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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
TOROTEL PRODUCTS, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
89 13 05 104
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(CUSIP Number)
Peter B. Caloyeras, 2041 W. 139th Street, Gardena, CA 90249 (310) 527-8100
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 24, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 89 1305 104 PAGE 2 OF 5 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Peter B. Caloyeras (S.S. No.: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Citizen of the United States
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7 SOLE VOTING POWER
198,900
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 198,900
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
198,900
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1%
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14 TYPE OF REPORTING PERSON*
IN
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ITEM 1. SECURITY AND ISSUER
This statement relates to the common stock of Torotel Products, Inc.
(the "Company"). The Company's principal executive offices are located at 13402
South 71 Highway, Grandview, Missouri 64030.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Peter B. Caloyeras, the beneficial
owner, as defined in Rule 13d-3(a) under the Securities Exchange Act of 1934, of
the 198,900 shares to which this statement relates. Mr. Caloyeras acquired
shares of common stock of the Company from time-to-time commencing in September
1994 as follows: (i) Mr. Caloyeras purchased 109,900 shares originally in the
name of the Caloyeras 1982 Revocable Trust (the "Trust") of which Mr. Caloyeras
is the sole trustee and the beneficial owner, (ii) 13,000 shares were acquired
by his individual retirement account (the "IRA"), and (iii) 70,100 shares were
acquired by the Caloyeras Family Partnership, a California Limited Partnership
("CFP") of which the three adult children of Mr. Caloyeras are the limited
partners equally and the general partner of which is PBC, Inc., a California
corporation of which Mr. Caloyeras is the sole shareholder and president. In
late 1996, (i) the Trust sold all of its 109,900 shares in the Company's common
stock to CFP, and (ii) CFP purchased an additional 18,900 shares on the open
market. On about December 31, 1997, the IRA transferred 4,000 of its shares to
four nieces and nephews of Mr. Caloyeras and its remaining 9,000 shares equally
to each of Mr. Caloyeras' three adult children. The principal business of CFP is
real estate and equipment leasing, while the principal business of PBC is to act
as the general partner of CFP. The business address of each of Mr. Caloyeras,
CFP and PBC is 2041 W. 139th Street, Gardena, California 90249. Mr. Caloyeras is
the Chairman of Magnetika, Inc. ("Magnetika"), an electrical component
manufacturer, and Magnetika's address also is 2041 W. 139th Street, Gardena,
California 90249. None of Mr. Caloyeras, CFP or PBC has been convicted in a
criminal proceeding during the last five years or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction during
the past five years. Mr. Caloyeras is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Caloyeras acquired the securities with funds from his personal bank
account or the accounts of the Trust or CFP, as the case may be.
ITEM 4. PURPOSE OF TRANSACTION
On July 24, 1998, Caloyeras, Inc., d/b/a Electronika, Inc., an entity
which is owned equally by the three adult children of Mr. Caloyeras, executed a
letter agreement with the Company (the "Letter Agreement"). The Letter Agreement
represents the parties' intention to negotiate in good faith a definitive merger
agreement providing for the forward triangular merger of a subsidiary of the
Company with Caloyeras, Inc., with Caloyeras, Inc. as the surviving entity. As a
result of the contemplated transaction, (i) Mr. Caloyeras would be allowed to
vote 525,165 shares of common stock of the Company owned by the family of the
Company's founder, which shares would be placed in a voting trust or similar
arrangement, and (ii) the Caloyeras family would acquire more than fifty percent
of the voting control of the Company.
Page 3 of 5 Pages
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, Mr. Caloyeras is the beneficial owner,
as defined in Rule 13d-3(a) under the Securities Exchange Act
of 1934, of 198,900 shares of the Company's common stock,
representing approximately 7.1% of the Company's outstanding
common stock. The 198,900 shares are held by CFP.
(b) Mr. Caloyeras has the sole power to vote or to direct the vote
and the sole power to dispose or to direct the disposition of
the 198,900 shares of the Company's common stock to which this
statement relates. Mr. Caloyeras does not share any voting or
dispositive power with respect to such common stock with any
other person or entity.
(c) None.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
On July 24, 1998, Caloyeras, Inc., d/b/a Electronika, Inc., an entity
which is owned equally by the three adult children of Mr. Caloyeras, executed
the Letter Agreement with the Company. The Letter Agreement represents the
parties' intention to negotiate in good faith a definitive merger agreement
providing for the forward triangular merger of a subsidiary of the Company with
Caloyeras, Inc., with Caloyeras, Inc. as the surviving entity. As a result of
the contemplated transaction, (i) Mr. Caloyeras would be allowed to vote 525,165
shares of common stock of the Company owned by the family of the Company's
founder, which shares would be placed in a voting trust or similar arrangement,
and (ii) the Caloyeras family would acquire more than fifty percent of the
voting control of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following exhibit is filed with this statement:
Exhibit 1 Letter Agreement, dated July 24, 1998, by and between the
Company and Caloyeras, Inc.
Page 4 of 5 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: July 30, 1998 /s/ Peter B. Caloyeras
----------------------------------------
PETER B. CALOYERAS
Page 5 of 5 Pages
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EXHIBIT 1
LETTER AGREEMENT
Letter Agreement dated as of July 24, 1998, by and between Torotel,
Inc., a Missouri corporation, and Caloyeras, Inc. a California corporation.
1. GENERAL. The Proposed Terms Sheet attached to this letter and
incorporated herein by reference sets forth the proposal discussed between us
for a merger of a newly created subsidiary of Torotel, Inc. with Caloyeras, Inc.
(Caloyeras, Inc., d/b/a Electronika, Inc., will also include the business and
assets operating under the name of Magnetika/East). This letter, and the
Proposed Terms Sheet (collectively, the "Proposal"), represents the parties'
intention to negotiate in good faith a definitive Merger Agreement and all of
the documents ancillary thereto (the "Definitive Agreements"), which will
reflect in substance the Proposed Terms Sheet. The parties acknowledge that tax
and accounting issues may require modification of the structure contemplated by
the Proposed Terms Sheet.
2. DUE DILIGENCE ACCESS. The parties agree to allow each other and
their respective representatives access to the books and records (including
without limitation information related to financial, accounting, commercial,
legal, environmental, regulatory and employee benefits matters) of each other
for purposes of conducting a due diligence review and confirming their
understandings as to the status of each other's business, assets and related
liabilities. In connection therewith, the parties and their respective
representatives will be promptly introduced to, and thereafter permitted to
contact and communicate with, upon prior notice to and consent of each other
(which consent shall not be unreasonably withheld, delayed or conditioned), the
other's officers, employees and agents.
3. DEFINITIVE AGREEMENTS. The parties will proceed diligently and in
good faith to negotiate, execute and deliver the Definitive Agreements, subject
in all respects to (i) the approval of the parties hereto, (ii) verification of
legal and factual issues deemed relevant by the parties, (iii) receipt of
requisite regulatory and other third party approvals and consents and (iv) the
satisfaction of the conditions precedent described in the Proposed Terms Sheet.
The Definitive Agreements will contain such representations and warranties,
agreements and covenants, conditions and indemnification provisions as are
customarily found in agreements for a transaction of the size, type and
complexity contemplated by this Proposal.
4. EXPENSES. Each party will bear its own respective costs and expenses
in connection with the proposed transaction, including without limitation the
negotiation and preparation of this Proposal, the negotiation and drafting of
the Definitive Agreements, financial advisory fees, finders fees and the
obtaining of all regulatory and other approvals or consents.
5. NO BINDING OBLIGATION. This proposal is an expression of the intent
of the parties only and is subject to due diligence review and to the other
terms and conditions set forth herein. Except as expressly set forth in
Paragraph 2 and 4, this Proposal does not constitute or
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create, and shall not be deemed to constitute or create, legally binding or
enforceable obligations on the part of any party hereto. No such obligation
shall be created, except by the execution and delivery of the Definitive
Agreements containing such terms and conditions of the proposed transaction as
shall be agreed upon by the parties, and then only in accordance with the terms
and conditions of the Definitive Agreements.
Torotel, Inc.
By: /s/ Dale H. Sizemore, Jr.
------------------------------------
Name: Dale H. Sizemore, Jr.
Title: Chairman
Caloyeras, Inc.
By: /s/ W. Edgar Jessup, Jr.
------------------------------------
Name: W. Edgar Jessup, Jr.
Title: Assistant Secretary
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TOROTEL, INC.
PROPOSED TERMS SHEET
(JULY 24, 1998)
BUYER: Torotel, Inc. ("TTL")
SELLER(S): Caloyeras, Inc. (dba Electronika, Inc.) which will
include the business and assets operating under the
name of Magnetika/East. ("Target")
PROPOSED
TRANSACTION: A newly created subsidiary of TTL will merge with the
Target in a Forward Triangular Merger (as a tax free
reorganization under Section 368(a)(2)(D) with the
Target being the surviving entity. The Target will own
all business assets of Caloyeras, Inc. (dba
Electronika, Inc.) including the business and assets
operating under the name of Magnetika/East free and
clear of all liens and encumbrances, except for
accruals and payables incurred in the normal course of
business. TTL will exchange (1) 1,800,000 shares of
TTL's common stock and (2) $2,500,000 of TTL's new
Class A Preferred Stock (5%, Cumulative,
non-participating Preferred, callable at 110%, escrowed
- see below) for 100% of the outstanding stock of
Target.
PRICE: The value of the Common Stock (1,800,000 X $.75 =
$1,350,000) plus the $2,500,000 in Preferred Stock
[escrowed - see below] equals a total purchase price
for Target of Three Million, Eight Hundred Fifty
Thousand Dollars ($3,850,000).
EARNINGS
PROTECTION: In order to protect the shareholders of TTL, the
operations of Target will be accounted separately for
the balance of the fiscal year of closing plus three
full fiscal years after the year in which the closing
occurs ("Escrow Period"). At closing, the $2,500,000 of
Preferred Stock will be placed in escrow subject to the
performance of Target during the Escrow Period. At the
end of each fiscal year in Escrow Period, the Preferred
Stock will be released from escrow as follows:
A. The amount of EBIT-DA generated by Target,
after the merger, during each fiscal year,
will be calculated and verified by the
independent auditors.
B. For each One Dollar ($1) of EBIT-DA
calculated in (A) One Dollar ($1) of
Preferred Stock will be released from escrow
within 30 days following the independent
auditors verification of the calculation.
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C. After final year end of the Escrow Period,
any Preferred Stock remaining in escrow,
will be returned to TTL and canceled.
REPS &
WARRANTIES: In the definitive agreements, both parties will make
normal and customary Representations and Warranties for
a transaction of this type. In addition, Target will
warrant that they will own at least Four Hundred
Thousand Dollars ($400,000) of Cash, Accounts
Receivable, Inventory, Work In Process and Deposits, in
excess of liabilities, at the time of closing. Within
twelve months after closing, any amount of assets at
closing that are determined to have been worthless or
any liability of Target that was not disclosed, will
reduce EBITDA for purposes of the calculation of the
amount of Preferred Stock to be released from escrow.
VOTING
TRUST: At closing, a voting trust (or similar arrangement)
will be formed to allow Peter Caloyeras to vote 525,165
shares of common stock owned by the Sizemore Family.
This trust will provide that Mr. Caloyeras has the
power to vote these shares for the Escrow Period. At
the end of the escrow period, the trust will be
liquidated and the voting rights will revert to the
Sizemore Family. Both the Sizemore Family and Mr.
Caloyeras will mutually agree on the trustee of the
trust and on a list of specific matters on which Mr.
Caloyeras may not vote the trusts shares.
REQUIRED
STEPS: The transaction is subject to the following steps:
A. Further Due Diligence by both parties.
B. Mutually acceptable definitive agreements.
C. A fairness opinion from an independent Investment
Banker.
D. Approval by both parties Board of Directors.
E. Approval by the Securities and Exchange Commission.
F. A shareholder vote approving the transaction.
EXPECTED
CLOSING DATE: October 1, 1998 or as soon as possible.
SCOPE OF
TERMS SHEET: The scope of this Proposed Terms Sheet is
limited to being a basis on which to discuss and
negotiate a potential transaction between the parties.
IT IS NOT INTENDED, NOR IS IT TO BE CONSIDERED, AN
OFFER TO BUY OR SELL STOCK OF ANY PARTY.
CONFIDENTIALITY: This document and all discussions surrounding it are
Strictly Confidential and subject to the written
confidentiality agreement between the parties.
