exv10w1






Exhibit 10.1




Memorandum of Understanding

Regarding Distribution of Colt Law Enforcement and Commercial Rifles

1 May 2011



This Memorandum of Understanding (“MOU”) is to confirm the arrangements that have been agreed upon
between Colt Defense LLC (“CD”) and Colt’s Manufacturing Company LLC (“CMC”) with regard to the
distribution of law enforcement and commercial rifles but it does not change the allocation of
markets to each company affected by the existing license agreements. The companies’ joint mission
is to re-establish CMC as a leading commercial rifle supplier in part by leveraging the products
and capability of CD as a world renowned manufacturer of military grade rifles and carbines.



We have agreed to the following:



CD’s VP of Domestic Sales will manage the commercial and law enforcement channels of distribution
for rifle products for both CMC and CD, including rifle products not made by CD, for sale to the
commercial market, which will allow the two companies that share the Colt brand to present one face
to these channels of distribution. VP Domestic Sales will be employed
by CD, and CMC will have no
responsibility for his compensation, but will work with CMC’s Chief Operating Officer (“CMC COO”)
to the extent any decision involves the marketing or sale of any rifle products to the commercial
market.



Beginning 1 May 2011 and for a period of two (2) years, CD will sell CD-made rifles to CMC for the
commercial market at 5% less than CD’s net distributor price to law enforcement distributors for
the same models, which will be CMC’s distributor price. For all rifles not made by CD, CMC will pay
CD 5% of CMC’s sales price plus commissions to rep groups
allocable to those sales. At the
inception of the relationship described in this MOU, CD will review backorders for all of CMC’s
commercial distributors. CD will fill these orders and subsequently issue CMC a credit equal to 5%
of such distributor price. Prior to the each anniversary of these arrangements, CD and CMC will
meet and confer to determine whether there are changes that can be made to these arrangements that
would be beneficial to both parties. Prior to the second anniversary of this agreement, CD and CMC
will meet and confer to determine if the agreement should be extended, modified, or terminated.
VP Domestic Sales has provided CD’s backlog of commercial orders to CMC COO and shall endeavor to
provide updates of such backlogs at least on a monthly basis.



CD and CMC will send a joint communication to all commercial distributors stating that after a
certain date, to be determined by the parties, they must place all commercial rifle orders going
forward with CMC.



CD will amend its law enforcement distributor agreement to clearly permit law enforcement
distributors to sell only to agencies, individual officers, first responders, military personnel
active or retired with proper identification and during the term of
this MOU CD will enforce this
limitation.



CMC will amend its commercial distributor agreement to clearly prohibit commercial distributors
from




 









 





2


participating in direct bids for, or selling, rifles directly or indirectly to state or local law
enforcement agencies or departments or agencies of the United States Government. During the term
of this agreement, CMC will enforce this limitation and will permit VP Domestic Sales to enforce
it. Similarly, during the term of this agreement, CMC will not participate in direct bids for,
or the selling of, rifles directly or indirectly to state or local law enforcement agencies or
departments or agencies of the United States Government.



VP Domestic Sales’goal during the term of this MOU is to engage rep groups to sell
Colt-branded rifles for CD and CMC in order to give the parties a combined sales presence for
law enforcement and commercial distribution, participation at trade shows, and exposure to
individual retailers.



Implementation Plan:



CD will engage rep groups to promote commercial rifle products to commercial distributors and
key retailers in assigned territories of representation.



CD will pay all commissions and training expenses to manage the rep groups.



CD will market and advertise the rifle products for the commercial channel, provide CMC with
quarterly updates, and assume the associated cost.



CD will hire a public relations firm to manage the media and advertising efforts associated
with this effort.



VP Domestic Sales and CMC COO will work closely together to manage any conflict that may arise
and ensure success for both companies.



CMC and CD recognize that by working cooperatively together as set forth above, the companies will
be able to achieve their mutually beneficial objectives, such as providing a coordinated effort
for marketing and sales of rifles in the highly competitive LE and commercial markets, sharing
financial risks, and achieving synergistic and competitive advantages.




COLT DEFENSE LLC




	 	 	 

	/s/ Gerald R. Dinkel
 


	 	 
	President and Chief Executive Officer
	 	 






COLT’S MANUFACTURING COMPANY LLC




	 	 	 

	/s/ Lt. Gen. William M. Keys, USMC (Ret.)
 


	 	 
	President and Chief Executive Officer