Document:

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.

 

  

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(vii) “Amendment No. 4 Effective Date” means the date on which all conditions precedent to Amendment No. 4 have been satisfied.

 

(viii) “Annualized” means, with respect to the calculation of any amount at the end of any four (4) fiscal quarter period ending September 30, 2013, December 31, 2013 or March 31, 2014, the following: (i) with respect to fiscal quarter ended September 30, 2013, the aggregate amount at the end of such fiscal quarter multiplied by 4, (ii) with respect to fiscal quarter ended December 31, 2013, the aggregate amount at the end of the two consecutive fiscal quarters ended December 31, 2013 multiplied by 2, and (iii) with respect to fiscal quarter ended March 31, 2014, the aggregate amount at the end of the three consecutive fiscal quarters ended March 31, 2014 multiplied by 4/3.

 

(ix) “Certificate of Merger” means the Certificate of Merger executed by Acquisition Sub and New Colt with respect to the Merger and duly filed with the Secretary of State of the State of Delaware.

 

(x) “Closing Date Transactions” means, collectively, the transactions contemplated by the Loan Documents, the Acquisition Documents (including, without limitation, the Merger) and the Term Loan Documents, as amended in connection with each of the foregoing.

 

(xi) “CMC” means Colt’s Manufacturing Company LLC, a Delaware limited liability company.

 

(xii) “Collateral Assignment” means the Collateral Assignment of Acquisition Documents, dated as of the date hereof, and in form and substance reasonably satisfactory to Agent, made by Parent, Acquisition Sub and New Colt in favor of Agent.

 

(xiii)  “Consulting Agreement” means the Consulting Services Agreement, dated as of July 12, 2013, by and between Parent and Sciens Institutional Services LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Institutional Services LLC to provide certain consulting services.

 

(xiv) “Covered Claims” shall have the meaning given to such term in the Litigation Management Agreement, dated as of July 12, 2013, by and among, Parent, New Colt, Colt’s Manufacturing, and each of the Stockholder Representatives (as defined therein) signatory thereto, as in effect on the Closing Date.

 

(xv) “Excluded Issuance” means means (a) the issuance of Qualified Equity Interests of the Parent to directors, officers and employees of the Parent and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors of the Parent and permitted under this Agreement), (b) in the event that Parent or any of its Subsidiaries forms any Subsidiary in accordance with the terms hereof, the issuance by such Subsidiary of Qualified Equity Interests to Parent or such Subsidiary, as applicable, (c) the issuance of Qualified Equity Interests of Parent in order to finance (i) the purchase consideration (or a portion thereof) in connection with a Permitted Acquisition or an Investment permitted under clause (w)(ii) of the definition of Permitted Investments, (ii) Capital

 

  

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Expenditures permitted under this Agreement, and/or (iii) so long as no Default or Event of Default shall have occurred and be continuing, for working capital purposes of Parent and its Subsidiaries (other than for the prepayment of Indebtedness permitted under Section 6.7(a)(iii)), (d) the issuance of Qualified Equity Interests of Parent in order to fund the prepayment of Indebtedness permitted under Section 6.7(a)(iii) and (e) the issuance of Qualified Equity Interests by a Subsidiary of Parent to its parent or member in connection with the contribution by such parent or member to such Subsidiary of the proceeds of an issuance described in clauses (a) through (e) above, but solely to the extent that (i) in the case of clauses (a) through (e) above, prior to the issuance of any such Qualified Equity Interests, Administrative Borrower has provided Agent with written notice of Borrowers’ intention to apply the proceeds of such Qualified Equity Interests in accordance with clause (a), (b), (c), (d) or (e) above, and (ii) in the case of clauses (c)(i), (c)(ii) and (d) above, the use of the proceeds of such issuance or sale of Qualified Equity Interests occurs substantially contemporaneously with the issuance or sale of such Qualified Equity Interests.

 

(xvi) “Employee Litigation Escrow Fund” shall have the meaning given to such term in the Escrow Agreement, dated as of July 12, 2013, by and among Parent, the Stockholder Representatives (as defined therein) signatory thereto and Bank of America, as escrow agent, as in effect on the Closing Date.

 

(xvii) “Extraordinary Receipts” means any payments in cash received by Parent or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of (a) proceeds of judgments, proceeds of settlements, or other consideration of any kind received in connection with any cause of action or claim, (b) indemnity payments (other than to the extent such indemnity payments are immediately payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, (c) foreign, federal, state or local tax refunds, (d) pension plan reversions, and (e) any purchase price adjustment received in connection with any purchase agreement, including the Acquisition Agreement, in each case, after deducting therefrom, to the extent applicable, taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such event, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

 

(xviii) “Intercreditor Agreement” means the Intercreditor Agreement, dated as of July 12, 2013, by and between Agent and Term Loan Agent, as acknowledged and agreed to by Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

(xix) “IP Reporting Certificate” means an IP reporting certificate substantially in the form of Exhibit I-1 executed and delivered by the Loan Parties to Agent.

 

(xx) “Management Agreement” means the letter agreement, dated as of July 9, 2007, by and between Parent and Sciens Management, LLC, as amended, restated, modified or supplemented from time to time in accordance with the terms hereof, pursuant to which Parent engaged Sciens Management, LLC to provide certain investment banking, corporate and strategic advisory services.

 

  

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(xxi) “Merger” means the merger of Acquisition Sub with and into New Colt with New Colt as the surviving entity.

 

(xxii) “Merger Effective Time” means the effective time of the Merger as set forth in the Certificate of Merger.

 

(xxiii)  “Net Cash Proceeds” means (a)  with respect to any sale or disposition by Parent or any of its Subsidiaries of assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of Parent or its Subsidiaries, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents, (B) Indebtedness assumed by the purchaser of such asset and (C) Indebtedness owing under the Term Loan Documents) which is required to be, and is, repaid in connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such sale or disposition, (iii) taxes paid or payable to any taxing authorities (or tax distributions made to members or shareholders) by Parent or such Subsidiary in connection with such sale or disposition, in each case (other than with respect to tax distributions), to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction; and (iv) all amounts that are set aside as a reserve (A) for adjustments in respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to the extent such reserve is required by GAAP, and (C) for the payment of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within thirty (30) days after, the date of such sale or other disposition, to the extent that in each case the funds described above in this clause (iv) are (x) deposited into escrow with a third party escrow agent or set aside in a separate Deposit Account that is subject to a Controlled Account Agreement in favor of Agent and (y) paid to Agent as a prepayment of the applicable Obligations in accordance with Section 2.4(e) of the Agreement at such time when such amounts are no longer required to be set aside as such a reserve; and (b)  with respect to the issuance or incurrence of any Indebtedness by Parent or any of its Subsidiaries, or the issuance by Parent or any of its Subsidiaries of any Equity Interests, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of Parent or such Subsidiary in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by Parent or such Subsidiary in connection with such issuance or incurrence, (ii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary in connection with such issuance or incurrence, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent or any of its Subsidiaries, and are properly attributable to such transaction.

 

  

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(xxiv) “New Colt” means New Colt Holding Corp., a Delaware corporation.

 

(xxv) “Permitted Tax Distribution” means, for any period, the amount of tax distributions that the Loan Parties are permitted to make, and actually make, to Parent’s equityholders pursuant to Section 6.9(e) of this Agreement.

 

(xxvi) “Post-Closing Restructuring Certificate” means the certificate of Parent (in form and substance satisfactory to the Agent), dated as of the Amendment No. 4 Effective Date, describing the transactions in respect of the restructuring of the Loan Parties’ corporate and capital structure after the Amendment No. 4 Effective Date.

 

(xxvii) “Post-Closing Restructuring Documents” means each of the agreements, instruments and other documents entered into to consummate the Post-Closing Restructuring Transactions.

 

(xxviii) “Post-Closing Restructuring Effective Date” has the meaning specified therefor in Section 5.17(a).

 

(xxix) “Post-Closing Restructuring Transactions” means the restructuring transactions described in the Post-Closing Restructuring Certificate.

 

(xxx)  “Specified Loan Party” means any Loan Party (a) that is not formed, organized and/or incorporated under the laws of the United States of America, any state thereof, the District of Columbia, Canada (or any province or territory thereof) or the Netherlands and (b) for which Agent has provided notice to Administrative Borrower that such Loan Party is a Specified Loan Party.

 

(xxxi) “Term Loan Agent” shall mean Cortland Capital Market Services LLC and its successors and assigns, including any successor or replacement agent under the Term Loan Agreement.

 

(xxxii) “Term Loan Agreement” shall mean the Term Loan Agreement, dated as of July 12, 2013, by and among Term Loan Agent, Term Loan Lenders, Parent and certain of its affiliates, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced in accordance with the terms of the Intercreditor Agreement.

 

(xxxiii) “Term Loan Debt” shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrowers and Guarantors to Term Loan Agent and Term Loan Lenders, including principal, interest, charges, fees, premiums, indemnities, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under the Term Loan Documents.

 

  

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(xxxiv) “Term Loan Documents” shall mean, collectively, the following (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, in each case in accordance with the terms of the Intercreditor Agreement): (a) the Term Loan Agreement; and (b) all other agreements, documents and instruments at any time executed and/or delivered by any Borrower or Guarantor with, to or in favor of Term Loan Agent or any Term Loan Lender in connection therewith or related thereto; sometimes being referred to herein individually as a “Term Loan Document”.

 

(xxxv) “Term Loan Lenders” shall mean the lenders under the Term Loan Agreement and their respective successors and assigns.

 

(xxxvi) “Term Priority Collateral” shall have the meaning set forth in the Intercreditor Agreement.

 

(xxxvii) “Transactions” means, collectively, the Closing Date Transactions and the Post-Closing Restructuring Transactions.

 

(b) Amendments to Definitions.

 

(i) Collateral.  The definition of “Collateral” is hereby amended by adding the following proviso at the end thereof immediately prior to the period:

 

(ii) “; provided, that, the Collateral shall not include the Keys Additional Employee Litigation Escrow Fund, Stockholder Representative Escrow Fund, Purchase Price Escrow Fund, General Escrow Fund and Employee Litigation Escrow Fund (as each such term is defined in the Acquisition Agreement) and in each case, together with all accounts in which such funds are held pursuant to the Acquisition Agreement”.

 

(iii) Compliance Period.  The definition of “Compliance Period” is hereby amended by deleting each reference therein to “$9,000,000” and substituting “$11,000,000” therefor.

 

(iv) Consolidated EBITDA.  The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Consolidated EBITDA” shall mean, as to any Person and its Subsidiaries, for any period, the amount equal to (without duplication): (a) the Consolidated Net Income of such Person and its Subsidiaries for such period determined in accordance with GAAP, plus (b) as to such Person and its Subsidiaries, each of the following (in each case to the extent deducted in the calculation of Consolidated Net Income for such period in accordance with GAAP): (i) the Interest Expense for such period, (ii) all Taxes of such Person and its Subsidiaries paid or accrued in accordance with GAAP for such period, including any Permitted Tax Distributions, (iii) depreciation and amortization (including, but not limited to, imputed interest and deferred compensation) for such period, all in accordance with GAAP, (iv) extraordinary, unusual or non-recurring charges, expenses or losses that are incurred outside the ordinary course of business, other than contract start-up costs and losses; provided, however, in the case of the Loan Parties, the aggregate amount added back to Consolidated EBITDA pursuant to this clause (iv) shall not exceed for any period $1,000,000, (v) other non-cash charges, expenses or losses and (vi) costs and expenses in connection with this Transaction in an aggregate amount not exceeding $2,500,000.”

 

  

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(v) Consolidated Net Income.  The definition of “Consolidated Net Income” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, that, (a) except to the extent included pursuant to the foregoing clause and except to the extent necessary to reflect Consolidated Net Income on a pro forma basis as provided herein, the net income of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated or amalgamated with such Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or by any of its Subsidiaries shall be excluded; and (b) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to such Person or to any other Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary shall be excluded, other than any distribution or dividend actually received in cash by such Person or its Subsidiaries, (c) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors or employees shall be excluded, (d) any impairment charges or asset writeoffs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded, (e) any after tax effect of income (loss) from early extinguishment of Indebtedness or Hedge Agreements or other derivative instruments or any currency translation gains and losses related to currency remeasurements of Indebtedness, and any net loss or gain resulting from hedging transactions for currency exchange risk shall be excluded, (f) any extraordinary non-cash gain or loss shall be excluded, (g) an amount equal to the Permitted Tax Distributions in respect of such period shall be included as though such amounts had been paid as income taxes directly by such Person for such period, and (h) the cumulative effect of a change in accounting principles shall be excluded.  For the purpose of this definition, net income excludes any gain together with any related Taxes for such gain realized upon the sale or other disposition of any assets outside of the ordinary course of business or of any Equity Interests of such Person or a Subsidiary of such Person.”

 

(vi) Eligible Accounts.

 

(A) Clause (c) of the definition of “Eligible Accounts” in Section 1.1 of the Credit Agreement is hereby deleted and “[Reserved]” substituted therefor.

 

(B) Clause (j)(i) of the definition of “Eligible Accounts” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following immediately before the “,” at the end thereof:

 

“; except that with respect to each of Sports South, LLC and Bass Pro Group LLC, Accounts owing by such Account Debtors exceed 30% of all Eligible Accounts; provided, that, in the Permitted Discretion of Agent, if the creditworthiness of either Sports South, LLC or Bass Pro Group LLC adversely changes, Agent may reduce such percentage applicable to such Account Debtor to 10%”

 

  

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(vii) Eligible Inventory.  Clause (n) of the definition of “Eligible Inventory” in Section 1.1 of the Credit Agreement is hereby amended by deleting the reference to “7,500,000” therein and substituting “$8,500,000” therefor.

 

(viii) Fixed Charge Coverage Ratio.  The definition of “Fixed Charge Coverage Ratio” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Fixed Charge Coverage Ratio” means, for any Person and its Subsidiaries with respect to any date of determination, the ratio of (a) the amount equal to (1) Consolidated EBITDA of such Person and its Subsidiaries on a consolidated basis, as of the end of a fiscal quarter for the immediately preceding period of four (4) consecutive fiscal quarters for which Agent has received financial statements, less (2) Capital Expenditures of such Person and its Subsidiaries during such period to the extent not financed by a third party, less (3) any Permitted Tax Distributions; provided, that, solely for purposes of calculating the Fixed Charge Coverage Ratio, the amount of Permitted Tax Distributions shall not include the amount accrued and paid for the fiscal quarter ending June 30, 2013 and the amount of any Permitted Tax Distribution for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized, to (b) Fixed Charges of such Person and its Subsidiaries for such period.”

 

(ix) Fixed Charges.  The definition of “Fixed Charges” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Fixed Charges” means, as to any Person and its Subsidiaries, on a consolidated basis, with respect to any period, the sum of, without duplication, (a) all Interest Expense paid in cash during such period, plus (b) all regularly scheduled (as determined at the beginning of the respective period) principal payments of Indebtedness for borrowed money, and regularly scheduled (as determined at the beginning of the respective period) payments related to Indebtedness with respect to Capital Leases (and without duplicating in items (a) and (b) of this definition, the cash interest component with respect to Indebtedness under Capital Leases) and, in each case, to the extent there is an equivalent reduction in the commitments thereunder in the case of any term credit facility, plus (c) if the sum of the Canadian Letter of Credit Usage plus the aggregate outstanding principal amount of Canadian Advances in each case on the last day of such period exceeds the Canadian Borrowing Base (without giving effect to Canadian Fixed Asset Availability) on the last day of such period, an amount equal to the product of (i) the aggregate amount of reductions in Canadian Fixed Asset Availability during such period and (ii) an amount equal to (A) such excess divided by (B) the Canadian Fixed Asset Availability on the last day of such period, plus (d) if the sum of the US Letter of Credit Usage plus the aggregate outstanding principal amount of US Advances in each case on the last day of such period exceeds the US Borrowing Base (without giving effect to US Equipment Availability) on the last day of such period, an amount equal to the product of (i) the aggregate amount of reductions in US Equipment Availability during such period and (ii) an amount equal to (A) such excess divided by (B) the US Equipment Availability on the last day of such period, plus (e) all taxes paid or tax distributions made to members or shareholders (other than Permitted Tax Distributions) by such Person and its Subsidiaries in cash during such period, plus (f) all Restricted Payments (other than Permitted Tax Distributions) made by such Person and its Subsidiaries during such period pursuant to the Agreement; provided, that, in the case of clauses (a), (b) and (e), the amounts for the fiscal quarters ending on or prior to March 31, 2014 shall be Annualized.”

 

  

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(x) Guarantors.  The definition of “Guarantors” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Guarantors” means (a) Colt Finance Corp., a Delaware corporation, (b) Colt Defense Technical Services, LLC, a Delaware limited liability company, (c) New Colt Holding Corp., a Delaware corporation, (d) New Colt Acquisition Corp., a Delaware corporation, (which will merge with and into New Colt Holding Corp. on the Amendment No. 4 Effective Date with New Colt Holding Corp. as the surviving entity), (e) Colt International Coöperatief U.A., a cooperative formed under Dutch law, and (f) any other Person that becomes a guarantor under the Agreement after the Amendment No. 4 Effective Date; and “Guarantor” means any one of them.”

 

(xi) Loan Documents.  The definition of “Loan Documents” in Section 1.1 of the Credit Agreement is hereby amended by deleting “any Trademark Security Agreement” and replacing it with “any Trademark Security Agreement, the Intercreditor Agreement, the Collateral Assignment,”.

 

(xii) Material Contracts.  The definition of “Material Contracts” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Material Contract” means (i) the Senior Note Indenture, (ii) each Term Loan Document, (iii) each Acquisition Document, (iv) each Post-Closing Restructuring Document, (vi) any contract or agreement (other than a Loan Document, Term Loan Document, Acquisition Document or Post-Closing Restructuring Document) of any Loan Party involving monetary liability of or to Parent or its Subsidiaries in excess of $2,000,000 in any fiscal year of Parent and (v) each other contract or agreement, the loss of which could reasonably be expected to result in a Material Adverse Change.”

 

(xiii) Permitted Disposition.  The definition of “Permitted Disposition” in Section 1.1 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“Permitted Disposition” means:

 

(a) sales, abandonment, or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business,

 

(b) sales of Inventory to buyers in the ordinary course of business and the consignment of Inventory to the Government of the United Mexican States in the ordinary course of business pursuant to a written agreement (the “DCAM Consignment”); provided, that, the maximum value of Inventory at the Government of the United Mexican States at any one time shall not exceed $1,000,000

 

  

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(c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents,

 

(d) the non-exclusive licensing or sublicensing of Intellectual Property or other general intangibles (other than the exclusive licenses in effect on the Amendment No. 4 Effective Date as set forth on Schedule L-1) and licenses, leases or subleases of other property (in each case other than Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real Property), in each case, in the ordinary course of business and so long as any such transaction shall not: (i) materially interfere with the business of Parent and its Subsidiaries, (ii) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (iii) have a material and adverse effect on the value  of such Intellectual Property, or (iv) otherwise adversely limit or interfere in any respect with the use of any such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

 

(e) the granting of Permitted Liens,

 

(f) the sale or discount, in each case without recourse, of Accounts arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

 

(g) any involuntary loss, damage or destruction of property,

 

(h) any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property;

 

(i) the leasing or subleasing of assets of Parent or its Subsidiaries (other than Accounts and Inventory) in the ordinary course of business,

 

(j) the sale or issuance of Equity Interests by any Subsidiary of Parent to a Loan Party,

 

(k) the non-exclusive licensing or sublicensing of Intellectual Property pursuant to manufacturing license agreements or technical assistance agreements with certain foreign governments, or otherwise in accordance with the International Traffic in Arms Regulations, in each case so long as any such transaction does not:  (i) adversely affect, limit or restrict the rights of Agent to use any Intellectual Property of Loan Parties to sell or otherwise dispose of any Inventory or other Collateral, (ii) have a material and adverse effect on the value of such Intellectual Property, or (iii) otherwise adversely limit or interfere with the use of such Intellectual Property by Agent in connection with the exercise of its rights or remedies hereunder or under any of the other Loan Documents;

 

  

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(l) the making of a Restricted Payment that is expressly permitted to be made pursuant to the Agreement,

 

(m) the making of a Permitted Investment,

 

(n) the sale or other disposition of property by a Loan Party to another Loan Party, and

 

(o) sales or other dispositions of assets of Parent and its Subsidiaries not otherwise subject to the provisions set forth in this definition, provided, that, as to any such sale or other disposition, each of the following conditions is satisfied:

 

(i) such transaction does not involve the sale or other disposition of any Intellectual Property, Equity Interest in any Subsidiary or of Accounts or Inventory; and

 

(ii) the aggregate amount of such dispositions does not exceed $1,000,000 during any fiscal year.

 

(xiv) Permitted Indebtedness. The definition of “Permitted Indebtedness” in Section 1.1 of the Credit Agreement is hereby amended by (A) replacing the period following clause (v) with “; and” and (B) adding the following new clause (w) at the end of such definition:

 

“(w)  Indebtedness evidenced by the Term Loan Documents in an aggregate outstanding principal amount not to exceed $50,000,000, and any Refinancing Indebtedness in respect of such Indebtedness”

 

(xv) Permitted Intercompany Advances. The definition of “Permitted Intercompany Advances” in Section 1.1 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“Permitted Intercompany Advances” means loans (a) made by a Loan Party that is not a Specified Loan Party to another Loan Party that is not a Specified Loan Party and (b) made by a Loan Party that is not a Specified Loan Party to a Specified Loan Party; provided, that, (i) in the case of clauses (a) and (b), Agent shall have received an Intercompany Subordination Agreement as duly authorized, executed and delivered by the parties to any such loans and (ii) in the case of clause (b) only, the aggregate amount of all such loans does not exceed $500,000 at any time outstanding unless otherwise agreed to in writing by the Agent.”

 

(xvi) Permitted Investments. The definition of “Permitted Investments” in Section 1.1 of the Credit Agreement is hereby amended by (A) replacing the period following clause (v) with “; and” and (B) replacing clause (w) and inserting a new clause (x) as follows at the end of such definition:

 

  

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“(w) other Investments in an aggregate outstanding amount not to exceed $500,000 at any time and (ii) other Investments not constituting Permitted Acquisitions made solely with the proceeds of any Excluded Issuances (as described in clause (c)(i) of the definition thereof; provided, that, as of the date of and such Investment and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; and

 

(x) the Merger in accordance with the terms of the Acquisition Agreement on the Amendment No. 4 Effective Date; provided, that, before and immediately after effect to the Merger (i) no Default or Event of Default shall exist before or immediately after giving effect thereto, and (ii) the Excess Availability shall not be less than $15,000,000 as of the date of the Merger and immediately after giving effect thereto.”

 

(xvii) Permitted Liens.  The definition of “Permitted Liens” in Section 1.1 of the Credit Agreement is hereby amended by (A) inserting the following at the end of clause (u) thereof “including inventory consigned pursuant to the DCAM Consignment described in clause (b) of the definition of Permitted Dispositions”, (B) replacing the period following clause (z) with “; and” and (C) adding the following at the end of such definition:

 

“(aa) Liens of Term Loan Agent to secure the Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness, provided, that, such liens shall at all times be subject to the terms of the Intercreditor Agreement; and

 

(bb) any Lien arising out of a prejudgment remedy to the extent ordered by the court overseeing any Covered Claim, including any prejudgment writ of attachment, solely to the extent that each of the following conditions have been satisfied, as certified by Parent within three (3) Business Days of the date any such prejudgment remedy is ordered by such Court: (i) the allocated amount available for satisfaction of such Covered Claim in the Employee Litigation Escrow Fund (the “Allocated Escrow”) shall not be less than the  mount specified in such prejudgment writ of attachment (collectively, the “Claim Amount”), (ii) the Employee Litigation Escrow Fund shall be valid and in full force and effect at all times that such Covered Claim is secured by such Lien, (iii) to the extent the Claim Amount exceeds the Allocated Escrow, the Loan Parties shall have posted bonds, cash collateral or other financial assurances acceptable to such Court sufficient to satisfy the amount specified in such prejudgment writ of attachment (the “Additional Security”), and (iv) such Lien shall be junior to the Liens securing the Obligations pursuant to applicable law; provided, that, Agent, in its Permitted Discretion, shall be permitted to implement reserves with respect to any such Liens arising from any prejudgment remedy in respect of the Covered Claims, including a prejudgment writ of attachment, as set forth in Section 2.1(d)(v) hereof.

 

Notwithstanding anything to the contrary contained in any of the Loan Documents, Permitted Liens shall not include any Liens on assets of any Loan Party which secure any Indebtedness or other obligations of any Foreign Subsidiary, except (x) as permitted by clause (a) of the definition of Permitted Liens and liens arising in respect of Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness, (y) as consented to in writing by the Required Lenders or (z) Liens on assets of Canadian Loan Parties may secure Indebtedness and other obligations of Canadian Loan Parties to the extent permitted by Section 6.1 or 6.2 of the Agreement.”

 

  

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(xviii) Senior Note Indenture Secured Cap. The definition of “Senior Note Indenture Secured Cap” is hereby deleted and the following substituted therefor:

 

“Senior Note Indenture Secured Debt Cap” means, on any date, the maximum principal amount of all Advances, Swing Loans, Letter of Credit Usage and Overadvances, plus the Term Loan Debt permitted to be incurred by the Loan Parties in accordance with, and without contravening, Section 3.2(b)(2) of the Senior Note Indenture and remain outstanding on a fully secured basis pursuant to clause (1) of the definition of “Permitted Liens” (as defined in the Senior Note Indenture) in accordance with Section 3.6 of the Senior Note Indenture.”

 

(xix) Underlying Issuer.  The definition of “Underlying Issuer” is hereby deleted and the following substituted therefor:

 

“Underlying Issuer” means Wells Fargo or one of its Affiliates, and solely with respect to Canadian Underlying Letters of Credit, Toronto Dominion Bank.”

 

(xx) US Borrowers.  The definition of “US Borrowers” is hereby deleted and the following substituted therefor:

 

“US Borrowers” means, collectively, (a) Colt Defense LLC, a Delaware limited liability company, (b) Colt’s Manufacturing Company LLC, a Delaware limited liability company and (c) any other person that after the Amendment No. 4 Effective Date becomes a US Borrower under the Agreement; and “Borrower” means any one of them.”

 

(c) Interpretation.  For purposes of this Amendment No. 4, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement as amended by this Amendment No. 4.

 

2. Section 1.6 (Pro Forma and Other Calculations).  Article 1 is hereby amended by inserting the following Section 1.6 at the end of such Article:

 

“1.6.  Pro Forma and Other Calculations.

 

(a) Notwithstanding anything to the contrary herein, financial ratios and tests, including Consolidated EBITDA and the Fixed Charge Coverage Ratio shall be calculated in the manner prescribed by this Section 1.6; provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.6, when calculating Consolidated EBITDA and the Fixed Charge Coverage Ratio, each as applicable, for purposes of Section 7 (other than for the purpose of determining pro forma compliance with Section 7) the events described in this Section 1.6 that occurred subsequent to the end of the applicable period shall not be given pro forma effect.  In addition, whenever a financial ratio or test is to be calculated on a pro forma basis, the reference to “four consecutive fiscal quarters” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended four consecutive fiscal quarters for which Agent has received or is required to have received financial statements (it being understood that for purposes of determining pro

 

  

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forma compliance with Section 7, if no four consecutive fiscal quarters with an applicable level cited in Section 7 has passed, the applicable level shall be the level for the four consecutive fiscal quarters cited in such section with an indicated level).  For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating Consolidated EBITDA, the Fixed Charge Coverage Ratio, as applicable, for purposes of Section 7 (other than for the purpose of determining pro forma compliance with such Section to the extent referenced in such Section or another Section), each of which shall be based on the financial statements delivered to Agent pursuant to Section 5.1, as applicable, for the relevant period.

 

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

 

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

 

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

 

  

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period).  Notwithstanding the foregoing or any other provision contained in the Loan Documents, with respect to the repayment or redemption of Indebtedness with the proceeds of an Excluded Issuance, such repayment or redemption shall be disregarded for all purposes under this Agreement, including the calculation of any financial covenants or ratios and, for the avoidance of doubt, Sections 7, until Parent has delivered the financial information required under Section 5.1 for the first full fiscal quarter of Parent ending after the fiscal quarter in which such repayment or redemption was made.

 

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

 

3. Section 2.1 (Revolver Advances).  Section 2.1(d) is hereby amended by (a) deleting the “and” in clause (iii) thereof, (b) deleting the “.” at the end of clause (iv) thereof and inserting the following:

 

“and (v) reserves with respect to any Liens arising from any prejudgment attachments in respect of the Covered Claims as set forth in clause (bb) of the definition of Permitted Liens in Schedule 1.1 hereto.”

 

4. Section 2.4 (Payments; Reduction of Commitments; Prepayments).  Section 2.4(e) is hereby amended by deleting“(ii) [Reserved]” and replacing it with the following:

 

“(ii) Dispositions.  Within 3 Business Days of the date of receipt by Parent or any of its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or disposition by Parent or any of its Subsidiaries of assets (including casualty losses or condemnations but excluding sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (e), (i), (j), (l), (m) or (n) of the definition of Permitted Dispositions), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including condemnation awards and payments in lieu thereof) received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received exceeds $2,500,000 in the aggregate during the term of this Agreement; provided that, so long as (A) no Default or Event of Default shall have occurred and is continuing or would result therefrom, (B) Administrative Borrower shall have given Agent prior written notice of Borrowers' intention to apply such Net Cash Proceeds to the costs of replacement of the properties or assets that are the subject of such sale or disposition or the cost of purchase or construction of other assets (other than current assets) useful in the business of Parent or its Subsidiaries, (C) the Net Cash Proceeds of ABL

 

  

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Priority Collateral (or upon payment in full of the Term Loan Debt and termination of the Term Loan Agreement, any Collateral) are held in a Deposit Account in which Agent has a perfected first-priority security interest (subject to Permitted Liens), and (D) Parent or its Subsidiaries, as applicable, complete such replacement, purchase, or construction within one hundred and eighty (180) days after the initial receipt of such Net Cash Proceeds, then the Loan Party whose assets were the subject of such disposition shall have the option to apply such monies to the costs of replacement of the assets that are the subject of such sale or disposition or the costs of purchase or construction of other assets useful in the business of such Loan Party unless and to the extent that such applicable period shall have expired without such replacement, purchase, or construction being made or completed, in which case, any amounts remaining in the Deposit Account referred to in clause (C) above shall be paid to Agent and applied in accordance with Section 2.4(f).  Nothing contained in this Section 2.4(e)(ii) shall permit Parent or any of its Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 6.4.

 

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

 

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

 

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

 

(vi) Waivable Mandatory Prepayments. Anything contained herein to the contrary notwithstanding, in the event Borrowers are required to make any mandatory prepayment (a “Waivable Mandatory Prepayment”) of the Loans pursuant to this Section 2.4(e), not less than two (2) Business Days prior to the date (the “Required Prepayment Date”) on which Borrowers are required to make such Waivable Mandatory Prepayment, Administrative Borrower shall notify Agent of the amount of such prepayment, and Agent will promptly thereafter notify Lenders of the Administrative Borrower’s request.  If on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Lender that does not notify Administrative Borrower and Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option) the Required Lenders have waived such prepayment, then Borrowers shall not be required to make such prepayment.”

 

5. Section 2.4 (Application of Payments).  Clause (f) of Section 2.4 is hereby amended by deleting “(ii) [Reserved]” and replacing it with the following:

 

  

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“(ii) Each prepayment pursuant to Section 2.4(e)(ii) shall, (A) in the case of Net Cash Proceeds of any sale or disposition of assets consisting of any ABL Priority Collateral, be applied, first, to the Obligations in the manner provided in Section 2.5(f)(v) and, second, to the Term Loan Debt to the extent provided in the Term Loan Documents and (B) in the case of Net Cash Proceeds of any sale or disposition of assets consisting of any Term Priority Collateral, be applied, first, to the Term Loan Debt to the extent provided in the Term Loan Documents, and, second, to the Obligations in the manner provided in Section 2.5(f)(v).

 

(iii) Each prepayment pursuant to Section 2.4(e)(iii) shall be applied (A) first, to the Obligations in the manner provided in Section 2.5(e)(v) and (B) second, to the Term Loan Debt to the extent provided in the Term Loan Documents.

 

(iv) Each prepayment pursuant to Sections 2.4(e)(iv) shall be applied, (A) first, to the Term Loan Debt to the extent provided in the Term Loan Documents, and, (B) second, to the Obligations in the manner provided in Section 2.5(f)(v).”

 

(v) Each prepayment of Obligations pursuant to Section 2.4(e)(ii), (iii) or (iv) shall, (A) so long as no Application Event shall have occurred and be continuing, be applied, first, ratably to the outstanding principal amount of the US Advances and Canadian Advances until paid in full, and second, to ratably cash collateralize the US Letters of Credit and Canadian Letters of Credit in an amount equal to 105% of the then outstanding US Letter of Credit Usage or Canadian Letter of Credit Usage, as applicable, and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(ii), (iii) or (iv)”.

 

6. Section 4.2 (Due Authorization, No Conflict).  Clause (v) of Section 4.2(b) of the Credit Agreement is hereby amended by inserting immediately after the phrase “require any approval of any holders of Equity Interests of a Loan Party” the following: “, except as set forth on Schedule 4.2,”.

 

7. Section 4.3 (Governmental Consents).  Section 4.3 is hereby amended by inserting “Except as set forth on Schedule 4.3,” at the beginning thereof.

 

8. Section 4.4 (Binding Obligations; Perfected Liens).  Section 4.4(b) of the Credit Agreement is hereby amended by inserting the following phrase immediately after the phrase “by operation of law” in the second sentence of Section 4.4(b): “and with respect to the Term Priority Collateral, subject to the terms of the Intercreditor Agreement”.

 

9. Section 4.7 (Litigation).  Section 4.7 of the Credit Agreement is hereby deleted and the following substituted therefor

 

“(a) Before and after giving effect to the Closing Date Transactions, there are no actions, suits, or proceedings pending or, to the knowledge of any Loan Party, after due inquiry, threatened in writing against a Loan Party or any of its Subsidiaries that either individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.

 

  

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(b)      Before and after giving effect to the Closing Date Transactions, Schedule 4.7 sets forth a complete and accurate description, with respect to each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably be expected to result in liabilities in excess of, $50,000 that, as of the Amendment No. 4 Effective Date, is pending or, to the knowledge of any Loan Party, after due inquiry, threatened against a Loan Party or any of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings, (ii) the nature of the dispute that is the subject of such actions, suits, or proceedings, (iii) the procedural status, as of the Amendment No. 4 Effective Date, with respect to such actions, suits, or proceedings, and (iv) whether any liability of the Loan Parties’ and their Subsidiaries in connection with such actions, suits, or proceedings is covered by insurance.”

 

10. Section 4.12 (Environmental Matters).  Section 4.12 of the Credit Agreement is hereby amended by as follows: (a) clause (c) is amended by deleting “and” at the end thereof, (b) replacing the “.” at the end of clause d with “; and”, and (c) inserting the following as a new clause (e): “(e) no Environmental Law regulates, or requires notification to a Governmental Authority of the Closing Date Transactions or the Post-Closing Restructuring Transactions.”

 

11. Section 4.9 (No Material Adverse Change).  Section 4.9 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“4.9 No Material Adverse Change.  All historical financial statements relating to the Loan Parties and their Subsidiaries that have been delivered by any Borrower to Agent have been prepared in accordance with GAAP (except (x) in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments and (y) as set forth on Schedule 4.9) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended.  Since December 31, 2012, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Change.”

 

12. Section 4.19 (Merger).  Section 4.19 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“4.19 Merger.

 

(a) The Loan Parties have delivered to Agent a complete and correct copy of the Acquisition Documents, including all schedules and exhibits thereto.  The execution, delivery and performance of each of the Acquisition Documents has been duly authorized by all necessary action on the part of each Loan Party who is a party thereto.  Each Acquisition Document is the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against each such Loan Party in accordance with its terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.  No Loan Party is in default in the performance or compliance with any provisions thereof.  All representations and warranties made by Loan Parties and the seller in the Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects.

 

  

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(b) As of the Amendment No. 4 Effective Date, the Merger has been consummated in all material respects, in accordance with all applicable laws.  As of the Amendment No. 4 Effective Date, all requisite approvals by Governmental Authorities having jurisdiction over Loan Parties and, to each Loan Party’s knowledge, the seller, with respect to the Merger, have been obtained (including filings or approvals required under the Hart-Scott-Rodino Antitrust Improvements Act), except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Agent or Lenders.  As of the Amendment No. 4 Effective Date, after giving effect to the transactions contemplated by the Acquisition Documents, the Loan Parties will have good title to the assets acquired pursuant to the Acquisition Agreement, free and clear of all Liens other than Permitted Liens.  As of the Amendment No. 4 Effective Date, CMC is a wholly-owned subsidiary of New Colt.  The Merger Effective Time has occurred such that New Colt is a wholly-owned Subsidiary Parent. ”

 

13. Section 4.32 through 4.34 of Article IV.  Article IV of the Credit Agreement is amended by inserting the following Section at the end of such Article:

 

“4.32           Insurance.  The Loan Parties keep their respective properties adequately insured and maintains (a) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law (including, without limitation, against larceny, embezzlement or other criminal misappropriation).  Schedule 4.32 sets forth a list of all insurance maintained by the Loan Parties on the Amendment No. 4 Effective Date.

 

4.33.  Senior Note Indenture.  All Obligations, including, without limitation, those to pay principal of and interest (including post-petition interest) on all Advances, Swing Loans, Letter of Credit Usage and Overadvances and fees and expenses in connection therewith, constitute Indebtedness (under and as defined in the Senior Note Indenture) that is permitted under Section 3.2(b)(2) of the Senior Note Indenture.  Parent acknowledges that Agent and the Lenders are entering into this Agreement, and extending their Commitments, in reliance upon this Section 4.33.”

 

14. Section 5.1 (Financial Statements, Reports, Certificates).  Schedule 5.1 to the Credit Agreement is hereby amended by inserting at the end thereof the following rows:

 

	
promptly, but in any event within 2 days after a Responsible Officer of any Borrower has knowledge thereof,

	
(o)  notice of a default or event of default or notice of reservation of rights under the Term Loan Documents.

	
Quarterly (no later than the 45th day after the end of each of parent’s fiscal quarters)

	
(p)  an IP Reporting Certificate.

  

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15. Section 5.11 (Formation of Subsidiaries).  Section 5.11 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“5.11  Formation of Subsidiaries.  At any time that any Loan Party forms any direct or indirect Subsidiary or acquires any direct Subsidiary after the Amendment No. 4 Effective Date, such Loan Party shall (a) within thirty (30) days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) cause any such new Subsidiary to provide to Agent a Guaranty and a joinder to the Security Agreement and any other applicable Loan Documents, together with such other security documents (including mortgages with respect to any Real Property owned in fee of such new Subsidiary with a fair market value of at least $200,000) as well as appropriate financing statements (and with respect to all property subject to a mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary); provided, that, a Guaranty or a joinder to the Security Agreement and other applicable Loan Documents, and such other documents shall not be required to be provided to Agent if the costs to the Loan Parties of providing such Guaranty, executing the Security Agreement and other Loan Documents or perfecting the security interests created thereby are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the security or guarantee afforded thereby, (b) within thirty (30) days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide to Agent a pledge agreement (or an addendum to the Security Agreement or other applicable Loan Documents) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary reasonably satisfactory to the Agent provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such other pledge are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and Lenders of the security afforded thereby, and (c) within 30 days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide to Agent all other documentation reasonably requested by Agent (including policies of title insurance or other documentation with respect to all Real Property owned in fee and subject to a mortgage).”

 

16. Section 5.12 (Further Assurances).  Section 5.12 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“5.12  Further Assurances.  At any time upon the reasonable request of Agent execute or deliver to Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel and all other documents (the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and maintain Agent’s Liens in all of the assets of Parent and its Subsidiaries (other than Excluded Property) (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Parent or its Subsidiaries after

 

  

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the Amendment No. 4 Effective Date with a fair market value in excess of $200,000, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents; provided, that, no other pledge shall be required if the costs to the Loan Parties of providing such documents are unreasonably excessive (as determined by Agent in consultation with Borrowers) in relation to the benefits of Agent and the Lenders of the benefits afforded thereby.  To the maximum extent permitted by applicable law, if any Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time following the request to do so, such Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name, as applicable, and authorizes Agent to file such executed Additional Documents in any appropriate filing office.  In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as Agent may reasonably request from time to time (a) in connection with any merger, amalgamation, consolidation, or reorganization permitted under Section 6.3, delivery to Agent of the agreements and documentation set forth in Section 5.11 above, or (b) to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of the Loan Parties (subject to exceptions and limitations contained in the Loan Documents).”

 

17. Section 5.17 (Post-Closing Restructuring Transactions).  Article V is amended by inserting the following Section at the end of such Article:

 

“5.17. Post-Closing Restructuring Transactions.  If the Loan Parties consummate the Post-Closing Restructuring Transactions, the Loan Parties agree that each of the following conditions precedent shall be satisfied, in each case, as determined by Agent in its sole discretion (the date on which such conditions are satisfied, is hereinafter referred to as the “Post-Closing Restructuring Effective Date”):

 

(a) On or before the Post-Closing Restructuring Effective Date, Parent shall have delivered to Agent complete and correct copies of the Post-Closing Restructuring Documents, including all schedules and exhibits thereto, in each case, certified by the Secretary of Parent.  The execution, delivery and performance of each of the Post-Closing Restructuring Documents shall have been duly authorized by all necessary action by each of the parties thereto.  Each Post-Closing Restructuring Document shall be the legal, valid and binding obligation of each of the parties thereto, enforceable against such parties in accordance with its terms, in each case, except (i) as may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.  None of the parties to the Post-Closing Restructuring Documents shall be in default in the performance or compliance with any provisions thereof, the performance or compliance of which is material to the interests of the Lenders.  All representations and warranties made by the parties to the Post-Closing Restructuring Documents in the Post-Closing Restructuring Documents and in the certificates delivered in connection therewith shall be true and correct in all material respects.

 

(b) No Default or Event of Default shall have occurred and be continuing on the Post-Closing Restructuring Effective Date, nor shall either result immediately from the consummation of the Post-Closing Restructuring Transactions.

 

  

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(c)  Agent shall have received a certificate from a Responsible Officer of Parent certifying that the conditions set forth above in this Section 5.17 have been satisfied.”

 

18. Section 6.3 (Restrictions on Fundamental Changes).  Section 6.3 is hereby amended by inserting the following clause (d) at the end of such Section:

 

“(d) Notwithstanding the foregoing, nothing in Section 6.3 or 6.5 shall restrict or prohibit the Loan Parties from consummating (i) the Acquisition on the Amendment No. 4 Effective Date in accordance with the provisions of the Acquisition Documents, or (ii) to the extent permitted pursuant to Section 5.17, the Post-Closing Restructuring Transactions in accordance with the provisions of the Post-Closing Restructuring Documents.”

 

19. Section 6.7 (Certain Payment of Debts and Amendments).  Section 6.7 of the Credit Agreement is hereby amended as follows:

 

(a) Clause (i) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

 

“(i) Loan Parties (A) may make regularly scheduled payments of principal and interest in respect of Indebtedness permitted under clause (p) of the definition of Permitted Indebtedness and other mandatory payments as and when due in respect of such Indebtedness in accordance with the terms thereof, and (B) may make regularly scheduled payments of principal and interest in respect of Indebtedness permitted under clause (w) of the definition of Permitted Indebtedness and other mandatory payments as and when due in respect of such Indebtedness in accordance with the terms of the Term Loan Documents in effect as of the Amendment No. 4 Effective Date.”

 

(b) Clause (ii) of Section 6.7(a) is hereby amended by deleting the phrase “(g) or (p)” and substituting “(g), (p) or (w)” therefor.

 

(c) Clause (iii) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

 

“(iii)           all Loan Parties may make optional prepayments and redemptions of Indebtedness solely with the proceeds of the issuance and sale of Qualified Equity Interests of Parent that constitutes an Excluded Issuance (as described in clause (d) of the definition thereof); provided, that, as of the date of any such prepayment or redemption, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing;”

 

(d) Clause (v) of Section 6.7(a) is hereby deleted in its entirety and the following substituted therefor:

 

“(v) Parent and its Subsidiaries may make optional prepayments of Permitted Intercompany Advances to the extent permitted by the Intercompany Subordination Agreement; provided, that, (x) so long as on and as of the date of any such prepayment, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing and (y) unless agreed to in writing by the Agent, optional prepayments by a Loan Party of Permitted Intercompany Advances owing to a Specified Loan Party shall not exceed $500,000 in aggregate principal amount during the term of this Agreement;”

 

  

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(e) Section 6.7(b) is hereby amended by (i) replacing “; and” at the end of clause (ii) with “;”, (b) replacing “.” at the end of clause (iii) with “; and”,  (iii) inserting the following at the end of such Section:

 

“(iv) the Term Loan Documents, except in accordance with the terms of the Intercreditor Agreement;

 

(v) any of the Acquisition Documents, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or its Subsidiaries in any material respect and do not adversely affect in any material respect the ability of a Loan Party to be in compliance with the terms hereof or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interests of Agent or Lenders in any material respect; and

 

(vi) the Management Agreement, the Consulting Agreement or any other agreement listed on Schedule 6.12(d) except with the prior written consent of the Agent.”

 

20. Section 6.9 (Restricted Payments).  Section 6.9 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“6.9 Restricted Payments.  Declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:

 

(a) Parent and each Subsidiary may declare and make dividend payments or other distributions payable in the Equity Interests of such Person (other than Disqualified Equity Interests);

 

(b) any Subsidiary of Parent may make Restricted Payments described in Section 6.12(f);

 

(c) any Subsidiary of Parent may pay or make distributions to Parent that are used to make substantially contemporaneous payments to, and Parent may make payments to, repurchase or redeem Equity Interests and options to purchase Equity Interests of Parent held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates) of Parent pursuant to any management equity subscription agreement, employee agreement or stock option agreement or other agreement with such officer, director or employee or former officer, director or employee; provided, that, (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (ii) the aggregate cash consideration paid for all such payments, repurchases or redemptions shall not in any fiscal year of Parent exceed $250,000;

 

(d) Parent may repurchase its Equity Interests to the extent such repurchase is deemed to occur upon (i) the non-cash exercise of stock options to the extent such Equity Interests represents a portion of the exercise price of such options and (ii) the withholding of a portion of such Equity Interests to pay taxes associated therewith, and the purchase of fractional shares of Equity Interests of Parent or any Subsidiary arising out of stock dividends, splits or combinations or business combinations;

 

  

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(e)  for each taxable year ending after the Amendment No. 4 Effective Date with respect to which Parent is treated as a partnership or a disregarded entity for U.S. federal income tax purposes, Parent may make distributions, advances or other payments to each owner of its Equity Interests, in an amount equal to the product of (i) the portion of Parent’s “taxable income” (as modified below) allocable to such member for such year and (ii) the highest combined marginal federal, state and/or local income tax rate applicable to any such owner for such year; provided, that, for purposes of this clause (e), Parent’s “taxable income” for any year shall be computed (A) with respect to any taxable year (or portion thereof) through and including Parent’s fiscal quarter ending June 30, 2013, without any deduction for any interest expense for such year attributable to any indebtedness of Parent used to finance distributions (as determined in accordance with Treasury Regulation Section 1.163-8T) or any indebtedness treated as having refinanced any such indebtedness, or any other interest expense incurred by Parent, that, in each case, is not treated as deductible or federal income tax purposes by each holder of Equity Interests issued by Parent, and (B) with respect to any taxable year, whether ended prior to or after the Amendment No. 4 Effective Date, by including any increases to taxable income for such year as a result of any tax examination, audit or other adjustment; and

 

(f) any Subsidiary of Parent may pay dividends or other distributions to a Loan Party (including, without limitation, distributions to a Loan Party upon the reduction of capital (by whatsoever name called, including paid in capital, paid up capital or stated capital) of such Subsidiary).”

 

21. Section 6.12 (Transaction with Affiliates).

 

(a) Clause (d) of Section 6.12 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“(d) the payment of reasonable and customary (i) fees and reasonable out-of-pocket expenses paid to and (ii) indemnities provided on behalf of, the directors of Parent or any Subsidiary; provided that, in the case of the preceding clause (i) only, the aggregate amount of such payments shall not exceed $250,000 in any fiscal year;”

 

(b) Clause (f) of Section 6.12 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“(f) (x) fees payable by Parent to Sciens Management LLC and Sciens Institutional Services LLC and (y) the reimbursement by Parent of Sciens Management LLC and Sciens Institutional Services LLC of reasonable and customary out-of-pocket expenses of Sciens Management LLC and Sciens Institutional Services LLC incurred in the ordinary course of business in connection with the businesses of Parent and its Subsidiaries, solely to the extent required by terms of the Management Agreement and the Consulting Agreement, in an aggregate amount in respect of subclauses (x) and (y) not to exceed $1,000,000 in the aggregate in any fiscal year of Parent; provided, that, as of the date of any such payment and after giving effect thereto, no Default or Event of Default, in each case, pursuant to Section 8.1, shall exist or have occurred and be continuing;”

 

  

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22. Section 6.13 (Use of Proceeds).  Clause (b) of Section 6.13 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor:

 

“(b)(i) on the Amendment No. 4 Effective Date, and only after application of the proceeds of the Term Loan and the $9,000,000 in proceeds of an equity issuance received by Colt Defense from Colt Defense Holding III L.P. and other purchasers, pay a portion of the Merger Consideration (as such term is defined in the Acquisition Agreement) and pay transactional fees, costs and expenses incurred in connection with the transactions contemplated by the Acquisition Documents and the Loan Documents; and (ii) otherwise, consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve).”

 

23. Section 6.15 (Senior Note Indenture Secured Debt Cap).  Section 6.15 of the Credit Agreement is hereby deleted and the following substituted therefor:

 

“6.15 Senior Note Indenture Secured Debt Cap.

 

(a) Incur (under and as defined in the Senior Note Indenture) or suffer to exist any Indebtedness (under and as defined in the Senior Note Indenture) pursuant to Section 3.2(b)(1) of the Senior Note Indenture other than (i) Indebtedness under this Agreement and the other Loan Documents and (ii) Indebtedness under the Term Loan Agreement and the other Term Loan Documents as in effect on the Amendment No. 4 Effective Date.

 

(b) Permit the amount of the Senior Note Indenture Secured Debt Cap with respect to the Loan Parties at any time to be less than the aggregate outstanding principal amount of the Term Loan (as defined in the Term Loan Agreement) plus all Advances, Swing Loans, Letter of Credit Usage and Overadvances.

 

24. Section 15.15 (Concerning the Collateral and Related Loan Documents).  Section 15.15 is hereby amended by inserting “, the Intercreditor Agreement” immediately following the phrase “this Agreement” in the first sentence thereof.

 

25. Joinder of CMC as Borrower.  CMC (“New Borrower”) hereby expressly (i) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Credit Agreement applicable to the Borrowers and as applied such New Borrower, with the same force and effect as if New Borrower had originally executed and been an original Borrower signatory to the Credit Agreement, (ii) is deemed to make as to itself, and is in all respects bound by, all representations and warranties made by the Borrowers to Agent and Lenders set forth in the Credit Agreement, and (iii) assumes and agrees to be directly liable to Agent and Secured Parties for all Obligations under, contained in, or arising pursuant to the Credit Agreement to the same extent as if New Borrower had originally executed and had been an original Borrower signatory to the Credit Agreement.

 

  

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26. Joinder of New Colt and Acquisition Sub as Guarantors.  Each of New Colt and Acquisition Sub (each a “New Guarantor”) hereby expressly (i) agrees to perform, comply with and be bound by all terms, conditions and covenants of the Credit Agreement applicable to each Guarantors and as applied to such New Guarantor with the same force and effect as if such New Guarantor had originally executed and been an original Guarantor signatory to the Credit Agreement, (ii) is deemed to make as to itself, and is in all respects bound by, all representations and warranties made by the Guarantors to Agent and Lenders set forth in the Credit Agreement, and (iii) assumes and agrees to be directly liable to Agent and Secured Parties for all Obligations under, contained in, or arising pursuant to the Credit Agreement to the same extent as if such New Guarantor had originally executed and had been an original Guarantor signatory, to the Credit Agreement.

 

27. Schedules and Exhibits to Credit Agreement.  Attached as Annex A to this Amendment No. 4 are the following schedules (inclusive of each New Borrower and New Guarantor) that replace, as of the Amendment No. 4 Effective Date, each corresponding schedule to the Credit Agreement and are deemed a part thereof for all purposes of the Credit Agreement: Schedule A-2 – Authorized Persons; Schedule D-1 – Designated Account; Schedule F-1 – Freight Forwarders; Schedule P-1 – Permitted Investments; Schedule P-2 – Permitted Liens; Schedule P-3 – Permitted Holders; Schedule 4.1(b) – Capitalization of Loan Parties; Schedule 4.4(b) – UCC Filing Jurisdictions; Schedule 4.6(a) – Jurisdiction of Organization; Schedule 4.6(b) – Chief Executive Offices; Schedule 4.6(c) – Organizational Identification Numbers; Schedule 4.6(d) – Commercial Tort Claims; Schedule 4.6(e) – Location of Assets; Schedule 4.11 – Benefit Plans; Schedule 4.12 – Environmental Matters; Schedule 4.13 – Intellectual Property; Schedule 4.15 – Deposit Accounts and Securities Accounts; Schedule 4.19 – Permitted Indebtedness, and; Schedule 6.12(e) – Agreements with Affiliates.  In addition, attached as Annex A hereto are the following new exhibit and schedules which are addended to the Credit Agreement and are deemed a part thereof for all purposes of the Credit Agreement: Exhibit I-1 – IP Reporting Certificate, Schedule L-1 – Exclusive Intellectual Property and other Intangible Licenses, Schedule 4.2 – Due Authorization; No Conflict, Schedule 4.3 – Governmental Consents, Schedule 4.7 – Litigation, 4.9– No Material Adverse Change and Schedule 4.32 – Insurance.  The Table of Contents shall be updated to reflect the new schedules and exhibit.

 

28. Representations and Warranties.  Each Borrower and Guarantor, jointly and severally, represents and warrants to Lender Group as follows:

 

(a) This Amendment No. 4 and each of the documents, instruments and agreements executed and delivered in connection herewith (collectively, with this Amendment No. 4, the “Amendment Documents”) has been duly authorized, executed and delivered by all necessary action of each Loan Party party thereto and constitutes the legal, valid and binding obligations of each such Borrower and such Guarantor party thereto enforceable against each Loan Party in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, moratorium or similar laws relating to or limiting creditors' rights generally;

 

  

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(b) The execution, delivery, and performance by each Loan Party of this Amendment and each other Amendment Document to which it is a party and the consummation of the transactions contemplated hereby and thereby do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the effective date hereof where the failure to obtain the foregoing has or could reasonably be expected to have a Material Adverse Change; and

 

(c) As to each Loan Party, the execution, delivery, and performance by such Loan Party of this Amendment No. 4 and each other Amendment Document to which it is a party and the transactions contemplated hereby and thereby do not and will not (i) violate any provision of federal, provincial, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, where such violation has or could reasonably be expected to have a Material Adverse Change, (ii) violate any provisions of the Governing Documents of any Loan Party or its Subsidiaries, (iii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Loan Party or its Subsidiaries where any such conflict, breach or default has or could individually or in the aggregate reasonably be expected to have a Material Adverse Effect,(iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (v) require any approval of any holders of Equity Interests of a Loan Party or any approval or consent of any Person under any Material Contract of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of Material Contracts, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to have a Material Adverse Change.

 

(d) Within ninety (90) days after the Amendment No. 4 Effective Date, each US Loan Party shall establish and maintain its cash management system with Wells Fargo and shall enter into Controlled Account Agreements with Agent, Term Loan Agent and Wells Fargo, in form and substance reasonably acceptable to Agent, in each case other than Excluded Accounts (as defined in the Security Agreement).

 

(e) No Default or Event of Default exists.

 

29. Amendment Fee.  In addition to all other fees, charges, interest and expenses payable by Borrowers to Agent and Lenders under the Credit Agreement and the other Loan Documents, Borrowers shall pay to Agent, for the ratable benefit of Lenders, an amendment fee of $35,000, which amount is fully earned and payable on the Amendment No. 4 Effective Date and may be charged directly to any loan account(s) of Borrowers maintained by Agent.

 

30. Conditions Precedent.  The amendments provided for herein and the joinder of Acquisition Sub and CMC as a Borrower and New Colt as a Guarantor as provided for herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Agent:

 

(a) Agent shall have received counterparts of this Amendment No. 4, duly authorized, executed and delivered by Existing Borrowers, Existing Guarantors, Acquisition Sub, New Colt, CMC and the Lenders;

 

  

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(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;

 

  

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(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;

 

  

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(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. 

 

  

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(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]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be duly executed and delivered by their authorized officers as of the day and year first above written.

 

	
BORROWERS

 

COLT DEFENSE LLC

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

 

COLT CANADA CORPORATION

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

 

COLT’S MANUFACTURING COMPANY LLC

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

 

GUARANTOR

 

COLT FINANCE CORP.

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

 

COLT DEFENSE TECHNICAL SERVICES LLC

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

Amendment No. 4 to Credit Agreement (Colt)

  

  

  

	
COLT INTERNATIONAL COÖPERATIEF U.A.

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Authorised Representative

 

NEW COLT HOLDING CORP.

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

 

NEW COLT ACQUISITION CORP.

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    Chief Executive Officer

Amendment No. 4 to Credit Agreement (Colt)

  

  

  

	
AGENT AND LENDERS

 

WELLS FARGO CAPITAL FINANCE, LLC, as

Agent and as a Lender

 

By:  /s/ Willis Williams

       Name:  Willis Williams

       Title:    Authorized Signatory

 

WELLS FARGO CAPITAL FINANCE

CORPORATION CANADA, as a Lender

 

By:  /s/ Domenic Cosentino

       Name:  Domenic Cosentino

       Title:    Vice President

Amendment No. 4 to Credit Agreement (Colt)

 

 

  

  

  

Amendment No. 4

to

Credit Agreement

Annex A

Updated Exhibit and Schedules to Credit Agreement

See attached.

 

  

  

  

EXHIBIT I-1

FORM OF IP REPORTING CERTIFICATE1

The undersigned Responsible Officers of the Loan Parties hereby certify as of the date hereof on behalf of such Loan Parties in their capacity as officers of such Loan Parties and not in their individual capacities that the information in this IP Reporting Certificate is true, correct, and complete.

Set forth below is a list identifying all of the Copyrights for proprietary software that is material to generating revenue of any Loan Party, whether created or acquired before, on, or after the Closing Date. Such list sets forth such Copyrights sequentially based on the amount of revenue generated from licensing the corresponding software programs, starting from the software program that generates the highest amount of revenue to the software program that generates the least amount of revenue. Such list identifies which of the Copyrights in such proprietary software have been filed for registration with the United States Copyright Office or the Canadian Intellectual Property Office.

< List here, or attach separate schedule if needed >

  
1 All initially capitalized terms used herein without definition shall have the meanings ascribed thereto in that certain Credit Agreement, dated as of September 29, 2011, as amended by Amendment No. 1 to Credit Agreement and Waiver, dated as of February 24, 2012, and Amendment No. 2 to Credit Agreement and Consent, dated as of March 22, 2013, Amendment No. 3 to Credit Agreement and Consent, dated as of June 19, 2013, and Amendment No. 4 to Credit Agreement, dated as of July [__], 2013 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement") by and among COLT DEFENSE LLC, as Parent ("Parent"), COLT'S MANUFACTURING COMPANY LLC ("Colt's Manufacturing"), and COLT CANADA CORPORATION ("Colt Canada", and together with Parent and Colt's Manufacturing, each individually, a "Borrower" and, collectively, "Borrowers"), COLT FINANCE CORP. ("Colt Finance"), NEW COLT ACQUISITION CORP. ("Acquisition Sub"), which on the Closing Date shall be merged with and into, NEW COLT HOLDING CORP., (“New Colt”), with New Colt surviving such merger, COLT DEFENSE TECHNICAL SERVICES LLC ("CDTS"), and COLT INTERNATIONAL COÖPERATIEF U.A. ("Colt Netherlands" and, together with Colt Finance, Acquisition Sub, New Colt and CDTS and any other Guarantor party thereto from time to time, each individually a "Guarantor" and, collectively, "Guarantors"), the lenders identified on the signature pages thereof (each of such lenders, together with their respective successors and permitted assigns, are referred to thereinafter as a “Lender,” as that term is thereinafter further defined), and Wells Fargo Capital Finance LLC, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, "Agent"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

  

  

  

 

Set forth below is a description of all new Patents, Trademarks or Copyrights that are registered or the subject of pending applications for registrations with the United States Copyright Office or the Canadian Intellectual Property Office and patent or trademark applications filed with the United States Patent and Trademark Office, and of all Intellectual Property Licenses that are material to the conduct of such Grantor's business, in each case, which were acquired, registered, or for which applications for registration were filed by any Grantor during the prior quarter.

< List here, or attach separate schedule if needed >

  

  

  

Set forth below is a description of each statement of use or amendment to allege use filed during the prior quarter with respect to intent-to-use trademark applications.

< List here, or attach separate schedule if needed >

  

  

  

IN WITNESS WHEREOF, this IP Reporting Certificate is executed by each of the undersigned Responsible Officers, in his/her capacity as an officer of a Loan Party and not in an individual capacity, on behalf of the applicable Loan Party, this _______ day of _______________, 20____.

	
COLT DEFENSE LLC,

 

By:  __________________________

        Name:

        Title:

 

COLT FINANCE CORP.,

 

By:  __________________________

        Name:

        Title:

 

NEW COLT ACQUISITION CORP.,

 

By:  __________________________

        Name:

        Title:

 

NEW COLT HOLDING CORP.,

 

By:  __________________________

        Name:

        Title:

 

COLT’S MANUFACTURING COMPANY LLC,

 

By:  __________________________

        Name:

        Title:

 

COLT CANADA CORPORATION,

 

By:  __________________________

        Name:

        Title:

 

COLT DEFENSE TECHNICAL SERVICES

LLC,

 

By:  __________________________

        Name:

        Title:

  

  

  

	
COLT INTERNATIONAL COÖPERATIEF

U.A.,

 

By:  __________________________

        Name:

        Title:

 

  

  

  

Schedule A-2

 

Authorized Persons

Gerald R. Dinkel

Scott B. Flaherty

  

  

  

Schedule D-1

 

Designated Account

 

	
Beneficiary Bank:

	
Bank of America

	
Bank name:

	
Bank of America

	
City:

	
West Hartford, CT 06110

	
Identification Code:

	
Swift: XXXXXXXXX

	
Identification Code:

	
ABA: XXXXXXXXX

	
Beneficiary:

	
Colt Defense LLC

	
Account number:

	
XXXX-XXXX-XXXX

  

  

  

Schedule E-2

Existing Letters of Credit

None.

 

  

  

  

Schedule F-1

Freight Forwarders

See Schedule 4.6(e).

 

  

  

  

Schedule L-1

Exclusive Intellectual Property and other Intangible Licenses

Parent

	
1.  

	
Consolidated License Agreement, dated February 8, 1984 between Her Majesty The Queen In Right of Canada and Colt’s Manufacturing Company, Inc., as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

 

New Colt Holding Corp./Colt’s Manufacturing Company LLC

 

	
1.  

	
License Agreement, dated February 11, 2010, between Rampant Classic and New Colt Holding Corp.

 

	
2.  

	
Master License Agreement, dated January 28, 2000, between New Colt Holding Corp. and Cybergun S.A., formerly known as 3P S.A. (Les Trois Pylons), as amended February 17, 2006 and April 20, 2010.

 

	
3.  

	
License Agreement, dated December 1, 2009, between New Zealand Mint Limited and New Colt Holding Corp., as amended September 24, 2010 and November 5, 2010 and as assigned by Antiquus Aurum Limited (formerly New Zealand Mint Limited) July 16, 2012.

 

	
4.  

	
License Agreement (Knives), dated June 14, 2007, between New Colt Holding Corp. and Smoky Mountain Knife Works, Inc., as amended January 29, 2011.

 

	
5.  

	
License Agreement, dated March 26, 2009, between Carl Walther GmbH and New Colt Holding Corp, as amended November 11, 2009.

 

	
6.  

	
License Agreement, dated July 18, 2008, between Carl Walther GmbH and New Colt Holding Corp., as amended December 10, 2008, January 5, 2009 and March 27, 2009.

 

	
7.  

	
License Agreement, dated April 27, 1965, between Colt Industries Inc. and the National Brewing Company.

 

	
8.  

	
Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd & Sportwaffen GmbH.

 

	
9.  

	
License Agreement, dated December 19, 2003, between Colt Defense LLC and New Colt Holding Corp.

 

	
10.  

	
Match Target License Agreement, dated on or about December 19, 2003 (but effective January 1, 2004), between Colt’s Manufacturing Company LLC and Colt Defense LLC.

 

  

  

  

	
11.  

	
Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

 

	
12.  

	
Settlement Agreement, dated as of January 12, 1998, among New Colt Holding Corporation, Colt’s Manufacturing Company, Inc. and Jimlar Corporation.

 

	
13.  

	
Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

  

2

  

Schedule P-1

 

Permitted Investments

 

None.

 

  

  

  

Schedule P-2

 

Permitted Liens

 

Liens on cash collateral securing Letters of Credit:

 

	
Issuer

	
Beneficiary

	
LC Number

	
Amount

Outstanding as

of 5/26/2013

	
Maturity Date

	
J.P. Morgan

	
Connecticut Department of Environmental Protection

	
TFTS-851474

	
$211,127

	
6/4/2014

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-841076

	
$9,091

	
1/31/2014

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-839429

	
$7,343

	
4/30/2013

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-887528

	
$11,984

	
1/31/2014

	
J.P. Morgan

	
State Bank of India

	
TFTS-907450

	
$809,625

	
6/6/2016

	
Interaudi Bank

	
QHQ Armed Forces- UAE

	
SLC-0017/SS/05

	
$461,585

	
12/30/2013

  

  

  

Schedule P-3

 

Permitted Holders

 

1.           Sciens Management L.L.C. and its Affiliates.

 

2.           Members of management of the Parent who on the Closing Date (x) are holders of Equity Interests of the Parent or (y) have options to obtain Equity Interests of the Parent.

 

  

  

  

Schedule R-1

 

Real Property Collateral

 

	
Company

	
Location

	
Leasehold or Fee

	
Lessor or Mortgagee

	
Lease Term

	
Other Liens

	
Colt Canada Corporation

	
1036 Wilson Avenue, Kitchener, ON, Canada N2C 1J3

	
Fee

	
Wells Fargo Capital Finance Corporation Canada See Attachment 9(b)

	
N/A

	
N/A

  

  

  

Schedule 4.1(b)

Capitalization of Loan Parties

 

Equity Interests of Loan Parties (other than Colt Defense LLC) as of closing:

 

	
Current Legal

Entity Owned

	
No. of

Shares/Interest

Authorized

	
No. of

Shares/Interest

Issued

	
No. of

Shares/Interest

Outstanding

	
Record

Owner

	
Certificate

No.

	
Percent

of each

Class of

Shares

owned

	
Colt Finance Corp.

	
1,000

	
1,000

	
1,000

	
Colt Defense LLC

	
1

	
100%

	
Colt Canada Corporation

	
100

	
99

	
100

	
Colt International Coöperatief U.A.

	
2

	
99%

	
100

	
1

	
100

	
Colt International Coöperatief U.A.

	
4

	
1%

	
Colt Defense Technical Services LLC

	
N/A

	
N/A

	
N/A

	
Colt Defense LLC

	
N/A

	
100%

	
Colt International Coöperatief U.A.

	
N/A

	
N/A

	
N/A

	
Colt Defense LLC (99%) and Colt Defense Technical Services LLC (1%)

	
N/A

	
100%

	
New Colt Acquisition Corp.

	
1000

	
1000

	
1000

	
Colt Defense LLC

	
1

	
100%

	
New Colt Holding Corp.

	
1000

	
1000

	
1000

	
Colt Defense LLC

	
M-1

	
100%

	
Colt’s Manufacturing Company LLC

	
N/A

	
N/A

	
N/A

	
New Colt Holding Corp.

	
N/A

	
100%

  

  

  

Options issued for shares of Equity Interests in Colt Defense LLC:

 

	
Name

	
Number of Options

	
Exercise Price

	
Gerald R. Dinkel

	
6,957

	
$100.00

	
Scott B. Flaherty

	
2,854

	
$100.00

	
George Casey

	
300

	
$100.00

	
J. Michael Magouirk

	
500

	
$100.00

	
Leslie Striedel

	
600

	
$288.78

	
Ronald Belcourt

	
400

	
$288.78

	
Kevin Green

	
300

	
$288.78

  

2

  

Schedule 4.2

Due Authorization; No Conflict

1. Master Lease Agreement dated January 14, 2009 by and between Banc of America Leasing & Capital, LLC and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  Banc of America is providing a temporary standstill with respect to the Master Lease Agreement and has consented to the change of control associated with the merger to that extent.

 

2. Master Lease Agreement dated November 9, 2007 by and between General Electric Capital Corporation and Colt's Manufacturing Company LLC, and all related ancillary agreements and documents, exhibits and Schedules.  The Master Lease Agreement with General Electric Capital Corporation is being paid off and terminated concurrent with closing of the merger.

 

3. Know-How and Patent License and Technology Transfer Agreement, dated July 5, 2012, between Colt’s Manufacturing Company LLC and Merkel Jagd-und & Sportwaffen GmbH ("Merkel").  Merkel has consented to the change of control associated with the merger and continuation of this agreement thereafter.

 

4. Loan Agreement, dated September 21, 2009, between Bank of America, N.A. and Colt’s Manufacturing Company LLC, as amended February 24, 2010, September 22, 2010, November 1, 2011 and February 8, 2012, and related exhibits, schedules, ancillary agreements and other documents.  The available credit under the Loan Agreement has not been utilized and the Loan Agreement will be terminated concurrent with closing of the merger.

5. Truck Lease and Service Agreement, dated January 9, 1998, between Colts Manufacturing Company LLC and Ryder Truck Rental, Inc., D.B.A. Ryder Transportation Services.  Ryder has consented to the change of control associated with the merger and continuation of this agreement thereafter.

  

  

  

Schedule 4.3

 

Governmental Consents

 

Governmental Authorities that will be notified post closing:

 

U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”)-ITAR Section 122.4 (22 C.F.R. §122.4) requires notifying DDTC of changes of ownership, officers, directors, and empowered officials to keep import and export registration information current.

 

U.S Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”)- 27 C.F.R. §478.54 requires notifying ATF regarding changes of control and responsible persons to keep Federal Firearms License and associated information current.

 

Colt Defense LLC will be required to comply with the Connecticut Transfer Act (Conn. Gen. Stat. §22a-134, et seq.) post closing.  (see also Schedule 4.12 regarding notices/filings under the Connecticut Transfer Act)

 

  

  

  

Schedule 4.4(b)

 

UCC Filing Jurisdictions

 

Delaware for Colt Defense LLC, Colt Finance Corp., Colt Defense Technical Services LLC, New Colt Acquisition Corp., New Colt Holding Corp., and Colt’s Manufacturing Company LLC

District of Columbia for Colt Canada Corporation and Colt International Coöperatief U.A.

  

  

  

Schedule 4.6(a)

 

Jurisdiction of Organization

 

	
 Company

	
Jurisdiction of

Organization

	
Jurisdictions of Foreign

Qualification

	
Colt Defense LLC

	
Delaware

	
Connecticut

	
Colt Finance Corp.

	
Delaware

	
None

	
Colt Defense Technical Services LLC

	
Delaware

	
None

	
New Colt Holding Corp.

	
Delaware

	
Connecticut

	
Colt’s Manufacturing Company LLC

	
Delaware

	
Connecticut; Florida

	
Colt Canada Corporation

	
Nova Scotia, Canada

	
Ontario, Canada

	
Colt International Coöperatief U.A.

	
Netherlands

	
None

	
New Colt Acquisition Corp.

	
Delaware

	
None

  

  

  

Schedule 4.6(b)

 

Chief Executive Offices

 

	
Company

	
Chief Executive Offices

	
Chief Executive Offices

post-close

	
Colt Defense LLC

	
547 New Park Avenue

West Hartford, CT 06110

	
547 New Park Avenue

West Hartford, CT 06110

	
Colt Finance Corp.

	
547 New Park Avenue

West Hartford, CT 06110

	
547 New Park Avenue

West Hartford, CT 06110

	
Colt Defense Technical Services LLC

	
547 New Park Avenue

West Hartford, CT 06110

	
547 New Park Avenue

West Hartford, CT 06110

	
New Colt Holding Corp.

	
545 New Park Avenue

West Hartford, CT 06110

	
547 New Park Avenue

West Hartford, CT 06110

	
Colt’s Manufacturing Company LLC

	
545 New Park Avenue

West Hartford, CT 06110

	
547 New Park Avenue

West Hartford, CT 06110

	
Colt Canada Corporation

	
1036 Wilson Avenue,

Kitchener, Ontario Canada N2C 1J32

	
1036 Wilson Avenue,

Kitchener, Ontario Canada N2C 1J3

	
New Colt Acquisition Corp.

	
547 New Park Avenue

West Hartford, CT 06110

	
N/A

	
Colt International Coöperatief U.A.

	
Fred. Roeskestraat 123

1076 EE Amsterdam, the Netherlands

	
Fred. Roeskestraat 123

1076 EE Amsterdam, the Netherlands

  
2 Chief executive officers and some records reside at 547 New Park Avenue, West Hartford, CT 06110.

  

  

  

Schedule 4.6(c)

 

Organizational Identification Numbers

 

	
Company

	
US Federal Tax

Identification Number

	
Organizational

Identification Number

	
Colt Defense LLC

	
32-0031950

	
3570211

	
Colt Finance Corp.

	
27-1237687

	
4743005

	
Colt Canada Corporation

	
98-0435534

	
3102045

	
Colt Defense Technical Services LLC

	
46-0538809

	
5111679

	
New Colt Holding Corp.

	
13-3786913

	
2413625

	
Colt’s Manufacturing Company LLC

	
42-1589139

	
2206122

	
New Colt Acquisition Corp.

	
90-0998380

	
5251079

 

	
Company

	
Canadian Business Number

	
Colt Defense LLC

	
N/A

	
Colt Finance Corp.

	
N/A

	
Colt Canada Corporation

	
84378 5270 (Business Number)

84378 5270 RT0001 (GST/HST)

84378 5270 RP0001 (payroll)

84378 5270 TE0001 (employer | health tax)

84378 5270 RN0001 (excise tax)

84378 5270 RC0002 (corporate | income tax)

	
Company

	
Netherlands Business Number

	
Colt International Coöperatief U.A.

	
56651317

  

  

  

Schedule 4.6(d)

 

Commercial Tort Claims

	
Company

	
Description of Commercial Tort Claim

	
Colt Defense LLC

Colt Finance Corp.

Colt Canada Corporation

Colt Defense Technical Services LLC

Colt International Coöperatief U.A.

New Colt Acquisition Corp.

	
None

	
New Colt Holding Corp

Colt Manufacturing Company LLC

	
None

  

  

  

Schedule 4.7

Litigation

Claims against Parent and Colt Canada

	
Parties

	
Nature of dispute

	
Procedural status

	
Insurance coverage

	
Douglas Burnside Claim against Colt Canada.

	
On April 17, 2012, Colt Canada learned of a claim asserted against it in the Ontario Superior Court of Justice by an employee, Douglas Burnside, seeking damages for emotional and physical distress allegedly sustained in the course of his employment by Colt Canada.  Colt Canada believes the claim against it has no merit and it intends to contest this case vigorously.

	
Colt Canada has retained counsel to represent it in connection with this claim and has referred it to its employment practices insurance carrier.

	
Colt Canada believes that it has coverage for this claim, subject to a self-insured retention of $100,000.

	
Claim of Jean-Charles Baillargeon against Colt Canada.

	
In December 2012, Colt Canada was sued by a former employee, Jean-Charles Baillargeon, in connection with his termination by Colt Canada during 2012.  Baillargeon is seeking damages of $100,000, plus interests, costs and other unspecified damages. Colt Canada believes the claims against it have no merit and it intends to contest this case vigorously.

	
Colt Canada has retained counsel to represent it in this case.

	
Colt Canada believes it has coverage for this claim, subject to a self-insured retention of $100,000.

  

  

  

 

	
Chen and Alpert Claims against Parent (Carlton Chen and Merrick Alpert).

	
In October 2012, two former executives of Colt’s Manufacturing, Carlton Chen and Merrick Alpert, each filed suit against Colt’s Manufacturing and certain other parties in connection with the termination of their employment by Colt’s Manufacturing. The two lawsuits seek unspecified damages.  Each of the plaintiffs recently filed amended complaints.  Neither of the amended complaints alleges facts that would give rise to any liability on the part of Parent to either of these individuals and it is unaware of any basis of liability. Parent believes the plaintiffs’ claims against it have no merit and it intends to contest these cases vigorously.

	
Parent has retained counsel to represent it in these cases.  Each of the plaintiffs recently filed amended complaints.  Parent was named as a defendant in the original complaints and in the amended complaints. Discovery is proceeding. Trial is scheduled for September, 2014.

 

 

	
Parent believes that it has partial coverage for these two lawsuits, subject to a self-insured retention of $250,000, but the carrier has thus far denied coverage.

 

 

	
Carlton Chen CHRO Claim against Parent (the “Chen Discrimination Claim”).

	
On April 8, 2013, Chen filed a related discrimination claim with the Connecticut Commission on Human Rights and Opportunities (“CHRO”) and the federal Equal Employment Opportunities Commission (“EEOC”) against many of the same defendants, including Parent.  The Chen Discrimination Claim seeks unspecified damages.  The Chen Discrimination Claim does not allege facts that would give rise to any liability on the part of Parent and it is unaware of any basis of liability. Parent believes the plaintiff’s claims against it have no merit and it intends to contest this case vigorously.

	
The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.

	
Parent believes this claim is covered by its EPL insurance subject to a self-insured retention.

  

2

  

Claims against Colt’s Manufacturing/New Colt

	
Parties

	
Nature of dispute

	
Procedural status

	
Insurance coverage

	
Chen and Alpert Claims (Carlton Chen and Merrick Alpert).

	
Claims by terminated former executives based on theories of breach of contract, fraudulent inducement/misrepresentation, promissory estoppel, tortious inducement to breach of contract, breach of implied covenant of good faith and fair dealing, and violations of the Connecticut unfair trade practices act.

	
Discovery is proceeding. Trial scheduled for September, 2014.

	
Insurance carrier is defending the matters, but is currently refusing to indemnify Colt’s Manufacturing.

	
Unfair Labor Practice Charge -Florida (by Union). 

	
Claim that Colt’s Manufacturing breached its collective bargaining agreement with the union and the National Labor Relations Act by announcing its intent to open a satellite plant in Florida.

	
Arbitration scheduled for September

	
No insurance.

	
Value Line Grievance (by Union).

	
Grievance alleging that Colt’s Manufacturing breached its collective bargaining agreement with the Union by entering a contract to have rifles manufactured in another location. Colt’s Manufacturing voluntarily discontinued having the rifles manufactured after approximately 5 months.

	
The Union continues to press the matter and it is currently at the pre-arbitration stage.

	
No insurance.

	
Carlton Chen CHRO Matter.

	
Charge filed against Colt’s Manufacturing and several of its employees with the Connecticut Commission on Human Rights and Opportunities by dismissed former executive alleging discrimination on the basis of race.

	
The complaint has been responded to and the documentary evidence submitted is being reviewed by the CHRO.

	
Colt’s Manufacturing believes this claim is covered by its EPL insurance subject to a self-insured retention.

  

3

  

	
Lawsuit by City of Gary, Indiana.

	
Lawsuit filed by the City of Gary against Colt’s Manufacturing and a number of other firearms manufacturers based on a theory of “negligent distribution.”

	
The plaintiff municipality has failed to pursue the matter for approximately 3 years and Colt’s Manufacturing’s attorney advises that the City is likely to voluntarily withdraw the case.

	
Cost of defense is being covered by insurance.

  

4

  

Schedule 4.9

 

 

GAAP

 

 

Effective January 1, 2012, Colt’s Manufacturing modified the post-retirement health care coverage it provides to certain retired employees in a manner that, among other things, eliminated the cap on benefits for certain retirees.  Colt’s Manufacturing believes that its obligations under the modified coverage are appropriately reflected in its Audited Financial Statements (as defined in the Target Acquisition Agreement) in accordance with GAAP.   

 

  

  

  

Schedule 4.11

 

Benefit Plans

 

Colt Defense LLC Pension Plans:

 

Colt Defense LLC Salaried Retirement Income Plan

Colt Defense LLC Bargaining Unit Employees’ Pension Plan

Colt Canada Corporation Pension Plans:

 

None.

Colt’s Manufacturing Company LLC Pension Plans:

Colt’s Manufacturing Company LLC Salaried Retirement Income Plan

Colt’s Manufacturing Company LLC Bargaining Unit Employees’ Pension Plan

  

  

  

Schedule 4.12

 

Environmental Matters

	
1.  

	
This transaction will require filing of the following forms with the Connecticut Department of Energy and Environmental Protection under the Connecticut Transfer Act within ten calendar (10) days after the closing:

	
a.  

	
Property Transfer Program - Form III

 

	
b.  

	
Environmental Condition Assessment Form (ECAF)

 

	
c.  

	
Fee Payment Form

  

  

  

Schedule 4.14

 

 

Leases

 

 

	
Entity

	
Secured Party

	
Type of

Collateral

 

	
Master

Lease #

	
Schedule

	
Colt’s Manufacturing Company LLC

	
Bank of America Leasing & Capital, LLC

	
Equipment

	
19621-90000

	
001

	
Colt’s Manufacturing Company LLC

	
Bank of America Leasing & Capital, LLC

	
Equipment

	
19621-90000

	
002

	
Colt’s Manufacturing Company LLC

	
Bank of America Leasing & Capital, LLC

	
Equipment

	
19621-90000

	
003

	
Colt’s Manufacturing Company LLC

	
General Electric Credit Corp, as assignee of General Electric Credit Corp of Tennessee

	
Equipment

	
5863151-003

	
---

  

  

  

Schedule 4.15

 

Deposit Accounts and Securities Accounts

 

	
Company

	
Bank or Broker

	
Address

	
Account No.

	
Account Type

	
Colt Defense LLC

	
Bank of America

	
PO Box 27025

	
XXXXXXXXX

	
Concentration Account

	
Colt Defense LLC

	
Bank of America

	
Richmond, VA 23261-7025

	
XXXXXXXXX

	
Controlled Disbursement Account

	
Colt Defense LLC

	
Bank of America

	
PO Box 27025

	
XXXXXXXXX

	
Payroll Account

	
Colt Defense Technical Services LLC

	
Bank of America

	
Richmond, VA 23261-7025

	
XXXXXXXXX

	
Concentration Account

	
Colt International Cooperatief U.A.

	
Bank of America

	
PO Box 27025

	
XXXXXXXXX

	
Concentration Account

	
Colt Defense LLC

	
JPMorgan Chase

	
Richmond, VA 23261-7025

	
XXXXXXXXX

	
Liquid MMDA for India Bid Bond

	
Colt Defense LLC

	
Interaudi Bank

	
PO Box 27025

	
XXXXXXXXX

	
Collateral for a Letter of Credit

	
Colt Canada Corporation

	
Bank of America

	
Richmond, VA 23261-7025

	
XXXXXXXXX

	
Colt Canada Corp. USD

	
Colt Canada Corporation

	
Bank of America

	
26 Elmfield Rd

	
XXXXXXXXX

	
Colt Canada Corp. CAD

	
Colt Canada Corporation

	
Bank of America

	
Bromley, Kent

	
XXXXXXXXX

	
Colt Canada Corp.

AP CAD

	
Colt Canada Corporation

	
Bank of America

	
CT51SD England

	
XXXXXXXXX

	
Colt Canada Corp. AP USD

	
Colt Canada Corporation

	
Bank of America

	
Northeast Market

	
XXXXXXXXX

	
Colt Canada Corp.

AP Euro

	
Colt Canada Corporation

	
Bank of America

	
PO Box 659754

	
XXXXXXXXX

	
Colt Canada Corp.

AR Euro

	
Colt’s Manufacturing Company LLC

	
Bank of America

	
San Antonio, TX 78265-9754

	
XXXXXXXXX

	
Accounts Payable

	
Colt’s Manufacturing Company LLC

	
Bank of America

	
19 East 54th Street

	
XXXXXXXXX

	
Payroll

  

  

  

	
Company

	
Bank or Broker

	
Address

	
Account No.

	
Account Type

	
Colt’s Manufacturing Company LLC

	
Bank of America

	
New York, NY 10022

	
XXXXXXXXX

	
Concentration Account

	
Colt’s Manufacturing Company LLC

	
Merrill Lynch, Pierce, Fenner & Smith Inc.

	
200 Front Street W

	
XXXXXXXXX

	
Prime Money Market Fund

  

2

  

Schedule 4.19

 

Permitted Indebtedness

 

Colt Defense and Colt Canada Corporation Letters of Credit:

 

	
Issuer

	
Beneficiary

	
LC Number

	
Amount

Outstanding as

of 5/26/2013

	
Maturity Date

	
J.P. Morgan

	
Connecticut Department of Environmental Protection

	
TFTS-851474

	
$211,127

	
6/4/2014

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-841076

	
$9,091

	
1/31/2014

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-839429

	
$7,343

	
4/30/2013

	
J.P. Morgan

	
National Bank of Egypt

	
TFTS-887528

	
$11,984

	
1/31/2014

	
J.P. Morgan

	
State Bank of India

	
TFTS-907450

	
$809,625

	
6/6/2016

	
Interaudi Bank

	
QHQ Armed Forces- UAE

	
SLC-0017/SS/05

	
$461,585

	
12/30/2013

	
Sultan International Holdings

	
2004-1024  UAE/GHQ Warranty

	
OLG-080041024

	
$593,650

	
2013

	
Sultan International Holdings

	
Ministry of Interior - UAE

	
OLG081202946

	
$29,580

	
2013

	
Sultan International Holdings

	
Ministry of Interior - UAE

	
OLG-081202943

	
$1,820

	
2013

	
Sultan International Holdings

	
Ministry of Interior - UAE

	
OLG-081101466

	
$38,613

	
6/29/2013

  

  

  

Colt’s Manufacturing Letters of Credit:

 

	
Bank of America

	
National Union Fire Insurance Co. of Pittsburgh, PA, et al.

	
68095875

	
$325,000

	
04/08/2014

 

 

Other Indebtedness:

 

Purchase and Sale Agreement among CF Intellectual Property Limited Partnership, the Connecticut Developmental Authority, and New Colt Holding Corp., dated as of August 22, 1994, under which, among other things, New Colt Holding Corp. is obligated to pay to Anthony Autorino, as assignee of the rights thereunder, 50% of the “non-firearms” licensing revenues, up to a total of $2,500,000.00, as outlined in the Purchase and Sale Agreement.  New Colt Holding Corp.’s remaining obligation under this Purchase and Sale Agreement is $1,140,272.88.

 

  

2

  

Schedule 4.32

Insurance

COLT DEFENSE LLC and Subsidiaries

	
POLICY NO.

	
COVERAGE

AND

LOCATION

	
INSURANCE

COMPANY

	
AMOUNT INSURED

	
DEDUCTIBLE/SIR

	
Policy Period

	
GPP004738101

	
General Liability

	
Arch Specialty Insurance Company

	
$1,000,000 Each Occurrence

	
$250,000 Self Insured Retention - Each Occurrence or Offense

	
12/07/2012 -12/07/2013

	  	  	  	
$1,000,000 Personal & Advertising Injury

	
Defense Costs erode the SIR

	  
	  	  	  	
$2,000,000 General Aggregate Limit

	  	  
	  	  	  	
$2,000,000 Products/Completed Operations Aggregate Limit

	  	  
	  	  	  	
$50,000 damage to rented Premises

	  	  
	  	  	  	
Defense Costs are in Addition to the Limits

	  	  
	  	  	  	  	  	  
	
WC015684254

	
Workers Compensation and Employers Liability

	
Commerce & Industry insurance Company

	
Workers Compensation - Statutory

	  	
12/07/2012 -12/07/2013

	
WC015684255

	
Workers Compensation and Employers Liability - CA

	
National Union Fire Insurance Company

	
Employers Liability:

	  	
surcharges

	  	  	
of Pittsburgh

	
$1,000,000 Bodily Injury by Accident - Each Accident

	  	  
	  	  	  	
$1,000,000 Each Employee Bodily Injury by Disease

	  	  
	  	  	  	
Stop Gap (ND,OH,WA,WY)

	  	  
	  	  	  	
$1,000,000 Bodily Injury by Accident - Each Accident

	  	  
	  	  	  	
$1,000,000 Each Employee Bodily Injury by Disease

	  	  
	  	  	  	  	  	  

  

  

  

	
CA0934874

	
 Business Automobile Liability

	
National Union Fire Insurance Company

	
 $1,000,000 Combined Single Limit

	  	
12/07/2012 -12/07/2013

	  	  	
of Pittsburgh

	
 $10,000 Medical Payments - Each Person Insured

	  	  
	  	  	  	
 Personal Injury Protection - Rejection /Basic Benefits by State

	  	  
	  	  	  	
 Uninsured / Underinsured Motorists - Policy Limits where Possible

	  	  
	  	  	  	
 Physical Damage Hired & Owned Vehicles

	
 $1,000 Comprehensive & Collision

	  
	  	  	  	  	  	  
	
PHFD37577327 001

	
Foreign Package

	
ACE American Insurance Company

	
INTERNATIONAL GENERAL LIABILITY

	  	
12/7/2012 - 12/7/2015

	  	  	  	
$1,000,000 General Aggregate

	
NIL for International Liability except Employee Benefits Liability; $1,000

	  
	  	  	  	
Not Covered Products/Completed Operations Aggregate

	  	  
	  	  	  	
$1,000,000 Personal/Advertising Injury Limit

	  	  
	  	  	  	
$1,000,000 Each Occurrence Bodily Injury

	  	  
	  	  	  	
$10,000 Medical Expense Limit

	  	  
	  	  	  	
$1,000,000/$1,000,000 Employee Benefits Liability (Each claim/aggregate)

	  	  
	  	  	  	  	  	  
	  	  	  	
INTERNATIONAL AUTO LIABILITY

	  	  
	  	  	  	
$1,000,000 Liability Coverage

	  	  
	  	  	  	
$25,000 Hired Auto Physical Damage – Each Accident

	  	  
	  	  	  	
$25,000 Hired Auto Physical Damage – Any one policy period

	  	  
	  	  	  	  	  	  
	  	  	  	
INTERNATIONAL WORKERS COMPENSATION 

	  	  
	  	  	  	
US National - State of Hire Benefits

	  	  
	  	  	  	
Third Country Nationals - Country of Origin Benefits

	  	  
	  	  	  	
Local Nationals – EL Only

	  	  
	  	  	  	  	  	  

  

2

  

	  	  	  	
EMPLOYERS LIABILITY

	  	  
	  	  	  	
$1,000,000 Bodily Injury by Accident (Each Employee)

	  	  
	  	  	  	
$1,000,000 Bodily Injury by Disease (Each Employee)

	  	  
	  	  	  	
$1,000,000 Bodily Injury by Disease (Policy Limit)

	  	  
	  	  	  	  	  	  
	  	  	  	
Executive Assistance Services 

	  	  
	  	  	  	
$1,000,000 Policy Limit for Medical Assistance Services

	  	  
	  	  	  	  	  	  
	  	  	  	
PERSONAL PROPERTY 

	  	  
	  	  	  	
$20,000 Personal Property at Unnamed Locations (except while in Transit)

	
$1,000 Property deductible

	  
	  	  	  	
$20,000 Personal Property in Transit

	  	  
	
XSC2058511213

	
Excess Liability - Lead

	
Catlin Specialty Insurance Company

	
$5,000,000 Each Occurrence

	  	
12/07/2012 -12/07/2013

	  	  	  	
$5,000,000 Aggregate

	  	  
	  	  	  	  	  	  
	
CXA98HU12

	
Excess Liability

	
Aspen Specialty Insurance Company

	
$5,000,000 Each Occurrence

	  	
12/07/2012 -12/07/2013

	  	  	  	
$5,000,000 General Aggregate

	  	  
	  	  	  	
$5,000,000 Products / Completed Operations Aggregate

	  	  
	  	  	  	  	  	  
	
NYALL12-2544

 

	
Transit

	
Allianze Ins. Co.

	
$10,000,000 Any One Conveyance

	
$10,000 Per Occurrence

	
12/31/2012 - 12/31/2013

	
PLS13769806

	
Environmental

	
Chartis Specialty Insurance Company

	
$1,000,000 Each Incident/$2,000,000 Aggregate

	
$25,000 Each Incident

	
12/1/2012-12/1/2013

	
14363020

	
Executive Risk Package

(D&O, EPLI, Crime & Fiduciary)

	
National Union Fire Insurance Company

	
$18,000,000 Total limits. $15M D&O/EPL, $3M Fiduciary, $2M Crime

	
$50,000 D&O, 100,000 EPL, $50,000 Fiduciary, $25,000 Crime

	
12/1/2012-12/1/2013

	
82230579

	
D&O Side A

	
Federal Insurance Company

	
$15,000,000 Each Claim/Policy Period

	
Excess of Underlying $15,000,000 D&O only

	
12/1/2012-12/1/2013

  

3

  

	
GA0692

	
Special Contingency Risk

	
Great American Ins Co.

	
$10,000,000 Per Insured Event

	  	
12/1/2011 - 12/1/2014

	
31375428

	
Property

	
Westport Insurance Corporation

	
Policy Limit $182,288,000

	
$25,000 for each Occurrence insured against by this policy except where noted below.

	
12/7/2012 - 12/7/2013

	  	  	  	
Sublimts

	
Boiler and Machinery

	
(two-year agreement)

	  	  	  	
$25,000,000 Earth Movement

	
$50,000 PD and 2 times the Applicable Actual Daily Value - TE

	  
	  	  	  	
$25,000,000 Flood

	
Earth Movement - Combined PD& TE

	  
	  	  	  	
$1,000,000 Accounts Receivable

	
The amount to be deducted for each Occurrence as insured against by the Earth Movement Endorsement shall be the sum of $100,000 for all other Locations covered under the Earth Movement Endorsement where physical loss or damage occurs or TE loss ensures

	  
	  	  	  	
Policy limit Boiler and Machinery

	
Flood Deductibles(s)

	  
	  	  	  	
$1,000,000 Contingent Business Interruption and contingent Extra Expense Combined in the aggregate per Occurrence.

	
Flood - Combined PD & TE

	  
	  	  	  	
$1,000,000 contingent Liability From Operation Building Laws (DICC)

	
The amount to be deducted for each Occurrence as insured against by the Flood Endorsement shall be the sum of the greater of the stated Basic Deductible(s) or $100,000 for all other Locations covered under the Flood Endorsement where physical loss or damage occurs or TE loss ensues.

	  

  

4

  

	  	  	  	
$1,000,000 Debris Removal ( Lesser of 25% of the combined amount of direct physical damage and Time Element Loss payable at the location where the damage occurs or limit Shown)

	  	  
	  	  	  	
$500,000 Electronic Data Processing Media Valuation

	  	  
	  	  	  	
$500,000 Errors and Omissions

	  	  
	  	  	  	
$1,000,000 Expediting Expenses

	  	  
	  	  	  	
$1,000,000 Exhibition, Exposition, Fair or Trade Show

	  	  
	  	  	  	
$5,000,000 Extended Period of Indemnity (Lesser of Actual Loss Sustained for 365  Consecutive Days or Limit Shown)

	  	  
	  	  	  	
$5,000,000 Extra Expense

	  	  
	  	  	  	
$500,000 Fine Arts

	  	  
	  	  	  	
$100,000 Fire Department Service Charges

	  	  
	  	  	  	
$5,000,000 Ingress or Egress (Lesser of Limit shown or Actual Loss Sustained for 30 consecutive Days from the date of the physical loss or damage referred to in the provision)

	  	  
	  	  	  	
$5,000,000 Interruption by Civil Authority ( Lesser of limit shown or Actual Loss Sustained for 365 Consecutive Days form the date of the physical loss or damage referred to the provision)

	  	  

  

5

  

	  	  	  	
$1,000,000 Leasehold Interest

	  	  
	  	  	  	
$1,000,000 Miscellaneous Unnamed Locations

	  	  
	  	  	  	
$250,000 Mold Resulting from Covered Cause of Loss - Per Occurrence and in the annual aggregate

	  	  
	  	  	  	
$1,000,000 New Acquired Property

	  	  
	  	  	  	
$2,500,000 Off Premises Power, Including T&D lines (1 mile) Property Damage and Time Element Combined

	  	  
	  	  	  	
$50,000 Pollutant cleanup & Removal per Occurrence and Annual Aggregate

	  	  
	  	  	  	
$5,000,000 Property in the Course of Construction

	  	  
	  	  	  	
$100,000 Professional Fees

	  	  
	  	  	  	
$500,000 Research and Development Costs

	  	  
	  	  	  	
$1,000,000 Rent Insurance

	  	  
	  	  	  	
$1,000,000 Royalties

	  	  
	  	  	  	
$1,000,000 Soft Costs

	  	  
	  	  	  	
$1,000,000 Temporary Removal of Property

	  	  
	  	  	  	
$500,000 Transit

	  	  
	  	  	  	
$1,000,000 Valuable Papers and Records

	  	  
	
31375428

	
Property - Colt Canada

	
Westport Insurance Corporation

	
US$5,000,000 Building

	  	
12/7/2012 - 12/7/2013

	  	  	  	
US$12,000,000  Personal Property

	  	  
	  	  	  	
US$500,000 Fine Arts

	  	  
	  	  	  	
US$8,000,000 Stock

	  	  
	  	  	  	
US$6,263,000 Business Income

	  	  
	  	  	  	
USD 1,270,000 Extra Expense

	  	  
	
6741129556

	
Automobile - Colt Canada

	
Aviva Insurance Company of Canada

	
CAD$2,000,000 Combined Single Limit

	  	
5/20/2013 - 5/20/2014

	  	  	  	
Physical Damage - Actual Cash Value

	
$1,000 per accident

	  

  

6

  

Colt’s Manufacturing Company LLC

	
Coverage

	
Insurance Company

	
Term

	
Premium/Tax

	
Policy

Number

	
Other Notes

	
Broker

	
Commercial General

Liability/Products Liability

	
Lexington Insurance Company

	
1/7/2013-

1/7/2014

	
Prem

Tax

	
#20720822

	
Financed thru US Premium

	
Graham

	
Umbrella Liability

	
Lexington Insurance Company

	
1/7/2013-

1/7/2014

	
Prem

Tax

	
#23917690

	
Financed thru US Premium

	
Graham

	
Commercial Property

	
Liberty Mutual Fire

Insurance Company

	
3/1/2013-

3/1/2014

	
Prem

	
YU2-L9L-540052-013

	  	
Graham

	
Workers Compensation

& Employers Liability

	
National Union Fire Ins Co

of Pittsburg, PA

	
3/1/2013-

3/1/2014

	  	
#25052476

	  	
Graham

	  	
Large Deductible

Plan

$150,000 per accident

$950,000 Annual Aggregate Ded

	  	
Fixed Costs

Est Surcharges

Claims Handling

Loss Fund

Pay In

	  	
AIG will not offer a Guaranteed

Cost Program at this time

 

Add'l requirement:

Standby L/C was required for policy year for $325,000 and was opened w/BOA on 4/13/13

	  
	
Business Auto

	
National Union Fire

Ins Co of Pittsburg, PA

	
3/10/2013

3/10/2014

	
Prem

	
#939800

	  	
Graham

	
Ocean Cargo/Inland

Transit

	
National Union Fire

Ins Co of Pittsburg, PA

	
3/1/2013-

3/1/2014

	
Prem

	
#51764726

	  	
Graham

	
D&O / EPL

	
National Union Fire

Ins Co of Pittsburg, PA

	
12/31/12-

12/31/13

	
Prem

	
#15896195

	  	
Wells Fargo

	
D&O Excess Side A

	
Federal Insurance

Company

	
12/31/12-

12/31/13

	
Prem

	
#82255280

	  	
Wells Fargo

  

7

  

Schedule 6.12(d)

Agreements with Affiliates

 

This Schedule 6.12(d) does not change and/or modify in any way any limitation set forth in Section 6.9(c) or Section 6.12(e) or (f) of the Agreement.

 

Letter Agreement, between Colt Defense LLC and Sciens Management LLC, dated as of July 9, 2007.

License Agreement, between Colt Defense LLC and New Colt Holding Corp., dated as of December 19, 2003.

Colt Canada is the exclusive contractor under a license dated February 8, 1984 from Colt Defense LLC to the Crown of Canada for the manufacture sales and support of C-10 Canadian Forces Small Bore Rifle, Colt M16 Rifle, Carbine and various 5.56 mm model configurations, parts and spares to certain foreign governments, as amended by Amendment No. 1 dated August 15, 1986, Amendment 2 on September 13, 1993, Amendment No. 3 on June 14, 2000, Amendment No. 3A on May 31, 2001, Amendment No. 4 on August 30, 2002, Amendment No. 5 on September 18, 2006 and Amendment No. 6 dated July 28, 2008.

 

Services Agreement—2012, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated July 1, 2012, as amended by Section 8 of Amendment of Commercial Rifle MOU, dated April 26, 2013.

Match Target License Agreement, between Colt’s Manufacturing Company LLC and Colt Defense LLC, dated as of December 19, 2003.

 

Memorandum of Understanding Regarding Distribution of Colt Law Enforcement and Commercial Rifles, dated May 1, 2011, as amended April 26, 2013.

 

Amendment of Commercial Rifle MOU, between Colt Defense LLC and Colt’s Manufacturing Company LLC, dated April 26, 2013.

 

Collective Bargaining Agreement, among Colt Defense LLC and Colt’s Manufacturing Company LLC and Amalgamated Local No. 378 and United Automobile, Aerospace, and Agricultural Implement Workers of America – UAW, dated April 1, 2012.

First Amended and Restated Sublease Agreement, between CMC and Colt Defense LLC, dated October 26, 2005, as amended effective October 26, 2012 (See Section 5.11 of Services Agreement—2012) and May 1, 2013 (See Section 8 of Amendment of Commercial Rifle MOU) (Formal sublease not yet documented).

Firearms Licensing Agreement, dated September 28, 1994, between New Colt Holding Corp. and Colt’s Manufacturing Company, Inc.

  

  

  

Amended and Restated Trademark License Agreement, dated April 30, 2002, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

Trademark License Agreement, dated on or about November 28, 2001, between Colt’s Manufacturing Company, Inc. and Colt Archive Properties LLC.

 

Manufacturing License Agreement, between Colt Canada Corporation and Colt Defense LLC dated as of November 10, 2005, for the Canadian manufacture of automatic and semi-automatic rifles and carbines to .50 caliber inclusive, and 40 mm grenade launchers, as amended by Amendment 1, dated as of March 25, 2008; Amendment 1A, dated as of August 25, 2008; and Amendment 2, dated as of November 11, 2008.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Dennis Veilleux.

Letter Agreement, dated October 11, 2012, between Dennis Veilleux and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Veilleux’s February 29, 2012 change in control agreement, as amended,  (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter and (iii) his October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Joyce Rubino.

Letter Agreement, dated October 11, 2012, between Joyce Rubino and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Ms. Rubino’s February 29, 2012 change in control agreement, as amended,   (ii) the provisions relating to change in control and termination of her employment or severance benefits in her February 15, 2012 amended and restated employment letter and (iii) her October 1, 2012 letter agreement.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Jim Tipton.

 

Letter Agreement, dated October 11, 2012, between Jim Tipton and Colt’s Manufacturing Company LLC.  This letter agreement states that it supersedes all prior agreements and understandings between the parties with respect to its subject matter, including, without limitation, (i) Mr. Tipton’s February 29, 2012 change in control agreement, as amended,  and (ii) the provisions relating to change in control and termination of his employment or severance benefits in his February 15, 2012 amended and restated employment letter.

Employment Agreement, dated May 21, 1998, between Colt’s Manufacturing Company LLC and Carlton S. Chen.

  

2

  

Carlton S. Chen claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and is currently the subject of litigation.

Amended and Restated Employment Letter, dated February 15, 2012, between Colt’s Manufacturing Company LLC and Merrick Alpert.

 

Merrick Alpert claims to have a valid Change of Control Agreement, dated March 8, 2012, as amended August 15, 2012, between Colt’s Manufacturing Company LLC and himself.  This claim is denied by Colt’s Manufacturing Company LLC and  is currently the subject of litigation.

Option Agreement, dated as of July 12, 2013, between Colt’s Manufacturing Company LLC, Colt Archive Properties LLC, Donald E. Zilkha and John P. Rigas.

Services Agreement, dated  as of July 12, 2013, between Colt Defense LLC, Colt Archive Properties LLC, and Colt’s Manufacturing Company LLC.

Letter of Resignation of Donald E. Zilkha, dated July 12, 2013.

Letter of Resignation of William M. Keys, dated July 12, 2013.

Letter of Resignation of John R. Torell III, dated July 12, 2013.

Letter of Resignation of Abraham Klip, dated July 12, 2013.

Letter of Resignation of David Roth, dated July 12, 2013.

Letter of Resignation of Edward L. Koch, dated July 12, 2013.

Letter of Resignation of Donald Young, dated July 12, 2013.

Agreement and Mutual Release, dated February 15, 2013, by and among New Colt Holding Corp., Colt's Manufacturing Company LLC and William M. Keys.

Amended and Restated Agreement and Mutual Release, dated as of July 12, 2013, by and among New Colt Holding Corp., Colt’s Manufacturing Company LLC, William M. Keys and Donald Zilkha and Edward L. Koch III, as Stockholder Representatives under the Merger Agreement.

Assignment and Assumption Agreement, between Colt Defense LLC and Sciens International Holdings 3 Ltd., dated as of June 5, 2013.

Amended and Restated Limited Liability Company Agreement, of Colt Defense LLC dated as of June 12, 2003 reflecting the amendments adopted as of July 9, 2007, August 11, 2011, March 2012, and June 28, 2013.

Limited Liability Company Interests Purchase Agreement, between Colt Defense LLC, Colt Defense Holding III L.P., and the other purchasers thereunder, dated June 13, 2013.

  

3

  

Consulting Services Agreement, between Colt Defense LLC and Sciens Institutional Services LLC, dated July 12, 2013.

Net Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 26, 2005.

Amendment of Lease, by and between NPA Hartford LLC and Colt Defense LLC, dated October 25, 2012.

Employee Leasing Agreement, between Colt Defense LLC and Colt Security LLC, effective January 1, 2009.

Commitment of Colt’s Manufacturing Company LLC to William M. Keys as expressed in minutes of Board Meeting of New Colt Holding Corp. and Colt’s Manufacturing Company LLC on January 11, 2013.

Employment Agreement, dated as of October 4, 2010, between Gerald R. Dinkel and Colt Defense LLC.

Amendment of Employment Agreement, dated as of March 20, 2013 between Gerald R. Dinkel and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Gerald R. Dinkel and Colt Defense LLC.

Employment Agreement, dated as of February 1, 2011, between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between Scott B. Flaherty and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between J.  Michael Magouirk and Colt Defense LLC.

Option Agreement, dated as of March 1, 2012 between George W. Casey Jr. and Colt Defense LLC.

Separation Agreement, between James R. Battaglini and Colt Defense LLC dated as of August 25, 2011.

Engagement Letter, dated as of December 1, 2010 between Leslie S. Striedel and Colt Defense LLC.

Letter agreement, dated as of May 22, 2012 between Leslie S. Whicher and Colt Defense LLC.

Letter agreement, dated as of August 30, 2005, between Jeffrey Grody and Colt Defense LLC.

  

4

  

Letter agreement, dated as of August 28, 2003, between J. Michael Magouirk and Colt Defense LLC.

Colt Defense LLC Advisory Agreement, between Colt Defense LLC and George W. Casey Jr., dated December 16, 2011.

Solely for disclosure purposes only, Parent pays directors’ fees to members of its Governing Board who are not employees of Parent or Sponsor in the amount of $40,000 per year.   Currently, Gen. George Casey, Lord Guthrie of Craigiebank and Philip Wheeler receive such fees.  All members of the Governing Board recieve reimbursement of reasonable expenses incurred in the performance of their duties as members of the Governing Board.

Limited Liability Company Agreement of Colt’s Manufacturing Company LLC, dated as of June 12, 2003.

Indemnification Agreement, among New Colt Holding Corp., New Colt’s Manufacturing Company, Inc., and Colt Defense LLC, dated as of November 4, 2002.

Non-Disclosure Agreement, between Colt Defense LLC and New Colt Holding Corp. dated August 15, 2012.

Release Agreement, between Sciens Management LLC and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. 2 and William M. Keys, dated February 15, 2013.

Release Agreement, between New Colt L.P. and William M. Keys, dated February 15, 2013.

Release Agreement, between John P. Rigas and William M. Keys, dated February 15, 2013.

Release Agreement, between Daniel Standen and William M. Keys, dated February 15, 2013.

Release Agreement, between Donald E. Zilkha and William M. Keys, dated February 15, 2013.

Director and Officers Liability Insurance.

Letter Agreement, between New Colt Holding Corp. and William M. Keys, dated July 12, 2013.

Trademark License Agreement, dated as of July 5, 2013, by and between New Colt Holding Corp. and Colt Archive Properties LLC.

  

5

  

Amendment No. 4

To

Credit Agreement

Annex B

Conditions Subsequent

1. Within 5 Business Days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion) Agent shall have received certificates of insurance, together with the endorsements thereto, as are required by Section 5.6 of the Agreement, the form and substance of which shall be satisfactory to the Agent.

2. Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received Control Agreements, in form and substance satisfactory to Agent, with respect to each Securities Account and Deposit Account of the Loan Parties (other than Excluded Accounts) to the extent required by, or otherwise delivered pursuant to, the Loan Documents by and among ABL Agent, Term Loan Agent, each applicable Loan Party and the applicable depository bank or securities intermediary.

 

3. Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received credit card acknowledgments with respect to each credit card agreement with each of the Loan Parties’ credit card processors to the extent delivered pursuant to the Loan Documents.

 

4. Within 30 days of the Amendment No. 4 Effective Date (or such longer period as the Agent may agree to in its sole discretion), Agent shall have received a Collateral Access Agreement with respect to each of the following locations: (i) 1099 Shady Lane, Kissimee, FL 34744, and (ii) 1660 Tech Avenue, Unit 4, Mississauga, Ontario, Canada.ex10_3.htm

Exhibit 10.3

LIMITED LIABILITY COMPANY INTERESTS PURCHASE AGREEMENT

LIMITED LIABILITY COMPANY INTERESTS PURCHASE AGREEMENT (the “Agreement”), dated as of July 12, 2013, by and between Colt Defense LLC, a Delaware limited liability company (the “Company”), and the investors listed on the Schedule of Buyers attached as Schedule I hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A. The Company and each Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Units and Exchange Commission (the “SEC”) under the 1933 Act.

 

B. The Company has authorized the issuance of 31,165.589 voting limited liability common units (the “Offered Units”) plus an additional amount equal up to 17,314.218 voting limited liability common units pursuant to Section 5 of this Agreement.

  

C. Each Buyer wishes to purchase, severally but not jointly, and the Company wishes to sell, upon the terms and conditions stated in this Agreement that aggregate amount of Offered Units set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price” (which aggregate purchase price for all Buyers shall be $9,000,000.00).

 

NOW, THEREFORE, the Company and each Buyer (with respect only to itself) hereby agree as follows:

 

	
1.  

	
PURCHASE AND SALE OF OFFERED UNITS.

 

(a) Purchase of Offered Units. Subject to the satisfaction (or waiver) of the conditions set forth in Section 6 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), an amount of Offered Units as is set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price”.

(b) Subscription and Closing.  The closing of the purchase of the Offered Units (the “Closing”) and the payment of the Purchase Price (as defined below) shall occur on the Closing Date (as defined below) at the offices of Sciens Capital Management LLC, 667 Madison Avenue, New York, New York 10065. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City Time, on the business day immediately following notification from the Company of satisfaction (or waiver) of the conditions to the Closing set forth in Section 6 below or on a date to be mutually agreed to by the Company and each Buyer.

 

(c) Purchase Price. The purchase price for each Buyer (the “Purchase Price”) of the Offered Units to be purchased by each such Buyer at the Closing shall be equal to $288.78 per Offered Unit being purchased by such Buyer at the Closing.

  

  

  

(d) Subscription Deliveries. At the Closing, (i) each Buyer shall pay its Purchase Price (as set forth opposite such Buyer’s name on the Schedule of Buyers under the heading “Purchase Price”) for the Offered Units to be issued and sold to such Buyer, by wire transfer of immediately available funds to the Company and shall deliver to the Company its signature page to the LLC Agreement; and (ii) the Company shall deliver to such Buyer the certificates for the Offered Units, duly executed on behalf of the Company, dated as of the Closing Date, and registered in the name of such Buyer or its designee.

 

	
2.  

	
BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer represents and warrants with respect to only itself that:

 

(a) No Public Sale or Distribution. Such Buyer is acquiring the Offered Units for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that subject to the terms of the LLC Agreement such Buyer does not agree to hold any of the Offered Units for any minimum or other specific term and reserves the right to dispose of the Offered Units at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Offered Units hereunder in the ordinary course of its business. Such Buyer presently does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Offered Units. Such Buyer acknowledges that the Offered Units are subject to the restrictions on transfer provided for in the LLC Agreement. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and/or a government or any department or agency thereof.

 

(b) Accredited Investor Status. Such Buyer is an “accredited investor” (as that term is defined in Rule 501(a) of Regulation D). Such Buyer, taking into account the personnel and resources it can practically bring to bear on the purchase of the Offered Units contemplated hereby, is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in debt and equity securities presenting an investment decision like that involved in the purchase of the Offered Units. Such Buyer is able to bear the economic risk of an investment in the Offered Units.

 

(c) Reliance on Exemptions. Such Buyer understands that the Offered Units are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Offered Units.

  

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(d) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Offered Units which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands that its investment in the Offered Units involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Offered Units. Such Buyer has, in connection with its decision to purchase the Offered Units, relied solely upon the representations and warranties contained in the Transaction Documents (as defined below).

 

(e) Legends. Such Buyer understands that the certificates or other instruments representing the Offered Units have not been registered under the 1933 Act, the unit certificates representing such units, except as set forth below, may bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

THE TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE, AND THE RIGHTS OF THE HOLDER HEREOF, ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 12, 2003, AS AMENDED AS OF JULY 9, 2007, AND AS FURTHER AMENDED THEREAFTER (A COPY OF WHICH IS ON FILE WITH THE COMPANY), AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO TIME, AND NO TRANSFER OF THE UNITS REPRESENTED HEREBY OR OF UNITS ISSUED IN EXCHANGE THEREOF SHALL BE VALID OR EFFECTIVE UNLESS THE TERMS AND CONDITIONS OF SUCH AGREEMENT HAVE BEEN FULFILLED

 

The first legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Offered Units upon which it is stamped, if, unless otherwise required by state securities laws, (i) upon transfer such Offered Units are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel reasonably acceptable to the Company, in a form reasonably acceptable to the Company, to the effect that such legend is not required under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Offered Units can be sold, assigned or transferred pursuant to Rule 144.

  

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(f) Validity; Enforcement. This Agreement and each of the other Transaction Documents to which such Buyer is a party has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer, enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except that the indemnification provisions under the Transaction Documents may further be limited by principles of public policy.

 

(g) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and each of the other Transaction Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clause (ii) above, for such conflicts, defaults, rights or violations which, individually or in the aggregate, have not had, and would not reasonably be expected to have, a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(h) Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.

  

	
3.  

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company hereby represents and warrants to each of the Buyers as follows:

 

(a) Subsidiaries.  As of the date hereof, the Company has no directly or indirectly wholly-owned Subsidiaries other than as set forth on Schedule 2 (collectively, the “Subsidiaries”). The Company owns, directly or indirectly, the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien (as defined in Section 3(f) below) other than as set forth on Schedule 2 and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

 

(b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the

  

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business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, do not and could not, individually or in the aggregate, (i) materially adversely affect the legality, validity or enforceability of any of the material provisions of the Transaction Document, (ii) reasonably be expected to have or result in a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole on a consolidated basis, or (iii) materially adversely impair the Company’s or any of the Subsidiary’s ability to perform fully on a timely basis its material obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”). For purposes of this Agreement, “Transaction Documents” means, collectively, this Agreement, the Limited Liability Company Agreement of Colt Defense LLC, dated as of June 12, 2003, as amended (the “LLC Agreement”), the Offered Units, a Joinder to the LLC Agreement and each of the other documents entered into or delivered by the parties hereto in connection with the transactions contemplated by this Agreement.

 

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and each Subsidiary and no further consent or action is required by the Company and each Subsidiary, its Board of Directors or its stockholders. Each of the Transaction Documents has been (or, if executed after the date hereof, upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except that the indemnification provisions under the Transaction Documents may further be limited by principles of public policy.

 

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Offered Units, do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation or formation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a debt of the Company or a Subsidiary or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except to the extent that such conflict, default or termination right has not had, and could not reasonably be expected to have, a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject, or by which any property or asset of the Company or a Subsidiary is bound or affected, except to the extent that such violation has not had, and could not reasonably be expected to have, a Material Adverse Effect.

  

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(e) Consents. Except those that have been obtained prior to or on the date hereof, neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for the Company to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any of its Subsidiaries is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date. The Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the foregoing.

 

(f) Issuance of the Offered Units. The Offered Units are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable (if applicable), free and clear of all liens, charges, claims, security interests, encumbrances, rights of first refusal that have not been waived, or other restrictions (“Liens”) and shall not be subject to preemptive rights or similar rights of unitholders.

 

(g) Capitalization. Immediately prior to the transactions contemplated hereunder, the capital stock of the Company consists of 101,008.337 voting common units (the “Units”), in each case issued and outstanding.  All outstanding Units are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Except for options exercisable for 10,611 non-voting Units as of the date hereof, and outstanding commitments to issue an additional 1,300 non-voting Units, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Units, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Units, or securities or rights convertible or exchangeable into Units. The issue and sale of the Offered Units will not obligate the Company to issue Units or other securities to any Person (other than the Buyers) and will not result in a right of any holder of securities of the Company to adjust the exercise, conversion, exchange or reset price under such securities.

 

(h) Financial Statements.  The consolidated audited financial statements of the Company for the year ended December 31, 2012 (the “Balance Sheet Date”) and the unaudited quarterly financial statements for the quarter ended March 31, 2013 have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended.

  

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(i) Material Changes. Since the Balance Sheet Date, (A) there has been no event, occurrence or development that, individually or in the aggregate, has resulted in, or that could reasonably be expected to result in, a Material Adverse Effect, (B) the Company has not incurred any material liabilities (contingent or otherwise) other than (1) transactions in the ordinary course of business consistent with past practice and (2) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP, (C) the Company has not altered its method of accounting or the identity of its auditors, (D) except as set forth on Schedule 2, the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (E) the Company has not sold any assets, individually or in the aggregate, in excess of $5,000,000 and (F) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans.

  

(j) Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that, individually or in the aggregate, has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

(k) Compliance.  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator, governmental body or exchange or automated quotation system on which any of the securities of the Company are listed or designated, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as, individually or in the aggregate, has not had or resulted in, or could not reasonably be expected to have or result in, a Material Adverse Effect.

 

(l) Title to Assets. The Company and the Subsidiaries do not own real property, other than real estate owned by Colt Canada Corporation in Kitchener, Ontario, Canada and have good and marketable title to all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth on Schedule 2 and except for Liens that do not materially affect the value of such property, do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and, individually or in the aggregate, has not had or resulted in, and could not reasonably be expected to have or result in, a Material Adverse Effect. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance except, in each case, as do not result in, and could not reasonably be expected to result in, a Material Adverse Effect.

  

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(m) Certain Fees.  Other than such fees as are referenced in Section 4(c)(2) below, no brokerage or finder’s fees or commissions or any other payment, whether in the form of cash, securities or other consideration, or any combination of the foregoing, are or will be payable, directly or indirectly, by the Company, any Subsidiary or any Affiliate thereof to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person directly or indirectly with respect to the transactions contemplated by this Agreement or any of the other Transaction Documents, and the Company has not taken any action that would cause any Buyer to be liable for any such fees or commissions pursuant to any agreement or arrangement to which the Company is or may become a party. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any claim against any Buyer relating to a breach of this representation.

 

(n) Private Placement. Neither the Company nor any Person acting on the Company’s behalf has sold or offered to sell or solicited any offer to buy the Offered Units by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates (as defined under the 1933 Act) nor any person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security of the Company under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale by the Company of the Offered Units as contemplated hereby . None of the Company, its Subsidiaries, their Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require the registration of any of the Offered Units under the 1933 Act . The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  Assuming the accuracy of the representations and warranties of each Buyer made in Section 2, no consent, license, permit, waiver approval or authorization of, or designation, declaration, registration or filing with, the SEC or any state securities regulatory authority is required in connection with the offer, sale, issuance or delivery of the Offered Units, other than the possible filing of a Form D with the SEC and filings with applicable state securities agencies.

  

(o) Intellectual Property. To the knowledge of the Company, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with each of such companies operations as currently conducted and which the failure to so has had, or could reasonably be expected to have, a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person in each case except as does not result in, and could not reasonably be expected to result in, a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights, in each case except as does not result in, and could not reasonably be expected to result in, a Material Adverse Effect.

  

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(p) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits, individually or in the aggregate, has not had or resulted in, and could not reasonably be expected to have or result in, a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit except as has not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect.

 

(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are consistent with the Company’s past practices. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

  

(r) Tax Status. The Company and each of the Subsidiaries (i) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction.

 

	
4.  

	
COVENANTS.

 

(a) Form D and Blue Sky. The Company agrees to file a Form D with respect to the Offered Units as required under Regulation D and, if requested, to provide a copy thereof to each Buyer promptly after such filing. The Company shall make all filings and reports relating to the offer and sale of the Offered Units required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.

 

(b) Use of Proceeds. The Company will use the proceeds from the sale of the Offered Units for general working capital purposes.

  

(c) Fees and Expenses.

	
(i)  

	
At or subsequent to the Closing upon submission of an invoice, the Company shall reimburse Colt Defense Holding III L.P. for its fees and expenses, including, without limitation, its legal fees.

  

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(ii)  

	
 The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions relating to or arising out of the transactions contemplated hereby for placement agents, financial advisors or brokers engaged by the Company or its Affiliates or agents. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Offered Units to the Buyers.

 

(d) Pledge of Offered Units. Subject to the terms of the LLC Agreement, the Company acknowledges and agrees that the Offered Units may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Offered Units. The pledge of Offered Units shall not be deemed to be a transfer, sale, assignment or other disposition of the Offered Units hereunder, and no Buyer effecting a pledge of Offered Units shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, except as may be required by the LLC Agreement.. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Offered Units may reasonably request in connection with a pledge of the Offered Units to such pledgee by a Buyer.

  

5. Option.  Until December 31, 2013, Colt Defense Holding III L.P. shall have the option to purchase up to 17,314.218 additional Common Units (in whole or in part and from time to time) on the same terms and conditions as are set forth in this Agreement by executing and delivering to the Company a unit purchase agreement substantially in the form of this Agreement.

 

	
6.  

	
CONDITIONS TO SUBSCRIPTION.

 

(a) Conditions to the Company’s Obligations. The obligation of the Company hereunder to issue at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

 

	
(i)  

	
Each of the Buyers shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

	
(ii)  

	
Each of the Buyers shall have delivered the Purchase Price for the Offered Units being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

  

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(b) Conditions to each Buyer’s Obligation. The obligation of each Buyer hereunder to pay its Purchase Price at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

	
(i)  

	
The Company shall have executed and delivered (A) to such Buyer each of the Transaction Documents and (B) the Offered Units which are being purchased by such Buyer at the Closing pursuant to this Agreement, which Units shall be dated as of the Closing Date.

 

 

	
(ii)  

	
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Offered Units.

	
(iii)  

	
The consummation of the acquisition set forth on Schedule 1shall have closed simultaneously with the transactions contemplated by this Agreement.

    

	
7.  

	
MISCELLANEOUS.

 

(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. \

  

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(c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(d) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

(e) Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of the Offered Units representing at least a majority of the Offered Units, or, if prior to the Closing Date, the Company and the Buyers listed on the Schedule of Buyers as being obligated to purchase at least a majority of the Offered Units. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Offered Units then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents or holders of the Offered Units, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents.

 

(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company by mail or facsimile:

 

Colt Defense LLC

P.O. Box 118

Hartford, CT 06141

Facsimile: (860) 244-1442

Attention: General Counsel

  

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If to the Company by courier:

 

Colt Defense LLC

547 New Park Avenue

West Hartford, CT 06110

Attention: General Counsel

If to a Buyer, to its address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party fifteen (15) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Offered Units. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of Offered Units representing at least a majority of the Offered Units then outstanding, including by merger or consolidation. A Buyer may assign, without the consent of the Company, some or all of its rights hereunder to any Person to whom such Buyer assigns or transfers Offered Units, or the right to acquire Offered Units, in accordance herewith; provided, such transferee agrees in writing to be bound with respect to the transferred Offered Units to the provisions hereof that apply to the transferring Buyer, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights. A purported assignment in violation of this Agreement shall be void.

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(i) Survival. The representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4 and 7 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  

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(k) Indemnification.

 

	
(i)  

	
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Units hereunder and thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Offered Units and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Buyer Indemnified Liabilities”), incurred by any Buyer Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or (c) any cause of action, suit or claim brought or made against such Buyer Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) other than those arising from or resulting from a misrepresentation or breach of any representation or warranty made by such Buyer Indemnitee contained in the Transaction Documents or a breach of any covenant, agreement, obligation or applicable law by such Buyer Indemnitee contained in the Transaction Documents, the execution, delivery, performance or enforcement of the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Offered Units, or (iii) other than those arising from or resulting from a misrepresentation or breach of any representation or warranty made by such Buyer Indemnitee contained in the Transaction Documents or a breach of any covenant, agreement,  obligation or applicable law by such Buyer Indemnitee contained in the Transaction Documents, the status of such Buyer or holder of the Offered Units as an investor in the Company.  Notwithstanding the foregoing, the Company shall not be liable for any indemnification to a Buyer Indemnitee to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense (i) results from such Buyer Indemnitee’s violation of law, gross negligence, bad faith conduct, willful misconduct or breach of this Agreement or any other Transaction Document, or (ii) is brought against such Buyer Indemnitee by a third party transferee of any of the Offered Units purchased hereunder, and is based upon or arises out of the Buyer Indemnitee’s conduct in connection with such transfer.

  

14

  

	
(ii)  

	
To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

(l) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(m) Remedies. Each Buyer and each holder of the Offered Units shall have all rights and remedies set forth in the Transaction Documents, in addition to and not in lieu of all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of any of the Transaction Documents shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of any of the Transaction Documents and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under any of the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

  

(n) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.

 

(o) Knowledge. For purposes of this Agreement, the terms “knowledge of the Company” or “the Company’s knowledge” means the actual knowledge of the chief executive, chief financial and chief legal officers of the Company.

 

[Signature Pages Follow] 

  

15

  

IN WITNESS WHEREOF, each Buyer and the Company has caused their respective signature page to this Agreement to be duly executed as of the date first written above.

	
COMPANY:

 

COLT DEFENSE LLC

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

       Title:    President and CEO

  

  

  

IN WITNESS WHEREOF, each Buyer and the Company has caused their respective signature page to this Agreement to be duly executed as of the date first written above.

	
BUYER:

 

COLT DEFENSE HOLDING III L.P.

By: COLT DEFENSE HOLDING III

GP LLC, its general partner

 

By:  /s/ Daniel Standen

      Name:  Daniel Standen

 

BUYER:  Colt Defense Employee Plan

Holding Corporation

 

By:  /s/ Gerald R. Dinkel

       Name:  Gerald R. Dinkel

 

BUYER:

 

By:  /s/ Richard Nadeau

       Name:  Richard Nadeau

 

BUYER:

 

By:  /s/ Michael P. Reissig

       Name:  Michael P. Reissig

 

BUYER:

 

By:  /s/ John M. Magouirk

       Name:  John M. Magouirk

 

BUYER:

 

By:  /s/ John B. Ibbotson

       Name:  John B. Ibbotson

 

BUYER:

 

By:  /s/ Z. Clifton Dameron IV

       Name:  Z. Clifton Dameron IV

  

  

  

	
BUYER:

 

By:  /s/ Alexander Loucopoulos

       Name:  Alexander Loucopoulos

 

BUYER:

 

By:  /s/ Glen R. Johnson

       Name:  Glen R. Johnson

 

BUYER:

 

By:  /s/ Carlton S. Chen

       Name:  Carlton S. Chen

  

  

  

Schedule I

Schedule of Buyers

	
Buyer

	
 

Address

	 	
Purchase

Price

	 	 	
Numbered of Offered

Units

	 
	
Colt Defense Holding III L.P.

	
c/o Sciens Capital Management LLC

667 Madison Avenue

New York, New York 10065

 

	 	$	8,729,296.42	 	 	 	30,228.186	 
	
Colt Defense Employee Plan Holding Corporation

	
P.O. Box 118

Hartford, Connecticut 06141

 

	 	$	107,343.58	 	 	 	371.714	 
	
Richard Nadeau

	
1910 Ballycor Drive

Vienna, Virginia 22182

 

	 	$	48,108.16	 	 	 	166.591	 
	
Michael P. Reissig

	
56 Old King Street

Enfield, Connecticut 06082

 

	 	$	37,400.02	 	 	 	129.510	 
	
John M. Magourik

	
16 Farmbrook Drive

Tolland, Connecticut 06084

 

	 	$	20,958.02	 	 	 	72.574	 
	
John B. Ibbotson

	
14 Alger Road

Moodus, Connecticut 06469

 

	 	$	20,958.02	 	 	 	72.574	 
	
Z. Clifton Dameron IV

	
Sciens Capital Management LLC

667 Madison Avenue

New York, New York 10065

 

	 	$	15,016.56	 	 	 	52.000	 
	
Alexander Loucopoulos

	
Sciens Capital Management LLC

667 Madison Avenue

New York, New York 10065

 

	 	$	12,706.32	 	 	 	44.000	 
	
Glen R. Johnson

	
361 Polynesia Court

Marco Island, Florida 34145

 

	 	$	7,924.12	 	 	 	27.440	 
	
Carlton S. Chen

	
648 Nod Hill Road

Wilton, Connecticut 06897-1305

	 	$	288.78	 	 	 	1.000	 

 

  

I-1

  

Schedule 1

 

 

The acquisition of New Colt Holding Corp. by the Company.

 

  

1-1

  

Schedule 2

 

 

Directly and Indirectly Wholly Owned Subsidiaries of Colt Defense LLC

 

Colt Canada Corporation

 

Colt Finance Corp.

 

Colt Defense Technical Services LLC

 

Colt International Coöperatief U.A.

 

 

Liens

 

All or portions of the stock, membership interests and assets of the above Subsidiaries are subject to Liens in favor of Wells Fargo Capital Finance, LLC, as agent.

 

All or substantially all of the assets of Colt Defense LLC are subject to Liens in favor of Wells Fargo Capital Finance, LLC, as agent.

 

 

Distributions / Redemptions

 

The Company purchased all of the Units held by Blackstone Mezzanine Partners II-A L.P. and Blackstone Mezzanine Holdings II USS L.P. on March 22, 2013

 

The Company made a tax distribution to holders of Units in the aggregate amount of $1,356,645 pursuant to Section 8.2 of the LLC Agreement, on June 11, 2013.

 

2-1

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