Financing Agreements

9 Months Ended

Jan. 31, 2013

NOTE 4—FINANCING AGREEMENTS

Torotel Products has a financing agreement (the “agreement”) with Commerce Bank, N.A (the “Bank”). The agreement provides for a revolving line of credit, a guidance line of credit, and a real estate term loan. Both Torotel, Inc. and Electronika, Inc. serve as additional guarantors to all notes described below. A summary of the notes within this agreement is provided below:



	Line of Credit			Mortgage note payable to Commerce Bank			Equipment loan note payable to Commerce Bank
Face amount	$	500,000		$	650,000		$	500,000
Proceeds received	—			650,000			380,000
Unused borrowing capacity	500,000			—			120,000
Amount previously repaid	—			74,000			166,000
Total debt outstanding	$	—		$	576,000		$	214,000

Rate	4.00		%	4.63		%	4.63		%
Maturity date	September 27, 2013			September 26, 2015			September 26, 2015
Monthly payment	$	—		$	5,038		$	7,123

Additional Criteria	Borrowing base limited to 75% of eligible receivables			15 year amortization schedule			Advance rate equal to 80% of the price of the equipment purchased

The revolving line of credit, to be used for working capital purposes, is renewable annually. The associated interest rate is equal to the greater of the floating Commerce Bank Prime Rate (currently 3.25%) or a floor of 4% (as listed above). Monthly repayments of interest only are required with the principal due at maturity. This facility is cross collateralized and cross defaulted with all other facilities and is secured by a first lien on all business assets of Torotel Products.

The mortgage note is a refinancing of our previous real estate loan and equipment loans with the Bank of Blue Valley. Monthly payments consisting of both interest and principal are required. This facility is cross collateralized and cross defaulted with all other facilities and is secured by a first real estate mortgage on the property located at 620 North Lindenwood Drive in Olathe, Kansas.

The equipment note is a guidance line of credit to be used for equipment purchases. Monthly repayments consisting of both interest and principal are required. This facility is cross collateralized and cross defaulted with all other facilities and is secured by a purchase money security interest in the assets purchased as well as a first lien on all business assets of Torotel Products.

Torotel Products is also required to comply with specified financial covenants. As of January 31, 2013, Torotel was in compliance with these covenants.

Torotel Products also currently has capital lease agreements related to information technology equipment and other items for $40,000.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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