EXHIBIT 4a EXECUTION COPY

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EXHIBIT 4a

EXECUTION COPY

 

    This AMENDMENT NO. 3 TO REVOLVING CREDIT AGREEMENT (this “Amendment”) is made and dated as of September 30, 2004, by and among (a) Kaman Corporation (the “Company”), (b) the undersigned Banks, and (c) The Bank of Nova Scotia (“Scotiabank”) and Fleet National Bank (“Fleet”) as the Co-Administrative Agents for the Banks. Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement are used herein as therein defined.

    WHEREAS, the Company, the Banks and the Co-Administrative Agents and certain other parties have entered into that Revolving Credit Agreement, dated as of November 13, 2000 (as amended by Amendment No. 1 to Revolving Credit Agreement, dated as of June 28, 2002, Amendment No. 2 to Revolving Credit Agreement, dated as of September 12, 2003, and as further amended, supplemented, restated or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Banks have made, and have committed to make, Loans and other credit extensions to the Company on the terms set forth therein; and

 

    WHEREAS, the Company has requested that the Banks amend the Credit Agreement and the Majority Banks, on the terms and subject to the conditions set forth below, have agreed to amend the Credit Agreement;

 

    NOW, THEREFORE, in consideration of the foregoing premises, the Company, the undersigned Majority Banks and the Co-Administrative Agents agree as follows:

 

    §1.    Amendments to the Credit Agreement.  

 

        (a)    Section 4.1(a) and (b) of the Credit Agreement are hereby amended and restated in their entirety as follows:

 

         “(a) within (i) thirty (30) days after the close of each calendar month, (ii) sixty (60) days after the close of each of the first three quarters of each fiscal year of the Company and (iii) within one hundred twenty (120) days after the close of each fiscal year of the Company, the consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the close of each such period and consolidated and consolidating statements of income, cash flows and shareholders’ equity for such period, prepared in conformity with GAAP, applied on a basis consistent with that of the preceding period or containing disclosure of the effect on financial pos ition or results of operations of any change in the application of GAAP during the period, and certified by the president or a principal financial officer of the Company as accurate, true and correct in all material respects; (b) together with each such balance sheet referred to in clause (a)(ii) and (iii) above, a Compliance Certificate substantially in the form of Exhibit G attached thereto; (which Compliance Certificate shall contain written calculations by the Company in reasonable detail concerning compliance or non-compliance, as the case may be, by the Company with the financial covenants referred to herein);”

 

       (b)    Section 5.1(e) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

           “(e)    any other Liens at any time on assets owned by the Company or any of its Subsidiaries which, in the aggregate, do not secure Indebtedness in excess of $15,000,000; and”

 

        (c)    Article VI is amended by adding the following new Section 6.3 thereto as follows:

 

        “Section 6.3. Accounts Receivable and Inventory to Debt Ratio. At any time that the Company’s Adjusted Fixed Charge Coverage Ratio does not exceed 6.00 to 1.00, cause or permit the ratio of (a) the aggregate amount of (i) the Applicable Kaman Entities’ Eligible Accounts for which invoices have been issued and are payable plus (ii) the Eligible Inventory of the Applicable Kaman Entities, in each case calculated as at the end of the most recently completed fiscal quarter of the Company, to (b) the Company’s Consolidated Total Indebtedness as at the end of any fiscal quarter, to be less than 1.60 to 1.0.

 

  (d)    Section 9.2 of the Credit Agreement is hereby amended as follows:

 

       (i)    by amending and restating the definition of  “EBITDA” in its entirety as follows:

 

                     ““EBITDA” shall mean the consolidated operating earnings of the Company and its Subsidiaries for any fiscal period, after all expenses and other proper charges but before the p ayment or provision for any income taxes, interest expense, special items such as gains or losses on sales of assets, extraordinary or special items reported net of taxes, depreciation or amortization, and all other items reported as non-operating income for such period, in each case without duplication, and all determined in accordance with GAAP; provided that, notwithstanding the foregoing, EBITDA for any period shall be increased by Permitted 2004 Restructuring Charges, to the extent such Permitted 2004 Restructuring Charges were deducted in determining consolidated operating earnings of the Company and its Subsidiaries for such period.”

 

          (ii)    by adding the following new definitions in the appropriate alphabetical location:

 

                ““Accounts Receivable” shall mean all rights of any Applicable Kaman Entity to payment for goods sold, leased or otherwise marketed in the ordinary course of business and all rights of any Applicable Kaman Entity to payment for services rendered in the ordinary course of business and all sums of money or oth er proceeds due thereon pursuant to transactions with account debtors, except for that portion of the sum of money or other proceeds due thereon that relate to sales, use or property taxes in conjunction with such transactions, recorded on books of account in accordance with GAAP.”

““Adjusted Fixed Charge Coverage Ratio” shall mean the ratio of (a) the Company’s EBITDA (without adding back the Permitted 2004 Restructuring Charge as permitted by the proviso contained in the definition of EBITDA) for the four (4) most recently completed fiscal quarters of the Company, to (b) the aggregate consolidated interest expense on borrowed money (including the Obligations) (net of cash income from investments) of the Company and its Subsidiaries for such four fiscal quarters.”

““Applicable Kaman Entities” shall mean the Company and its Industrial Distribution and Music segments, and elements of the Aerospace segment, including Kamatics Corporation, RWG Frankejura Industrie Flugwerklager GmbH, Plastics Fabricating Company, Inc., Kaman Dayron, Inc., and Kaman Aerospace Corporation’s Fuzing and Measurement and Memory operations (the aforementioned segments being the Company’s operating segments identified pursuant to Statement of Financial Accounting Standards No. 131).”

“Eligible Accounts” shall mean the aggregate of the unpaid portions of Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other adjustments or commissions payable to third parties that are adjustments to such Accounts Receivable) (a) that the Company reasonably and in good faith determines to be collectible and (b) that are with account debtors or other obligors that (i) are not affiliates of any Applicable Kaman Entity, (ii) purchased the goods or services giving rise to the relevant Account Receivable in an arm's length transaction and (iii) are not known by such Applicable Kaman Entities to be insolvent or involved in any case or proceeding, whether voluntary or involuntary, under any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar law of any jurisdiction.”

““Eligible Inventory” shall mean the net book value (determined by the average costing method and at lower of cost or market) of finished goods, work in progress and raw materials and component parts inventory owned by any Applicable Kaman Entity; provided that Eligible Inventory shall not include any inventory (a) held on consignment, or not otherwise owned by any such Applicable Kaman Entity, or of a type no longer sold b y any such Applicable Kaman Entity or (b) which is damaged, obsolete or not marketable.”

““Permitted 2004 Restructuring Charges” shall mean all non-cash sales and pre-tax charges against earnings taken by the Company, in accordance with GAAP, for the fiscal quarter ending September 30, 2004, in respect of write-offs of accounts receivable and capitalized development and other start-up costs relating to development and production of helicopter fuselages and rotor blades for MD Helicopters, Inc., such charges not to exceed, in the aggregate, $21,000,000.

 

        (e)    Exhibit G of the Credit Agreement (Form of Compliance Certificate) is hereby amended and restated in its entirety to read as set forth on Annex A hereto.