SECOND AMENDMENT AND LIMITED WAIVER TO THE CREDIT AGREEMENT

Exhibit 4.5

SECOND AMENDMENT AND LIMITED WAIVER TO THE CREDIT AGREEMENT

          SECOND AMENDMENT AND LIMITED WAIVER, dated as of October 29, 2010 (this “Amendment and Waiver”), to the CREDIT AGREEMENT, dated as of November 10, 2009, as amended by the First Amendment dated as of March 11, 2010 (the “Credit Agreement”), among Colt Defense LLC, a Delaware limited liability company (the “Borrower”), the several banks and other financial institutions or entities from time to tithe parties to this Agreement (the “Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement are used herein as therein defined.

W I T N E S S E T H:

          WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to the Credit Agreement;

          WHEREAS, the Borrower has requested an amendment and a waiver with respect to the Credit Agreement as set forth herein; and

          WHEREAS, the Lenders and the Administrative Agent are willing to agree to such amendment and waiver with respect to the Credit Agreement, subject to the terms and conditions set forth herein;

          NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the Borrower, the Lenders and the Administrative Agent hereby agree as follows:

          1. Waiver. Notwithstanding anything in the Credit Agreement to the contrary, the Lenders hereby waive compliance with the requirements of Section 7.1 of the Credit Agreement, for all test dates beginning with the fiscal quarter ended September 30, 2010 (the “Waiver Period”).

          2. Amendment to Section 1.1 (Defined Terms). Section 1.1 of the Credit Agreement is hereby amended by replacing the definition of “L/C Commitment” with the following definition:

          “L/C Commitment”: $10,000,000.

          3. Amendment to Section 7.1 (Financial Condition Covenants). Section 7.1 of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

          “7.1. [Reserved].”

          4. Revolving Commitment Reduction. Effective on the Second Amendment Effective Date (as defined below), the aggregate Revolving Commitments shall automatically be permanently reduced to $10,000,000, such reduction to be allocated to the Lenders in the manner described in Section 2.13(a) of the Credit Agreement.

          5. Conversion of Facilities to $10,000,000 Letter of Credit Facility. Notwithstanding anything to the contrary in the Credit Agreement, unless otherwise agreed by the Required Lenders, (a) the Borrower shall not be permitted to borrow Term Loans or obtain Revolving Commitment Increases pursuant to Section 2.3 of the Credit Agreement, (b) the Borrower shall not be permitted to borrow Revolving Loans for any purpose other than to reimburse the amount of any draft paid under any Letter of Credit in accordance with Section 3.5 of the Credit Agreement and (c) the aggregate outstanding amount of L/C Obligations in respect of Letters of Credit issued to support obligations owing to suppliers or vendors or for similar purposes (“Specified L/C Obligations”) shall not at any time exceed $1,000,000. For the avoidance of doubt, (x) the limitation in clause (c) above shall not apply to Letters of Credit with respect to L/C Obligations other than Specified L/C Obligations and (y) the outstanding L/C Obligations as of the date of this Amendment and Waiver listed on Annex I hereto shall not be deemed Specified L/C Obligations. Concurrently with the delivery of any financial statements pursuant to Section 6.1 of the Credit Agreement, a Responsible Officer of the Borrower shall submit a certificate to the Administrative Agent listing each Letter of Credit outstanding as of the date of such certificate, together with a description in reasonable detail of the amount and purpose of each such Letter of Credit and a calculation of the Specified L/C Obligations. Failure to comply with the provisions of this Section 5 shall constitute an Event of Default for the purposes of the Credit Agreement and the other Loan Documents. The Credit Agreement shall be deemed to be amended to the extent necessary to reflect the provisions of this Section 5.

          6. Effectiveness. This Amendment and Waiver shall become effective on the date (the “Second Amendment Effective Date”) on which (a) the Administrative Agent and the Issuing Lender duly execute a counterpart of this Amendment and Waiver and the Administrative Agent notifies the Borrower that it has received counterparts of this Amendment and Waiver duly executed by the Company and the Required Lenders and (b) the Administrative Agent receives a consent fee for the account of each Lender equal to 0.75% of each Lender’s Revolving Commitment; provided that no Revolving Loans are outstanding on such date.

          7. Continuing Effect of the Credit Agreement. This Amendment and Waiver shall not constitute an amendment of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Borrower that would require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended hereby, the provisions of the Credit Agreement are and shall remain in full force and effect.

          8. Counterparts. This Amendment and Waiver may be executed by the parties hereto in any number of separate counterparts (including by email or telecopy), each of which shall be deemed to be an original, and all of which taken together shall be deemed to constitute one and the same instrument.

          9. GOVERNING LAW. THIS AMENDMENT AND WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[signature page follows]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

	COLT DEFENSE LLC
	By:	/s/ Xxxxxxx X. Xxxxx
		Name:	Xxxxxxx X. Xxxxx
		Title:	Senior Vice President and General Counsel
	JPMORGAN CHASE BANK, NA., as Administrative Agent, as Issuing Lender and as a Lender
	By:	/s/ Xxxxxxx X. Xxxxxx
		Name:	Xxxxxxx X. Xxxxxx
		Title:	Managing Director
	XXXXXX XXXXXXX BANK, N.A., as a Lender
	By:	/s/ X.X. Xxxx
		Name:	X.X. Xxxx
		Title:	Authorized Signatory

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Annex I

JPM

Liab

Expiry /

Auto

Final

Reference

Liab

Outstanding

Beneficiary

Release

Maturity

Purpose

Notification

Extension

Expiry

Number

Currency

Amount

Consent

Date

Date

Beneficiary Name

Purpose Code

Category

Period

Period

Date

TFTS- 821065

USD

25,626.63

N

MAR 30, 2010

MAR 29, 2011

INTESA SANPAOLO SPA

OTHER OBLIGATIONS (TRADE)

FINANCIAL

60 DAYS

12 MONTHS

JUL 30, 2012

TFTS- 851474

USD

211,127.00

N

JUN 07, 2010

JUN 04, 2011

COMMISSIONER, CONNECTICUT

OTHER OBLIGATIONS (TRADE)

FINANCIAL

120 DAYS

12 MONTHS

—

TFTS-

USD

95,742.00

N

MAR 19, 2010

XXX 00, 0000

XXXXX XX XXXXX

PERFORMANCE BONDS

PERFORMANCE

—

—

—

TFTS-

USD

43,616.61

N

SEP 17, 2010

SEP 15, 2011

BANCO PICHINCHA C.A.

PERFORMANCE BONDS

PERFORMANCE

—

—

—

TFTS- 823542

USD

362,016.90

N

MAR 26, 2010

MAR 25, 2011

BANGKOK BANK PUBLIC COMPANY LIMITED

PERFORMANCE BONDS

PERFORMANCE

60 DAYS

12 MONTHS

—

TFTS-

USD

12,239.00

N

MAY 12, 2010

MAY 10, 2011

NATIONAL BANK OF EGYPT

PERFORMANCE BONDS

PERFORMANCE

30 DAYS

12 MONTHS

MAY 10, 2012

TFTS-

USD

9,090.83

N

MAY 19, 2010

MAY 13, 2011

NATIONAL BANK OF EGYPT

PERFORMANCE BONDS

PERFORMANCE

30 DAYS

12 MONTHS

MAY 13, 2012

Total

759,458.97