ex10_2.htm

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.

(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

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.

(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.

(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.

(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.”

(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%”

(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.”

(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

(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;

(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:

“(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.”

(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

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

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

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:

“(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.

(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.

(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.

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

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.

(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.

“(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;”

(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;

(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;”

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.

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;

(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;

(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;

(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;

(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.

(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]

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

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,