DEBT

	April 30,			January 31,
	2012			2012
	(in thousands)
Note payable	$	16,054		$	16,134
Less current maturities		(330	)		(321	)
Long-term debt	$	15,724		$	15,813

Note Payable

In July 2004, QAD Ortega Hill, LLC, a wholly owned limited liability company of QAD Inc., entered into a loan agreement (the "2004 Mortgage") with Mid-State Bank & Trust, a bank which was subsequently purchased by Rabobank, N.A. The 2004 Mortgage had an original principal amount of $18.0 million and bore interest at a fixed rate of 6.5%. The 2004 Mortgage was secured by the Company's headquarters located in Santa Barbara, California. The terms of the 2004 Mortgage provided for QAD Ortega Hill, LLC to make 119 monthly payments of $115,000 consisting of principal and interest and one final principal payment of $15.4 million. The 2004 Mortgage was scheduled to mature in July 2014. The unpaid balance as of April 30, 2012 was $16.1 million.

Effective May 30, 2012, QAD Ortega Hill, LLC, a wholly owned limited liability company of QAD Inc., entered into a variable rate credit agreement (the "Agreement") with Rabobank, N.A., to refinance the 2004 Mortgage. The Agreement provides for an initial principal amount of $16.1 million and bears interest at LIBOR plus 2.25%. The Agreement matures in June 2022 and is secured by the Company's headquarters located in Santa Barbara, California. In conjunction with the Agreement, QAD Ortega Hill, LLC entered into an interest rate swap with Rabobank, N.A. The swap agreement has an initial notional amount and schedule matching that of the underlying loan that synthetically fixed the all-in interest rate on the debt at 4.31%. The terms of the Agreement provide for QAD Ortega Hill, LLC to make net monthly payments of $88,100 consisting of principal and interest and one final payment of $11.7 million.

Credit Facility

On July 8, 2011, the Company entered into an unsecured credit agreement with Rabobank, N.A. (the "Facility"). The Facility provides a one-year commitment for a $20 million line of credit for working capital or other business needs. The Company will pay a commitment fee of 0.25% per annum of the daily average of the unused portion of the $20 million Facility. Borrowings under the Facility bear interest at a rate equal to LIBOR plus 0.75%.

The Facility provides that the Company maintain certain financial and operating ratios which include, among other provisions, minimum liquidity on a consolidated basis of $25 million in cash and equivalents at all times, a current ratio (calculated using current liabilities excluding deferred revenue) of not less than 1.3 to 1.0 determined at the end of each fiscal quarter, a leverage ratio of not more than 1.5 to 1.0 determined at the end of each fiscal quarter, and a debt service coverage ratio of not less than 1.5 to 1.0 determined at the end of each fiscal year. The Facility also contains customary covenants that could restrict the Company's ability to incur additional indebtedness. At April 30, 2012, the effective borrowing rate would have been 1.0%.

As of April 30, 2012, there were no borrowings under the Facility and the Company was in compliance with the financial covenants. The Company expects to renew this facility prior to its expiration in July 2012, under competitive terms based on existing market conditions.