EX-10.(a)






AMENDMENT NO. 2 TO CREDIT AGREEMENT




This Amendment No. 2 to Credit Agreement (this “Agreement”) dated as of January
10, 2007 is made by and among THE TORO COMPANY, a Delaware corporation (“Toro”), TORO
CREDIT COMPANY, a Minnesota corporation (“TCC”), TORO MANUFACTURING LLC, a Delaware limited
liability company (“Manufacturing”), EXMARK MANUFACTURING COMPANY INCORPORATED, a Nebraska
corporation (“Exmark”, together with Toro, TCC, and Manufacturing sometimes collectively
referred to herein as the “Companies”), and TORO INTERNATIONAL COMPANY, a Minnesota
corporation, TOVER OVERSEAS B.V., a Netherlands company, and TORO FACTORING COMPANY LIMITED, a
Guernsey, Channel Islands company (the “Additional Borrowers”, and together with the
Companies, the “Borrowers” and, each a “Borrower”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK
OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.



W I T N E S S E T H:




WHEREAS, the Borrowers, the Administrative Agent and the Lenders have entered into that
certain Credit Agreement dated as of September 8, 2004 (as amended by Amendment No. 1 to Credit
Agreement dated as of October 25, 2005, as hereby amended and as from time to time hereafter
further amended, modified, supplemented, restated, or amended and restated, the “Credit
Agreement”; the capitalized terms as used in this Agreement not otherwise defined herein shall
have the respective meanings given thereto in the Credit Agreement), pursuant to which the Lenders
have made available to the Borrowers a revolving credit facility (including a letter of credit
facility and a swing line facility); and



WHEREAS, the Borrowers have advised the Administrative Agent and the Lenders that the
Borrowers desire to amend certain provisions of the Credit Agreement as set forth herein in
connection with adjustments to the Applicable Rate, extension of the Maturity Date and the amount
of Restricted Payments that the Borrowers can make, and the Administrative Agent and the Lenders
have agreed so to amend the Credit Agreement on the terms and conditions set forth herein;



NOW, THEREFORE, in consideration of the premises and further valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:



1. Amendments to Credit Agreement. Subject to the terms and conditions set forth
herein, the Credit Agreement is hereby amended as follows:




(a) The definition of “Applicable Rate” in Section 1.01 is hereby amended by
deleting the definition in its entirety and inserting the following definition in lieu
thereof:




“ ‘Applicable Rate’ means, from time to time, the following percentages per
annum, based upon (i) the ratio of (A) total Indebtedness to (B) the sum Consolidated EBIT
plus depreciation and amortization expense for such period, and (ii) the Debt Rating
as set forth below:



Applicable Rate




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Indebtedness	 	 	 	 	 	 	 	Eurocurrency Rate	 	 
	Pricing	 	to Consolidated	 	 	 	 	 	 	 	and Letters of	 	 
	Level	 	EBITDA Ratio	 	Debt Ratings S&P/Moody’s	 	Facility Fee	 	Credit	 	Utilization Fee
	1

	 	Less than or equal

to 0.50x
	 	

3 BBB+/Baa1
	 	

0.100%
	 	

0.400%
	 	

0.000%

	 

	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2

	 	Less than or equal

to 1.50x but

greater than 0.50x
	 	



BBB/Baa2
	 	



0.125%
	 	



0.500%
	 	



0.000%

	 

	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3

	 	Less than or equal

to 2.00x but

greater than 1.50x
	 	



BBB-/Baa3
	 	



0.150%
	 	



0.600%
	 	



0.000%

	 

	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4

	 	Greater than 2.00x
	 	£ BB+/Ba1
	 	 	0.175	%	 	 	0.700	%	 	 	0.000	%
	 

	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 







“ ‘Debt Rating’ means, as of any date of determination, the rating as
determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of
Toro’s non-credit-enhanced, senior unsecured long-term debt; provided that
if a Debt Rating is issued by each of the foregoing rating agencies, then the higher
of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the
highest and the Debt Rating for Pricing Level 4 being the lowest), unless there is a
split in Debt Ratings of more than one level, in which case the Pricing Level that
is one level higher than the Pricing Level of the lower Debt Rating shall apply.




“Initially, the Applicable Rate will be determined based upon the Debt Rating as specified
in the certificate delivered pursuant to Section 4.01(a)(viii). If, as of any date
of determination, the ratio of (A) total Indebtedness to (B) the sum Consolidated EBIT
plus depreciation and amortization expense for such period corresponds to a Pricing
Level different than that Pricing Level corresponding to the Debt Rating issued at the time
of calculation of such ratio, then the lower of such two Pricing Levels (with Pricing Level
1 being the lowest and the Pricing Level 4 being the highest) will apply, unless there is a
split of more than one level in corresponding Pricing Levels, in which case the Pricing
Level that is one level higher than the lower Pricing Level will apply. Thereafter, each
change in the Applicable Rate resulting from a publicly announced change in the Debt Rating
will be effective during the period commencing on the date of the public announcement
thereof and ending on the date immediately preceding the effective date of the next such
change, and any change in the Applicable Rate resulting from a change in the ratio of
(A) total Indebtedness to (B) the sum Consolidated EBIT plus depreciation and
amortization expense for such period will become effective as of the first Business Day
after the date on which such Compliance Certificate is delivered pursuant to Section
6.02(a); provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 4 will be the
applicable Pricing Level corresponding to such ratio for determination as set forth above of
the Applicable Rate as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered. In the event that a Debt Rating has not
been issued as of any date of determination, the Pricing Level corresponding to the ratio of
(A) total Indebtedness to (B) the sum Consolidated EBIT plus depreciation and
amortization expense for such period as of such date of determination shall apply. In the
event that only one Debt Rating has been issued as of any date of determination, that Debt
Rating shall apply.




“For the purposes of calculating total Indebtedness for use in calculating the ratio of (A)
total Indebtedness to (B) the sum Consolidated EBIT plus depreciation and
amortization expense for such period for the determination of “Applicable Rate”,
the Outstanding Amount of all Loans and L/C Obligations shall be calculated as an average of
the daily Outstanding Amount for the twelve month period most recently completed prior to
the date of determination for which financial statements have been delivered to the Lenders
pursuant to Section 6.01.”




(b) The definition of “Maturity Date” in Section 1.01 is hereby amended by
deleting the definition in its entirety and inserting the following definition in lieu
thereof:




(c) “ ‘Maturity Date’ means January 10, 2012.”




(d) Section 2.14(a) is hereby amended by deleting the number “$75,000,000” in
the fourth line of such subsection and inserting “$100,000,000” in lieu thereof.




(e) Section 7.07(c) is hereby amended by deleting that subsection (c) in its
entirety and inserting the following subsection (c) in lieu thereof:




“(c) (A) if the ratio of (1) total Indebtedness to (2) the sum Consolidated EBIT
plus depreciation and amortization expense for such period is less than or equal to
2.00 to 1.00 as set forth in the most recently delivered Compliance Certificate, Toro may
declare and pay cash dividends to its stockholders and purchase, redeem or otherwise acquire
 shares of its capital stock or warrants, rights or options to acquire any such shares for
cash without restriction, and (b) if the ratio of (1) total Indebtedness to (2) the sum
Consolidated EBIT plus depreciation and amortization expense for such period is
greater than 2.00 to 1.00 as set forth in the most recently delivered Compliance
Certificate, Toro may declare and pay cash dividends to its stockholders and purchase,
redeem or otherwise acquire shares of its capital stock or warrants, rights or options to
acquire any such shares for cash up to an amount not to exceed $50 million in any fiscal
year; provided, that, immediately after giving effect to any such proposed action, no
Default or Event of Default would exist; and”



2. Conditions Precedent. The effectiveness of this Agreement and the amendments to
the Credit Agreement herein provided are subject to the satisfaction of the following conditions
precedent:




(a) The Administrative Agent shall have received each of the following documents or
instruments in form and substance reasonably acceptable to the Administrative Agent:




(i) ten (10) original counterparts of this Agreement, duly executed by the
Borrowers, the Administrative Agent, and the Required Lenders, together with all
schedules and exhibits thereto duly completed;




(ii) such other documents, instruments, opinions, certifications, undertakings,
further assurances and other matters as the Administrative Agent shall reasonably
require.




(b) payment of (i) all reasonable out of pocket fees and expenses of counsel to the
Administrative Agent incurred in connection with the execution and delivery of this
Agreement to the extent invoiced prior to the date hereof; (ii) an upfront fee for each
Lender executing this Agreement by 12:00 noon (Eastern time) on January 10, 2007, which fee
shall be in an amount equal to five basis points (5 “bps”) multiplied by
each such Lender’s Applicable Percentage of the Aggregate Commitments immediately prior to
the effective date of this Agreement, such upfront fee for each such Lender’s own account.



3. Reaffirmation by each of the Borrowers. Each of the Borrowers hereby consents,
acknowledges and agrees to the amendments of the Credit Agreement set forth herein.



4. Representations and Warranties. In order to induce the Administrative Agent and
the Lenders to enter into this Agreement, each of the Borrowers represents and warrants to the
Administrative Agent and the Lenders as follows:




(a) The representations and warranties of (i) the Borrowers contained in Article
V (after giving effect to this Agreement) and (ii) each Loan Party contained in each
other Loan Document or in any document furnished at any time under or in connection herewith
or therewith, shall be true and correct on and as of the date hereof, except to the extent
that such representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for purposes of
this Agreement, the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.




(b) There does not exist any pending or threatened action, suit, investigation or
proceeding in any court or before any arbitrator or Governmental Authority that purports to
affect any transaction contemplated under this Agreement or the ability of any Borrower to
perform its respective obligations under this Agreement;




(c) There has not occurred since October 31, 2006, any event or circumstance that has
resulted or could reasonably be expected to result in a Material Adverse Effect or a
material adverse change in or a material adverse effect upon the business, assets,
liabilities (actual or contingent), operations, condition (financial or otherwise), or
prospects of Toro and its Subsidiaries taken as a whole; and




(d) No Default or Event of Default has occurred and is continuing.



5. Entire Agreement. This Agreement, together with all the Loan Documents
(collectively, the “Relevant Documents”), sets forth the entire understanding and agreement
of the parties hereto in relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relative to such subject matter. No promise,
condition, representation or warranty, express or implied, not herein set forth shall bind any
party hereto, and not one of them has relied on any such promise, condition, representation or
warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in
the Relevant Documents, no representations, warranties or commitments, express or implied, have
been made by any party to the other. None of the terms or conditions of this Agreement may be
changed, modified, waived or canceled orally or otherwise, except as permitted pursuant to
Section 11.01 of the Credit Agreement.



6. Full Force and Effect of Agreement. Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan Documents are hereby confirmed
and ratified in all respects by each party hereto and shall be and remain in full force and effect
according to their respective terms.



7. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original as against any party whose signature appears thereon, and all
of which shall together constitute one and the same instrument.



8. Governing Law. This Agreement shall in all respects be governed by, and construed
in accordance with, the laws of the state of New York.



9. Enforceability. Should any one or more of the provisions of this Agreement be
determined to be illegal or unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the parties hereto.



10. References. All references in any of the Loan Documents to the “Credit Agreement”
shall mean the Credit Agreement, as amended hereby.



11. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Administrative Agent and each of the Lenders, and their respective
successors, assigns and legal representatives; provided, however, that no Borrower, without
the prior consent of the Required Lenders, may assign any rights, powers, duties or obligations
hereunder.



12. Expenses. Toro agrees to pay to the Administrative Agent all reasonable
out-of-pocket expenses incurred or arising in connection with the negotiation and preparation of
this Agreement.



[Signature pages follow.]




1




IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
Credit Agreement to be made, executed and delivered by their duly authorized officers as of the day
and year first above written.




	 	 	 	THE TORO COMPANY





	 	 	 
	By:

Name:

Title:

	 	/s/ Stephen P. Wolfe

Stephen P. Wolfe

Vice President – Finance & CFO
	 
	 	 
	By:

Name:

Title:

	 	/s/ T J Larson

Thomas J. Larson

Treasurer







	 	 	TORO CREDIT COMPANY





	 	 	 
	By:

Name:

Title:

	 	/s/ T J Larson

Thomas J. Larson

Secretary-Treasurer







	 	 	TORO MANUFACTURING LLC












	 	 	 
	By:

Name:

Title:

	 	/s/ Stephen P. Wolfe

Stephen P. Wolfe

President







	 	 	EXMARK MANUFACTURING COMPANY






INCORPORATED



	 	 	 
	By:

Name:

Title:

	 	/s/ J. Lawrence McIntyre

J. Lawrence McIntyre

Vice President and Secretary
	 
	 	 






2





	 	 	TORO INTERNATIONAL COMPANY





	 	 	 
	By:

Name:

Title:

	 	/s/ J. Lawrence McIntyre

J. Lawrence McIntyre

Vice President and Secretary







	 	 	TORO OVERSEAS B.V.





	 	 	 
	By:

Name:

Title:

	 	/s/ Paula Graff

Paula Graff

Authorized Signatory







	 	 	TORO FACTORING COMPANY LIMITED





	 	 	 
	By:

Name:

Title:

	 	/s/ Paula Graff

Paula Graff

Managing Director
	 
	 	 






3





	 	 	BANK OF AMERICA, N.A., as Administrative Agent





	 	 	 
	By:

Name:

Title:

	 	/s/ Charlene Wright-Jones

Charlene Wright-Jones

Assistant Vice President
	 
	 	 






4





	 	 	BANK OF AMERICA, N.A., as a Lender, L/C






Issuer and Swing Line Lender



	 	 	 
	By:

Name:

Title:

	 	/s/ Charles R. Dickerson

Charles R. Dickerson

Managing Director
	 
	 	 






5





	 	 	SUNTRUST BANK, as a Lender and a Co-






Syndication Agent



	 	 	 
	By:

Name:

Title:

	 	/s/ Daniel S. Komitor

Daniel S. Komitor

Director
	 
	 	 






6





	 	 	U.S. BANK NATIONAL
ASSOCIATION, as a





Lender and a Co-Syndication Agent



	 	 	 
	By:

Name:

Title:

	 	/s/ Michael J. Staloch

Michael J. Staloch

Senior Vice President
	 
	 	 






7





	 	 	HARRIS TRUST AND SAVINGS BANK, as a






Lender and a Co-Documentation Agent



	 	 	 
	By:

Name:

Title:

	 	/s/ Patrick J. McDonnell

Patrick J. McDonnell

Managing Director
	 
	 	 






8





	 	 	WELLS FARGO BANK,
NATIONAL





ASSOCIATION, as a Lender and a Co-



Documentation Agent



	 	 	 
	By:

Name:

Title:

	 	/s/ Scott Bjelde

Scott Bjelde

Senior Vice President
	 
	 	 






9





	 	 	THE BANK OF NEW YORK,
as a Lender





	 	 	 
	By:

Name:

Title:

	 	/s/ Walter C. Parelli

Walter C. Parelli

Vice President
	 
	 	 







10