EXHIBIT
10.10


Long-Term Cash Incentive Plan


Article 1:  Administration


1.01: 
Purpose.  The purpose of the Torotel, Inc. Long-Term Incentive Plan (the “Plan”)
is to promote the long-term financial performance of Torotel, Inc. (the “Company”)
by providing officers and key employees of the Company and its present or
future subsidiaries, with the opportunity to earn cash awards for accomplishing
annual goals that promote the Company’s long-term financial performance.


1.02: 
Administration.  The Board of Directors (“Board”) of the Company shall supervise and
administer the Plan.  Any questions of
interpretation of the Plan or of any Awards issued under it shall be determined
by the Board and such determination shall be final and binding upon all
persons.  Any or all powers and
discretion vested in the Board under the Plan (except the power to amend or
terminate the Plan) may be exercised by the standing Compensation and
Nominating Committee of the Board (the “Committee”).  A majority of the members of the Committee
shall constitute a quorum, and all determinations of the Committee shall be
made by a majority of its members.  Any
determination of the Committee under the Plan may be made without meeting of
the Committee, by written notice signed by a majority of the Committee members.


1.03: 
Participants.
 (a) Participants will consist of such key employees, including officers of
the Company or any of its present or future subsidiaries, as the Board, in its
sole discretion, determines to be mainly responsible for the success and future
growth and profitability of the Company and who have been full-time employees
of the Company for at least one (1) year of the Plan period. Awards may be
granted under this Plan to persons who have previously received Awards or other
benefits under this or other plans of the Company. (b) Independent contractors
are ineligible to participate in the Plan, regardless of whether or not they
are later reclassified as common law employees.


1.04:  Eligibility for Awards.  (a)
Participants who are full-time employees at the time of payout shall be
eligible to receive full Awards under the Plan, except as indicated in Section
1.04(b), Section 1.04(c) and Section 1.11 below.


(b) If Participants have been full-time employees of the Company for at
least one (1) year of the Plan period and are not full-time employees at the
time of payout as a result of their death, disability or normal retirement as
defined in the Company’s qualified benefit plans, the Participants or their
designated beneficiaries on the Designation of Beneficiaries Form, included by
reference herein, will receive 100% of the Awards Participants would otherwise
be entitled to under the terms and conditions of the Plan.


(c) If Participants have been full-time employees of the Company for at
least one (1) year, are full-time employees at the time of payout, and enter
the Plan subsequent to the beginning of a Plan period, the Participants will
receive a prorated portion of the Awards they would otherwise be entitled to
under the terms and conditions of the Plan, using the following schedule:











 


	
  Years of 

  Participation in the 

  Plan

  	
   

  	
  Portion of

  Total Award

  Earned

  	
   

  	
  Marginal Increase in 

  Prorated

  Award

  	
   

  
	
   

  	
  <1

  	
   

  	
  0%
  of Total Award

  	
   

  	
  0%
  Increase

  	
   

  
	
   

  	
  1

  	
   

  	
  10%
  of Total Award

  	
   

  	
  10%
  Increase

  	
   

  
	
   

  	
  >1 to 2

  	
   

  	
  20%
  of Total Award

  	
   

  	
  10%
  Increase

  	
   

  
	
   

  	
  >2 to 3

  	
   

  	
  30%
  of Total Award

  	
   

  	
  10%
  Increase

  	
   

  
	
   

  	
  >3 to 4

  	
   

  	
  40%
  of Total Award

  	
   

  	
  10%
  Increase

  	
   

  
	
   

  	
  >4 to 5

  	
   

  	
  100% of Total Award

  	
   

  	
  60% Increase

  	
   

  



 


1.05: 
Stakeholder Safeguard.  (a) Awards earned under the Plan will not be paid if the Company’s
performance on any Plan metric is less than the threshold level of performance
defined for that Plan metric in Section 2.01 below.  (b) To optimize the incentive value of Awards
earned under the Plan, the Committee will communicate its decision regarding
threshold, target and optimum performance on all Plan metrics for the Plan
period as soon as practical following the Board’s review and approval of the
proposed performance ranges, but no later than one (1) month after the beginning
of the Plan period.


1.06: 
Plan Period.  The plan period will be five (5) years, beginning on May 1, 2007.


1.07: 
Duration of the Plan.  The policies and procedures described in the Plan apply to successive
five-year periods beginning May 1, 2007 and ending when changed.


1.08: Debts. 
To the extent
permitted by law, the right of any participant or any beneficiary to any
payment hereunder shall not be subject in any manner to attachment or other
legal process for the debts of the Participant or beneficiary; and any such
payment shall not be subject to anticipation, alienation, sale, transfer,
assignment or encumbrance.


1.09: 
Absence of Liability.  Neither members of
the Committee nor members of the Board shall be liable to any person for any
action taken or omitted in connection with the administration of this Plan
unless attributable to the member’s own fraud or willful misconduct; nor shall
the Company be liable to any person for any such action unless attributable to
fraud or willful misconduct on the part of an officer or employee of the
Company.


1.10: 
Amendment of the Plan.  (a)  The Plan may be
amended or terminated by the Board at the end of any Plan period when, in its
sole judgment, such amendment or termination is necessary or desirable.  No such termination or amendment shall affect
the rights of any Participant who is entitled to an Award under the Plan at the
time of its termination or amendment. (b) The Plan may also be amended by the
Board from time to time during a Plan period so long as such amendments do not
adversely impact Participants’ Award opportunities under the Plan at the time
of amendment.


1.11: 
Change of Control. 
(a) A change of control shall have occurred if (1) individuals who are
members of the Board on the first day of the Plan period no longer constitute a
majority of the Board; or (2) the Corporation merges or consolidates with any other entity and is, itself, not a
surviving entity; or (3) substantially all of the assets of the Corporation
have been sold, liquidated or dissolved; or (4) any person or group of persons
other the shareholders of record on the first day of the Plan period become the
beneficial owner, directly or indirectly, of 51% or more of the voting power of
the Corporation’s stock.











(b) In the event of a change of control and coincident decision to
either amend or terminate the Plan, the Committee or its designee shall (i)
prorate the Company’s threshold, target and optimum performance goals for all
Plan metrics identified in Section 2.01 below for the Plan period, (ii) prorate
the Participants’ Award opportunities for the Company’s threshold, target and
optimum performance on all Plan metrics over a full five (5) year Plan period,
(iii) calculate the Company’s performance on all Plan metrics from the beginning
of the Plan period to the point of change of control, and (iv) using their base
pay at the time of change of control, calculate any prorated Awards due
Participants using the formula defined in Section 2.02(b) below.  Awards due Participants shall be paid within
ninety (120) days of change of control.


(c) In the event of a change of control and coincident decision to
neither amend nor terminate the Plan, Participants who leave the Company for
reasons other than cause during the twelve (12) months subsequent to change of
control and are not full-time employees at the time of payout shall be eligible
to receive a prorated Award.  Upon
departure from the Plan, the Committee or its designee shall (i) prorate the
Company’s threshold, target and optimum performance goals for all Plan metrics
identified in Section 2.01 below for the Plan period, (ii) prorate the
Participants’ Award opportunities for the Company’s threshold, target and
optimum performance on all Plan metrics over a full five (5) year Plan period,
(iii) calculate the Company’s performance on all Plan metrics from the
beginning of the Plan period to the point of departure from the Company, and
(iv) using their base pay at the time of departure from the Plan, calculate any
prorated Awards due Participants using the formula defined in Section 2.02(b)
below, and pursuant to the terms and conditions of the Plan.  Awards due Participants shall be paid within
ninety (120) of departure from the Company.


(d) Participants who leave the Company for cause include Participants
who leave because of their (i) convictions of any criminal violation involving
dishonesty, fraud, or breach of trust, (ii) willful engagement in any
misconduct in the performance of their duties that materially injure the
Company, in the opinion of a majority of the Board, (iii) performance of any
act which, if known to the customers, clients or stockholders of the Company,
would materially and adversely impact the business of the Company in the
opinion of a majority of the Board, or (iv) willful and substantial
nonperformance of assigned duties; provided that such nonperformance continues
more than 10 days after the Company has given written notice of such
nonperformance and of its intention to terminate the participants’ employment
because of such nonperformance.


1.12: Beneficiaries.  If Participants who are
otherwise due Awards under the terms and conditions of the Plan die before the
date of payment, 100% of their Awards shall be paid to the Participants’
designated beneficiaries on the Designation of Beneficiary form, included by
reference herein.


1.13: Limitations. 
This Plan is not to
be construed as constituting a contract of employment.  The Plan does not limit or impair the right
of the Company to terminate any employee of the Company with or without cause
at any time.  No rights to an Award shall
be deemed to accrue to any employee whether or not he/she is selected to
participate herein, and no person shall, because of the Plan acquire any right
to an accounting or to examine the books or the affairs of the Company.


1.14: 
Governance.  This Plan shall be governed by the laws of
Kansas.











Article 2: Awards


2.01: 
Performance Range.
 Under the Plan, Participants will be eligible
for Awards if the Company’s return on capital employed (ROCE), average annual
growth in gross revenue, average annual growth in earnings before interest and
taxes (EBIT), and debt to equity ratio for the Plan period are within the
performance ranges specified below.


	
  

  	
   

  	
  Performance Level

  	
   

  
	
   

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Optimum

  	
   

  
	
  ROCE:

  	
   

  	
  20.00%

  	
   

  	
  25.00%

  	
   

  	
  30.00%

  	
   

  
	
  Average Annual
  Gross Revenue Growth:

  	
   

  	
  15.50%

  	
   

  	
  20.00%

  	
   

  	
  31.00%

  	
   

  
	
  Average Annual
  EBIT Growth:

  	
   

  	
  10.00%

  	
   

  	
  15.00%

  	
   

  	
  20.00%

  	
   

  
	
  Debit: Equity Ratio:

  	
   

  	
  60.00%

  	
   

  	
  50.00%

  	
   

  	
  40.00%

  	
   

  



 


2.02:  Awards.  (a)
Under the Plan, the size of Participants’ Awards will vary depending upon the
(i) payout level for the Company’s performance within the range for each metric
identified in Section 2.01 above, and (ii) weight assigned each of these Plan
metrics.  The payout levels and weights
associated with the Plan metrics are specified below.


	
  

  	
   

  	
  Payout Level

  (Percent of Base) 

  	
   

  
	
   

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Optimum

  	
   

  	
  Weight

  	
   

  
	
  ROCE:

  	
   

  	
  10.00%

  	
   

  	
  15.00%

  	
   

  	
  25.00%

  	
   

  	
  25.00%

  	
   

  
	
  Average Annual
  Gross Revenue Growth:

  	
   

  	
  10.00%

  	
   

  	
  15.00%

  	
   

  	
  25.00%

  	
   

  	
  25.00%

  	
   

  
	
  Average Annual
  EBIT Growth:

  	
   

  	
  10.00%

  	
   

  	
  15.00%

  	
   

  	
  25.00%

  	
   

  	
  25.00%

  	
   

  
	
  Debit: Equity Ratio:

  	
   

  	
  10.00%

  	
   

  	
  15.00%

  	
   

  	
  25.00%

  	
   

  	
  25.00%

  	
   

  



 


(b) Awards will be calculated as a percent of Participants’ base pay at
the end of the Plan period, except as specified in Section 1.11(b) above.  Participants’ Awards for each Plan metric
will be calculated using the following formula:


Plan Metric Award = Payout Level X Weight X Base Pay


For example, if the Company’s ROCE for the Plan period equals 25%,
(i.e., Target), and the Participant’s base pay at the end of the Plan period
equals $100,000, then the Participant’s ROCE Award equals $3,750:


	
   ROCE Award = Payout Level X Weight X Base
  Pay

  
	
   

  	
  = 15.00% X
  25.00% X $100,000

  
	
   

  	
  = $3,750

  



 


Linear interpolation will be used to calculate Awards for levels of
Plan metrics between threshold and target levels or target and optimum
levels.  (c) Participants’ total Awards
will be calculated by summing the Awards they earn for each Plan metric.


(d) Pursuant to Section 1.05 above, Awards will not be paid unless the
Company’s performance on each Plan metric meets or exceeds the threshold for
that Plan metric specified in Section 2.01 above.  Awards may be paid for Company performance on
any Plan metric that exceeds optimum. 
The Committee will evaluate the circumstances producing performance on
the Plan 











metric in excess of optimum and, in its sole discretion, decide whether
or not to pay Participants additional Awards for the Company’s performance on
the Plan metric that exceeds optimum.


2.03: Evaluation
of Performance.  Except as
specified in Section 1.11(b) above, the Committee or its designee shall (i)
calculate the Company’s performance on all Plan metrics for the Plan period,
and (ii) calculate Participants’ awards as specified in Section 2.02.


2.04: Timing of
Awards.   The total awards due Participants under the
terms and conditions of the Plan shall be paid within 120 days of the close of
the Plan period.


2.05:  Form of Awards.  Awards shall be paid wholly in cash.


2.06:  Forfeiture of Awards. All rights to
Awards earned by Participants under this Plan shall be immediately forfeited if
Participants are not full time employees of the Company on the date of payment
for any reason except their (i) death, (ii) disability, (iii) normal retirement
as defined in the Company’s qualified benefit plan, pursuant to Section 1.04
above or (iv) departure from the Company for reasons other than cause during
the twelve (12) months following change of control, pursuant to Section 1.11
above.