Exhibit 10.4

CONSULTING SERVICES AGREEMENT

This Consulting Services Agreement (“Agreement”), dated July 12, 2013, is by and
between SCIENS INSTITUTIONAL SERVICES LLC, a Delaware limited liability company
(“Provider”), and COLT DEFENSE LLC, a Delaware limited liability company
(“Company”).

RECITALS:

WHEREAS, Provider has the capability of performing and the expertise to perform,
certain consulting and other services for and on behalf of Company in connection
with the business of the Company;

WHEREAS, Company is in need of such consulting and other services and does not
have the capability, resources and expertise necessary to perform all of such
services for itself; and

WHEREAS, Company desires to engage Provider, and Provider desires to be engaged
by Company to perform certain consulting and other services in connection with
the business of the Company.

NOW, THEREFORE, in consideration of the promises and agreements set forth in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:

ARTICLE I
Consulting Services To Be Provided

1.1           Consulting Services.  Provider shall provide the consulting
services set forth on Schedule A and such other services as the parties hereto
may from time to time agree (the “Consulting Services”).

1.2           Use of Independent Contractors.  Provider will provide Consulting
Services either through its own resources or by contracting with third-party
independent contractors.  If, when and to the extent that Provider decides to
provide a Consulting Service through a third-party independent contractor,
Provider shall consult with and obtain the Company’s approval, which approval
shall not be unreasonably withheld or conditioned or unduly delayed.  Provider
shall at all times remain fully liable for the performance by any third-party
independent contractor retained by it.

1.3           Relationship Between Provider and Company.  The relationship
between Provider and Company established by this Agreement and Provider’s
performance hereunder shall be that of an independent contractor and not one of
employee and employer, co-employer, joint employer, partner, joint venturer or
alter ego.  Company agrees that it will have no right to control or direct the
details, manner or means by which Provider, Provider’s employees or Provider’s
contractors perform Consulting Services.  Provider shall be solely responsible
for training, instructing and compensating its employees and contractors who
perform Consulting Services, including, without limitation, paying their wages,
salaries or fees, providing their benefits and the withholding of any and all
taxes.  It is understood and agreed that Provider personnel performing
Consulting Services will meet the job or position qualifications normally
required of a person performing the particular or comparable service for
Provider’s own internal operations.

 
 

--------------------------------------------------------------------------------

 

ARTICLE II
Compensation for Consulting Services

2.1           Billings.                      The fee for the Consulting Services
shall be equal to $650,000 per annum, payable quarterly in advance.

2.2           Taxes.  Provider shall be responsible for reporting all of its
federal income and state income/franchise taxes, and filing all related federal
and state income/franchise tax returns with governmental entities related to
providing Consulting Services.

2.3           Expenses.  In addition to any fees that may be payable to Provider
hereunder, the Company hereby agrees, from time to time upon request, to
reimburse Provider for all reasonable expenses, disbursements, travel and other
out-of-pocket expenses incurred in connection with the Consulting Services.

ARTICLE III
Information/Cooperation

3.1           Information Regarding Consulting Services.  Provider and Company
shall each make available to the other party any information required or
reasonably requested by that other party regarding the performance of Consulting
Services and shall be responsible for timely providing that information and for
the accuracy and completeness of that information.  Provider shall not be liable
for any impairment of the Consulting Services caused by its not receiving
information, either timely or at all, or by its receiving inaccurate or
incomplete information from Company that is required or reasonably requested
regarding the Consulting Services.

3.2           Cooperation.                                 Provider and Company
will use good faith efforts to cooperate with each other in all matters relating
to the provision and receipt of Consulting Services.  Provider and Company will
cooperate with each other in making information available as needed in the event
of any and all internal or external audits.  If this Agreement is terminated in
whole or in part, the parties will cooperate with each other in all reasonable
respects in order to effect an efficient transition to minimize the disruption
to the business of both parties, including the assignment or transfer of the
rights and obligations under any contracts to the extent assignable or
transferable.

3.3           Further Assistance.  Provider and Company shall each take such
actions, upon request of the other party and in addition to the actions
specified in this Agreement, as may be necessary or reasonably appropriate to
implement or give effect to this Agreement.

 
2

--------------------------------------------------------------------------------

 

ARTICLE IV
Confidential Information

4.1           Definition.                      For the purposes of this
Agreement, “Confidential Information” means non-public information about the
disclosing party’s or any of its affiliates’ business or activities that is
proprietary and confidential, which shall include, without limitation, all
business, financial, technical and other information, including software (source
and object code) and programming code, of a party or its affiliates marked or
designated “confidential” or “proprietary” or by its nature or the circumstances
surrounding its disclosure should reasonably be regarded as
confidential.  Confidential Information includes not only written or other
tangible information, but also information transferred orally, visually,
electronically or by any other means.  Confidential Information will not include
information that (i) is in or enters the public domain without breach of this
Agreement, or (ii) the receiving party lawfully receives from a third party
without restriction on disclosure and to the receiving party’s knowledge without
breach of a nondisclosure obligation.

4.2           Nondisclosure.  Provider and Company each agree that (i) it will
not disclose to any third party (except a third party which is an affiliate of
either party) or use any Confidential Information disclosed to it by the other
except as expressly permitted in this Agreement, and (ii) it will take all
reasonable measures to maintain the confidentiality of all Confidential
Information of the other party in its possession or control, which will in no
event be less than the measures it uses to maintain the confidentiality of its
own information of similar type and importance.
 
 
4.3           Permitted Disclosure.  Notwithstanding the foregoing, Provider and
Company may disclose Confidential Information (i) to the extent required by a
court of competent jurisdiction or other governmental authority or otherwise as
required by law, including, without limitation, to disclosure obligations
imposed under the federal securities laws, provided that such party has given
the other party prior notice of such requirement when legally permissible to
permit the other party to take such legal action to prevent the disclosure as it
deems reasonable, appropriate or necessary, or (ii) on a “need-to-know” basis,
under a written obligation of confidentiality that contains customary
restrictions to prevent unlawful trading in the Company’s securities on the
basis of Confidential Information, to its consultants, legal counsel,
affiliates, accountants, banks and other financing sources and their advisors.

4.4           Ownership of Confidential Information.  All Confidential
Information supplied or developed by either party shall be and remain the sole
and exclusive property of the party who supplied or developed it.

ARTICLE V
Amendment; Term; Termination

5.1           Amendment.  This Agreement, including the quarterly fee amounts,
may be amended from time to time by written agreement of the parties.

5.2           Term.            This Agreement shall commence on the date hereof
and, unless otherwise extended pursuant this Section 5.2, shall terminate on the
earlier of (x) the seventh anniversary of the date hereof (the “Term”) or (y)
the occurrence of a Capital Transaction (as defined below).  Upon a Capital
Transaction prior to the end of the any applicable Term, the Company shall pay

 
3

--------------------------------------------------------------------------------

 

Provider the higher of (x) $650,000 and (y) the amount payable by the Company
for the remainder of the Term (not to exceed two years) assuming the Capital
Transaction had not occurred exclusively for the early termination of this
Agreement plus expenses.  For purposes of the foregoing, a Capital Transaction
means any of (1) the sale or other disposition of all or substantially all of
the assets of the Company, (2) a merger, consolidation, stock exchange, stock
issuance or other sale of stock transaction as a result of which the
shareholders (or their equivalent) immediately prior to such transaction hold
50% or less of the stock (or its equivalent) of the Company (or the successor
thereto) by vote or by equitable interest, (3) an initial public primary
offering for stock of the Company (or any successor thereto) or (4) dissolution
or liquidation of the Company (or any successor thereto). Upon the seventh
anniversary of the date hereof, and at the end of each year thereafter (each of
such seventh anniversary and the end of each year thereafter being a “Year
End”), the Term shall automatically be extended for an additional year unless
notice to the contrary is given by the Company at least 120, but no more than
180, days prior to such Year End, as applicable.  The provisions of Section 6.1,
and the obligation to pay any accrued fees or expenses payable pursuant to
Article II hereof shall survive the termination of this Agreement (fees shall
for purposes of any mid-year termination of this Agreement be deemed to have
accrued on a monthly basis).  Provider may terminate this Agreement at any time
upon 90 days prior written notice.

ARTICLE VI
Indemnification

6.1           Company Indemnification.  The Company shall indemnify and hold
harmless Provider and each of its Related Parties (as defined below) (each, an
“Indemnified Party”) from and against any and all losses, claims, actions,
damages and liabilities, joint or several, to which such Indemnified Party may
become subject under any applicable statute, law, ordinance, regulation, rule,
code, order, constitution, treaty, common law, judgment or decree, made by any
third party or otherwise, relating to or arising out of the Consulting Services
or other matters referred to in or contemplated by this Agreement or the
performance by such Indemnified Party of the Consulting Services or other
matters referred to or contemplated by this Agreement, and the Company will
reimburse any Indemnified Party for all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatening claim, or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto. The Company will not be liable
under the foregoing indemnification provision to the extent that any loss,
claim, damage, liability, cost or expense is determined by a court, in a final
judgment from which no further appeal may be taken, to have resulted from the
gross negligence or willful misconduct of such Indemnified Party. The
reimbursement and indemnity obligations of the Company, under this Section 6
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any affiliate of Provider and
any Related Party or controlling persons (if any), as the case may be, of
Provider and any such affiliate and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, Provider, any such affiliate and any such Related Party or other
person.

 
4

--------------------------------------------------------------------------------

 

6.2           Limitation of Liability.  Neither Provider nor any of its
officers, directors, managers, principals, stockholders, partners, members,
employees, agents, representatives and affiliates (each a “Related Party” and,
collectively, the “Related Parties”) shall be liable to the Company or any of
its affiliates for any loss, liability, damage or expense arising out of or in
connection with the performance of any Consulting Services contemplated by this
Agreement, unless such loss, liability, damage or expense shall be proven to
result directly from the gross negligence or willful misconduct of such person.
In no event will Provider or any of its Related Parties be liable to the Company
for special, indirect, punitive or consequential damages, including, without
limitation, loss of profits or lost business, even if Provider has been advised
of the possibility of such damages. Under no circumstances will the liability of
Provider and Related Parties hereunder relating to the provision of the
applicable Consulting Services exceed, in the aggregate, the fees actually paid
to Provider hereunder during the applicable year.

6.3           Survival.  The terms of this Article shall survive the termination
of this Agreement.

ARTICLE VII
Arbitration

7.1           Disputes.  All disputes among the parties relating to or in
connection with this Agreement, including, but not limited to, its
interpretation, performance or breach, shall be submitted to binding
confidential arbitration as described in this Article.

7.2           Notice; Selection of Arbitrators.  A party initiating arbitration
shall provide notice of its demand for arbitration.  The parties shall have 45
days from receipt of such demand for arbitration in which to appoint a sole
mutually acceptable arbitrator.  If the parties fail to appoint its arbitrator
within such 45 days, the initiating party shall request that that American
Arbitration Association appoint an arbitrator, which appointment shall be final.

7.3           Submission of Case.  A party shall submit its case to the
arbitrator (the “Panel”) within one month from the date of the appointment of
the arbitrator, but this period of time may be extended by written consent of
the Panel.

7.4           Decision.  The Panel shall make its decision with regard to the
custom and usage of Company’s business.  The written decision of the Panel shall
be rendered within 60 days following the termination of the Panel’s hearings,
unless the Parties consent to an extension.  Such decision of the Panel shall be
final and binding upon the Parties both as to law and fact, and may not be
appealed to any court of any jurisdiction.  Judgment may be entered upon the
final decision of the Panel in any court of proper jurisdiction.

7.5           Fees and Expenses.  The Panel shall award to the prevailing party
its costs and attorneys’ fees as well as the fees and expenses of the
arbitrators.

7.6           Location.  Any arbitration pursuant to this Article shall be
conducted in New York, New York, unless otherwise agreed in writing by the
parties; provided, however, that the Panel may choose to take evidence and/or
convene a hearing in a place other than New York, New York for the convenience
of the parties, the witnesses or the Panel.

 
5

--------------------------------------------------------------------------------

 

ARTICLE VIII
Miscellaneous

8.1           Entire Agreement.  This Agreement, including Schedule A attached
hereto, constitute the entire agreement between the parties pertaining to the
subject matter hereof, and supersede all prior agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof.  For the avoidance of doubt, this
Agreement does not supersede that certain Management Services Agreement, dated
as of July 7, 2007, between the Company and Sciens Management LLC.

8.2           Waiver.  At any time the parties by written agreement may waive
compliance with any of the provisions of this Agreement.
 
 
8.3           Governing Law.  This Agreement shall be construed and interpreted
according to the laws of the State of New York without regard to the conflicts
of Law rules thereof.

8.4            Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
 
 
8.5           Notices.  All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given when delivered personally or by messenger or by overnight delivery
service, or within five days of being mailed by registered or certified United
States mail, postage prepaid, return receipt requested, in all cases addressed
to the person for whom it is intended at his address set forth below or to such
other address as a party shall have designated by notice in writing to the other
party in the manner provided by this Section 8.5:

If to Provider:
Sciens Institutional Consulting Services LLC
667 Madison Avenue
New York, NY 10065
Attention: John P. Rigas
 
If to Company:
Colt Defense LLC
547 Park Avenue
Hartford, CT 06110
Attention: Chief Executive Officer
 

8.6           Counterparts; Headings.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement.  The Article and
Section headings in this Agreement are inserted for convenience of reference
only and shall not constitute a part hereof.

8.7           Severability.  If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect.  Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 
6

--------------------------------------------------------------------------------

 

8.8.           No Reliance.  Except for Related Parties, no third party is
entitled to rely on any of the provisions of this Agreement and neither Provider
nor Company assumes any liability to any third party because of any reliance on
the provisions of this Agreement.

8.9           No Strict Construction. The parties to this Agreement have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

8.10           Warranty Disclaimer.  PROVIDER MAKES NO EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES, INCLUDING WITHOUT LIMITATION, THE WARRANTIES
IMPLIED BY LAW OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, REGARDING
THIS AGREEMENT, THE PERFORMANCE OF THE CONSULTING SERVICES CONTEMPLATED BY THIS
AGREEMENT OR ANY TANGIBLE PROPERTY DELIVERED BY PROVIDER PURSUANT TO THIS
AGREEMENT.

[Signature Page Follows]

 
7

--------------------------------------------------------------------------------

 

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

Sciens Institutional Consulting Services LLC
 
 
By:  /s/ Z. Clifton Dameron
       Name:  Z. Clifton Dameron
       Its:       Authorized Signatory
 
 
Colt Defense LLC
 
 
By:  /s/ Gerald R. Dinkel
       Name:  Gerald R. Dinkel
       Its:       President and Chief Executive Officer
 

[SIGNATURE PAGE TO CONSULTING AGREEMENT]

 
 

--------------------------------------------------------------------------------

 

SCHEDULE A

Consulting Services shall be comprised of the following (without limitation):

General:

(1) general corporate support, and (2) other consulting services conducted in
the ordinary course consistent with past practice.

Legal Consulting:

General legal consulting with respect to: (1) mergers, acquisitions and joint
ventures, (2) capital markets transactions, (3) borrowing for indebtedness, (4)
litigation, (5) compensation arrangements and policies of the Company, including
senior management and (6) coordination with, and selection of, counsel to the
Company in connection with the foregoing

Financial:

General financial consulting with respect to (1) financial analysis of the
Company’s results of operations and projections and (2) financial modeling of
different financial scenarios and/or events

Management:

General consulting with respect to (1) compensation policies of the Company,
including long term retention compensation, including option and other equity
plans of the Company, (2) compensation of senior management of the Company, (3)
compensation arrangements with senior management of the Company, (4) number and
individuals serving as directors of the Company, (5) selecting and hiring senior
executives of the Company, including the CEO, CFO and GC, (6) the management
activities and evaluation of performance of senior management of the Company
(including recommending and providing an Executive Chairman of the Company) and
(7) selection and retention of advisors in connection with the foregoing.

Tax:

General tax consulting with respect to: (1) internal tax policies of the Company
with regards to the corporate structure of Colt Defense and its subsidiaries,
including mergers, acquisitions and joint ventures, (2) tax distribution
policies of the Company, including consultation with the Company’s tax advisors
regarding the tax distribution calculation and amounts, (3) coordination with,
and selection of, legal and accounting tax advisors to implement the foregoing
and (4) general tax planning of the Company.