/A
Colt Finance Corp.	N/A
Colt Canada Corporation	84378 5270 (Business Number) 84378 5270 RT0001 (GST/HST) 84378 5270 RP0001 (payroll) 84378 5270 TE0001 (employer | health tax) 84378 5270 RN0001 (excise tax) 84378 5270 RC0002 (corporate | income tax)

Company	Netherlands Business Number
Colt International Coöperatief U.A.	56651317

Schedule 4.6(d)

Commercial Tort Claims

Company	Description of Commercial Tort Claim
Colt Defense LLC Colt Finance Corp. Colt Canada Corporation Colt Defense Technical Services LLC Colt International Coöperatief U.A. New Colt Acquisition Corp.	None
New Colt Holding Corp Colt Manufacturing Company LLC	None

Schedule 4.7

Litigation

Claims against Parent and Colt Canada

Parties	Nature of dispute	Procedural status	Insurance coverage
Douglas Burnside Claim against Colt Canada.	On April 17, 2012, Colt Canada learned of a claim asserted against it in the Ontario Superior Court of Justice by an employee, Douglas Burnside, seeking damages for emotional and physical distress allegedly sustained in the course of his employment by Colt Canada.  Colt Canada believes the claim against it has no merit and it intends to contest this case vigorously.	Colt Canada has retained counsel to represent it in connection with this claim and has referred it to its employment practices insurance carrier.	Colt Canada believes that it has coverage for this claim, subject to a self-insured retention of $100,000.
Claim of Jean-Charles Baillargeon against Colt Canada.	In December 2012, Colt Canada was sued by a former employee, Jean-Charles Baillargeon, in connection with his termination by Colt Canada during 2012.  Baillargeon is seeking damages of $100,000, plus interests, costs and other unspecified damages. Colt Canada believes the claims against it have no merit and it intends to contest this case vigorously.	Colt Canada has retained counsel to represent it in this case.	Colt Canada believes it has coverage for this claim, subject to a self-insured retention of $100,000.

Chen and Alpert Claims against Parent (Carlton Chen and Merrick Alpert).	In October 2012, two former executives of Colt’s Manufacturing, Carlton Chen and Merrick Alpert, each filed suit against Colt’s Manufacturing and certain other parties in connection with the termination of their employment by Colt’s Manufacturing. The two lawsuits seek unspecified damages.  Each of the plaintiffs recently filed amended complaints.  Neither of the amended complaints alleges facts that would give rise to any liability on the part of Parent to either of these individuals and it is unaware of any basis of liability. Parent believes the plaintiffs’ claims against it have no merit and it intends to contest these cases vigorously.	Parent has retained counsel to represent it in these cases.  Each of the plaintiffs recently filed amended complaints.  Parent was named as a defendant in the original complaints and in the amended complaints. Discovery is proceeding. Trial is scheduled for September, 2014.	Parent believes that it has partial coverage for these two lawsuits, subject to a self-insured retention of $250,000, but the carrier has thus far denied coverage.
Carlton Chen CHRO Claim against Parent (the “Chen Discrimination Claim”).	On April 8, 2013, Chen filed a related discrimination claim with the Connecticut Commission on Human Rights and Opportunities (“CHRO”) and the federal Equal Employment Opportunities Commission (“EEOC”) against many of the same defendants, including Parent.  The Chen Discrimination Claim seeks unspecified damages.  The Chen Discrimination Claim does not allege facts that would give rise to any liability on the part of Parent and it is unaware of any basis of liability. Parent believes the plaintiff’s claims against it have no merit and it intends to contest this case vigorously.	The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.	Parent believes this claim is covered by its EPL insurance subject to a self-insured retention.

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Claims against Colt’s Manufacturing/New Colt

Parties	Nature of dispute	Procedural status	Insurance coverage
Chen and Alpert Claims (Carlton Chen and Merrick Alpert).	Claims by terminated former executives based on theories of breach of contract, fraudulent inducement/misrepresentation, promissory estoppel, tortious inducement to breach of contract, breach of implied covenant of good faith and fair dealing, and violations of the Connecticut unfair trade practices act.	Discovery is proceeding. Trial scheduled for September, 2014.	Insurance carrier is defending the matters, but is currently refusing to indemnify Colt’s Manufacturing.
Unfair Labor Practice Charge -Florida (by Union).	Claim that Colt’s Manufacturing breached its collective bargaining agreement with the union and the National Labor Relations Act by announcing its intent to open a satellite plant in Florida.	Arbitration scheduled for September	No insurance.
Value Line Grievance (by Union).	Grievance alleging that Colt’s Manufacturing breached its collective bargaining agreement with the Union by entering a contract to have rifles manufactured in another location. Colt’s Manufacturing voluntarily discontinued having the rifles manufactured after approximately 5 months.	The Union continues to press the matter and it is currently at the pre-arbitration stage.	No insurance.
Carlton Chen CHRO Matter.	Charge filed against Colt’s Manufacturing and several of its employees with the Connecticut Commission on Human Rights and Opportunities by dismissed former executive alleging discrimination on the basis of race.	The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.	Colt’s Manufacturing believes this claim is covered by its EPL insurance subject to a self-insured retention.

3

Lawsuit by City of Gary, Indiana. Lawsuit filed by the City of Gary against Colt’s Manufacturing and a number of other firearms manufacturers based on a theory of “negligent distribution.” The plaintiff municipality has failed to pursue the matter for approximately 3 years and Colt’s Manufacturing’s attorney advises that the City is likely to voluntarily withdraw the case. Cost of defense is being covered by insurance.

4

Schedule 4.9

GAAP

Effective January 1, 2012, Colt’s Manufacturing modified the post-retirement health care coverage it provides to certain retired employees in a manner that, among other things, eliminated the cap on benefits for certain retirees.  Colt’s Manufacturing believes that its obligations under the modified coverage are appropriately reflected in its Audited Financial Statements (as defined in the Target Acquisition Agreement) in accordance with GAAP.   

Schedule 4.11

Benefit Plans

Colt Defense LLC Pension Plans:

Colt Defense LLC Salaried Retirement Income Plan

Colt Defense LLC Bargaining Unit Employees’ Pension Plan

Colt Canada Corporation Pension Plans:

None.

Colt’s Manufacturing Company LLC Pension Plans:

Colt’s Manufacturing Company LLC Salaried Retirement Income Plan

Colt’s Manufacturing Company LLC Bargaining Unit Employees’ Pension Plan

Schedule 4.12

Environmental Matters

1.   This transaction will require filing of the following forms with the Connecticut Department of Energy and Environmental Protection under the Connecticut Transfer Act within ten calendar (10) days after the closing:

a.   Property Transfer Program - Form III

b.   Environmental Condition Assessment Form (ECAF)

c.   Fee Payment Form

Schedule 4.14

Leases

Entity	Secured Party	Type of Collateral	Master Lease #	Schedule
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	001
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	002
Colt’s Manufacturing Company LLC	Bank of America Leasing & Capital, LLC	Equipment	19621-90000	003
Colt’s Manufacturing Company LLC	General Electric Credit Corp, as assignee of General Electric Credit Corp of Tennessee	Equipment	5863151-003	---

Schedule 4.15

Deposit Accounts and Securities Accounts

Company	Bank or Broker	Address	Account No.	Account Type
Colt Defense LLC	Bank of America	PO Box 27025	XXXXXXXXX	Concentration Account
Colt Defense LLC	Bank of America	Richmond, VA 23261-7025	XXXXXXXXX	Controlled Disbursement Account
Colt Defense LLC	Bank of America	PO Box 27025	XXXXXXXXX	Payroll Account
Colt Defense Technical Services LLC	Bank of America	Richmond, VA 23261-7025	XXXXXXXXX	Concentration Account
Colt International Cooperatief U.A.	Bank of America	PO Box 27025	XXXXXXXXX	Concentration Account
Colt Defense LLC	JPMorgan Chase	Richmond, VA 23261-7025	XXXXXXXXX	Liquid MMDA for India Bid Bond
Colt Defense LLC	Interaudi Bank	PO Box 27025	XXXXXXXXX	Collateral for a Letter of Credit
Colt Canada Corporation	Bank of America	Richmond, VA 23261-7025	XXXXXXXXX	Colt Canada Corp. USD
Colt Canada Corporation	Bank of America	26 Elmfield Rd	XXXXXXXXX	Colt Canada Corp. CAD
Colt Canada Corporation	Bank of America	Bromley, Kent	XXXXXXXXX	Colt Canada Corp. AP CAD
Colt Canada Corporation	Bank of America	CT51SD England	XXXXXXXXX	Colt Canada Corp. AP USD
Colt Canada Corporation	Bank of America	Northeast Market	XXXXXXXXX	Colt Canada Corp. AP Euro
Colt Canada Corporation	Bank of America	PO Box 659754	XXXXXXXXX	Colt Canada Corp. AR Euro
Colt’s Manufacturing Company LLC	Bank of America	San Antonio, TX 78265-9754	XXXXXXXXX	Accounts Payable
Colt’s Manufacturing Company LLC	Bank of America	19 East 54th Street	XXXXXXXXX	Payroll

Company	Bank or Broker	Address	Account No.	Account Type
Colt’s Manufacturing Company LLC	Bank of America	New York, NY 10022	XXXXXXXXX	Concentration Account
Colt’s Manufacturing Company LLC	Merrill Lynch, Pierce, Fenner & Smith Inc.	200 Front Street W	XXXXXXXXX	Prime Money Market Fund

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Schedule 4.19

Permitted Indebtedness

Colt Defense and Colt Canada Corporation Letters of Credit:

Issuer	Beneficiary	LC Number	Amount Outstanding as of 5/26/2013	Maturity Date
J.P. Morgan	Connecticut Department of Environmental Protection	TFTS-851474	$211,127	6/4/2014
J.P. Morgan	National Bank of Egypt	TFTS-841076	$9,091	1/31/2014
J.P. Morgan	National Bank of Egypt	TFTS-839429	$7,343	4/30/2013
J.P. Morgan	National Bank of Egypt	TFTS-887528	$11,984	1/31/2014
J.P. Morgan	State Bank of India	TFTS-907450	$809,625	6/6/2016
Interaudi Bank	QHQ Armed Forces- UAE	SLC-0017/SS/05	$461,585	12/30/2013
Sultan International Holdings	2004-1024  UAE/GHQ Warranty	OLG-080041024	$593,650	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG081202946	$29,580	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG-081202943	$1,820	2013
Sultan International Holdings	Ministry of Interior - UAE	OLG-081101466	$38,613	6/29/2013

Colt’s Manufacturing Letters of Credit:

Bank of America National Union Fire Insurance Co. of Pittsburgh, PA, et al. 68095875 $325,000 04/08/2014

Other Indebtedness:

Purchase and Sale Agreement among CF Intellectual Property Limited Partnership, the Connecticut Developmental Authority, and New Colt Holding Corp., dated as of August 22, 1994, under which, among other things, New Colt Holding Corp. is obligated to pay to Anthony Autorino, as assignee of the rights thereunder, 50% of the “non-firearms” licensing revenues, up to a total of $2,500,000.00, as outlined in the Purchase and Sale Agreement.  New Colt Holding Corp.’s remaining obligation under this Purchase and Sale Agreement is $1,140,272.88.

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Schedule 4.32

Insurance

COLT DEFENSE LLC and Subsidiaries

POLICY NO.	COVERAGE AND LOCATION	INSURANCE COMPANY	AMOUNT INSURED	DEDUCTIBLE/SIR	Policy Period
GPP004738101	General Liability	Arch Specialty Insurance Company	$1,000,000 Each Occurrence	$250,000 Self Insured Retention - Each Occurrence or Offense	12/07/2012 -12/07/2013
			$1,000,000 Personal & Advertising Injury	Defense Costs erode the SIR
			$2,000,000 General Aggregate Limit
			$2,000,000 Products/Completed Operations Aggregate Limit
			$50,000 damage to rented Premises
			Defense Costs are in Addition to the Limits
WC015684254	Workers Compensation and Employers Liability	Commerce & Industry insurance Company	Workers Compensation - Statutory		12/07/2012 -12/07/2013
WC015684255	Workers Compensation and Employers Liability - CA	National Union Fire Insurance Company	Employers Liability:		surcharges
		of Pittsburgh	$1,000,000 Bodily Injury by Accident - Each Accident
			$1,000,000 Each Employee Bodily Injury by Disease
			Stop Gap (ND,OH,WA,WY)
			$1,000,000 Bodily Injury by Accident - Each Accident
			$1,000,000 Each Employee Bodily Injury by Disease

CA0934874	Business Automobile Liability	National Union Fire Insurance Company	$1,000,000 Combined Single Limit		12/07/2012 -12/07/2013
		of Pittsburgh	$10,000 Medical Payments - Each Person Insured
			Personal Injury Protection - Rejection /Basic Benefits by State
			Uninsured / Underinsured Motorists - Policy Limits where Possible
			Physical Damage Hired & Owned Vehicles	$1,000 Comprehensive & Collision
PHFD37577327 001	Foreign Package	ACE American Insurance Company	INTERNATIONAL GENERAL LIABILITY		12/7/2012 - 12/7/2015
			$1,000,000 General Aggregate	NIL for International Liability except Employee Benefits Liability; $1,000
			Not Covered Products/Completed Operations Aggregate
			$1,000,000 Personal/Advertising Injury Limit
			$1,000,000 Each Occurrence Bodily Injury
			$10,000 Medical Expense Limit
			$1,000,000/$1,000,000 Employee Benefits Liability (Each claim/aggregate)
			INTERNATIONAL AUTO LIABILITY
			$1,000,000 Liability Coverage
			$25,000 Hired Auto Physical Damage – Each Accident
			$25,000 Hired Auto Physical Damage – Any one policy period
			INTERNATIONAL WORKERS COMPENSATION
			US National - State of Hire Benefits
			Third Country Nationals - Country of Origin Benefits
			Local Nationals – EL Only

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			EMPLOYERS LIABILITY
			$1,000,000 Bodily Injury by Accident (Each Employee)
			$1,000,000 Bodily Injury by Disease (Each Employee)
			$1,000,000 Bodily Injury by Disease (Policy Limit)
			Executive Assistance Services
			$1,000,000 Policy Limit for Medical Assistance Services
			PERSONAL PROPERTY
			$20,000 Personal Property at Unnamed Locations (except while in Transit)	$1,000 Property deductible
			$20,000 Personal Property in Transit
XSC2058511213	Excess Liability - Lead	Catlin Specialty Insurance Company	$5,000,000 Each Occurrence		12/07/2012 -12/07/2013
			$5,000,000 Aggregate
CXA98HU12	Excess Liability	Aspen Specialty Insurance Company	$5,000,000 Each Occurrence		12/07/2012 -12/07/2013
			$5,000,000 General Aggregate
			$5,000,000 Products / Completed Operations Aggregate
NYALL12-2544	Transit	Allianze Ins. Co.	$10,000,000 Any One Conveyance	$10,000 Per Occurrence	12/31/2012 - 12/31/2013
PLS13769806	Environmental	Chartis Specialty Insurance Company	$1,000,000 Each Incident/$2,000,000 Aggregate	$25,000 Each Incident	12/1/2012-12/1/2013
14363020	Executive Risk Package (D&O, EPLI, Crime & Fiduciary)	National Union Fire Insurance Company	$18,000,000 Total limits. $15M D&O/EPL, $3M Fiduciary, $2M Crime	$50,000 D&O, 100,000 EPL, $50,000 Fiduciary, $25,000 Crime	12/1/2012-12/1/2013
82230579	D&O Side A	Federal Insurance Company	$15,000,000 Each Claim/Policy Period	Excess of Underlying $15,000,000 D&O only	12/1/2012-12/1/2013

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GA0692	Special Contingency Risk	Great American Ins Co.	$10,000,000 Per Insured Event		12/1/2011 - 12/1/2014
31375428	Property	Westport Insurance Corporation	Policy Limit $182,288,000	$25,000 for each Occurrence insured against by this policy except where noted below.	12/7/2012 - 12/7/2013
			Sublimts	Boiler and Machinery	(two-year agreement)
			$25,000,000 Earth Movement	$50,000 PD and 2 times the Applicable Actual Daily Value - TE
			$25,000,000 Flood	Earth Movement - Combined PD& TE
			$1,000,000 Accounts Receivable	The amount to be deducted for each Occurrence as insured against by the Earth Movement Endorsement shall be the sum of $100,000 for all other Locations covered under the Earth Movement Endorsement where physical loss or damage occurs or TE loss ensures
			Policy limit Boiler and Machinery	Flood Deductibles(s)
			$1,000,000 Contingent Business Interruption and contingent Extra Expense Combined in the aggregate per Occurrence.	Flood - Combined PD & TE
			$1,000,000 contingent Liability From Operation Building Laws (DICC)	The amount to be deducted for each Occurrence as insured against by the Flood Endorsement shall be the sum of the greater of the stated Basic Deductible(s) or $100,000 for all other Locations covered under the Flood Endorsement where physical loss or damage occurs or TE loss ensues.

4

$1,000,000 Debris Removal ( Lesser of 25% of the combined amount of direct physical damage and Time Element Loss payable at the location where the damage occurs or limit Shown)

$500,000 Electronic Data Processing Media Valuation

$500,000 Errors and Omissions

$1,000,000 Expediting Expenses

$1,000,000 Exhibition, Exposition, Fair or Trade Show

$5,000,000 Extended Period of Indemnity (Lesser of Actual Loss Sustained for 365  Consecutive Days or Limit Shown)

$5,000,000 Extra Expense

$500,000 Fine Arts

$100,000 Fire Department Service Charges

$5,000,000 Ingress or Egress (Lesser of Limit shown or Actual Loss Sustained for 30 consecutive Days from the date of the physical loss or damage referred to in the provision)

$5,000,000 Interruption by Civil Authority ( Lesser of limit shown or Actual Loss Sustained for 365 Consecutive Days form the date of the physical loss or damage referred to the provision)

5

			$1,000,000 Leasehold Interest
			$1,000,000 Miscellaneous Unnamed Locations
			$250,000 Mold Resulting from Covered Cause of Loss - Per Occurrence and in the annual aggregate
			$1,000,000 New Acquired Property
			$2,500,000 Off Premises Power, Including T&D lines (1 mile) Property Damage and Time Element Combined
			$50,000 Pollutant cleanup & Removal per Occurrence and Annual Aggregate
			$5,000,000 Property in the Course of Construction
			$100,000 Professional Fees
			$500,000 Research and Development Costs
			$1,000,000 Rent Insurance
			$1,000,000 Royalties
			$1,000,000 Soft Costs
			$1,000,000 Temporary Removal of Property
			$500,000 Transit
			$1,000,000 Valuable Papers and Records
31375428	Property - Colt Canada	Westport Insurance Corporation	US$5,000,000 Building		12/7/2012 - 12/7/2013
			US$12,000,000  Personal Property
			US$500,000 Fine Arts
			US$8,000,000 Stock
			US$6,263,000 Business Income
			USD 1,270,000 Extra Expense
6741129556	Automobile - Colt Canada	Aviva Insurance Company of Canada	CAD$2,000,000 Combined Single Limit		5/20/2013 - 5/20/2014
			Physical Damage - Actual Cash Value	$1,000 per accident

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Colt’s Manufacturing Company LLC

Coverage	Insurance Company	Term	Premium/Tax	Policy Number	Other Notes	Broker
Commercial General Liability/Products Liability	Lexington Insurance Company	1/7/2013- 1/7/2014	Prem Tax	#20720822	Financed thru US Premium	Graham
Umbrella Liability	Lexington Insurance Company	1/7/2013- 1/7/2014	Prem Tax	#23917690	Financed thru US Premium	Graham
Commercial Property	Liberty Mutual Fire Insurance Company	3/1/2013- 3/1/2014	Prem	YU2-L9L-540052-013		Graham
Workers Compensation & Employers Liability	National Union Fire Ins Co of Pittsburg, PA	3/1/2013- 3/1/2014		#25052476		Graham
	Large Deductible Plan $150,000 per accident $950,000 Annual Aggregate Ded		Fixed Costs Est Surcharges Claims Handling Loss Fund Pay In		AIG will not offer a Guaranteed Cost Program at this time Add'l requirement: Standby L/C was required for policy year for $325,000 and was opened w/BOA on 4/13/13
Business Auto	National Union Fire Ins Co of Pittsburg, PA	3/10/2013 3/10/2014	Prem	#939800		Graham
Ocean Cargo/Inland Transit	National Union Fire Ins Co of Pittsburg, PA	3/1/2013- 3/1/2014	Prem	#51764726		Graham
D&O / EPL	National Union Fire Ins Co of Pittsburg, PA	12/31/12- 12/31/13	Prem	#15896195		Wells Fargo
D&O Excess Side A	Federal Insurance Company	12/31/12- 12/31/13	Prem	#82255280		Wells Fargo

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Schedule 6.12(d)

Agreements with Affiliates

This Schedule 6.12(d) does not change and/or modify in any way any limitation set forth in Section 6.9(c) or Section 6.12(e) or (f) of the Agreement.

Letter Agreement, between Colt Defense LLC and Sciens Management LLC, dated as of July 9, 2007.

License Agreement, between Colt Defense LLC and New Colt Holding Corp., dated as of December 19, 2003.

Colt Canada is the exclusive contractor under a license dated February 8, 1984 from Colt Defense LLC to the Crown of Canada for the manufacture sales and support of C-10 Canadian Forces Small Bore Rifle, Colt M16 Rifle, Carbine and various 5.56 mm model configurations, parts and spares to certain foreign governments, as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

Services Agreement—2012, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated July 1, 2012, as amended by Section 8 of Amendment of Commercial Rifle MOU, dated April 26, 2013.

Match Target License Agreement, between Colt’s Manufacturing Company LLC and Colt Defense LLC, dated as of December 19, 2003.

Memorandum of Understanding Regarding Distribution of Colt Law Enforcement and Commercial Rifles, dated May 1, 2011, as amended April 26, 2013.

Amendment of Commercial Rifle MOU, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated April 26, 2013.

Collective Bargaining Agreement, among Colt Defense LLC and Colt’s Manufacturing Company LLC and Amalgamated Local No. 378 and United Automobile, Aerospace, and Agricultural Implement Workers of America – UAW, dated April 1, 2012.

First Amended and Restated Sublease Agreement, between CMC and Colt Defense LLC, dated October 26, 2005, as amended effective October 26, 2012 (See Section 5.11 of Services Agreement—2012) and May 1, 2013 (See Section 8 of Amendment of Commercial Rifle MOU) (Formal sublease not yet documented).

Firearms Licensing Agreement, dated September 28, 1994, between New Colt Holding Corp. and Colt’s Manufacturing Company, Inc.

Amended and Restated Trademark License Agreement, dated April 30, 2002, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

Manufacturing License Agreement, between Colt Canada Corporation and Colt Defense LLC dated as of November 10, 2005, for the Canadian manufacture of automatic and semi-automatic rifles and carbines to .50 caliber inclusive, and 40 mm grenade launchers, as amended by Amendment 1, dated as of March 25, 2008; Amendment 1A, dated as of August 25, 2008; and Amendment 2, dated as of November 11, 2008.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Dennis Veilleux.

Letter Agreement, dated October 11, 2012, between Dennis Veilleux and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Veilleux’s February 29, 2012 change in control agreement, as amended,  (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter and (iii) his October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Joyce Rubino.

Letter Agreement, dated October 11, 2012, between Joyce Rubino and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Ms. Rubino’s February 29, 2012 change in control agreement, as amended,   (ii) the provisions relating to change in control and termination of her employment or severance benefits in her February 15, 2012 amended and restated employment letter and (iii) her October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Jim Tipton.

Letter Agreement, dated October 11, 2012, between Jim Tipton and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Tipton’s February 29, 2012 change in control agreement, as amended,  and (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter.

Employment Agreement, dated May 21, 1998, between Colt’s Manufacturing Company LLC and Carlton S. Chen.

2

Carlton S. Chen claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and is currently the subject of litigation.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Merrick Alpert.

Merrick Alpert claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and  is currently the subject of litigation.

Option Agreement, dated as of July 12, 2013, between Colt’s Manufacturing Company LLC, Colt Archive Properties LLC, Donald E. Zilkha and John P. Rigas.

Services Agreement, dated  as of July 12, 2013, between Colt Defense LLC, Colt Archive Properties LLC, and Colt’s Manufacturing Company LLC.

Letter of Resignation of Donald E. Zilkha, dated July 12, 2013.

Letter of Resignation of William M. Keys, dated July 12, 2013.

Letter of Resignation of John R. Torell III, dated July 12, 2013.

Letter of Resignation of Abraham Klip, dated July 12, 2013.

Letter of Resignation of David Roth, dated July 12, 2013.

Letter of Resignation of Edward L. Koch, dated July 12, 2013.

Letter of Resignation of Donald Young, dated July 12, 2013.

Agreement and Mutual Release, dated February 15, 2013, by and among New Colt Holding Corp., Colt's Manufacturing Company LLC and William M. Keys.

Amended and Restated Agreement and Mutual Release, dated as of July 12, 2013, by and among New Colt Holding Corp., Colt’s Manufacturing Company LLC, William M. Keys and Donald Zilkha and Edward L. Koch III, as Stockholder Representatives under the Merger Agreement.

Assignment and Assumption Agreement, between Colt Defense LLC and Sciens International Holdings 3 Ltd., dated as of June 5, 2013.

Amended and Restated Limited Liability Company Agreement, of Colt Defense LLC dated as of June 12, 2003 reflecting the amendments adopted as of July 9, 2007, August 11, 2011, March 2012, and June 28, 2013.

Limited Liability Company Interests Purchase Agreement, between Colt Defense LLC, Colt Defense Holding III L.P., and the other purchasers thereunder, dated June 13, 2013.

3

Consulting Services Agreement, between Colt Defense LLC and Sciens Institutional Services LLC, dated July 12, 2013.

Net Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 26, 2005.

Amendment of Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 25, 2012.

Employee Leasing Agreement, between Colt Defense LLC and Colt Security LLC, effective January 1, 2009.

Commitment of Colt’s Manufacturing Company LLC to William M. Keys as expressed in minutes of Board Meeting of New Colt Holding Corp. and Colt’s Manufacturing Company LLC on January 11, 2013.

Employment Agreement, dated as of October 4, 2010, between Gerald R. Dinkel and Colt Defense LLC.

Amendment of Employment Agreement, dated as of March 20, 2013 between Gerald R. Dinkel and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Gerald R. Dinkel and Colt Defense LLC.

Employment Agreement, dated as of February 1, 2011, between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between J.  Michael Magouirk and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between George W. Casey Jr. and Colt Defense LLC.

Separation Agreement, between James R. Battaglini and Colt Defense LLC dated as of August 25, 2011.

Engagement Letter, dated as of December 1, 2010 between Leslie S. Striedel and Colt Defense LLC.

Letter agreement, dated as of May 22, 2012 between Leslie S. Whicher and Colt Defense LLC.

Letter agreement, dated as of August 30, 2005, between Jeffrey Grody and Colt Defense LLC.

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Letter agreement, dated as of August 28, 2003, between J. Michael Magouirk and Colt Defense LLC.

Colt Defense LLC Advisory Agreement, between Colt Defense LLC and George W. Casey Jr., dated December 16, 2011.

Solely for disclosure purposes only, Parent pays directors’ fees to members of its Governing Board who are not employees of Parent or Sponsor in the amount of $40,000 per year.   Currently, Gen. George Casey, Lord Guthrie of Craigiebank and Philip Wheeler receive such fees.  All members of the Governing Board recieve reimbursement of reasonable expenses incurred in the performance of their duties as members of the Governing Board.

Limited Liability Company Agreement of Colt’s Manufacturing Company LLC, dated as of June 12, 2003.

Indemnification Agreement, among New Colt Holding Corp., New Colt’s Manufacturing Company, Inc., and Colt Defense LLC, dated as of November 4, 2002.

Non-Disclosure Agreement, between Colt Defense LLC and New Colt Holding Corp. dated August 15, 2012.

Release Agreement, between Sciens Management LLC and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. 2 and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. and William M. Keys, dated February 15, 2013.

Release Agreement, between John P. Rigas and William M. Keys, dated February 15, 2013.

Release Agreement, between Daniel Standen and William M. Keys, dated February 15, 2013.

Release Agreement, between Donald E. Zilkha and William M. Keys, dated February 15, 2013.

Director and Officers Liability Insurance.

Letter Agreement, between New Colt Holding Corp. and William M. Keys, dated July 12, 2013.

Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

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Amendment No. 4

To

Credit Agreement

Annex B

Conditions Subsequent

1.Within 5 Business Days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion) Agent shall have received certificates of insurance, together with the endorsements thereto, as are required by Section 5.6 of the Agreement, the form and substance of which shall be satisfactory to the Agent.

2.Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received Control Agreements, in form and substance satisfactory to Agent, with respect to each Securities Account and Deposit Account of the Loan Parties (other than Excluded Accounts) to the extent required by, or otherwise delivered pursuant to, the Loan Documents by and among ABL Agent, Term Loan Agent, each applicable Loan Party and the applicable depository bank or securities intermediary.

3.Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received credit card acknowledgments with respect to each credit card agreement with each of the Loan Parties’ credit card processors to the extent delivered pursuant to the Loan Documents.

4.Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received a Collateral Access Agreement with respect to each of the following locations: (i) 1099 Shady Lane, Kissimee, FL 34744, and (ii) 1660 Tech Avenue, Unit 4, Mississauga, Ontario, Canada.

EX-10.3

Exhibit 10.3

LIMITED LIABILITY COMPANY INTERESTS PURCHASE AGREEMENT

LIMITED LIABILITY COMPANY INTERESTS PURCHASE AGREEMENT (the “Agreement”), dated as of July 12, 2013, by and between Colt Defense LLC, a Delaware limited liability company (the “Company”), and the investors listed on the Schedule of Buyers attached as Schedule I hereto (individually, a “Buyer” and collectively, the “Buyers”).

WHEREAS:

A. The Company and each Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Units and Exchange Commission (the “SEC”) under the 1933 Act.

B. The Company has authorized the issuance of 31,165.589 voting limited liability common units (the “Offered Units”) plus an additional amount equal up to 17,314.218 voting limited liability common units pursuant to Section 5 of this Agreement.

C. Each Buyer wishes to purchase, severally but not jointly, and the Company wishes to sell, upon the terms and conditions stated in this Agreement that aggregate amount of Offered Units set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price” (which aggregate purchase price for all Buyers shall be $9,000,000.00).

NOW, THEREFORE, the Company and each Buyer (with respect only to itself) hereby agree as follows:

1.   PURCHASE AND SALE OF OFFERED UNITS.

(a)Purchase of Offered Units. Subject to the satisfaction (or waiver) of the conditions set forth in Section 6 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), an amount of Offered Units as is set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price”.

(b)Subscription and Closing.  The closing of the purchase of the Offered Units (the “Closing”) and the payment of the Purchase Price (as defined below) shall occur on the Closing Date (as defined below) at the offices of Sciens Capital Management LLC, 667 Madison Avenue, New York, New York 10065. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City Time, on the business day immediately following notification from the Company of satisfaction (or waiver) of the conditions to the Closing set forth in Section 6 below or on a date to be mutually agreed to by the Company and each Buyer.

(c)Purchase Price. The purchase price for each Buyer (the “Purchase Price”) of the Offered Units to be purchased by each such Buyer at the Closing shall be equal to $288.78 per Offered Unit being purchased by such Buyer at the Closing.

(d)Subscription Deliveries. At the Closing, (i) each Buyer shall pay its Purchase Price (as set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price”) for the Offered Units to be issued and sold to such Buyer, by wire transfer of immediately available funds to the Company and shall deliver to the Company its signature page to the LLC Agreement; and (ii) the Company shall deliver to such Buyer the certificates for the Offered Units, duly executed on behalf of the Company, dated as of the Closing Date, and registered in the name of such Buyer or its designee.

2.   BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer represents and warrants with respect to only itself that:

(a)No Public Sale or Distribution. Such Buyer is acquiring the Offered Units for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that subject to the terms of the LLC Agreement such Buyer does not agree to hold any of the Offered Units for any minimum or other specific term and reserves the right to dispose of the Offered Units at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Offered Units hereunder in the ordinary course of its business. Such Buyer presently does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Offered Units. Such Buyer acknowledges that the Offered Units are subject to the restrictions on transfer provided for in the LLC Agreement. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and/or a government or any department or agency thereof.

(b)Accredited Investor Status. Such Buyer is an “accredited investor” (as that term is defined in Rule 501(a) of Regulation D). Such Buyer, taking into account the personnel and resources it can practically bring to bear on the purchase of the Offered Units contemplated hereby, is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in debt and equity securities presenting an investment decision like that involved in the purchase of the Offered Units. Such Buyer is able to bear the economic risk of an investment in the Offered Units.

(c)Reliance on Exemptions. Such Buyer understands that the Offered Units are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Offered Units.

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(d)Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Offered Units which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands that its investment in the Offered Units involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Offered Units. Such Buyer has, in connection with its decision to purchase the Offered Units, relied solely upon the representations and warranties contained in the Transaction Documents (as defined below).

(e)Legends. Such Buyer understands that the certificates or other instruments representing the Offered Units have not been registered under the 1933 Act, the unit certificates representing such units, except as set forth below, may bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

THE TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE, AND THE RIGHTS OF THE HOLDER HEREOF, ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 12, 2003, AS AMENDED AS OF JULY 9, 2007, AND AS FURTHER AMENDED THEREAFTER (A COPY OF WHICH IS ON FILE WITH THE COMPANY), AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO TIME, AND NO TRANSFER OF THE UNITS REPRESENTED HEREBY OR OF UNITS ISSUED IN EXCHANGE THEREOF SHALL BE VALID OR EFFECTIVE UNLESS THE TERMS AND CONDITIONS OF SUCH AGREEMENT HAVE BEEN FULFILLED

The first legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Offered Units upon which it is stamped, if, unless otherwise required by state securities laws, (i) upon transfer such Offered Units are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel reasonably acceptable to the Company, in a form reasonably acceptable to the Company, to the effect that such legend is not required under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Offered Units can be sold, assigned or transferred pursuant to Rule 144.

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(f)Validity; Enforcement. This Agreement and each of the other Transaction Documents to which such Buyer is a party has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer, enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except that the indemnification provisions under the Transaction Documents may further be limited by principles of public policy.

(g)No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and each of the other Transaction Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clause (ii) above, for such conflicts, defaults, rights or violations which, individually or in the aggregate, have not had, and would not reasonably be expected to have, a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

(h)Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.

3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to each of the Buyers as follows:

(a)Subsidiaries.  As of the date hereof, the Company has no directly or indirectly wholly-owned Subsidiaries other than as set forth on Schedule2 (collectively, the “Subsidiaries”). The Company owns, directly or indirectly, the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien (as defined in Section 3(f) below) other than as set forth on Schedule 2 and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

(b)Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the

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business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, do not and could not, individually or in the aggregate, (i) materially adversely affect the legality, validity or enforceability of any of the material provisions of the Transaction Document, (ii) reasonably be expected to have or result in a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole on a consolidated basis, or (iii) materially adversely impair the Company’s or any of the Subsidiary’s ability to perform fully on a timely basis its material obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”). For purposes of this Agreement, “Transaction Documents” means, collectively, this Agreement, the Limited Liability Company Agreement of Colt Defense LLC, dated as of June 12, 2003, as amended (the “LLC Agreement”), the Offered Units, a Joinder to the LLC Agreement and each of the other documents entered into or delivered by the parties hereto in connection with the transactions contemplated by this Agreement.

(c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and each Subsidiary and no further consent or action is required by the Company and each Subsidiary, its Board of Directors or its stockholders. Each of the Transaction Documents has been (or, if executed after the date hereof, upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except that the indemnification provisions under the Transaction Documents may further be limited by principles of public policy.

(d)No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Offered Units, do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation or formation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a debt of the Company or a Subsidiary or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except to the extent that such conflict, default or termination right has not had, and could not reasonably be expected to have, a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject, or by which any property or asset of the Company or a Subsidiary is bound or affected, except to the extent that such violation has not had, and could not reasonably be expected to have, a Material Adverse Effect.

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(e)Consents. Except those that have been obtained prior to or on the date hereof, neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for the Company to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any of its Subsidiaries is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date. The Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the foregoing.

(f)Issuance of the Offered Units. The Offered Units are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable (if applicable), free and clear of all liens, charges, claims, security interests, encumbrances, rights of first refusal that have not been waived, or other restrictions (“Liens”) and shall not be subject to preemptive rights or similar rights of unitholders.

(g)Capitalization. Immediately prior to the transactions contemplated hereunder, the capital stock of the Company consists of 101,008.337 voting common units (the “Units”), in each case issued and outstanding.  All outstanding Units are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Except for options exercisable for 10,611 non-voting Units as of the date hereof, and outstanding commitments to issue an additional 1,300 non-voting Units, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Units, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Units, or securities or rights convertible or exchangeable into Units. The issue and sale of the Offered Units will not obligate the Company to issue Units or other securities to any Person (other than the Buyers) and will not result in a right of any holder of securities of the Company to adjust the exercise, conversion, exchange or reset price under such securities.

(h)Financial Statements.  The consolidated audited financial statements of the Company for the year ended December 31, 2012 (the “Balance Sheet Date”) and the unaudited quarterly financial statements for the quarter ended March 31, 2013 have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended.

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(i)Material Changes. Since the Balance Sheet Date, (A) there has been no event, occurrence or development that, individually or in the aggregate, has resulted in, or that could reasonably be expected to result in, a Material Adverse Effect, (B) the Company has not incurred any material liabilities (contingent or otherwise) other than (1) transactions in the ordinary course of business consistent with past practice and (2) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP, (C) the Company has not altered its method of accounting or the identity of its auditors, (D) except as set forth on Schedule 2, the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (E) the Company has not sold any assets, individually or in the aggregate, in excess of $5,000,000 and (F) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans.

(j)Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that, individually or in the aggregate, has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

(k)Compliance.  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator, governmental body or exchange or automated quotation system on which any of the securities of the Company are listed or designated, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as, individually or in the aggregate, has not had or resulted in, or could not reasonably be expected to have or result in, a Material Adverse Effect.

(l)Title to Assets. The Company and the Subsidiaries do not own real property, other than real estate owned by Colt Canada Corporation in Kitchener, Ontario, Canada and have good and marketable title to all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth on Schedule 2 and except for Liens that do not materially affect the value of such property, do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and, individually or in the aggregate, has not had or resulted in, and could not reasonably be expected to have or result in, a Material Adverse Effect. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance except, in each case, as do not result in, and could not reasonably be expected to result in, a Material Adverse Effect.

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(m)Certain Fees.  Other than such fees as are referenced in Section 4(c)(2) below, no brokerage or finder’s fees or commissions or any other payment, whether in the form of cash, securities or other consideration, or any combination of the foregoing, are or will be payable, directly or indirectly, by the Company, any Subsidiary or any Affiliate thereof to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person directly or indirectly with respect to the transactions contemplated by this Agreement or any of the other Transaction Documents, and the Company has not taken any action that would cause any Buyer to be liable for any such fees or commissions pursuant to any agreement or arrangement to which the Company is or may become a party. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any claim against any Buyer relating to a breach of this representation.

(n)Private Placement. Neither the Company nor any Person acting on the Company’s behalf has sold or offered to sell or solicited any offer to buy the Offered Units by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates (as defined under the 1933 Act) nor any person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security of the Company under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale by the Company of the Offered Units as contemplated hereby . None of the Company, its Subsidiaries, their Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require the registration of any of the Offered Units under the 1933 Act . The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  Assuming the accuracy of the representations and warranties of each Buyer made in Section 2, no consent, license, permit, waiver approval or authorization of, or designation, declaration, registration or filing with, the SEC or any state securities regulatory authority is required in connection with the offer, sale, issuance or delivery of the Offered Units, other than the possible filing of a Form D with the SEC and filings with applicable state securities agencies.

(o)Intellectual Property. To the knowledge of the Company, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with each of such companies operations as currently conducted and which the failure to so has had, or could reasonably be expected to have, a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person in each case except as does not result in, and could not reasonably be expected to result in, a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights, in each case except as does not result in, and could not reasonably be expected to result in, a Material Adverse Effect.

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(p)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits, individually or in the aggregate, has not had or resulted in, and could not reasonably be expected to have or result in, a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit except as has not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect.

(q)Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are consistent with the Company’s past practices. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

(r)Tax Status. The Company and each of the Subsidiaries (i) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction.

4.   COVENANTS.

(a)Form D and Blue Sky. The Company agrees to file a Form D with respect to the Offered Units as required under Regulation D and, if requested, to provide a copy thereof to each Buyer promptly after such filing. The Company shall make all filings and reports relating to the offer and sale of the Offered Units required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.

(b)Use of Proceeds. The Company will use the proceeds from the sale of the Offered Units for general working capital purposes.

(c)Fees and Expenses.

(i)   At or subsequent to the Closing upon submission of an invoice, the Company shall reimburse Colt Defense Holding III L.P. for its fees and expenses, including, without limitation, its legal fees.

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(ii)    The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions relating to or arising out of the transactions contemplated hereby for placement agents, financial advisors or brokers engaged by the Company or its Affiliates or agents. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Offered Units to the Buyers.

(d)Pledge of Offered Units. Subject to the terms of the LLC Agreement, the Company acknowledges and agrees that the Offered Units may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Offered Units. The pledge of Offered Units shall not be deemed to be a transfer, sale, assignment or other disposition of the Offered Units hereunder, and no Buyer effecting a pledge of Offered Units shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, except as may be required by the LLC Agreement.. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Offered Units may reasonably request in connection with a pledge of the Offered Units to such pledgee by a Buyer.

5.Option.  Until December 31, 2013, Colt Defense Holding III L.P. shall have the option to purchase up to 17,314.218 additional Common Units (in whole or in part and from time to time) on the same terms and conditions as are set forth in this Agreement by executing and delivering to the Company a unit purchase agreement substantially in the form of this Agreement.

6.   CONDITIONS TO SUBSCRIPTION.

(a)Conditions to the Company’s Obligations. The obligation of the Company hereunder to issue at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

(i)   Each of the Buyers shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

(ii)   Each of the Buyers shall have delivered the Purchase Price for the Offered Units being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

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(b)Conditions to each Buyer’s Obligation. The obligation of each Buyer hereunder to pay its Purchase Price at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

(i)   The Company shall have executed and delivered (A) to such Buyer each of the Transaction Documents and (B) the Offered Units which are being purchased by such Buyer at the Closing pursuant to this Agreement, which Units shall be dated as of the Closing Date.

(ii)   The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Offered Units.

(iii)   The consummation of the acquisition set forth on Schedule 1shall have closed simultaneously with the transactions contemplated by this Agreement.

7.   MISCELLANEOUS.

(a)Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(b)Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. \

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(c)Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

(d)Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

(e)Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of the Offered Units representing at least a majority of the Offered Units, or, if prior to the Closing Date, the Company and the Buyers listed on the Schedule of Buyers as being obligated to purchase at least a majority of the Offered Units. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Offered Units then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents or holders of the Offered Units, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents.

(f)Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company by mail or facsimile:

Colt Defense LLC

P.O. Box 118

Hartford, CT 06141

Facsimile: (860) 244-1442

Attention: General Counsel

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If to the Company by courier:

Colt Defense LLC

547 New Park Avenue

West Hartford, CT 06110

Attention: General Counsel

If to a Buyer, to its address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party fifteen (15) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

(g)Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Offered Units. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of Offered Units representing at least a majority of the Offered Units then outstanding, including by merger or consolidation. A Buyer may assign, without the consent of the Company, some or all of its rights hereunder to any Person to whom such Buyer assigns or transfers Offered Units, or the right to acquire Offered Units, in accordance herewith; provided, such transferee agrees in writing to be bound with respect to the transferred Offered Units to the provisions hereof that apply to the transferring Buyer, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights. A purported assignment in violation of this Agreement shall be void.

(h)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 hereof be enforced by, any other Person.

(i)Survival. The representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4 and 7 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

(j)Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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(k)Indemnification.

(i)   In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Units hereunder and thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Offered Units and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Buyer Indemnified Liabilities”), incurred by any Buyer Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or (c) any cause of action, suit or claim brought or made against such Buyer Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) other than those arising from or resulting from a misrepresentation or breach of any representation or warranty made by such Buyer Indemnitee contained in the Transaction Documents or a breach of any covenant, agreement, obligation or applicable law by such Buyer Indemnitee contained in the Transaction Documents, the execution, delivery, performance or enforcement of the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Offered Units, or (iii) other than those arising from or resulting from a misrepresentation or breach of any representation or warranty made by such Buyer Indemnitee contained in the Transaction Documents or a breach of any covenant, agreement,  obligation or applicable law by such Buyer Indemnitee contained in the Transaction Documents, the status of such Buyer or holder of the Offered Units as an investor in the Company.  Notwithstanding the foregoing, the Company shall not be liable for any indemnification to a Buyer Indemnitee to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense (i) results from such Buyer Indemnitee’s violation of law, gross negligence, bad faith conduct, willful misconduct or breach of this Agreement or any other Transaction Document, or (ii) is brought against such Buyer Indemnitee by a third party transferee of any of the Offered Units purchased hereunder, and is based upon or arises out of the Buyer Indemnitee’s conduct in connection with such transfer.

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(ii)   To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

(l)No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

(m)Remedies. Each Buyer and each holder of the Offered Units shall have all rights and remedies set forth in the Transaction Documents, in addition to and not in lieu of all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of any of the Transaction Documents shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of any of the Transaction Documents and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under any of the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

(n)Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.

(o)Knowledge. For purposes of this Agreement, the terms “knowledge of the Company” or “the Company’s knowledge” means the actual knowledge of the chief executive, chief financial and chief legal officers of the Company.

[Signature Pages Follow]

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IN WITNESS WHEREOF, each Buyer and the Company has caused their respective signature page to this Agreement to be duly executed as of the date first written above.

COMPANY:

COLT DEFENSE LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and CEO

IN WITNESS WHEREOF, each Buyer and the Company has caused their respective signature page to this Agreement to be duly executed as of the date first written above.

BUYER:

COLT DEFENSE HOLDING III L.P.

By: COLT DEFENSE HOLDING III

GP LLC, its general partner

By:  /s/ Daniel Standen

      Name:  Daniel Standen

BUYER:  Colt Defense Employee Plan

Holding Corporation

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

BUYER:

By:  /s/ Richard Nadeau

       Name:  Richard Nadeau

BUYER:

By:  /s/ Michael P. Reissig

       Name:  Michael P. Reissig

BUYER:

By:  /s/ John M. Magouirk

       Name:  John M. Magouirk

BUYER:

By:  /s/ John B. Ibbotson

       Name:  John B. Ibbotson

BUYER:

By:  /s/ Z. Clifton Dameron IV

       Name:  Z. Clifton Dameron IV

BUYER:

By:  /s/ Alexander Loucopoulos

       Name:  Alexander Loucopoulos

BUYER:

By:  /s/ Glen R. Johnson

       Name:  Glen R. Johnson

BUYER:

By:  /s/ Carlton S. Chen

       Name:  Carlton S. Chen

Schedule I

Schedule of Buyers

Buyer	Address	Purchase Price		Numbered of Offered Units
Colt Defense Holding III L.P.	c/o Sciens Capital Management LLC 667 Madison Avenue New York, New York 10065	$	8,729,296.42		30,228.186
Colt Defense Employee Plan Holding Corporation	P.O. Box 118 Hartford, Connecticut 06141	$	107,343.58		371.714
Richard Nadeau	1910 Ballycor Drive Vienna, Virginia 22182	$	48,108.16		166.591
Michael P. Reissig	56 Old King Street Enfield, Connecticut 06082	$	37,400.02		129.510
John M. Magourik	16 Farmbrook Drive Tolland, Connecticut 06084	$	20,958.02		72.574
John B. Ibbotson	14 Alger Road Moodus, Connecticut 06469	$	20,958.02		72.574
Z. Clifton Dameron IV	Sciens Capital Management LLC 667 Madison Avenue New York, New York 10065	$	15,016.56		52.000
Alexander Loucopoulos	Sciens Capital Management LLC 667 Madison Avenue New York, New York 10065	$	12,706.32		44.000
Glen R. Johnson	361 Polynesia Court Marco Island, Florida 34145	$	7,924.12		27.440
Carlton S. Chen	648 Nod Hill Road Wilton, Connecticut 06897-1305	$	288.78		1.000

I-1

Schedule 1

The acquisition of New Colt Holding Corp. by the Company.

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Schedule 2

Directly and Indirectly Wholly Owned Subsidiaries of Colt Defense LLC

Colt Canada Corporation

Colt Finance Corp.

Colt Defense Technical Services LLC

Colt International Coöperatief U.A.

Liens

All or portions of the stock, membership interests and assets of the above Subsidiaries are subject to Liens in favor of Wells Fargo Capital Finance, LLC, as agent.

All or substantially all of the assets of Colt Defense LLC are subject to Liens in favor of Wells Fargo Capital Finance, LLC, as agent.

Distributions / Redemptions

The Company purchased all of the Units held by Blackstone Mezzanine Partners II-A L.P. and Blackstone Mezzanine Holdings II USS L.P. on March 22, 2013

The Company made a tax distribution to holders of Units in the aggregate amount of $1,356,645 pursuant to Section 8.2 of the LLC Agreement, on June 11, 2013.

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EX-10.4

Exhibit 10.4

CONSULTING SERVICES AGREEMENT

This Consulting Services Agreement (“Agreement”), dated July 12, 2013, is by and between SCIENS INSTITUTIONAL SERVICES LLC, a Delaware limited liability company (“Provider”), andCOLT DEFENSE LLC, a Delaware limited liability company (“Company”).

RECITALS:

WHEREAS, Provider has the capability of performing and the expertise to perform, certain consulting and other services for and on behalf of Company in connection with the business of the Company;

WHEREAS, Company is in need of such consulting and other services and does not have the capability, resources and expertise necessary to perform all of such services for itself; and

WHEREAS, Company desires to engage Provider, and Provider desires to be engaged by Company to perform certain consulting and other services in connection with the business of the Company.

NOW, THEREFORE, in consideration of the promises and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

Consulting Services To Be Provided

1.1           Consulting Services.  Provider shall provide the consulting services set forth on Schedule A and such other services as the parties hereto may from time to time agree (the “Consulting Services”).

1.2           Use of Independent Contractors.  Provider will provide Consulting Services either through its own resources or by contracting with third-party independent contractors.  If, when and to the extent that Provider decides to provide a Consulting Service through a third-party independent contractor, Provider shall consult with and obtain the Company’s approval, which approval shall not be unreasonably withheld or conditioned or unduly delayed.  Provider shall at all times remain fully liable for the performance by any third-party independent contractor retained by it.

1.3           Relationship Between Provider and Company.  The relationship between Provider and Company established by this Agreement and Provider’s performance hereunder shall be that of an independent contractor and not one of employee and employer, co-employer, joint employer, partner, joint venturer or alter ego.  Company agrees that it will have no right to control or direct the details, manner or means by which Provider, Provider’s employees or Provider’s contractors perform Consulting Services.  Provider shall be solely responsible for training, instructing and compensating its employees and contractors who perform Consulting Services, including, without limitation, paying their wages, salaries or fees, providing their benefits and the withholding of any and all taxes.  It is understood and agreed that Provider personnel performing Consulting Services will meet the job or position qualifications normally required of a person performing the particular or comparable service for Provider’s own internal operations.

ARTICLE II

Compensation for Consulting Services

2.1           Billings.                      The fee for the Consulting Services shall be equal to $650,000 per annum, payable quarterly in advance.

2.2           Taxes.  Provider shall be responsible for reporting all of its federal income and state income/franchise taxes, and filing all related federal and state income/franchise tax returns with governmental entities related to providing Consulting Services.

2.3           Expenses.  In addition to any fees that may be payable to Provider hereunder, the Company hereby agrees, from time to time upon request, to reimburse Provider for all reasonable expenses, disbursements, travel and other out-of-pocket expenses incurred in connection with the Consulting Services.

ARTICLE III

Information/Cooperation

3.1           Information Regarding Consulting Services.  Provider and Company shall each make available to the other party any information required or reasonably requested by that other party regarding the performance of Consulting Services and shall be responsible for timely providing that information and for the accuracy and completeness of that information.  Provider shall not be liable for any impairment of the Consulting Services caused by its not receiving information, either timely or at all, or by its receiving inaccurate or incomplete information from Company that is required or reasonably requested regarding the Consulting Services.

3.2           Cooperation.                                 Provider and Company will use good faith efforts to cooperate with each other in all matters relating to the provision and receipt of Consulting Services.  Provider and Company will cooperate with each other in making information available as needed in the event of any and all internal or external audits.  If this Agreement is terminated in whole or in part, the parties will cooperate with each other in all reasonable respects in order to effect an efficient transition to minimize the disruption to the business of both parties, including the assignment or transfer of the rights and obligations under any contracts to the extent assignable or transferable.

3.3           Further Assistance.  Provider and Company shall each take such actions, upon request of the other party and in addition to the actions specified in this Agreement, as may be necessary or reasonably appropriate to implement or give effect to this Agreement.

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ARTICLE IV

Confidential Information

4.1           Definition.                      For the purposes of this Agreement, “Confidential Information” means non-public information about the disclosing party’s or any of its affiliates’ business or activities that is proprietary and confidential, which shall include, without limitation, all business, financial, technical and other information, including software (source and object code) and programming code, of a party or its affiliates marked or designated “confidential” or “proprietary” or by its nature or the circumstances surrounding its disclosure should reasonably be regarded as confidential.  Confidential Information includes not only written or other tangible information, but also information transferred orally, visually, electronically or by any other means.  Confidential Information will not include information that (i) is in or enters the public domain without breach of this Agreement, or (ii) the receiving party lawfully receives from a third party without restriction on disclosure and to the receiving party’s knowledge without breach of a nondisclosure obligation.

4.2           Nondisclosure.  Provider and Company each agree that (i) it will not disclose to any third party (except a third party which is an affiliate of either party) or use any Confidential Information disclosed to it by the other except as expressly permitted in this Agreement, and (ii) it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar type and importance.

4.3           Permitted Disclosure.  Notwithstanding the foregoing, Provider and Company may disclose Confidential Information (i) to the extent required by a court of competent jurisdiction or other governmental authority or otherwise as required by law, including, without limitation, to disclosure obligations imposed under the federal securities laws, provided that such party has given the other party prior notice of such requirement when legally permissible to permit the other party to take such legal action to prevent the disclosure as it deems reasonable, appropriate or necessary, or (ii) on a “need-to-know” basis, under a written obligation of confidentiality that contains customary restrictions to prevent unlawful trading in the Company’s securities on the basis of Confidential Information, to its consultants, legal counsel, affiliates, accountants, banks and other financing sources and their advisors.

4.4           Ownership of Confidential Information.  All Confidential Information supplied or developed by either party shall be and remain the sole and exclusive property of the party who supplied or developed it.

ARTICLE V

Amendment; Term; Termination

5.1           Amendment.  This Agreement, including the quarterly fee amounts, may be amended from time to time by written agreement of the parties.

5.2           Term.            This Agreement shall commence on the date hereof and, unless otherwise extended pursuant this Section 5.2, shall terminate on the earlier of (x) the seventh anniversary of the date hereof (the “Term”) or (y) the occurrence of a Capital Transaction (as defined below).  Upon a Capital Transaction prior to the end of the any applicable Term, the Company shall pay

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Provider the higher of (x) $650,000 and (y) the amount payable by the Company for the remainder of the Term (not to exceed two years) assuming the Capital Transaction had not occurred exclusively for the early termination of this Agreement plus expenses.  For purposes of the foregoing, a Capital Transaction means any of (1) the sale or other disposition of all or substantially all of the assets of the Company, (2) a merger, consolidation, stock exchange, stock issuance or other sale of stock transaction as a result of which the shareholders (or their equivalent) immediately prior to such transaction hold 50% or less of the stock (or its equivalent) of the Company (or the successor thereto) by vote or by equitable interest, (3) an initial public primary offering for stock of the Company (or any successor thereto) or (4) dissolution or liquidation of the Company (or any successor thereto). Upon the seventh anniversary of the date hereof, and at the end of each year thereafter (each of such seventh anniversary and the end of each year thereafter being a “Year End”), the Term shall automatically be extended for an additional year unless notice to the contrary is given by the Company at least 120, but no more than 180, days prior to such Year End, as applicable.  The provisions of Section 6.1, and the obligation to pay any accrued fees or expenses payable pursuant to Article II hereof shall survive the termination of this Agreement (fees shall for purposes of any mid-year termination of this Agreement be deemed to have accrued on a monthly basis).  Provider may terminate this Agreement at any time upon 90 days prior written notice.

ARTICLE VI

Indemnification

6.1           Company Indemnification.  The Company shall indemnify and hold harmless Provider and each of its Related Parties (as defined below) (each, an “Indemnified Party”) from and against any and all losses, claims, actions, damages and liabilities, joint or several, to which such Indemnified Party may become subject under any applicable statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment or decree, made by any third party or otherwise, relating to or arising out of the Consulting Services or other matters referred to in or contemplated by this Agreement or the performance by such Indemnified Party of the Consulting Services or other matters referred to or contemplated by this Agreement, and the Company will reimburse any Indemnified Party for all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatening claim, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability, cost or expense is determined by a court, in a final judgment from which no further appeal may be taken, to have resulted from the gross negligence or willful misconduct of such Indemnified Party. The reimbursement and indemnity obligations of the Company, under this Section 6 shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any affiliate of Provider and any Related Party or controlling persons (if any), as the case may be, of Provider and any such affiliate and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Provider, any such affiliate and any such Related Party or other person.

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6.2           Limitation of Liability.  Neither Provider nor any of its officers, directors, managers, principals, stockholders, partners, members, employees, agents, representatives and affiliates (each a “Related Party” and, collectively, the “Related Parties”) shall be liable to the Company or any of its affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of any Consulting Services contemplated by this Agreement, unless such loss, liability, damage or expense shall be proven to result directly from the gross negligence or willful misconduct of such person. In no event will Provider or any of its Related Parties be liable to the Company for special, indirect, punitive or consequential damages, including, without limitation, loss of profits or lost business, even if Provider has been advised of the possibility of such damages. Under no circumstances will the liability of Provider and Related Parties hereunder relating to the provision of the applicable Consulting Services exceed, in the aggregate, the fees actually paid to Provider hereunder during the applicable year.

6.3           Survival.  The terms of this Article shall survive the termination of this Agreement.

ARTICLE VII

Arbitration

7.1           Disputes.  All disputes among the parties relating to or in connection with this Agreement, including, but not limited to, its interpretation, performance or breach, shall be submitted to binding confidential arbitration as described in this Article.

7.2           Notice; Selection of Arbitrators.  A party initiating arbitration shall provide notice of its demand for arbitration.  The parties shall have 45 days from receipt of such demand for arbitration in which to appoint a sole mutually acceptable arbitrator.  If the parties fail to appoint its arbitrator within such 45 days, the initiating party shall request that that American Arbitration Association appoint an arbitrator, which appointment shall be final.

7.3           Submission of Case.  A party shall submit its case to the arbitrator (the “Panel”) within one month from the date of the appointment of the arbitrator, but this period of time may be extended by written consent of the Panel.

7.4           Decision.  The Panel shall make its decision with regard to the custom and usage of Company’s business.  The written decision of the Panel shall be rendered within 60 days following the termination of the Panel’s hearings, unless the Parties consent to an extension.  Such decision of the Panel shall be final and binding upon the Parties both as to law and fact, and may not be appealed to any court of any jurisdiction.  Judgment may be entered upon the final decision of the Panel in any court of proper jurisdiction.

7.5           Fees and Expenses.  The Panel shall award to the prevailing party its costs and attorneys’ fees as well as the fees and expenses of the arbitrators.

7.6           Location.  Any arbitration pursuant to this Article shall be conducted in New York, New York, unless otherwise agreed in writing by the parties; provided, however, that the Panel may choose to take evidence and/or convene a hearing in a place other than New York, New York for the convenience of the parties, the witnesses or the Panel.

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ARTICLE VIII

Miscellaneous

8.1           Entire Agreement.  This Agreement, including Schedule A attached hereto, constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof.  For the avoidance of doubt, this Agreement does not supersede that certain Management Services Agreement, dated as of July 7, 2007, between the Company and Sciens Management LLC.

8.2           Waiver.  At any time the parties by written agreement may waive compliance with any of the provisions of this Agreement.

8.3           Governing Law.  This Agreement shall be construed and interpreted according to the laws of the State of New York without regard to the conflicts of Law rules thereof.

8.4           Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

8.5           Notices.  All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by messenger or by overnight delivery service, or within five days of being mailed by registered or certified United States mail, postage prepaid, return receipt requested, in all cases addressed to the person for whom it is intended at his address set forth below or to such other address as a party shall have designated by notice in writing to the other party in the manner provided by this Section 8.5:

If to Provider:	Sciens Institutional Consulting Services LLC 667 Madison Avenue New York, NY 10065 Attention: John P. Rigas
If to Company:	Colt Defense LLC 547 Park Avenue Hartford, CT 06110 Attention: Chief Executive Officer

8.6           Counterparts; Headings.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement.  The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

8.7           Severability.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

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8.8.           No Reliance.  Except for Related Parties, no third party is entitled to rely on any of the provisions of this Agreement and neither Provider nor Company assumes any liability to any third party because of any reliance on the provisions of this Agreement.

8.9           No Strict Construction. The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

8.10           Warranty Disclaimer.  PROVIDER MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING WITHOUT LIMITATION, THE WARRANTIES IMPLIED BY LAW OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, REGARDING THIS AGREEMENT, THE PERFORMANCE OF THE CONSULTING SERVICES CONTEMPLATED BY THIS AGREEMENT OR ANY TANGIBLE PROPERTY DELIVERED BY PROVIDER PURSUANT TO THIS AGREEMENT.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.

Sciens Institutional Consulting Services LLC

By:  /s/ Z. Clifton Dameron

       Name:  Z. Clifton Dameron

       Its:       Authorized Signatory

Colt Defense LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Its:       President and Chief Executive Officer

[SIGNATURE PAGE TO CONSULTING AGREEMENT]

SCHEDULE A

Consulting Services shall be comprised of the following (without limitation):

General:

(1) general corporate support, and (2) other consulting services conducted in the ordinary course consistent with past practice.

Legal Consulting:

General legal consulting with respect to: (1) mergers, acquisitions and joint ventures, (2) capital markets transactions, (3) borrowing for indebtedness, (4) litigation, (5) compensation arrangements and policies of the Company, including senior management and (6) coordination with, and selection of, counsel to the Company in connection with the foregoing

Financial:

General financial consulting with respect to (1) financial analysis of the Company’s results of operations and projections and (2) financial modeling of different financial scenarios and/or events

Management:

General consulting with respect to (1) compensation policies of the Company, including long term retention compensation, including option and other equity plans of the Company, (2) compensation of senior management of the Company, (3) compensation arrangements with senior management of the Company, (4) number and individuals serving as directors of the Company, (5) selecting and hiring senior executives of the Company, including the CEO, CFO and GC, (6) the management activities and evaluation of performance of senior management of the Company (including recommending and providing an Executive Chairman of the Company) and (7) selection and retention of advisors in connection with the foregoing.

Tax:

General tax consulting with respect to: (1) internal tax policies of the Company with regards to the corporate structure of Colt Defense and its subsidiaries, including mergers, acquisitions and joint ventures, (2) tax distribution policies of the Company, including consultation with the Company’s tax advisors regarding the tax distribution calculation and amounts, (3) coordination with, and selection of, legal and accounting tax advisors to implement the foregoing and (4) general tax planning of the Company.

EX-10.5

Exhibit 10.5

EXECUTION VERSION

OPTION AGREEMENT

This Option Agreement(this “Agreement”), is made and entered into as of July 12, 2013 (the “Effective Date”), by and among Colt’s Manufacturing Company LLC, a Delaware limited liability company (“Optionholder”), Colt Archive Properties LLC, a Delaware limited liability company (the "Company"), Donald E. Zilkha (“Zilkha”) and John P. Rigas (“Rigas” and, together with Zilkha, the “Owners”).

WHEREAS, the Owners together hold 100% of the membership interests in the Company (the “Interests”); and

WHEREAS, the Owners desire to grant to Optionholder, and Optionholder desires to receive from the Owners, an option to purchase the Interests, in accordance with the terms and conditions hereof.

NOW, THEREFORE, in consideration of the above recitals and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties hereby agree as follows:

Article 1

Grant of Option

1.1           Grant of Option.  The Owners hereby grant to Optionholder an option to purchase (the “Option”) the Interests for the Purchase Price (as defined herein) during the Option Period (as defined herein), upon sixty (60) days prior written notice to the Owners thereof, and in accordance with the additional terms and conditions contained herein.

1.2           Purchase Price.  The purchase price for the Interests, in the aggregate (the “Purchase Price”), shall be equal to (i) $5,000,000 or (ii) if the product of (x) 11.1 and (y) the LTM Pre-Tax Revenues of the Company (the “Product”) is greater than $5,000,000, the sum of $5,000,000 plus 50% of the amount by which the Product exceeds $5,000,000.  For purposes of the foregoing, “LTM Pre-Tax Revenues of the Company” shall mean an amount equal to the aggregate revenues of the Company as reflected on the Company’s monthly financial statements for the twelve months immediately preceding the date of calculation; in any case before giving effect to any taxes payable by the Company or the Owners.

Article 2

Option Terms

2.1           Option Period.  Purchaser may exercise the Option at any time from and after the date hereof until 5:00 p.m. EST on July 9, 2015 (the “Option Period”), at which time the Option shall terminate.

2.2           Termination; Exercise.   Optionholder may terminate this Agreement at any time for any reason or no reason upon sixty (60) days prior written notice to the Owners.  Optionholder may exercise the Option by providing the Owners with written notice of such exercise at any time during the Option Period.   If the Option is not exercised by Optionholder during the Option Period, then this Agreement shall be null and void and of no further force and effect.

2.3           Closing.  The closing of the purchase of the Interests as contemplated hereunder and payment of the Purchase Price (the “Closing”) shall take place at a time, place and date designated by Optionholder by written notice to the Owners not less than thirty (30) days prior to said Closing, and which date for the Closing shall be not more than sixty (60) days after the date of the exercise of the Option by Optionholder, which 60-day period shall be extended, if delay in Closing occurs as a result of material acts or omissions of the Owners, by any such delayed period (the “Conclusion Date”).  In the event that the Closing does not occur by the Conclusion Date, this Agreement shall immediately terminate.

 Article 3

Representations and Warranties

3.1           Optionholder.  Optionholder hereby represents and warrants to the Company and the Owners as follows:

(a)Corporate Organization.  Optionholder is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Delaware.  Optionholder has all necessary power and authority to operate its business, and Optionholder holds all permits, licenses, orders and approvals of all federal, state and local governmental or regulatory bodies necessary and required therefor.

(b)Authority for Transaction.  The execution and delivery of this Agreement by Optionholder, and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary action of Optionholder.  This Agreement is the legal, valid and binding obligation of Optionholder, enforceable against Optionholder in accordance with its terms.  Neither the execution and delivery of this Agreement by Optionholder, nor the performance by Optionholder of its obligations hereunder, will violate Optionholder’s certificate of formation or limited liability company operating agreement or will result in a violation or breach of, or constitute a default under, any indenture, mortgage, deed of trust or other contract, license or other agreement to which Optionholder is a party or by which it is bound, or of any provision of any federal or state judgment, writ, decree, order, statute, rule, or governmental regulation applicable to Optionholder.

(c)No Governmental Consent.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of Optionholder in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.

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3.2           Owners.  Each of the Owners, severally, and not jointly and severally, hereby represents and warrants to Optionholder as follows:

(a)           Enforceability.   This Agreement is the legal, valid and binding obligation of the Owner, enforceable against the Owner in accordance with its terms.  Neither the execution and delivery of this Agreement by the Owner, nor the performance by the Owner of its obligations hereunder, will violate nor will result in a violation or breach of, or constitute a default under, any indenture, mortgage, deed of trust or other contract, license or other agreement to which the Owner is a party or by which it or its assets is bound, or of any provision of any federal or state judgment, writ, decree, order, statute, rule, or governmental regulation applicable to the Owner.

Section 1.2.(b)           Ownership, Power to Transfer.  Owner is the beneficial and legal owner of the Interests set forth next to such Owner’s name on Schedule A hereto, free and clear of all liens, encumbrances and restrictions and apart from any restrictions on transfer as provided in this Agreement, in the limited liability company operating agreement of the Company and any restrictions on transfer imposed under applicable securities laws, and such Interests may be sold, transferred, assigned and conveyed by the Owner to Optionholder as called for in this Agreement without such sale, transfer, assignment and conveyance constituting a breach or default by the Owner of any provisions of any agreement or covenant by which Owner is bound.

Article 4

Miscellaneous

4.1Further Assurances.  Each party shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby.

4.2Headings.  Titles and headings to sections and subsections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

4.3Expenses.  Except as otherwise provided herein, each party will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel, accountants, advisors and consultants.

4.4Assignment.  No party shall, without the prior written consent of the other party, assign or otherwise transfer, by operation of law or otherwise, this Agreement or the rights and obligations hereunder, and any attempt to assign or otherwise transfer this Agreement or the rights or obligations hereunder other than in accordance with the provisions of this Section shall be void and of no effect.  Subject to the foregoing, this Agreement will bind and inure to the benefit of the parties and their respective successors and permitted assigns.

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4.5Notices.  All notices, demands or consents required or permitted under this Agreement shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section):

(a)    if to Optionholder:

Colt’s Manufacturing Company LLC

545 New Park Avenue

West Hartford, CT 06110

Attn:  Chief Executive Officer

with a copy (which shall not constitute notice) to:

Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

Attn:  Chief Legal Officer

(b) if to the Company:

Colt Archive Properties LLC

c/o Zilkha Investments, L.P.

152 West 57th Street, 37th Floor

New York, NY 10019

Attention:  Donald E. Zilkha

with a copy (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Attention:  Brian Platton, Esq.

with a copy (which shall not constitute notice) to:

Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

Attn:  Chief Legal Officer

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(c) if to the Owners:

Donald E. Zilkha

152 West 57th Street, 37th Floor

New York, NY 10019

Donald E. Zilkha

with a copy (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Attention:  Brian Platton, Esq.

John Rigas

c/o Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

4.6Entire Agreement.  This Agreement (including any exhibits) constitutes the entire agreement and understanding between the parties with respect to the Option and other obligations of the parties set forth herein, superseding and replacing any and all prior agreements, communications, and understandings (both written and oral) regarding the subject matter hereof.

4.7Amendment; Waiver.  No term or provision of this Agreement may be amended or supplemented except by a writing signed by each of the parties clearly stating the parties’ intention to amend or supplement this Agreement.  No term or provision of this Agreement may be waived other than by a writing signed by the party to be bound by such waiver.  No waiver by a party of any breach of this Agreement will be deemed to constitute a waiver of any other breach or any succeeding breach.

4.8No Third Party Beneficiaries.  Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or to give any person, firm or corporation, other than the parties hereto, any rights or remedies under or by reason of this Agreement.

4.9Execution in Counterparts.  For the convenience of the parties, this Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The parties agree that the delivery of this Agreement may be effected by means of an exchange by facsimile or other electronic methods.

4.10Force Majeure.  Except with respect to payment obligations, no party hereto will be deemed in default if its performance or obligations hereunder are delayed or become impractical by reason of any act of God, war, fire, earthquake, labor dispute, civil commotion, epidemic, act of government or governmental agency or officers, or any other cause beyond such party’s control; provided that the delayed party promptly notifies the other party of such force majeure event and uses all commercially reasonable efforts to resume performance as soon as possible.

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4.11Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, without regard to its conflict of laws provisions.Any and all disputes or claims arising in connection herewith shall be resolved by a court of competent jurisdiction within the State of Connecticut.  By executing this Agreement, each party submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Connecticut, and the venue of the U.S. District Court for the State of Connecticut.

4.12Severability.  If any provision of this Agreement is for any reason and to any extent deemed to be invalid or unenforceable, then such provision shall not be voided but rather shall be enforced to the maximum extent then permissible under applicable law and so as to reasonably effect the intent of the parties hereto, and the remainder of this Agreement will remain in full force and effect.

4.13Remedies Non-exclusive.  Except as otherwise set forth herein, any remedy provided for in this Agreement is deemed cumulative with, and not exclusive of, any other remedy provided for in this Agreement or otherwise available at law or in equity.  The exercise by a party of any remedy shall not preclude the exercise by such party of any other remedy.

4.14Specific Performance.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each party shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or equity.

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IN WITNESS WHEREOF, this Option Agreement has been duly executed and delivered by a duly authorized representative of each of the parties as of the date first set forth above.

OPTIONHOLDER:

COLT’S MANUFACTURING COMPANY LLC

By:  /s/ Dennis Veilleux

       Name:  Dennis Veilleux

       Title:     President/CEO

COMPANY:

COLT ARCHIVE PROPERTIES LLC

By:  /s/ John P. Rigas

       Name:  John P. Rigas

       Title:     Manager

By:  /s/ Donald E. Zilkha

        Name:  Donald E. Zilkha

       Title:      Member

OWNERS:

/s/ John P. Rigas

John P. Rigas

/s/ Donald E. Zilkha

Donald E. Zilkha

[Signature Page to Colt Archive Option Agreement]

SCHEDULE A

Schedule of Membership Interests in Colt Archive Properties LLC

Name	Percentage
John P. Rigas	50.0%
Donald E. Zilkha	50.0%

EX-10.6

Exhibit 10.6

EXECUTION VERSION

SERVICES AGREEMENT

THIS SERVICES AGREEMENT (this “Agreement”), is made as of July 12, 2013 (the “Effective Date”), by and among Colt Defense LLC, a Delaware limited liability company (“Defense”), Colt Archive Properties LLC, a Delaware limited liability company (“Owner”), and Colt’s Manufacturing Company LLC, a Delaware limited liability company (“Servicer”).

WHEREAS, as of November 28, 2001, Owner purchased from Servicer, and, as a result, owns all right, title and interest in and to certain assets created or retained by Servicer and its predecessors during the period prior to November 28, 2001, including all then extant historical records of Servicer and its predecessors-in-interest, created or retained for the purpose of providing letters of authenticity and related services, consisting of documents, records, materials, information, and other property related to firearms of historical significance, including, without limitation, (i) existing documentation such as shipping ledgers, invoice books, computer ledgers, microfiche and microfilm, and more recent original letters, minutes, records, photographs, artwork, publications and other documents related thereto, and specific product and shipping information, (ii) images of certain of the items referred to in (i) above residing in the digital vault maintained by Servicer, (iii) 83 original ledger books that date from 1861 through 1945, which are hand written and contain the original specifications of the firearms, to whom they were shipped, and the date of shipment from the factory, (iv) approximately 1,400 production books covering the period of 1909 to 1972, and (v) 50 books of shipping records on the Model 1911A1 shipments to the government spanning the years 1943 through 1945 that provide the date of assembly of a firearm and the date it was received in the shipping department (some of which records include notations concerning mechanical updates, calibers, or engraving comments), as well as the goodwill associated with the authentication services that Servicer and its predecessors-in-interest conducted through the date hereof;

WHEREAS, as of November 28, 2001, Owner purchased from Servicer, and, as a result, owns, all right, title and interest in and to certain assets created or retained by Servicer for the purpose of providing letters of authenticity and related services during the period commencing on and after November 28, 2001 through the date of this Agreement, as well as the goodwill associated with the authentication services that Servicer conducted during the period commencing on and after November 28, 2001 through the date of this Agreement (such assets, as well as those described in the immediately preceding paragraph being collectively referred to as the “Archive Assets”);

WHEREAS, as of November 28, 2001, Owner purchased from Servicer, and, as a result, owns all right, title and interest in and to certain firearms of historical significance, as set forth on Exhibit A hereto (the “Historical Firearms”); and

WHEREAS, Owner desires that Servicer perform certain services relating to the Archive Assets, and Servicer desires to perform such services, in accordance with the terms and conditions hereof.

NOW, THEREFORE, in consideration of the above recitals and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, Servicer, Owner and Defense hereby agree as follows:

1.Definitions.  As used herein, each of the following capitalized terms shall have the following meanings ascribed to it:

1.1An “Event of Default” shall occur when a party hereto breaches any material term or condition of this Agreement, and such party fails to cure such breach within ten (10) days after receiving written notice of such breach from the other party.  A breach of a material term shall include (a) a failure by Servicer to perform any of the Services in the manner set forth herein, or, (b) a failure by Owner to pay any undisputed amount under this Agreement.

1.2“Services” shall mean the services and arrangements described on Exhibit B attached hereto.  To enable Servicer to provide the Services hereunder, Owner hereby grants to Servicer a limited, non-transferable, non-exclusive license to use the Archive Assets for the sole purpose of providing the Services hereunder.  Such license shall terminate upon the termination of this Agreement.

2.Services.  Subject to, and in accordance with, the terms and conditions of this Agreement, Servicer will provide the Services to Owner at 545 New Park Avenue, West Hartford, Connecticut or a successor location, or at such location as is otherwise mutually agreed by Owner, Servicer and Defense (the “Location”), for the duration of the Term (as defined herein).  The Services shall be provided in a timely, professional and workmanlike manner, and in accordance with all applicable laws, rules, regulations and permits.

3.Fees.  In consideration of the rendering of the Services, and of Servicer’s other obligations hereunder, Owner agrees to pay to Servicer an annual fee of $241,300 for the first year of this agreement and $248,500 for the second year, which shall be payable in equal installments, quarterly in arrears, on each of January 1st, April 1st, July 1st and October 1st; provided, however, that the first installment shall be payable on October 1, 2013 and shall be prorated on a daily basis for the period commencing on the date hereof and ending on September 30, 2013, and the last installment shall be payable upon the expiration of the Tail period set forth in Section 5.4 of this Agreement, and, if not applicable, the termination date of this Agreement, and shall be prorated on a daily basis for the period commencing after the period covered by Owner’s previous payment hereunder.

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4.Confidentiality; Cooperation.

4.1Confidentiality.

(a)During the Term and thereafter, the parties hereto each shall, and shall instruct their respective agents or other representatives to, maintain in strict confidence, not disclose to any third party, and, except in connection with the provision of the Services hereunder, not use for its own benefit, the other party’s proprietary or confidential information, however recorded or preserved, whether written or oral, including the Archive Assets (any such information, “Confidential Information”).  Each party hereto shall use the same degree of care, but no less than reasonable care, to protect the other party’s Confidential Information as it uses to protect its own Confidential Information of like nature.  Unless otherwise authorized in any other agreement between the parties, any party receiving any Confidential Information of the other party (the “Receiving Party”) may use Confidential Information only for the purposes of fulfilling its obligations under this Agreement (the “Permitted Purpose”). Any Receiving Party may disclose such Confidential Information only to its agents or other representatives who have a need to know such information for the Permitted Purpose and who have been advised of the terms of this Section, and the Receiving Party shall be liable for any breach of these confidentiality provisions by such persons; provided, however, that any Receiving Party may disclose such Confidential Information to the extent such Confidential Information is required to be disclosed by applicable law, rule, regulation or competent regulatory authority in which case the Receiving Party shall promptly notify, to the extent possible, the disclosing party (the “Disclosing Party”), and take reasonable steps to assist in protecting the Disclosing Party’s rights prior to disclosure, and in which case the Receiving Party shall only disclose such Confidential Information that it is advised by its counsel in writing that it is legally bound to disclose under such law.

(b)Notwithstanding the foregoing, “Confidential Information” shall not include any information that the Receiving Party can demonstrate: (i) was publicly known at the time of disclosure to it, or has become publicly known through no act of the Receiving Party or its agents, other representatives or predecessors-in-interest in breach of this Section; (ii) was rightfully received from a third party without a duty of confidentiality that was known or reasonably should have been known by the Receiving Party; or (iii) was developed by it independently without any use of or reliance on the Confidential Information.  Notwithstanding anything to the contrary contained herein, the disclosure of Confidential Information by Servicer to third parties to the extent necessary in order to provide the Services hereunder, shall be permissible and not be deemed a breach of this Agreement.

(c)Upon demand by the Disclosing Party at any time, or upon termination of this Agreement, the Receiving Party agrees promptly to return all Confidential Information, and to return or destroy, at the Disclosing Party’s option, all copies thereof and abstracts therefrom, provided however, that the Receiving Party may keep one copy of the Confidential Information if required by applicable law, rule, regulation or competent regulatory authority provided, however, that the Receiving Party shall only use the copy so retained for compliance purposes and for no other purpose, and, provided further, that such Confidential Information shall remain subject to this Section 4.1.  If copies of and abstracts from such Confidential Information are destroyed, an authorized officer of the Receiving Party shall certify to such destruction in writing.  Following the termination of this Agreement, this Section 4.1(c) shall not prohibit Servicer from using the same employees, facilities, equipment and supplies to provide historical letter and authentication services with respect to the New Assets.

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(d)Servicer shall store the Historical Firearms in a secure location, and shall allow representatives of Owner to access such secure location at any time and from time to time during normal business hours and with reasonable prior notice.  Upon the written request of Owner, Servicer shall transfer the Historical Firearms, at the sole expense of Owner, to such legally permissible location and transferee as is identified by Owner.

4.2Cooperation.  The parties acknowledge and agree that the parties will act in good faith and reasonably cooperate with one another during the Term (each at its own expense, except as otherwise specified herein or on Exhibit B) to perform as obligated under this Agreement.  Without limitation of the foregoing, in the event that the parties have not finalized, as of the date hereof, the report to be attached to Exhibit A hereto (including the list of Historical Firearms to be included in such report), the parties agree to undertake to conduct an inventory of the Historical Firearms as soon as is reasonably practicable following the date hereof and prepare such report (including the list of Historical Firearms); provided, that, if the parties fail to complete such inventory by July 31, 2013, they agree to appoint a mutually agreeable independent third party to prepare such report (including the list of Historical Firearms), any and all costs incurred in connection therewith to be shared equally by Owner and Servicer.

5.Term; Termination; Insolvency.

5.1Term.  The term of this Agreement shall commence on the Effective Date and, unless earlier terminated by mutual written agreement of the parties or as otherwise provided in accordance with the terms of this Section 5, shall terminate on the second (2nd) anniversary of the date hereof (the “Term”); provided, however, that the Term shall be automatically extended for successive one (1) year periods unless either Owner or Servicer has given notice to the other no less than fifteen (15) days prior to the anniversary date of this Agreement that they wish to terminate this Agreement.

5.2Termination for Breach.  Each party shall have the right to immediately terminate this Agreement upon an Event of Default by the other party.

5.3Survival.  The provisions of Sections 3 (with respect to any pro rata amount of the annual fee earned prior to the expiration of the Tail period set forth in Section 5.4 of this Agreement, and, if not applicable, the actual termination date of this Agreement, which remains unpaid as of such date) 4, 5, 6, 8, 9, 10, 11 and 12 hereof shall survive any termination of this Agreement.  The representations and warranties set forth in Section 7 hereof shall survive any termination of this Agreement for a period of one (1) year thereafter.

5.4Tail.  Following any termination of this Agreement by Servicer for any reason or any termination by Owner due to an Event of Default of Servicer, Owner shall be entitled to maintain the Archive Assets on the premises of Servicer for a period of up to six (6) months (the “Tail”), and, if requested to do so by Owner, Servicer shall continue to provide the Services to Owner in the same manner as provided hereunder and for the same fee as set forth in Section 3 during such time.

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5.5Insolvency.  In the event that either Servicer or Defense shall (i) file a petition in bankruptcy, (ii) become or be declared insolvent, or become the subject of any proceedings (not dismissed within sixty (60) days) related to its liquidation, insolvency or the appointment of a receiver, (iii) make an assignment on behalf of all or substantially all of its creditors, or (iv) take any corporate action for its winding up or dissolution, then Owner shall have the right to immediately terminate this Agreement.

6.Acknowledgement of Title.  Servicer, Owner and Defense hereby agree and acknowledge that the Archive Assets and the Historical Firearms are, and at all times during and following the Term, shall remain, the sole and exclusive property of Owner, with all right, title and interest thereto vesting with Owner, irrespective of any actions of the parties or otherwise; provided, however, that any and all corresponding records, documents, materials and information created by Servicer after the date hereof or retained by Servicer following their creation after the date hereof, which shall not include the Archive Assets (the “New Assets”), shall be the sole and exclusive property of Servicer; and provided, further, that with respect to any such New Assets and the Archive Assets, Owner and Servicer shall consult with each other regarding pricing of authentication services to customers so as not to create confusion in the marketplace.  Without limitation as to the foregoing, and except for the limited license set forth in Section 1.2 hereof, neither this Agreement nor any other agreement between the parties shall be deemed (a) to grant a license or any other interest in the Archive Assets or the Historical Firearms, or constitute a sale or bailment or other transfer of title of or to the Archive Assets or the Historical Firearms, to Servicer or any third party; or (b) to grant to Owner or any third party a license or other interest in the New Assets or any other asset or property of Servicer.

7.Representations and Warranties

7.1Owner.  Owner hereby represents and warrants to Servicer and Defense as follows:

(a)Organization.  Owner is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b)Authority for Transaction.  The execution and delivery of this Agreement by Owner has been duly and validly authorized by all necessary action of Owner.  This Agreement is the legal, valid and binding obligation of Owner, enforceable against Owner and its successors and assigns, including by operation of law, in accordance with its terms.  Neither the execution and delivery of this Agreement by Owner, nor the performance by Owner of its obligations hereunder, will violate Owner’s certificate of formation or limited liability company operating agreement or will result in a violation or breach of, or constitute a default under, any indenture, mortgage, deed of trust or other contract, license or other agreement to which Owner is a party or by which it is bound, or of any provision of any federal or state judgment, writ, decree, order, statute, rule, or governmental regulation applicable to Owner.

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(c)No Governmental Consent.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of Owner in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.

(d)No Bankruptcy.  No petition in bankruptcy (voluntary or otherwise), attachment, execution proceeding, assignment for the benefit of creditors, or petition seeking reorganization or insolvency, arrangement or other action or proceeding under federal or state bankruptcy law is pending against or, to Owner’s knowledge, threatened by or against Owner.

(e)Litigation.  There is not now any action, proceeding, litigation or investigation pending or, to the best of Owner’s knowledge, threatened against Owner, or affecting the ability of Owner to perform its obligations under this Agreement, or which questions the validity or enforceability of this Agreement.

7.2Servicer.  Servicer hereby represents and warrants to Owner and Defense as follows:

(a)Corporate Organization.  Servicer is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Delaware.  Servicer has all necessary power and authority to perform the Services and to operate its business, and Servicer holds all permits, licenses, orders and approvals of all federal, state and local governmental or regulatory bodies necessary and required therefor.

(b)Authority for Transaction.  The execution and delivery of this Agreement by Servicer, and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary action of Servicer.  This Agreement is the legal, valid and binding obligation of Servicer, enforceable against Servicer and its successors and assigns, including by operation of law, in accordance with its terms.  Neither the execution and delivery of this Agreement by Servicer, nor the performance by Servicer of its obligations hereunder, will violate Servicer’s certificate of formation or limited liability company operating agreement or will result in a violation or breach of, or constitute a default under, any indenture, mortgage, deed of trust or other contract, license or other agreement to which Servicer is a party or by which it is bound, or of any provision of any federal or state judgment, writ, decree, order, statute, rule, or governmental regulation applicable to Servicer.

(c)No Governmental Consent.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of Servicer in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, including the performance of the Services.

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(d)No Bankruptcy.  No petition in bankruptcy (voluntary or otherwise), attachment, execution proceeding, assignment for the benefit of creditors, or petition seeking reorganization or insolvency, arrangement or other action or proceeding under federal or state bankruptcy law is pending against or, to Servicer’s knowledge, threatened by or against Servicer.

(e)Litigation.  There is not now any action, proceeding, litigation or investigation pending or, to the best of Servicer’s knowledge, threatened against Servicer, or affecting the ability of Servicer to perform its obligations under this Agreement, or which questions the validity or enforceability of this Agreement.

7.3Defense.  Defense hereby represents and warrants to Owner and Servicer as follows:

(a)Corporate Organization.  Defense is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Delaware.  Defense has all necessary power and authority to perform its obligations under this Agreement and to operate its business, and holds all permits, licenses, orders and approvals of all federal, state and local governmental or regulatory bodies necessary and required therefor, except for such as could not reasonably be expected to result in a material adverse effect on Defense.

(b)Authority for Transaction.  The execution and delivery of this Agreement by Defense, and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary action of Defense.  This Agreement is the legal, valid and binding obligation of Defense, enforceable against Defense and its successors and assigns, including by operation of law, in accordance with its terms.  Neither the execution and delivery of this Agreement by Defense, nor the performance by Defense of its obligations hereunder, will (i) violate Defense’s certificate of formation or limited liability company operating agreement or (ii) will result in a violation or breach of, or constitute a default under, any indenture, mortgage, deed of trust or other contract, license or other agreement to which Defense is a party or by which it is bound, or of any provision of any federal or state judgment, writ, decree, order, statute, rule, or governmental regulation applicable to Defense, except, in the case of clause (ii), any such breach, default, violation or event (individually or in the aggregate) that could not reasonably be expected to result in a material adverse effect on Defense.

(c)No Governmental Consent.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of Defense in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such consents, approvals, orders or authorizations, the failure of which to obtain, could not reasonably be expected to result in a material adverse effect on Defense.

(d)No Bankruptcy.  No petition in bankruptcy (voluntary or otherwise), attachment, execution proceeding, assignment for the benefit of creditors, or petition seeking reorganization or insolvency, arrangement or other action or proceeding under federal or state bankruptcy law is pending against or, to Defense’s knowledge, threatened by or against Defense.

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(e)Litigation.  There is not now any action, proceeding, litigation or investigation pending or, to the best of Defense’s knowledge, threatened against Defense, or affecting the ability of Defense to perform its obligations under this Agreement, or which questions the validity or enforceability of this Agreement.

8.Relationship between the Parties.  The relationship among the parties established under this Agreement is that of independent contractors, and no party is, or should be considered to be, an employee, agent, partner, or joint venture of the other.  No party shall have the right or power to bind any other party.  Each party shall be solely responsible for any compensation, employment-related taxes, insurance premiums or other employment benefits with respect to its personnel who perform Services under this Agreement; without limitation as to the foregoing, any employees of Servicer who provide the Services hereunder shall be and remain employees of Servicer and shall not, for any purposes, be deemed employees or consultants of Owner.  All such employees of Servicer shall be subject to the direction and control of Servicer solely, and Owner shall not interfere therewith or cause any such employees to violate any of their obligations as employees of Servicer.

9.Bailment Agreement; Original Services Agreement.  Owner, Servicer and Defense hereby agree and acknowledge that the certain Bailment Agreement, dated as of November 28, 2001, by and between Servicer and Owner (the “Bailment Agreement”), expired prior to the Effective Date.  Owner, Servicer and Defense hereby further agree and acknowledge that the certain Amended and Restated Servicing Agreement, dated as of April 30, 2002, by and between Servicer and Owner (the “Original Services Agreement”), expired prior to the Effective Date.  To the extent not previously expired or terminated, as of the Effective Date, each of the Bailment Agreement and the Original Services Agreement shall be and hereby is terminated.

10.Guarantee.  Defense hereby irrevocably and unconditionally guarantees the performance by Servicer and its assignees and successors-in-interest of all of Servicer’s obligations under this Agreement.  Such guarantee is a continuing guarantee of performance and not of collection, and Owner may proceed against Defense with respect to any claim without first exhausting its remedies against Servicer.  Defense shall not be discharged by any change in or waiver of the underlying obligations of Servicer.  Defense hereby waives promptness, diligence, notice of acceptance and any other notice with respect to its guarantee hereunder.

11.Release.

(a)  Except with respect to any claims or actions arising under or in connection with this Agreement, each of Servicer and Defense, respectively, on its behalf and on behalf of its predecessors, affiliates and other related entities, as well as its or any of their current or former administrators, trustees, officers, directors, stockholders or members (whether their ownership interests are held directly or indirectly), partners, agents, attorneys, employees, successors and

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assigns (collectively, the “Releasors,” and each, a “Releasor”), as applicable, hereby irrevocably and unconditionally releases and forever discharges Owner and Donald E. Zilkha and John P. Rigas (the sole members of Owner), and, to the extent applicable, each of their predecessors, parents, subsidiaries, affiliates and other related entities, and all of their respective, past, present and future officers, directors, stockholders, members, managers, affiliates, agents, representatives, successors and assigns (collectively, the “Releasees,” and each, a “Releasee”), from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, liabilities, judgments, executions, claims and demands of every type and nature whatsoever, whether known or unknown, accrued or unaccrued, liquidated or unliquidated, asserted or unasserted, fixed or contingent, whether sounding in contract, statute, tort, fraud, misrepresentation or other legal theory, which any Releasor has had or claims to have had, now has or claims to have, or may in the future have against any Releasee by reason of any matter, cause or thing pertaining to the Archive Assets or the Historical Firearms prior to and through the date of this Agreement.

(b)           Except with respect to any claims or actions arising under or in connection with this Agreement, Owner, on its behalf and on behalf of its members, predecessors, affiliates and other related entities, as well as its or any of their current or former administrators, trustees, officers, directors, stockholders or members (whether their ownership interests are held directly or indirectly), partners, agents, attorneys, employees, successors and assigns (collectively, the “Owner Releasors,” and each, an “Owner Releasor”), as applicable, hereby irrevocably and unconditionally releases and forever discharges Servicer, and its predecessors, parents, subsidiaries, affiliates and other related entities, and all of its past, present and future officers, directors, stockholders, members, managers, affiliates, agents, representatives, successors and assigns (collectively, the “Servicer Releasees,” and each, a “Servicer Releasee”), from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, liabilities, judgments, executions, claims and demands of every type and nature whatsoever, whether known or unknown, accrued or unaccrued, liquidated or unliquidated, asserted or unasserted, fixed or contingent, whether sounding in contract, statute, tort, fraud, misrepresentation or other legal theory, which any Owner Releasor has had or claims to have had, now has or claims to have, or may in the future have against any Servicer Releasee by reason of any matter, cause or thing pertaining to the Archive Assets or the Historical Firearms prior to and through the date of this Agreement.

12.Miscellaneous.

12.1Further Assurances.  Each party shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby.

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12.2Headings.  Titles and headings to sections and subsections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

12.3Expenses.  Except as otherwise provided herein, each party will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel, accountants, advisors and consultants.

12.4Assignment.  No party shall, without the prior written consent of the other parties hereto, assign or otherwise transfer, this Agreement or the rights and obligations hereunder, and any attempt to assign or otherwise transfer this Agreement or the rights or obligations hereunder other than in accordance with the provisions of this Section shall be void and of no effect.  Subject to the foregoing, this Agreement will bind and inure to the benefit of the parties and their respective successors and permitted assigns, including any and all successors and assigns by operation of law.

12.5Notices.  All notices, demands or consents required or permitted under this Agreement shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section):

(a)    if to Servicer:

Colt’s Manufacturing Company LLC

545 New Park Avenue

West Hartford, CT 06110

Attention:  Chief Executive Officer

with a copy (which shall not constitute notice) to:

Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

Attention:  Chief Legal Officer

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(b) if to Owner:

Colt Archive Properties LLC

c/o Zilkha Investments, L.P.

152 West 57th Street, 37th Floor

New York, NY 10019

Attention:  Donald E. Zilkha

with a copy (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Attention:  Brian Platton, Esq.

and

Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

Attention:  Chief Legal Officer

(c)if to Defense:

Colt Defense LLC

545 New Park Avenue

West Hartford, CT 06110

Attention:  Chief Executive Officer

with a copy (which shall not constitute notice) to:

Sciens Capital Management LLC

667 Madison Avenue

New York, NY  10065

Attention:  Chief Legal Officer

12.6Entire Agreement.  This Agreement (including any exhibits) constitutes the entire agreement and understanding among the parties with respect to the Services and other obligations of the parties set forth herein, superseding and replacing any and all prior agreements, communications, and understandings (both written and oral) regarding the subject matter hereof.

12.7Amendment; Waiver.  No term or provision of this Agreement may be amended or supplemented except by a writing signed by each of Servicer, Owner and Defense clearly stating the parties’ intention to amend or supplement this Agreement.  No term or provision of this Agreement may be waived other than by a writing signed by the party to be bound by such waiver.  No waiver by a party of any breach of this Agreement will be deemed to constitute a waiver of any other breach or any succeeding breach.

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12.8No Third Party Beneficiaries.  Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or to give any person, firm or corporation, other than the parties hereto, any rights or remedies under or by reason of this Agreement.

12.9Execution in Counterparts.  For the convenience of the parties, this Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The parties agree that the delivery of this Agreement may be effected by means of an exchange by facsimile or other electronic methods.

12.10Force Majeure.  Except with respect to payment obligations, no party hereto will be deemed in default if its performance or obligations hereunder are delayed or become impractical by reason of any act of God, war, fire, earthquake, labor dispute, civil commotion, epidemic, act of government or governmental agency or officers, or any other cause beyond such party’s control; provided that the delayed party promptly notifies the other parties of such force majeure event and uses all commercially reasonable efforts to resume performance as soon as possible.

12.11Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, without regard to its conflict of laws provisions.Any and all disputes or claims arising in connection herewith shall be resolved by a court of competent jurisdiction within the State of Connecticut.  By executing this Agreement, each party submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Connecticut, and the venue of the U.S. District Court for the State of Connecticut.

12.12Severability.  If any provision of this Agreement is for any reason and to any extent deemed to be invalid or unenforceable, then such provision shall not be voided but rather shall be enforced to the maximum extent then permissible under applicable law and so as to reasonably effect the intent of the parties hereto, and the remainder of this Agreement will remain in full force and effect.

12.13Remedies Non-exclusive.  Except as otherwise set forth herein, any remedy provided for in this Agreement is deemed cumulative with, and not exclusive of, any other remedy provided for in this Agreement or otherwise available at law or in equity.  The exercise by a party of any remedy shall not preclude the exercise by such party of any other remedy.

12.14Specific Performance.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each party shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or equity.

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IN WITNESS WHEREOF, this Services Agreement has been duly executed and delivered by a duly authorized representative of each of the parties as of the date first set forth above.

COLT DEFENSE LLC

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and Chief Executive Officer

COLT ARCHIVE PROPERTIES LLC

By:  /s/ John P. Rigas

       Name:  John P. Rigas

       Title:    Manager

By:  /s/ Donald Zilkha

       Name:  Donald Zilkha

       Title:    Member

COLT’S MANUFACTURING COMPANY LLC

By:  /s/ Donald Zilkha

       Name:  Donald Zilkha

       Title:    Chairman

[Signature Page to Colt Archive Services Agreement]

EXHIBIT A

Historical Firearms

Firearms of various models and calibers and certain related items, produced by Servicer and its predecessors, as more particularly described in a report delivered by Servicer to Owner and as set forth on the list attached hereto.

EXHIBIT B

Services

1.   Employees.  Servicer shall provide to Owner three (3) of Servicer’s employees, on a full-time equivalent basis (other than services provided with respect to the New Assets, which the parties expect will be nominal during the Term hereof, but which will be provided during the Term hereof in the same manner as the Services provided to Owner hereunder), to provide the Services; such employees shall initially consist of Susan Glazier, Paul Szymaszek, and Beverly Haynes.  Servicer shall additionally provide to Owner one (1) of Servicer’s employees, who shall initially be Joe Canali, at a 40% of full-time equivalent basis, to provide the Services.  To the extent that the employment of any of such employees by Servicer terminates for any reason, including a termination by Servicer, with or without cause, resignation, or, death of the employee(s), or any of such employees become disabled such that they can no longer perform the Services, Servicer shall provide prompt written notice of same to Owner and further provide such additional employees as are reasonably available to Servicer and acceptable to Owner both in terms of experience and expertise.  Servicer shall permit reasonable access to such employees of Servicer, at Servicer’s facilities, as Owner and its representatives may from time to time require in connection with this Agreement.

2.   Facilities.  Servicer agrees to provide a segregated set of offices at the Location, as are currently used by Servicer for the historical letters and archive business..  In connection therewith, Servicer shall provide computers, telephones and other office supplies and equipment as necessary for the provision of the Services in accordance with this Agreement.

3.   Historical Records.  Servicer issues historical records for specific product and shipping information for the purpose of providing letters of authenticity.  Servicer maintains copies of its shipping invoices that are used for corroboration of the ledger book records.  All such records pertaining to sales of firearms by Servicer or its predecessors prior to the date of this Agreement are included in “Archive Assets”.  All such records pertaining to sales of firearms by Servicer or its successors on and after the date of this Agreement are included in “New Assets”.

4.   Historical Research.  Servicer’s Historical Department has the capability of providing historical research and support for legal counsel; authors and researchers for books, magazine articles, documentaries, and movies.  There are frequent opportunities to conduct this historical research on a fee for service basis.  The Historical Department also provides historical support for Servicer’s Firearms Control, Customer Service, Product Service, and Marketing Departments, and the Colt Custom Shop.

5.   Public and Customer Relations.  Servicer’s Historical Department engages in public relations activities by hosting visitors, such as magazine writers, book authors, BATF representatives, collectors, and customers; serves as a company liaison for various museums throughout the country, i.e., Gene Autry Western Heritage Museum, Buffalo Bill Cody Museum, NRA Museum, Museum of Connecticut History, and the Wadsorth Atheneum; and represents the Servicer at various trade shows and exhibitions as required to promote the historical aspects of the business.  It develops and maintains favorable relations with customers, collectors, writers, distributors and dealers; and serves as company liaison for Colt Collectors Association.  It responds in a courteous and professional manner to customer mail and phone inquiries, including complex inquiries pertaining to the history of Servicer and Servicer’s products.

6.   Maintenance and Upkeep of Historical Records.  Servicer’s Historical Department addresses the computerization of the historical records as time and revenue permits.  It maintains and preserves the company shipping/historical records; coordinates record computerization projects; and researches and formulates Special Edition letters and computerizes information for historical retrieval purposes.  It carries out a proper maintenance program to ensure the preservation of the historical records and attends to rebinding needs when necessary.

7.   Product Knowledge.  Servicer’s employees in its Historical Department are trained as a historian and an archivist respectively and requires substantial knowledge of Servicer’s history and its products over the last 165 years.  The historian and the archivist must keep current with the Servicer’s new product introductions (firearms as well as memorabilia) especially since a number of Servicer’s recent introductions are replicas of older models manufactured by Servicer’s predecessor companies.

8.   Historical Department Operations and Administration.  Servicer’s Historical Department maintains the revenue log book and the posting of receipts and monthly billings for the purposes of tracking and reporting monthly forecast goals.  It balances the revenue account with the Credit Department at month end; generates weekly and monthly status reports; prepares and processes billing invoices bi-monthly in a manner consistent with Servicer’s order entry and accounting policies; and types correspondence, historical documents, special edition letters, etc. as necessary to achieve Department goals.

9.   Receipts; Taxes; Audit

(a) Servicer shall be responsible for all customer billing for authentication services.  Servicer shall instruct all customers purchasing services arising from the use of or pertaining to the Archive Assets to make all payments by credit card or any other means directly to Owner.  All credit card payments shall be directed to such account as Owner shall advise Servicer in writing.  All other payments in respect of the performance of such authentication services by Servicer arising from the use of or pertaining to the Archive Assets shall be made payable to Owner and directed to a lockbox account in the name of Owner or to such other recipient as Owner may specify in writing and Servicer shall segregate from its own funds and promptly remit to Owner any payments in respect of such services that it nevertheless receives.

(b) Servicer shall collect and cause to be remitted to Owner any applicable sales or other excise tax that Servicer is required under applicable law to collect from customers.  Owner shall be solely responsible for the payment of all applicable taxes to the extent of amounts collected and remitted to Owner.

(c) Owner (either directly, or, through its representatives) shall have the right at its own expense, to audit, at such times and with such frequency as Owner shall reasonably request, the books and records of Servicer relating to the Services provided hereunder.  Owner shall provide not less than five (5) business days prior written notice of any such audit, and shall conduct same during regular business hours.

(d) Servicer shall provide monthly statements to Owner, certified by a senior officer of Servicer, of any and all payments received by Servicer in connection with the Services provided hereunder.

10.   Not contained in this Agreement, including this Exhibit B, shall be deemed to require any change by Servicer from its past practices concerning the activities described herein except as expressly stated.

EX-99.1

Exhibit 99.1

Colt Defense LLC and New Colt Holding Corp. Merge

West Hartford, Conn.  - Colt Defense LLC, one of the world’s leading manufacturers of rifles and carbines for the military, law enforcement and sporting markets, has acquired New Colt Holding Corp., the parent company of Colt’s Manufacturing Company LLC, one of the world’s leading manufacturers of firearms for the civilian and sporting markets.  For the first time since their separation in 2003, a single company will now develop, manufacture and sell firearms under the Colt name for all markets.

About Colt:

Colt is one of the world’s leading designers, developers and manufacturers of firearms. The company has supplied military, law enforcement and individual customers in the United States and throughout the world for more than 175 years. Our subsidiary, Colt Canada Corporation, is the Canadian government’s Center of Excellence for small arms and is the Canadian military’s sole supplier of the C7 rifle and C8 carbine. Colt operates its manufacturing facilities in West Hartford, Connecticut and Kitchener, Ontario. For more information on Colt and its subsidiaries, please visit www.colt.com, www.coltsmfg.com and www.coltcanada.com.

Contact

Colt Defense LLC

Isabelle DeFosses

Idefosses@colt.com

1-860-236-6311 x1505