Document:

Exhibit 10.1

 

CREDIT AND SECURITY AGREEMENT

 

dated as of

 

AUGUST 12, 2009

 

between

 

RED IRON ACCEPTANCE, LLC

 

and

 

TCF INVENTORY FINANCE, INC.

 

[PORTIONS OF THIS EXHIBIT HAVE
BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 
A COPY OF THIS EXHIBIT WITH ALL SECTIONS INTACT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

 

 

Table of Contents

 

	
   

  	
  Page

  
	
  SECTION I
  INTERPRETATION

  	
  1

  
	
  1.01
  Definitions

  	
  1

  
	
  1.02
  GAAP

  	
  1

  
	
  1.03
  Headings

  	
  1

  
	
  1.04
  Plural Terms

  	
  1

  
	
  1.05
  Time

  	
  2

  
	
  1.06
  Governing Law

  	
  2

  
	
  1.07
  Construction

  	
  2

  
	
  1.08
  Entire Agreement

  	
  2

  
	
  1.09
  Calculation of Interest and Fees

  	
  2

  
	
  1.10
  Other Interpretive Provisions

  	
  2

  
	
  SECTION II
  CREDIT FACILITY

  	
  2

  
	
  2.01
  Revolving Loan Facility

  	
  2

  
	
  2.02
  Commitment, Commitment Reductions, Etc.

  	
  4

  
	
  2.03
  Prepayments

  	
  4

  
	
  2.04
  Other Payment Terms

  	
  4

  
	
  2.05
  Revolving Loan Note and Interest Account

  	
  5

  
	
  2.06
  Revolving Loan Funding

  	
  6

  
	
  2.07
  [Reserved]

  	
  6

  
	
  2.08
  Additional Compensation in Certain Circumstances; Increased Costs or Reduced
  Return Resulting from Taxes, Reserves, Capital Adequacy Requirements,
  Expenses, Etc.

  	
  6

  
	
  SECTION III
  CONDITIONS PRECEDENT

  	
  7

  
	
  3.01
  Conditions Precedent to Initial Revolving Loan

  	
  7

  
	
  3.02
  Conditions Precedent to Each Revolving Loan

  	
  7

  
	
  3.03
  Covenant to Deliver

  	
  8

  
	
  SECTION IV
  REPRESENTATIONS AND WARRANTIES

  	
  8

  
	
  4.01
  Borrower’s Representations and Warranties

  	
  8

  
	
  4.02
  Reaffirmation

  	
  11

  
	
  SECTION V
  COVENANTS

  	
  11

  
	
  5.01
  Affirmative Covenants

  	
  11

  
	
  5.02
  Negative Covenants

  	
  13

  
	
  SECTION VI
  DEFAULT

  	
  15

  
	
  6.01 Events
  of Default

  	
  15

  
	
  6.02
  Remedies

  	
  16

  
	
  SECTION VII
  GRANT OF SECURITY INTEREST AND PROVISIONS REGARDING COLLATERAL

  	
  17

  
	
  7.01
  Grant of Security Interest

  	
  17

  
	
  7.02
  Lock Box

  	
  18

  
	
  7.03
  Special Provisions Regarding Accounts

  	
  18

  
	
  7.04
  Lender’s Power of Attorney

  	
  19

  
	
  7.05
  No Liability for Safekeeping

  	
  20

  
	
  7.06
  Supplemental Documentation Relating to Collateral; Further Assurances

  	
  20

  
	
  7.07
  Rights and Remedies

  	
  20

  

 

i

 

	
  SECTION VIII
  MISCELLANEOUS

  	
  21

  
	
  8.01
  Notices

  	
  21

  
	
  8.02
  Expenses

  	
  23

  
	
  8.03
  Indemnification

  	
  23

  
	
  8.04
  Waivers; Amendments

  	
  23

  
	
  8.05
  Successors and Assigns

  	
  24

  
	
  8.06
  Setoff

  	
  24

  
	
  8.07
  No Third Party Rights

  	
  25

  
	
  8.08
  Partial Invalidity

  	
  25

  
	
  8.09
  Jury Trial

  	
  25

  
	
  8.10
  Submission to Jurisdiction

  	
  25

  
	
  8.11
  Counterparts

  	
  25

  
	
  8.12
  Disclosure of Information about Borrower

  	
  25

  
	
  8.13
  No Recourse to Members of Borrower

  	
  26

  
	
  8.14
  No Indirect or Consequential Damages

  	
  26

  

 

ii

 

CREDIT AND SECURITY AGREEMENT

 

This CREDIT AND SECURITY
AGREEMENT (this “Agreement”), dated as of August 12, 2009, is
entered into by and among:

 

RED IRON ACCEPTANCE, LLC,
a Delaware limited liability company (“Borrower”), and

 

TCF INVENTORY FINANCE,
INC., a Minnesota corporation (“Lender” or “TCFIF”).

 

RECITALS

 

A.            Borrower has requested Lender to provide a revolving
credit facility to Borrower for general business purposes.

 

B.            Lender is willing to provide such revolving credit
facility upon the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the above Recitals and the mutual covenants herein contained,
the parties hereto hereby agree as follows:

 

SECTION I

INTERPRETATION

 

1.01  Definitions.  Unless otherwise indicated in this Agreement
or any other Credit Document, each term set forth in Schedule 1.01, when
used in this Agreement or any other Credit Document, shall have the respective
meaning given to that term in Schedule 1.01 or in the provision of this
Agreement or other Credit Document referenced in Schedule 1.01.

 

1.02  GAAP. 
Unless otherwise indicated in this Agreement or any other Credit
Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP.  If GAAP changes during the term of this
Agreement such that any covenants contained herein would then be calculated in
a different manner or with different components, Borrower and Lender agree to
negotiate in good faith to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating Borrower’s
financial condition to substantially the same criteria as were effective prior
to such change in GAAP; provided, however, that, until Borrower and Lender so
amend this Agreement, all such covenants shall be calculated in accordance with
GAAP as in effect immediately prior to such change.

 

1.03  Headings.  Headings in this Agreement and each of the
other Credit Documents are for convenience of reference only and are not part
of the substance hereof or thereof.

 

1.04  Plural Terms.  All terms defined in this Agreement or any
other Credit Document in the singular form shall have comparable meanings when
used in the plural form and vice versa.

 

 

1.05  Time. 
All references in this Agreement and each of the other Credit Documents
to a time of day shall mean Chicago, Illinois time, unless otherwise indicated.

 

1.06  Governing Law.  This Agreement and each of the other Credit
Documents shall be governed by and construed in accordance with the laws of the
state of Minnesota without reference to conflicts of law rules.

 

1.07  Construction.  Each of this Agreement and the other Credit
Documents is the result of negotiations among, and has been reviewed by,
Borrower, Lender and their respective counsel. Accordingly, this Agreement and
the other Credit Documents shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against Borrower or
Lender.

 

1.08  Entire Agreement.  This Agreement and each of the other Credit
Documents, taken together, constitute and contain the entire agreement of
Borrower and Lender and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.

 

1.09  Calculation of Interest and Fees.  All calculations of interest and fees under
this Agreement and the other Credit Documents for any period shall include the
first day and the last day of such period.

 

1.10  Other Interpretive Provisions.  References in this Agreement to “Recitals,” “Sections,”
“Exhibits” and “Schedules” are to recitals, sections, exhibits and schedules
herein and hereto unless otherwise indicated. References in this Agreement and
each of the other Credit Documents to any document, instrument or agreement (a) shall
include all exhibits, schedules and other attachments thereto, (b) shall
include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified and
supplemented in writing from time to time and in effect at any given time. The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement or any other Credit Document shall refer to this Agreement or
such other Credit Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Credit Document, as the
case may be. The words “include” and “including” and words of similar import
when used in this Agreement or any other Credit Document shall not be construed
to be limiting or exclusive.  The word “or”
when used in this Agreement or any other Credit Document shall have the meaning
represented by the phrase “and/or.”

 

SECTION II

CREDIT FACILITY

 

2.01  Revolving Loan Facility.

 

(a)           Revolving
Loan Availability.  Subject to the
terms and conditions of this Agreement, Lender agrees to advance to Borrower
from time to time during the period beginning on the Closing Date and ending on
October 31, 2014, or such earlier date on which the LLC Term shall end (such
date or such earlier date, if applicable, the “Revolving Loan Maturity Date”),
such loans as Borrower may request under this 

 

2

 

Section 2.01 (individually, a “Revolving Loan”); provided,
however, that the aggregate principal amount of all Revolving Loans outstanding
at any time shall not exceed the Commitment at such time. Except as otherwise
provided herein, Borrower may borrow, repay and reborrow Revolving Loans until
the Revolving Loan Maturity Date.

 

(b)           Revolving
Loan Borrowings.  Borrower shall
request each Revolving Loan by having a representative of Borrower request by
telephone or other means acceptable to Lender a Revolving Loan, which request
shall specify the principal amount of the requested Revolving Loan and the date
of the requested Revolving Loan, which shall be a Business Day (any such
request, a “Revolving Loan Borrowing Request”). Any Revolving Loan
Borrowing Request received after 11:00 a.m., Chicago time, on a Business
Day may not be honored until the next following Business Day (or such later
time as may be specified in the Revolving Loan Borrowing Request).

 

(c)           Revolving
Loan Interest Rates.  Borrower shall
pay interest on the unpaid principal amount of each Revolving Loan from the
date of such Revolving Loan until the Maturity thereof, at a rate per annum
equal to the TCFIF Rate from time to time in effect. All computations of
interest on Revolving Loans shall be based on a year of 365  days
for actual days elapsed.

 

(d)           Scheduled
Revolving Loan Payments.  Unless
sooner repaid, Borrower shall repay to Lender on the Revolving Loan Maturity
Date the unpaid principal amount of each Revolving Loan made by Lender.
Borrower shall pay accrued interest in arrears on the unpaid principal amount
of each Revolving Loan (A) no later than the fifteenth day in each
calendar month for the preceding calendar month, and (B) at Maturity.

 

(e)           Purpose.  Borrower shall use the proceeds of the
Revolving Loans solely for Borrower’s general business needs (including (i) the
purchase of certain receivables from Toro, TCC, Toro International, Exmark and
their Affiliates, or from third parties that have purchased receivables from
Toro or its Affiliates (the “Purchased Receivables”), (ii) the
funding of Borrower’s financing programs for its customers, (iii) payment
of expenses and other items incurred in the ordinary course of business
(including payments of principal and interest under Section 2.01(d))
and (iv) distributions of “Distributable Cash” (as defined in the LLC
Agreement) to the Members).

 

(f)            Extension
of Facility.  So that the Members of
Borrower may make a fully informed decision as to whether to continue Borrower’s
existence beyond the then-current LLC Term, Lender agrees to provide to
Borrower, no later than fourteen (14) months prior to the expiration of the
then-current LLC Term, written notice indicating Lender’s intent with respect
to the extension of the Revolving Loan facility and, if Lender intends to
extend the Revolving Loan facility, the proposed material terms of such
extension; provided, however, that failure to provide such notice by Lender
shall not be a default of the terms of this Agreement and shall be deemed to be
a declination of its willingness to extend the term of this Agreement.

 

3

 

2.02  Commitment, Commitment Reductions, Etc.

 

(a)           Commitment.  The aggregate principal amount of all
Revolving Loans outstanding at a time shall not exceed the lesser of (x) the
Borrowing Base and (y) $450,000,000 (or, if reduced pursuant to Section 2.02(b) or
otherwise; the lesser amount to which reduced) (such lesser amount, as so
reduced from time to time, to be referred to herein as the “Commitment”).

 

(b)           Reduction
or Cancellation of the Commitment. 
Borrower may, upon three (3) Business Days’ written notice to
Lender, permanently reduce the Commitment by the amount of $1,000,000 or an
integral multiple of $1,000,000 in excess thereof or cancel the Commitment in
its entirety; provided, however, that (i) Borrower may not reduce the
Commitment prior to the Revolving Loan Maturity Date, if, after giving effect
to such reduction, the aggregate principal amount of all Revolving Loans
outstanding would exceed the Commitment, (ii) Borrower may not cancel the
Commitment prior to the Revolving Loan Maturity Date, if, after giving effect
to such cancellation, any Obligations would remain outstanding, and (iii) Borrower
may reduce or cancel the Commitment in connection with a dissolution of
Borrower under the terms of the LLC Agreement. Once reduced or cancelled, the
Commitment may not be increased or reinstated without the prior written consent
of Lender.

 

2.03  Prepayments.

 

(a)           Optional
Prepayments.  At its option, Borrower
may prepay, at any time and from time to time on a Business Day, any Revolving
Loan in whole or in part.

 

(b)           Mandatory
Prepayments.  If, at any time, the
aggregate principal amount of all Revolving Loans then outstanding exceeds the
Commitment at such time, Borrower shall prepay Revolving Loans in an aggregate
principal amount equal to such excess (i) by the twentieth (20th) day of the following month if such excess is greater
than $500,000 or (ii) if less, by the end of the last day of such
month.  Lender acknowledges that under
the terms of Section 2.4 of the LLC Agreement, required capital
contributions to Borrower at the end of each month will be based upon estimates
and that Borrower’s Borrowing Base compliance as determined as of the end of
any month will be dependent upon the accuracy of such estimates.  Borrower shall not be deemed to be in breach
of this covenant as a result of reliance on such estimates so long as it
complies with the provisions set forth in this Section 2.03(b).

 

2.04  Other Payment Terms.

 

(a)           Place
and Manner.  Borrower shall make all
payments due to Lender hereunder without setoff, counterclaim or deduction by
payments at Lender’s office, located at the address specified in Section 8.01,
or to such other place or account as Lender may designate from time to time in
writing to Borrower, in lawful money of the United States and in same day or
immediately available funds not later than 2:00 p.m. on the date due.  Borrower shall establish various bank
accounts, including a parent account, an electronic disbursements account, a
manual collections account, an electronic 

 

4

 

collections account, and one or more Lock Box accounts.  Each day, funds will be transferred
electronically between the parent account and the electronic disbursement,
manual collections, electronic collections and the Lock Box accounts so as to
result in a zero balance in all accounts other than the parent account.  The balance in the parent account, if
positive, will be transferred electronically to Lender and applied pursuant to Section 2.04(d).

 

(b)           Date.  Whenever any payment due hereunder shall fall
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest.

 

(c)           Late
Payments.  If any amounts required to
be paid by Borrower under this Agreement or the other Credit Documents
(including principal or interest payable on any Revolving Loan or other
amounts) remain unpaid when due, Borrower shall pay interest on the aggregate
outstanding balance of such amounts from the due date thereof until such
amounts are paid in full at a per annum rate equal to the TCFIF Rate from time
to time in effect plus two percent (2.00%) (or, if less, the maximum amount
permitted by law), such rate to change from time to time as the TCFIF Rate
shall change. All computations of such interest shall be based on a year of 365
days for actual days elapsed.

 

(d)           Application
of Payments.  All payments hereunder
shall be applied first to unpaid costs and expenses then due and payable under
this Agreement or the other Credit Documents, second to accrued interest then
due and payable under this Agreement or the other Credit Documents and finally
to reduce the principal amount of outstanding Revolving Loans.

 

(e)           Application
of Seller Credits.  At Lender’s
request, Borrower shall pay all Seller Credits to Lender as soon as the same
are received for application to the Obligations.  At any time Lender is entitled to terminate
the Commitment after the occurrence and during the continuance of an Event of
Default under Section 6.01(f) or 6.01(g), Borrower
authorizes Lender to collect such amounts directly from Sellers and, upon
request of Lender, shall instruct Sellers to pay Lender directly.

 

2.05  Revolving Loan Note and Interest Account.

 

(a)           Revolving
Loan Note.  The obligation of
Borrower to repay the Revolving Loans and to pay interest thereon at the rates
provided herein shall be evidenced by a promissory note in the form of Exhibit A
(the “Revolving Loan Note”), which note shall be (i) in the
original principal amount of $450,000,000, (ii) dated the Closing Date and
(iii) otherwise appropriately completed. Lender shall record on its
general ledger the date and amount of each Revolving Loan and of each payment
or prepayment of principal and each payment of interest or other amounts
thereon made by Borrower.

 

(b)           Interest
Account.  Borrower authorizes Lender
to record in an account or accounts maintained by Lender on its books (the “Interest
Account”) (i) the interest rates applicable to all Revolving Loans and
the effective dates of all changes thereto, (ii) the 

 

5

 

date and amount of each principal and interest payment on each
Revolving Loan and (iii) such other information as Lender may determine is
necessary for the computation of interest payable by Borrower hereunder.

 

(c)           Notations.  Borrower agrees that all notations on the
Schedule annexed to the Revolving Loan Note and the Interest Account shall
constitute prima facie evidence of the matters noted absent manifest error;
provided, however, that the failure of Lender to make any such notation shall
not affect Borrower’s Obligations.

 

2.06  Revolving Loan Funding.  Unless otherwise directed by Borrower, Lender
shall disburse the proceeds of each Revolving Loan to Borrower by disbursement
to such account at such bank as Borrower may designate from time to time in
writing to Lender from time to time.

 

2.07   [Reserved]

 

2.08  Additional Compensation in Certain
Circumstances; Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.  If any change in any Requirement of Law,
guideline or interpretation or application thereof by any Governmental
Authority charged with the interpretation or administration thereof or
compliance with any request or directive (whether or not having the force of a
Requirement of Law) of any central bank or other Governmental Authority:

 

(a)           subjects
Lender to any Taxes or changes the basis of taxation with respect to this
Agreement, the Revolving Loans or payments by Borrower of principal, interest,
fees, or other amounts due from Borrower hereunder,

 

(b)           imposes,
modifies or deems applicable any reserve, special deposit or similar
requirement against credits or commitments to extend credit extended by, or
assets (funded or contingent) of, deposits with or for the account of, or other
acquisitions of funds by, Lender, or

 

(c)           imposes,
modifies or deems applicable any capital adequacy or similar requirement (i) against
assets (funded or contingent) of, or other credits or commitments to extend
credit extended by, Lender, or (ii) otherwise applicable to the
obligations of Lender under this Agreement,

 

and the result of any of
the foregoing is to increase the cost to, reduce the income receivable by, or
impose any expense (including loss of margin) upon Lender with respect to this
Agreement or the making, maintenance or funding of any part of the Revolving
Loans (or, in the case of any capital adequacy or similar requirement, to have
the effect of reducing the rate of return on Lender’s capital, taking into
consideration Lender’s customary policies with respect to capital adequacy) by
an amount which Lender in its sole discretion deems to be material, Lender
shall from time to time notify Borrower of the amount determined in good faith
by Lender to be necessary to compensate Lender for such increase in cost,
reduction of income, additional expense or reduced rate of return.  Such notice shall set forth in reasonable
detail the basis for such determination. 
Such amount shall be due and payable by Borrower to Lender ten (10) Business
Days after such notice is given. If Lender fails to give such notice within three
hundred sixty-five (365) days after it obtains knowledge of such event, Lender
shall, with respect to 

 

6

 

compensation payable
pursuant to this Section 2.08, only be entitled to payment for
increase in cost, reduction of income, additional expense or reduced rate of
return incurred from and after the date three hundred sixty five (365) days
prior to the date that Lender does give such notice.

 

SECTION III

CONDITIONS PRECEDENT

 

3.01  Conditions Precedent to Initial Revolving
Loan.  The obligation of Lender to
make the initial Revolving Loan is subject to receipt by Lender, on or prior to
the Closing Date, of the following documents, each in form and substance
satisfactory to Lender:

 

(a)           This Agreement, duly executed by Borrower;

 

(b)           The
Revolving Loan Note payable to Lender, duly executed by Borrower;

 

(c)           The
Security Documents duly executed and delivered to Lender;

 

(d)           The
organizational documents of each of the Members;

 

(e)           Certificate
of Formation of Borrower;

 

(f)            The
Joint Venture Agreement duly executed by the parties thereto;

 

(g)           The
LLC Agreement duly executed by the parties thereto;

 

(h)           A
certificate of the general manager of Borrower, dated the Closing Date,
certifying that attached thereto are true and correct copies of resolutions
duly adopted by the Board of Managers of Borrower and continuing in effect,
which authorize the execution, delivery and performance by Borrower of this
Agreement and the other Credit Documents executed or to be executed by Borrower
and the consummation of the transactions contemplated hereby and thereby; and

 

(i)            A
certificate of the general manager of Borrower, dated the Closing Date,
certifying the incumbency, signatures and authority of the members of the Board
of Managers of Borrower or other officers of Borrower authorized to execute,
deliver and perform this Agreement and the other applicable Credit Documents on
behalf of Borrower.

 

3.02  Conditions Precedent to Each Revolving
Loan.  The obligation of Lender to
make each Revolving Loan, including the making of the initial Revolving Loan,
is subject to the further conditions that Lender shall have received the
appropriate Revolving Loan Borrowing Request requesting such Revolving Loan, or
request therefor shall otherwise have been made to Lender’s satisfaction, in
accordance with the terms of this Agreement and that on the date such Revolving
Loan is to be made and after giving effect to such Revolving Loan, the
following shall be true and correct:

 

(a)           The
representations and warranties set forth in Section 4.01 are true
and correct in all material respects as if made on such date;

 

7

 

(b)           No
Event of Default has occurred and is continuing that would permit the Lender to
terminate the Commitment;

 

(c)           No
Material Adverse Effect or Acceleration Event has occurred and is continuing;
and

 

(d)           Each
of the Credit Documents remains in full force and effect.

 

3.03  Covenant to Deliver.  Borrower agrees (not as a condition but as a
covenant) to deliver to Lender each item required to be delivered to Lender as
a condition to the making of each Revolving Loan. Borrower expressly agrees
that the making of any Revolving Loan prior to the receipt by Lender of any
such item shall not constitute a waiver by Lender of Borrower’s obligation to
deliver such item.

 

SECTION IV

REPRESENTATIONS AND WARRANTIES

 

4.01  Borrower’s Representations and Warranties.  To induce Lender to enter into this Agreement
and to make Revolving Loans hereunder, Borrower represents and warrants to
Lender that:

 

(a)           Due
Organization, Qualification, Etc. Borrower (i) is a limited liability
company duly organized and validly existing under the laws of the state of
Delaware; (ii) has the power and authority to own, lease and operate its
properties and carry on its business as now conducted and as proposed to be
conducted; and (iii) is duly qualified or licensed to do business in each
jurisdiction where the nature of the business of Borrower requires such
qualification or licensing and the failure to be so qualified or licensed could
reasonably be expected to have a Material Adverse Effect.

 

(b)           Authority.
The execution, delivery and performance by Borrower of each Credit Document to
be executed by Borrower and the consummation of the transactions contemplated
thereby (i) are within the limited liability company power of Borrower and
(ii) have been duly authorized by all necessary limited liability company
actions on the part of Borrower (including Member action, if necessary).

 

(c)           Enforceability.
Each Credit Document executed, or to be executed, by Borrower has been, or will
be, duly executed and delivered by Borrower and constitutes, or will
constitute, a legal, valid and binding obligation of Borrower enforceable against
Borrower in accordance with its terms.

 

(d)           Non-Contravention.
The execution and delivery by Borrower of the Credit Documents executed by
Borrower and the performance and consummation of the transactions contemplated
thereby do not (i) violate any Requirement of Law applicable to Borrower; (ii) violate
any provision of, or result in the breach or the acceleration of, or entitle
any other Person to accelerate (whether after the giving of notice or lapse of
time or both), any Contractual Obligation of Borrower; or (iii) result in
the creation or imposition of any Lien upon any property, asset or revenue of
Borrower (except such 

 

8

 

Liens as may be created in favor of Lender pursuant to this Agreement
or the other Credit Documents).

 

(e)           Approvals.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Authority or other Person (including  the partners, members or shareholders of any
Person) that has not been obtained on or prior to the Closing Date is required
in connection with the execution and delivery of the Credit Documents executed
by Borrower and the consummation and performance of the transactions
contemplated thereby.

 

(f)            No
Violation or Default. Borrower is not in violation of or in default with
respect to (i) any Requirement of Law applicable to it or (ii) any
Contractual Obligation of it (nor is there any waiver in effect which, if not
in effect, would result in such a violation or default), where, individually or
in the aggregate, such violations or defaults could reasonably be expected to
have a Material Adverse Effect.

 

(g)           Litigation.
No actions, suits, proceedings or investigations are pending or, to the
knowledge of Borrower, threatened against Borrower at law or in equity in any
court or before any other Governmental Authority which (i) could
reasonably be expected to (individually or in the aggregate) have a Material
Adverse Effect or (ii) seek to enjoin, either directly or indirectly, the
execution, delivery or performance by Borrower of the Credit Documents or the
transactions contemplated thereby.

 

(h)           Title.
Borrower owns and has good and marketable title in fee simple absolute to, or a
valid leasehold interest in, all of its real properties and good title to its
other respective assets and properties as reflected in the most recent
Financial Statements delivered to Lender (except those assets and properties
disposed of in the ordinary course of business or otherwise in compliance with
this Agreement since the date of such Financial Statements) and all respective
assets and properties acquired by Borrower since such date (except those
disposed of in the ordinary course of business or otherwise in compliance with
this Agreement), including all of the Collateral. Such assets and properties
are subject to no Liens, except for Permitted Liens.

 

(i)            Financial
Statements. The Financial Statements of Borrower that have been delivered
to Lender, (i) are in accordance with the books and records of Borrower,
which have been maintained in accordance with good business practice; (ii) have
been prepared in conformity with GAAP and (iii) fairly present the
financial position of Borrower at such date. Borrower does not have any
contingent obligations, liability for Taxes or other outstanding obligations
which are material in the aggregate, except as disclosed in the Financial
Statements most recently delivered to Lender pursuant to Section 5.01(a)(i) or
(ii).

 

(j)            Membership
Interests.  Outstanding Membership
Interests of Borrower are owned as follows:

 

	
  Toro Sub:

  	
   

  	
  45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  TCFIF Sub:

  	
   

  	
  55

  	
  %

  

 

9

 

All outstanding
Membership Interests of Borrower are duly authorized, validly issued and fully
paid, subject to the “Purchase Capital Contribution” and the “Additional
Capital Contribution” requirements set forth in Sections 2.03 and 2.04 of the
LLC Agreement, respectively.   There are no outstanding subscriptions,
options, conversion rights, warrants or other agreements or commitments of any
nature whatsoever (firm or conditional) regarding the Membership Interests of
Borrower other than as contemplated by the Joint Venture Agreement or the LLC
Agreement. All Membership Interests of Borrower have been offered and sold in
compliance with all federal and state securities laws and all other
Requirements of Law.

 

(k)           No
Agreements to Sell Assets, Etc. 
Borrower has no legal obligation, absolute or contingent, to any Person
to sell the assets of Borrower (other than sales in the ordinary course of
business), or to effect any merger, consolidation or other reorganization of
Borrower or to enter into any agreement with respect thereto.

 

(l)            Employee
Benefit Plans.  As of the date
hereof, Borrower does not maintain or contribute to, nor has it any obligation
under any Employee Benefit Plan of any type or nature whatsoever. Borrower does
not contribute to and does not have any liability with respect to any
Multiemployer Plan.

 

(m)          Other
Regulations.  Borrower is not subject
to regulation under the Investment Company Act of 1940, the Public Utility
Holding Company Act of 1935, the Federal Power Act, any state public utilities
code or to any federal or state statute or regulation limiting its ability to
incur Indebtedness.

 

(n)           Governmental
Charges and Other Indebtedness. Borrower has filed or caused to be filed
all tax returns which are required to be filed by it. Borrower has paid, or
made provision for the payment of, all taxes and other Governmental Charges
which have or may have become due pursuant to said returns or otherwise and all
other Indebtedness which has become due, except for such Governmental Charges
or Indebtedness, if any, which are being contested in good faith and as to
which adequate reserves (determined in accordance with GAAP) have been provided
or which could not reasonably be expected to have a Material Adverse Effect if
unpaid.

 

(o)           Subsidiaries,
Etc.  Borrower has no Subsidiaries,
is not a partner in any partnership and is not a joint venturer in any joint
venture.

 

(p)           No
Material Adverse Effect.  No event
has occurred and no condition exists which could reasonably be expected to have
a Material Adverse Effect.

 

(q)           Records
Regarding Collateral.  Borrower keeps
and maintains its books and records regarding its accounts and chattel paper at
its  chief executive office  in Hoffman Estates, Illinois or at its office in
Bloomington, Minnesota. The only locations at which any Collateral is located
are at its offices in Bloomington, Minnesota and Hoffman Estates, Illinois.

 

(r)            Accounts.  All of Borrower’s accounts are bona fide
existing receivables created by Toro, an Affiliate of Toro or a distributor of
Toro in the regular course of 

 

10

 

business of Toro or such Affiliate or distributor to their respective
account debtors or acquired by Toro or an Affiliate of Toro in connection with
the acquisition of the business of another party.

 

(s)           Accuracy
of Information Furnished.  None of
the Credit Documents and none of the other certificates, statements or
information furnished to Lender by or on behalf of Borrower in connection with
the Credit Documents or the transactions contemplated hereby or thereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

 

4.02  Reaffirmation.  Borrower shall be deemed to have reaffirmed,
in all material respects, for the benefit of Lender, each representation and
warranty contained in Section 4.01 on and as of the date each
Revolving Loan is made.

 

SECTION V

COVENANTS

 

5.01  Affirmative Covenants.  Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower shall comply,
and shall cause compliance, with the following affirmative covenants unless
Lender shall otherwise consent in writing:

 

(a)           Financial
Statements, Reports, Etc.  Borrower
shall furnish to Lender the following, each in such form and such detail as
Lender shall reasonably request:

 

(i)            Within
thirty (30) Business Days after the last day of each calendar month, copies of
the unaudited Financial Statements of Borrower for such month as of the last
day of such month;

 

(ii)           Within
one hundred twenty (120) days after the close of each fiscal year of Borrower,
copies of the unaudited Financial Statements of Borrower;

 

(iii)          As
soon as possible and in no event later than five (5) Business Days after
any manager or officer of Borrower knows of the occurrence or existence of (A) any
actual or threatened litigation, suits, claims or disputes against Borrower
involving potential monetary damages payable by Borrower of $100,000 or more
(individually or in the aggregate), (B) any other event or condition which
could reasonably be expected to have a Material Adverse Effect, or (C) any
Event of Default or Default; a written statement of the general manager of
Borrower setting forth the details of such event, condition, Event of Default
or Default and the action which Borrower proposes to take with respect thereto;
and

 

(iv)          Such
other instruments, agreements, certificates, opinions, statements, documents
and information relating to the operations or condition (financial or otherwise)
of Borrower, and compliance by Borrower with the terms 

 

11

 

of this Agreement and the other Credit Documents, as Lender may from
time to time reasonably request.

 

(b)           Books
and Records.  Borrower shall at all
times keep proper books of record and account in which full, true and correct
entries will be made of its transactions in accordance with GAAP.

 

(c)           Inspections;
Information.  Borrower shall permit
any Person designated by Lender, upon reasonable notice and during normal
business hours, to visit and inspect any of the properties and offices of
Borrower, to examine the books of account of Borrower and to discuss the
affairs, finances and accounts of Borrower with, and to be advised as to the
same by, their managers, officers, auditors and accountants, all at such times
and intervals as Lender may reasonably request. Borrower shall permit Lender,
upon reasonable notice and during normal business hours, to inspect the
Collateral and Borrower shall furnish to Lender, upon request of Lender, such
information regarding the Collateral and Borrower’s business as Lender may from
time to time reasonably request.

 

(d)           Governmental
Charges and Other Indebtedness. 
Borrower shall promptly pay and discharge when due (i) all taxes
and other Governmental Charges imposed on Borrower prior to the date upon which
penalties accrue thereon, (ii) all Indebtedness which, if unpaid, could
become a Lien upon the property of Borrower and (iii) all other
Indebtedness which, if unpaid, could reasonably be expected to have a Material
Adverse Effect, except such taxes and Indebtedness as may in good faith be
contested or disputed, or for which arrangements for deferred payment have been
made, provided that in each such case appropriate reserves are maintained to
the reasonable satisfaction of Lender.

 

(e)           Use
of Proceeds.  Borrower shall use the
proceeds of the Revolving Loans only for the purposes set forth in Section 2.01(e).

 

(f)            General
Business Operations.  Borrower shall (i) preserve
and maintain its limited liability company existence and all of its rights,
privileges and franchises reasonably necessary to the conduct of its business, (ii) conduct
its business activities in compliance with all Requirements of Law and Contractual
Obligations applicable to it, the violation of which could reasonably be
expected to have a Material Adverse Effect, (iii) keep all property useful
and necessary in its business in good working order and condition, ordinary
wear and tear excepted, and (iv) maintain its chief executive office and
principal place of business in Hoffman Estates, Illinois.

 

(g)           Collateral.  Borrower shall keep all Collateral at the
locations identified in Section 4.01(q) and shall keep all
tangible Collateral in good order, repair and operating condition. Borrower
shall not sell, rent, lease, transfer, consign, dispose or otherwise convey any
of the Collateral except for sales or other dispositions in the ordinary course
of Borrower’s business. Borrower shall not change its name or change its chief
executive office or the office where it keeps its books and records with
respect to accounts and chattel paper without giving at least thirty (30) days’
prior written notice to Lender.

 

12

 

(h)                                 Borrowing Base. 
Upon request of Lender, Borrower promptly shall provide to Lender a
written report, prepared in reasonable detail and with supporting
documentation, setting forth the calculation of the Borrowing Base.

 

5.02  Negative Covenants.  Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower shall comply,
and shall cause compliance, with the following negative covenants unless Lender
shall otherwise consent in writing:

 

(a)                                  Indebtedness.  Borrower
shall not create, incur, assume or permit to exist any Indebtedness except for
Permitted Indebtedness.

 

(b)                                 Liens.  Borrower
shall not create, incur, assume or permit to exist any Lien on or with respect
to any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens. Borrower shall keep all
Collateral free and clear of all Liens except Liens in favor of Lender.

 

(c)                                  Asset Dispositions. 
Borrower shall not sell, lease, transfer or otherwise dispose of any of
its assets or property, whether now owned or hereafter acquired, except in the
ordinary course of its business and except as otherwise contemplated by the
Credit Documents.  Notwithstanding the
foregoing, in the event Borrower elects to transfer to any Seller any Purchased
Receivables acquired from such parties pursuant to any reconveyance rights that
it may have under the terms of any agreement with such Seller, it shall be
permitted to do so free and clear of any Lien granted hereunder upon payment of
any amount due from the original transferor thereof as set forth in the
agreement governing the original purchase by Borrower of such Purchased
Receivables.

 

(d)                                 Mergers, Acquisitions, Etc. 
Borrower shall not consolidate with or merge into any other Person or
permit any other Person to merge into it, or acquire all or substantially all
of the assets of any other Person, except, with respect to TCC, pursuant to the
initial Receivable Purchase Agreement described in Section 7.02.

 

(e)                                  Distributions, Etc. 
Except for Permitted Distributions, Borrower shall not (i) make any
distributions of any kind whatsoever to its Members; (ii) purchase,
redeem, retire, defease or otherwise acquire for value any of its Membership
Interests held by any Person; (iii) return any capital to any of its
Members; or (iv) set apart any sum for any such purpose.

 

(f)                                    Capital Expenditures. 
Borrower shall not pay or incur Capital Expenditures which exceed in the
aggregate in any fiscal year $50,000.

 

(g)                                 Investments. 
Borrower shall not make any Investments other than loans, advances or
purchases of Indebtedness in the ordinary course of Borrower’s business.

 

(h)                                 Change in Business. 
Borrower shall not engage, either directly or indirectly through
Subsidiaries, in any business substantially different from its business as
conducted on the date hereof or as expected to be conducted after the date
hereof; provided, however, that Borrower shall be permitted to engage in the
business of providing floorplan financing and open account inventory financing
of any and all 

 

13

 

products manufactured or
distributed from time to time after the date hereof by Toro, or any of its
Affiliates, including parts, accessories, software and software updates to
support equipment or services, advertising materials, advertising placements,
training materials, point of sale or merchandising materials, extended service
contracts, licenses for scheduling software and online services, to the extent
permitted by the LLC Agreement.

 

(i)                                     Security Issuances. 
Borrower shall not issue, offer or sell any Equity Securities of it
other than as contemplated by the Joint Venture Agreement or the LLC Agreement.

 

(j)                                     [Reserved]

 

(k)                                  Subsidiaries, Etc. 
Borrower shall not create or permit to exist any Subsidiaries, and
Borrower shall not become a partner in any partnership or a joint venturer in
any joint venture.

 

(l)                                     Transactions With Affiliates. 
Borrower shall not enter into any Contractual Obligation with any Affiliate
or engage in any other transaction with any Affiliate except upon terms at
least as favorable to Borrower as an arms-length transaction with unaffiliated
Persons and except for Contractual Obligations and transactions expressly
contemplated by the Joint Venture Agreement or the LLC Agreement.

 

(m)                               Accounting Changes. 
Borrower shall not change (i) its fiscal year (currently January 1
through December 31) or (ii) its accounting practices except as
required by GAAP.

 

(n)                                 Tangible Net Worth Covenant. 
Borrower shall not permit its Tangible Net Worth as at the last day of
any calendar month (after giving effect to any capital contributions made by
the Members with respect to such calendar month in accordance with the terms of
the LLC Agreement) to be less than its Required Equity Investment as of such
date; provided that Borrower shall not be deemed to be in breach of this
covenant so long as (i) the actual Tangible Net Worth is no more than $
XXXXXXXXXX less than its Required Equity Investment as of such date, or (ii) if
the actual Tangible Net Worth is more than $ XXXXXXXXXX less than its Required
Equity Investment as of such date, then each Member shall make a capital
contribution on or before the twentieth (20th)
day of the  following month in the amount
of such difference.  Lender acknowledges
that under the terms of  Section 2.4
of the LLC Agreement, required capital contributions to Borrower at the end of
each month will be based upon estimates. 
In the case of a deficit of less than $XXXXXXXXXX, Borrower shall take
such deficiency into account when determining the required capital
contributions to be made by the Members for the following month.  [PORTIONS OF THIS SECTION HAVE
BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 
A COPY OF THIS EXHIBIT WITH ALL SECTIONS INTACT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

 

14

 

SECTION VI

DEFAULT

 

6.01  Events of Default.  The occurrence or existence of any one or
more of the following shall constitute an “Event of Default” hereunder:

 

(a)                                  Borrower shall fail to pay when due any
principal, interest or other payment required under the terms of this Agreement
or any of the other Credit Documents; or

 

(b)                                 Borrower shall fail to observe or perform
in any material respect any covenant, obligation, condition or agreement set
forth in Sections 5.01(d)(iii), 5.02(c), 5.02(d), 5.02(f),
5.02(h), 5.02(i), 5.02(j) or 5.02(k); or

 

(c)                                  Borrower shall fail to observe or perform
any other covenant, obligation, condition or agreement contained in this
Agreement or the other Credit Documents and such failure shall continue for
thirty (30) days after notice thereof is given by Lender to Borrower or such
longer period of time as is reasonably necessary to allow Borrower to so
observe or perform such covenant, obligation, condition or agreement but, in
any event, not more than seventy-five (75) days after notice thereof is given
by Lender to Borrower; provided, that with respect to a failure by Borrower to
observe or perform the Tangible Net Worth covenant pursuant to Section 5.02(n),
such failure shall have only continued for five (5) days after notice
thereof is given by Lender to Borrower; or

 

(d)                                 Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by
or on behalf of Borrower to Lender in or in connection with this Agreement or
any of the other Credit Documents, or as an inducement to Lender to enter into
this Agreement, shall be false, incorrect, incomplete or misleading in any
material respect when made or furnished; or

 

(e)                                  Borrower shall (i) fail to make any
payment when due under the terms of any bond, debenture, note or other evidence
of Indebtedness to be paid by such Person (excluding this Agreement and the
other Credit Documents but including any other evidence of Indebtedness of
Borrower to Lender) and such failure shall continue beyond any period of grace
provided with respect thereto, or (ii) default in the observance or
performance of any other agreement, term or condition contained in any such
bond, debenture, note or other evidence of Indebtedness, and the effect of such
failure or default in either case is to cause, or permit the holder or holders
thereof to cause Indebtedness in an aggregate amount of $100,000 or more to
become due prior to its stated date of maturity; or

 

(f)                                    Borrower shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) be unable, or
admit in writing its inability, to pay its debts generally as they mature, (iii) make
a general assignment for the benefit of its or any of its creditors, (iv) become
insolvent (as such term may be defined or interpreted under any applicable
statute), (v) commence a voluntary case or other proceeding seeking
liquidation, reorganization or 

 

15

 

other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or consent to any such relief or to the appointment
of or taking possession of its property by any official in an involuntary case
or other proceeding commenced against it, or (vi) take any action for the
purpose of effecting any of the foregoing; or

 

(g)                                 Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of Borrower or of all or a
substantial part of the property of Borrower, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
Borrower or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect shall be commenced and not dismissed within sixty (60)
days of commencement; or

 

(h)                                 A final, non-appealable judgment or order
for the payment of money in excess of $100,000 (exclusive of amounts covered by
insurance issued by an insurer not an Affiliate of Borrower) shall be rendered
against Borrower and the same shall remain unsatisfied, unstayed or unvacated
for a period of thirty (30) days after entry thereof, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower, and
such judgment, writ, assessment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within thirty (30) days
after filing; or

 

(i)                                     Any Credit Document or any material term
thereof shall cease to be a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms; or

 

(j)                                     Toro Sub and TCFIF Sub shall cease to be
the sole members of Borrower or Toro Sub closes on its acquisition of the
interest of TCFIF Sub in Borrower pursuant to the exercise of the Toro Sub
Purchase Option under Section 9.03 of the LLC Agreement; or

 

(k)                                  Borrower shall have been finally
dissolved, wound up and liquidated, whether at scheduled maturity or otherwise
or the business of Borrower shall have been discontinued pursuant to an
election made as described in the third sentence of Section 10.04 of the
LLC Agreement;

 

(l)                                     Lender’s security interest in any
material portion of the Collateral shall at any time cease to be a valid and
perfected, first priority, security interest.

 

6.02  Remedies.

 

(a)                                  Upon (i) the occurrence or existence
of any Event of Default (other than an Event of Default referred to in Section 6.01(f) or
6.01(g) or an Event of Default caused solely by TCFIF or an
Affiliate of TCFIF, including any failure by TCFIF to make a capital
contribution to Borrower required pursuant to the terms of the LLC Agreement or
any willful violation on the part of the general manager of Borrower while such
general manager is TCFIF’s employee, which such failure or violation shall be
deemed to have been caused solely by TCFIF) and at any time thereafter during
the continuance of such 

 

16

 

Event of Default, (ii) the
occurrence or existence of a Material Adverse Effect or (iii) the
occurrence of an Acceleration Event, Lender may, by written notice to Borrower,
(a) terminate the Commitment and the obligation of Lender to make
Revolving Loans and/or (b) declare all outstanding Obligations payable by
Borrower hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Revolving Loan Note to
the contrary notwithstanding. 
Notwithstanding the occurrence or existence of an Event of Default under
Sections 6.01(b) – (e), 6.01(h), 6.01(i) or 6.01(l),
Lender shall not be permitted to terminate the Commitment or declare the
Obligations due and payable and shall continue to make Revolving Loans
hereunder so long as there shall not occur or exist a Material Adverse Effect
or Acceleration Event or an Event of Default under any of Sections 6.01(a),
6.01(f), 6.01(g), 6.01(j) or 6.01(k).

 

(b)                                 Upon the occurrence or existence of any
Event of Default described in Section 6.01(f) or 6.01(g),
immediately and without notice, (i) the Commitment and the obligations of
Lender to make Revolving Loans shall automatically terminate and (ii) all
outstanding Obligations payable by Borrower hereunder shall automatically
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Revolving Loan Note to the contrary notwithstanding.

 

(c)                                  In addition to the foregoing remedies,
upon the occurrence or existence of any Event of Default at any time Lender is
permitted to terminate the Commitment, Lender may exercise any other right,
power or remedy granted to it by the Credit Documents or otherwise permitted to
it by law, either by suit in equity or by action at law, or both.

 

SECTION VII

GRANT OF SECURITY INTEREST AND PROVISIONS REGARDING COLLATERAL

 

7.01  Grant of Security
Interest.  As security for the
payment of all Revolving Loans now or hereafter made by Lender to Borrower
hereunder or under the Revolving Loan Note, and as security for the payment or
other satisfaction of all other Obligations, Borrower hereby grants to the
Lender a Lien and a security interest in and to the following property of
Borrower, whether now or hereafter owned, existing, licensed, leased,
consigned, acquired or arising, wherever now or hereafter located (all such
property is herein referred to collectively as the “Collateral” (each
capitalized term used in this Section 7.01 and not otherwise
defined in this Agreement shall have in this Agreement the meaning given to it
by the UCC)):

 

(a)                                  The Purchased Receivables, and any and
all other Accounts, Goods, Health Care Insurance Receivables, General Intangibles,
Payment Intangibles, Deposit Accounts, Chattel Paper (including Electronic
Chattel Paper), Documents, contracts, advices of credit, money, Commercial Tort
Claims, Equipment, Inventory, Fixtures and Supporting Obligations, together
with all products of and Accessions to any of the foregoing and all Proceeds of
any of the foregoing (including all insurance policies and proceeds thereof);

 

17

 

(b)                                 to the extent, if any, not listed in clause
(a) above, each and every other item of personal property and
fixtures, whether now existing or hereafter arising or acquired, including  all licenses, contracts and agreements and
all collateral for the payment or performance of any contract or agreement,
together with all products and Proceeds (including all insurance policies and
proceeds) or any Accessions to any of the foregoing;

 

(c)                                  all present and future business records
and information, including computer tapes and other storage media containing
the same, together with all Proceeds of any of the foregoing;

 

(d)                                 all replacements, substitutions,
additions or Accessions to or for any of the foregoing; and

 

(e)                                  all rights of Borrower in, to and under
all policies of insurance, including claims of rights to payments thereunder
and proceeds therefrom, including credit insurance and business interruption
insurance.

 

In furtherance of the foregoing grant of security,
upon the request of Lender, Borrower will make proper entries in its books and
records, disclosing the above-described grant of a security interest in the
Collateral, including the assignment of its accounts to Lender. To the extent
any of the Collateral is evidenced by chattel paper, a promissory note, a trade
acceptance or any other instrument for the payment of money, unless Lender
shall otherwise agree, Borrower will deliver the original of same to Lender,
appropriately endorsed to Lender’s order and, regardless of the form of such
endorsement, Borrower hereby expressly waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect thereto.

 

7.02  Lock Box.  On or before the date Borrower makes the
initial purchase of Purchased Receivables pursuant to the terms of the initial
Receivable Purchase Agreement to be entered into by and among Toro, and certain
of its Affiliates and Borrower, Borrower shall either (a) establish one or
more post office lock box arrangements with Lender on terms acceptable to the
Lender (each, a “Lock Box”) for the collection of payments from its
respective account debtors or other amounts owing to it or (b) enter into
agreements acceptable to Lender with each financial institution where Borrower
deposits such collections on the date of this Agreement or will hereafter
deposit such collections. In connection with any Lock Box, if required by
Lender, Borrower shall direct its account debtors to send their payments
directly to such Lock Box, and all invoices issued thereafter by Borrower shall
direct its account debtors to send their payments directly to such Lock Box.

 

7.03  Special Provisions
Regarding Accounts.  Lender is
authorized and empowered (which authorization and power, being coupled with an
interest, is irrevocable until the last to occur of (i) termination of
this Agreement, the Commitment and any other obligations of Lender under this
Agreement and (ii) indefeasible payment in full in cash, and performance
in full, of all of the Obligations) at any time in its sole and absolute
discretion:

 

18

 

(a)                                  To request, in the name of Lender,
Borrower, or in the name of a third party, confirmation from any account debtor
or party obligated under or with respect to any Collateral of the amount shown
by the accounts or other Collateral to be payable, or any other matter stated
therein;

 

(b)                                 To endorse in Borrower’s name and to
collect, any chattel paper, checks, notes, drafts, instruments or other items
of payment tendered to or received by Lender in payment of any account or other
obligation owing to Borrower;

 

(c)                                  At any time Lender is entitled to
terminate the Commitment after the occurrence and during the continuance of an
Event of Default, to notify, either in Lender’s name or Borrower’s name, and/or
to require Borrower to notify, any account debtor or other Person obligated
under or in respect of any Collateral or of the fact of Lender’s Lien thereon
and of the collateral assignment thereof to Lender;

 

(d)                                 At any time Lender is entitled to
terminate the Commitment after the occurrence and during the continuance of an
Event of Default, to direct, either in Lender’s name or Borrower’s name, and/or
to require Borrower to direct, any account debtor or other Person obligated
under or in respect of any Collateral to make payment directly to Lender of any
amounts due or to become due thereunder or with respect thereto; and

 

(e)                                  At any time Lender is entitled to
terminate the Commitment after the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or exchange all or any
part of any Collateral or any amounts due thereunder or with respect thereto,
or compromise or extend or renew for any period (whether or not longer than the
initial period) any and all sums which are now or may hereafter become due or owing
upon or with respect to any of the Collateral, or enforce, by suit or
otherwise, payment or performance of any of the Collateral, in Lender’s own
name or Borrower’s name.

 

Under no circumstances shall Lender be under any duty
to act in regard to any of the foregoing matters. The costs relating to any of
the foregoing matters, including attorneys’ fees and out-of-pocket expenses,
and the cost of any bank account or accounts which may be required hereunder,
shall be borne solely by Borrower whether the same are incurred by Lender or
Borrower.

 

7.04  Lender’s Power of
Attorney.  Borrower appoints the
Lender, or any Person whom the Lender may from time to time designate, as
Borrower’s attorney and agent-in-fact with power: (a) at any time Lender
is entitled to terminate the Commitment after the occurrence and during the
continuance of an Event of Default, to notify the post office authorities to
change the address for delivery of Borrower’s mail to an address designated by
Lender; (b) at any time Lender is entitled to terminate the Commitment
after the occurrence and during the continuance of an Event of Default, to
receive, open and dispose of all mail addressed to Borrower; (c) to send
requests for verification of Borrower’s accounts or other Collateral to its
account debtors; (d) to open an escrow account under Lender’s sole control
for the collection of Borrower’s accounts or other Collateral, if not required
contemporaneously with the execution hereof; and

 

19

 

(e) to do all other things which Lender is permitted to do under
this Agreement or any other Credit Document or which are necessary to carry out
this Agreement and the other Credit Documents. Neither Lender nor any of the
directors, officers, employees or agents of Lender will be liable for any acts
of commission or omission nor for any error in judgment or mistake of fact or
law, unless the same shall have resulted from gross negligence or willful
misconduct. The foregoing appointment and power, being coupled with an
interest, is irrevocable until the last to occur of (x) termination of
this Agreement, the Commitment and any other obligations of Lender under this
Agreement and (y) indefeasible payment in full in cash, and performance in
full, of all Obligations. Borrower expressly waives presentment, demand, notice
of dishonor and protest of all instruments and any other notice to which it
might otherwise be entitled.

 

7.05  No
Liability for Safekeeping.  Lender
shall not be liable or responsible in any way for the safekeeping of any
Collateral of Borrower delivered to it, to any bailee appointed by or for it,
to any warehouseman, or under any other circumstances. Lender shall not be
responsible for collection of any proceeds or for losses in collected proceeds
held by Borrower in trust for Lender. Any and all risk of loss for any or all
of the foregoing shall be upon Borrower, except for such loss as shall result
from Lender’s gross negligence or willful misconduct.

 

7.06  Supplemental
Documentation Relating to Collateral; Further Assurances.  At Lender’s request, Borrower shall execute
and/or deliver to Lender, at any time or times hereafter, such agreements,
documents, financing statements, warehouse receipts, bills of lading, notices
of assignment of accounts, schedules of accounts assigned, certificates of
origin or title and other written matter necessary or reasonably requested by
Lender to perfect and maintain perfected Lender’s security interest in the
Collateral owned by it in form and substance acceptable to Lender, and pay or
cause to be paid all taxes, fees and other costs and expenses associated with
any recording or filing of any such documentation. Borrower hereby irrevocably
makes, constitutes and appoints Lender (and all Persons designated by Lender
for that purpose) as Borrower’s true and lawful attorney (and agent-in-fact)
(which appointment and power, being coupled with an interest, is irrevocable
until the last to occur of (a) termination of this Agreement, the
Commitment and all other obligations of Lender under this Agreement and (b) indefeasible
payment in full in cash, and performance in full, of all Obligations) to sign
the name of Borrower on any of such documentation and to deliver any of such
documentation to such Persons as Lender, in its sole and absolute discretion,
may elect. Borrower agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. Borrower shall fully cooperate with Lender and perform all
additional acts reasonably requested by Lender to effect the purposes of this Section VII.

 

7.07  Rights
and Remedies.  In addition to the
rights and remedies of Lender set forth in Section 6.02, at any
time Lender is entitled to terminate the Commitment upon the occurrence of and
during the continuance of an Event of Default, Lender (i) shall have all
rights and remedies of a secured party under the UCC and other applicable law
and all the rights and remedies set forth in this Agreement, and Borrower
waives notice of intent to accelerate, and of acceleration of, the Obligations;
(ii) Lender may enter any premises of Borrower, with or without process of
law, without force, to search for, take possession of, and remove the
Collateral, or any part thereof; (iii) if Lender requests, Borrower shall
cease disposition of and shall assemble the Collateral and make it available to
Lender, at Borrower’s expense, at a convenient place or places designated by
Lender; (iv) Lender may take possession of the Collateral or any part 

 

20

 

thereof on Borrower’s premises and cause it to remain there at Borrower’s
expense, pending sale or other disposition. Any notice of a disposition shall
be deemed reasonably and properly given if given to Borrower at least ten (10) days
before such disposition. If Borrower fails to perform any of its Obligations
under this Agreement, Lender may perform the same in any form or manner Lender
in its discretion deems necessary or desirable, and all monies paid by Lender
in connection therewith shall be additional Obligations and shall be
immediately due and payable without notice together with interest payable on
demand at the rate set forth in Section 2.04(c). All of Lender’s
rights and remedies shall be cumulative.

 

SECTION VIII

MISCELLANEOUS

 

8.01  Notices.  Except as otherwise provided herein, all
notices, requests, demands, consents, instructions or other communications to
or upon Lender or Borrower under this Agreement or the other Credit Documents
shall be in writing and faxed, mailed or delivered to each party at its
facsimile number or address set forth below (or to such other facsimile number
or address for any party as indicated in any notice given by that party to the
other party). All such notices and communications shall be effective (a) when
sent by an overnight service of recognized standing, on the Business Day
following the deposit with such service; (b) 72 hours after being mailed,
first class postage prepaid and addressed as aforesaid through the United
States Postal Service; (c) when delivered by hand, upon delivery; (d) when
faxed, upon confirmation of receipt; provided, however, that any notice
delivered to Lender under Section II shall not be effective until
received by Lender; and (e) upon receipt of electronic mail (with a notice
contemporaneously given by another method specified in this Section 8.01).

 

	
  Lender:

  	
  TCF Inventory Finance, Inc.

  
	
   

  	
  2300 Barrington Road

  
	
   

  	
  Suite 600

  
	
   

  	
  Hoffman Estates, Illinois 60169

  
	
   

  	
  Attention: Vincent E. Hillery, General Counsel

  
	
   

  	
  Telephone: (847) 252-6616

  
	
   

  	
  Facsimile: (847) 295-6012

  
	
   

  	
  Email:
  vhillery@tcfif.com

  

 

21

 

	
  with copies to:

  	
  TCF National Bank

  
	
   

  	
  200 E. Lake Street

  
	
   

  	
  Wayzata, MN 55391

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telephone: (952) 475-6498

  
	
   

  	
  Facsimile: (952) 475-7975

  
	
   

  	
  Email: jgreen@tcfbank.com

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Kaplan, Strangis and Kaplan, P.A.

  
	
   

  	
  5500 Wells Fargo Center

  
	
   

  	
  90 South Seventh Street

  
	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
  Attention: Harvey F. Kaplan, Esq.

  
	
   

  	
  Telephone: (612) 375-1138

  
	
   

  	
  Facsimile: (612) 375-1143

  
	
   

  	
  Email: hfk@kskpa.com

  
	
   

  	
   

  
	
  Borrower:

  	
  Red Iron Acceptance, LLC

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN 55420

  
	
   

  	
  Attention: General Manager

  
	
   

  	
  Telephone: 952-888-8801

  
	
   

  	
  Facsimile: 952-887-8258

  
	
   

  	
  Email:

  
	
   

  	
   

  
	
  with copies to:

  	
  The Toro Company

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN 55420

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Telephone: 952-887-8449

  
	
   

  	
  Facsimile: 952-887-8920

  
	
   

  	
  Email:
  Tom.Larson@toro.com

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  The Toro Company

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN 55420

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telephone: 952-887-8178

  
	
   

  	
  Facsimile: 952-887-8920

  
	
   

  	
  Email:
  Tim.Dordell@toro.com

  
	
   

  	
   

  
	
   

  	
  and

  

 

22

 

	
   

  	
  Oppenheimer
  Wolff & Donnelly LLP

  
	
   

  	
  3300 Plaza VII
  Building

  
	
   

  	
  45 South Seventh
  Street

  
	
   

  	
  Attention: C.
  Robert Beattie, Esq.

  
	
   

  	
  Telephone:
  612-607-7395

  
	
   

  	
  Facsimile:
  612-607-7100

  
	
   

  	
  Email:
  RBeattie@Oppenheimer.com

  

 

Each Revolving Loan Borrowing Request shall be made to
Lender’s telephone number referred to above (or by such other means as Lender
and Borrower shall agree) during Lender’s normal business hours. In any case
where this Agreement authorizes notices, requests, demands or other
communications by Borrower to Lender to be made by telephone, facsimile or
electronic mail, Lender may conclusively presume that anyone purporting to be a
Person designated in any incumbency certificate or other similar document
delivered by Borrower to Lender is such a Person.

 

8.02  Expenses.  Borrower shall pay on demand all reasonable
fees and expenses, including reasonable attorneys’ fees and expenses, incurred
by Lender in the enforcement or attempted enforcement of any of the Obligations
or in preserving any of Lender’s rights and remedies, including  all such fees and expenses incurred in
connection with any “workout” or restructuring affecting the Credit Documents
or the Obligations or any bankruptcy or similar proceeding involving Borrower.

 

8.03  Indemnification.  To the fullest extent permitted by law, Borrower
agrees to protect, indemnify, defend and hold harmless Lender and its
directors, officers, employees, agents and any Affiliates thereof (“Indemnitees”)
from and against any and all liabilities, losses, damages or expenses of any
kind or nature and from any and all suits, claims or demands (including in
respect of or for reasonable attorney’s fees and other expenses) arising on
account of or in connection with any matter or thing or action or failure to
act by Indemnitees, or any of them, arising out of or relating to the Credit
Documents, including any use by Borrower of any proceeds of the Revolving
Loans, except to the extent such liability arises from the willful misconduct
or gross  negligence of the Indemnitees.  Upon receiving knowledge of any suit, claim
or demand asserted by a third party that Lender believes is covered by this
indemnity, Lender shall give Borrower notice of the matter and an opportunity
to defend it, at Borrower’s sole cost and expense, with legal counsel
reasonably satisfactory to Lender. Any failure or delay of Lender to notify
Borrower of any such suit, claim or demand shall not relieve Borrower of its
obligations under this Section 8.03 but shall reduce such
obligations to the extent of any increase in those obligations caused solely by
an unreasonable failure or delay. The obligations of Borrower under this Section 8.03
shall survive the payment and performance of the Obligations, the termination
of the Commitment and the termination of this Agreement.

 

8.04  Waivers;
Amendments.  Any term, covenant,
agreement or condition of this Agreement or any other Credit Document may be
amended or waived if such amendment or waiver is in writing and is signed by
Borrower and Lender. No failure or delay by Lender in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in such waiver or consent, a
waiver or consent given 

 

23

 

hereunder shall be effective only in the specific instance and for the
specific purpose for which given.

 

8.05  Successors
and Assigns.

 

(a)           Binding Effect.  This Agreement and the other Credit Documents
shall be binding upon and inure to the benefit of Borrower, Lender, all future
holders of the Revolving Loan Note and their respective successors and, solely
in the case of Lender, its assigns permitted pursuant to Section 8.05(b).
All references in this Agreement to any Person shall be deemed to include all
successors and permitted assigns of such Person.

 

(b)           Assignments.  Borrower may not assign or transfer any of
its rights or obligations under any Credit Document without the prior written
consent of Lender. Lender may at any time, without the consent of Borrower,
assign to one or more Affiliates (each an “Assignee”) all, or a
proportionate part of all, of its rights and obligations under this Agreement
and the other Credit Documents, and such Assignee shall assume such rights and
obligations, pursuant to an assignment and assumption agreement executed by
such Assignee and Lender; provided, however, that any Assignee of Lender shall
be required to have at the time of assignment (i) a creditworthiness not
less than the creditworthiness of Lender at such time and (ii) a credit
facility, with TCF Bank as lender and Assignee as borrower, no less favorable
than Lender’s credit facility with TCF Bank and supported by the same
Performance Assurance Agreement from TCF Bank furnished in connection with
Lender’s credit facility with TCF Bank, and such Assignee shall be able to
perform the obligations of Lender hereunder. Upon execution and delivery of
such instrument, such Assignee shall be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender with a commitment as set
forth in such instrument of assumption, and Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this Section 8.05(b), Lender and Borrower shall make
appropriate arrangements so that, if required, a new Revolving Loan Note is
issued to the Assignee and the existing Revolving Loan Note is returned to
Borrower.

 

(c)           Information.  Lender may disclose the Credit Documents and
any financial or other information relating to Borrower to any Assignee or
potential Assignee, subject to the terms of Section 8.12, and subject
to Lender obtaining the agreement of such Assignee or potential Assignee to be
bound by the terms of Section 8.12.

 

8.06  Setoff.  In addition to any rights and remedies of
Lender provided by law, Lender shall have the right, without prior notice to Borrower,
any such notice being expressly waived by Borrower to the extent permitted by
applicable law, at any time Lender is entitled to terminate the Commitment
following the occurrence and during the continuance of a Default or an Event of
Default, to set-off and apply against any Indebtedness, whether matured or
unmatured, of Borrower to Lender (including 
the Obligations), any amount owing from Lender to Borrower. The
aforesaid right of set-off may be exercised by Lender against Borrower or
against any trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
Borrower or against anyone else claiming through 

 

24

 

or against Borrower or such trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that such
right of set-off shall not have been exercised by Lender prior to the
occurrence of a Default or an Event of Default. Lender agrees promptly to
notify Borrower after any such set-off and application made by Lender, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.

 

8.07  No
Third Party Rights.  Subject to the
terms of the Joint Venture Agreement, nothing expressed in or to be implied
from this Agreement or any other Credit Document is intended to give, or shall
be construed to give, any Person, other than the parties hereto and thereto and
their permitted successors and assigns, any benefit or legal or equitable
right, remedy or claim under or by virtue of this Agreement or any other Credit
Document.

 

8.08  Partial
Invalidity.  If at any time any
provision of this Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality, validity
or enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.

 

8.09  Jury
Trial.  EACH OF BORROWER AND LENDER,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE
RELATING TO ANY CREDIT DOCUMENT IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR OUR ENTERING
INTO THIS AGREEMENT.

 

8.10  Submission
to Jurisdiction.  Each of Borrower
and Lender hereby irrevocably submits to the non-exclusive jurisdiction of the
Federal courts sitting in Minneapolis or St. Paul, Minnesota and any state
court located in Hennepin County, Minnesota, and by execution and delivery of
this Agreement, each of Borrower and Lender accepts for itself and in
connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of such courts with respect to any litigation
concerning the Credit Documents or the transactions contemplated thereby or any
matters related thereto. Each of Borrower and Lender irrevocably waives any
objection (including any objection to the laying of venue or any objection on
the grounds of forum non conveniens) which it may now or hereafter have to the
bringing of any proceeding with respect to this Agreement to the courts set
forth above. Borrower agrees to the personal jurisdiction of such courts and
that service of process may be made on it at the address indicated in Section 8.01
above. Nothing herein shall affect the right to serve process in any other
manner permitted by law.

 

8.11  Counterparts.  This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties hereto
shall be deemed to constitute a complete, executed original for all purposes.

 

8.12  Disclosure
of Information about Borrower. 
Lender agrees that it will not provide any information to any Person
regarding the business and operations of Borrower without the 

 

25

 

prior written consent of Borrower, except for (i) disclosures to
any Person to the extent necessary to permit an assignment permitted under the
terms of Section 8.05, (ii) disclosures to Lender’s
accountants to the extent necessary in connection with such accountants’
auditing responsibilities, (iii) disclosures to any Person of information
which is or becomes generally available to the public other than as a result of
a disclosure in violation of the terms of this Section 8.12, (iv) disclosures
to any Person of information which Lender is legally compelled to disclose,
provided that Lender agrees to use all reasonable efforts to notify Borrower of
any such legal requirement to disclose sufficiently in advance of the
disclosure to permit Borrower to challenge the legal requirement, and (v) disclosure
to any Person to the extent otherwise permitted by the Joint Venture Agreement
or the LLC Agreement.

 

8.13  No
Recourse to Members of Borrower. 
Notwithstanding any provision of this Agreement to the contrary,
recourse for the payment of the Obligations and any other liabilities and
obligations of Borrower arising under any Credit Document shall be had only
against the assets, property and rights of Borrower.

 

8.14  No
Indirect or Consequential Damages. 
NO PARTY TO THIS AGREEMENT SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO THIS AGREEMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF
SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR PUNITIVE, EXEMPLARY OR, EXCEPT IN THE CASE OF FRAUD, BAD FAITH,
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, 
INDIRECT OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT
OF ANY TRANSACTION CONTEMPLATED HEREUNDER.

 

[Signature
page follows]

 

26

 

IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be executed as of the day and year first above written.

 

	
   

  	
  RED IRON
  ACCEPTANCE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Wrend

  
	
   

  	
   

  	
  Name:

  	
  Mark Wrend

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TCF INVENTORY FINANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rosario A.
  Perrelli

  
	
   

  	
   

  	
  Name:

  	
  Rosario A.
  Perrelli

  
	
   

  	
   

  	
  Title:

  	
  President and
  CEO

  

 

27

 

SCHEDULE 1.01

 

DEFINITIONS

 

“Acceleration Event” shall mean Toro, on a
consolidated basis, permits its consolidated ratio of (x) Indebtedness to (y) Indebtedness
plus stockholders’ equity to exceed (i) 0.60 to 1.0 as at the end
of the first fiscal quarter of Toro’s fiscal year, (ii) 0.65 to 1.00 as at
the end of the second fiscal quarter of Toro’s fiscal year, (iii) 0.60 to
1.0 as at the end of the third fiscal quarter of Toro’s fiscal year or (iv) 0.55
to 1.00 as at the end of Toro’s fiscal year.

 

“Affiliate” means, with respect to any Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.  For purposes of this
definition, “Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

“Agreement” shall mean this Credit and Security
Agreement.

 

“Assignee” shall have the meaning given to that
term in Section 8.05(b).

 

“Borrower” shall have the meaning given to that
term in clause (1) of the preamble to this Agreement.

 

“Borrowing Base” shall mean, with respect to
Borrower at any time, the remainder of Tangible Assets less the sum of (i) all
liabilities of Borrower at such time (other than the aggregate principal amount
of Revolving Loans borrowed by Borrower at such time) and (ii) the
Required Equity Investment. The Borrowing Base for Borrower shall be determined
by Lender as at the last day of each calendar month (after giving effect to any
capital contributions made by the Members of Borrower with respect to such
calendar month in accordance with the terms of the LLC Agreement).

 

“Business Day” shall mean any day on which
commercial banks are not authorized or required to close in Minneapolis,
Minnesota or Chicago, Illinois.

 

“Capital Asset” shall mean, with respect to any
Person, tangible property owned or leased (in the case of a Capital Lease) by
such Person, or any expense incurred by any Person that is required by GAAP to
be reported as an asset on such Person’s balance sheet.

 

“Capital Expenditures” shall mean, with respect
to any Person and any period, all amounts expended and Indebtedness incurred or
assumed by such Person during such period for the acquisition of real property
and other Capital Assets (including amounts expended and Indebtedness incurred
or assumed in connection with Capital Leases).

 

“Capital Leases” shall mean any and all lease
obligations that, in accordance with GAAP, are required to be capitalized on
the books of a lessee.

 

“Closing Date” shall mean August 12, 2009.

 

1

 

“Collateral” shall have the meaning given to
that term in Section 7.01.

 

“Commitment” shall have the meaning given to
that term in Section 2.02(a).

 

“Contractual Obligation” of any Person shall
mean, any indenture, note, security, deed of trust, mortgage, security
agreement, lease, guaranty, instrument, contract, agreement or other form of
obligation or undertaking to which such Person is a party or by which such
Person or any of its property is bound.

 

“Credit Documents” shall mean and include this
Agreement, the Revolving Loan Note and each Security Document delivered to
Lender in connection with this Agreement, as each of the foregoing may be
amended from time to time.

 

“Default” shall mean any event or circumstance
not yet constituting an Event of Default but which, with the giving of any
notice or the lapse of any period of time or both, would become an Event of
Default.

 

“Dollars” and “$” shall mean the lawful
currency of the United States of America and, in relation to any payment under
this Agreement, same day or immediately available funds.

 

“Employee Benefit Plan” shall mean any employee
benefit plan within the meaning of section 3(3) of ERISA maintained or
contributed to by Borrower, other than a Multiemployer Plan.

 

“Equity Securities” of any Person shall mean (a) all
common stock, preferred stock, limited liability company interests,
participations, shares, partnership interests or other equity interests in and
of such Person (regardless of how designated and whether or not voting or
non-voting) and (b) all warrants, options and other rights to acquire any
of the foregoing.

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as the same may from time to time be amended or
supplemented, including any rules or regulations issued in connection
therewith.

 

“Event of Default” shall have the meaning given
to that term in Section 6.01.

 

“Exmark” shall mean Exmark Manufacturing
Company Incorporated, a Nebraska corporation, a wholly owned subsidiary of
Toro.

 

“Financial Statements” shall mean, with respect
to any accounting period for any Person, statements of income of such Person
for such period and balance sheets of such Person as of the end of such period
and, with respect to any annual accounting period for any Person, statements of
cash flows of such Person for such annual period, setting forth in each case in
comparative form figures for the corresponding period in the preceding fiscal
year if such period is less than a full fiscal year or, if such period is a full
fiscal year, corresponding figures from the preceding fiscal year, all prepared
in reasonable detail and in accordance with GAAP.

 

“GAAP” shall mean generally accepted accounting
principles and practices as in effect in the United States of America from time
to time, consistently applied.

 

2

 

“Governmental Authority” shall mean any
domestic or foreign national, state or local government, any political
subdivision thereof, any department, agency, authority or bureau of any of the
foregoing, or any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Governmental Charges” shall mean all levies,
assessments, fees, claims or other charges imposed by any Governmental
Authority upon or relating to (i) Borrower, (ii) the Revolving Loans,
(iii) income or gross receipts of Borrower, (iv) the ownership or use
of any of its assets by Borrower or (v) any other aspect of the business
of Borrower.

 

“Governmental Rule” shall mean any law, rule,
regulation, ordinance, order, code interpretation, judgment, decree, directive,
guidelines, policy or similar form of decision of any Governmental Authority.

 

“Indebtedness” of any Person shall mean and include
(a) all items of indebtedness and liabilities which, in accordance with
GAAP, would be included in determining liabilities that are shown on the
liability side of the balance sheet of such Person,  (b) all
indebtedness and liabilities of other Persons assumed or guaranteed by such
Person or in respect to which such Person is secondarily or contingently liable
whether by any agreement to acquire indebtedness and liabilities or to supply
or advance funds or otherwise, and (c) all indebtedness and liabilities of
other Persons secured by any Lien in any property of such Person (including
Capital Leases).

 

“Indemnitees” shall have the meaning given to
that term in Section 8.03.

 

“Interest Account” shall have the meaning given
to that term in Section 2.05(b).

 

“Investment” of any Person shall mean any loan
or advance of funds by such Person to any other Person (other than advances to
employees of such Person for moving and travel expense, drawing accounts and
similar expenditures in the ordinary course of business), any purchase or other
acquisition of any Equity Securities or Indebtedness of any other Person, and
any capital contribution by such Person to or any other investment by such
Person in any other Person (including 
any Indebtedness incurred by such Person of the type described in clauses
(b) and (c) of the definition of “Indebtedness” on behalf
of any other Person).

 

“Joint Venture Agreement” shall mean that
certain Agreement to Form Joint Venture, dated as of the date hereof,
between TCFIF and Toro, as it may be amended from time to time.

 

“Lender” shall have the meaning given to that
term in clause (2) of the preamble of this Agreement.

 

“LIBOR” shall mean the most recent 15 Business
Day moving average of one-month interbank offered rates for dollar deposits in
the London market, as reported to Lender by “The Bloomberg Financial Markets,
Commodities and News,” a publicly available financial reporting service (“Bloomberg”). 
If Bloomberg no longer publishes such rates, the Lender may, in its
discretion, choose a similar successor publicly available financial reporting
service.  LIBOR for any month will be based on the reported one-month
LIBOR rate for the most recent 15 Business Days preceding the 25th day of the
immediately preceding month.

 

3

 

“Lien” shall mean, with respect to any
property, any security interest, mortgage, pledge, lien, claim, charge or other
encumbrance in, of, or on such property or the income therefrom, including  the interest of a vendor or lessor under a
conditional sale agreement, Capital Lease or other title retention agreement,
or any agreement to provide any of the foregoing, and the filing of any
financing statement or similar instrument under the UCC or comparable law of
any jurisdiction.

 

“LLC Agreement” shall mean that certain Limited
Liability Company Agreement of Borrower, dated as of the date hereof, by and
between Toro Sub and TCFIF Sub, as it may be amended from time to time.

 

“LLC Term” shall mean, at any time, the term of
Borrower in effect at such time pursuant to the LLC Agreement.

 

“Lock Box” shall have the meaning given to that
term in Section 7.02.

 

“Material Adverse Effect” shall mean a material
adverse effect on (a) the business, assets, operations or financial or
other condition of Borrower if the same could reasonably be expected to affect
the ability of Borrower to pay or perform the Obligations in accordance with
the terms of this Agreement and the other Credit Documents; (b) the
ability of Borrower to pay or perform the Obligations in accordance with the
terms of this Agreement and the other Credit Documents; (c) the rights and
remedies of Lender under this Agreement or the other Credit Documents; or (d) the
value of a material portion of the Collateral, the Lender’s security interest
in a material portion of the Collateral or the general perfection or priority
of a material portion such security interests.

 

“Maturity” shall mean, with respect to any
Revolving Loan, interest or other amount payable by Borrower under this
Agreement or the other Credit Documents, the date such Revolving Loan, interest
or other amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.

 

“Member” shall mean either Toro Sub or TCFIF
Sub, in their respective capacities as members of Borrower.

 

“Membership Interests” shall mean all
membership interests, units, securities and interests assigned to members of a
limited liability company, together with all voting rights associated
therewith.

 

“Multiemployer Plan” shall mean any
multiemployer plan within the meaning of section 3(37) of ERISA maintained or
contributed to by Borrower.

 

“Obligations” shall mean and include all loans,
advances, debts, liabilities, and obligations, howsoever arising, owed by Borrower
to Lender of every kind and description (whether or not evidenced by any note
or instrument and whether or not for the payment of money), direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising
pursuant to the terms of this Agreement or any of the other Credit Documents,
including all interest, fees (if any), charges, expenses, attorneys’ fees and
accountants’ fees chargeable to Borrower or payable by Borrower hereunder or
thereunder.

 

4

 

“Permitted Distributions” shall mean any
distributions expressly contemplated or permitted by the Joint Venture
Agreement or the LLC Agreement, provided, however, that any distribution
otherwise permitted by the foregoing which would result in a Default or Event
of Default shall not be deemed to be a Permitted Distribution.

 

“Permitted Indebtedness” shall mean and
include:

 

(a)           Indebtedness
incurred in the ordinary course of business other than indebtedness for
borrowed money or Capital Leases;

 

(b)           Indebtedness of
Borrower to Lender or an Affiliate of Lender; and

 

(c)           Indebtedness arising
from the endorsement of instruments in the ordinary course of business.

 

“Permitted Liens” shall mean and include:

 

(d)           Liens for taxes or other
governmental charges not at the time delinquent or thereafter payable without
penalty or being contested in good faith, provided provision is made to the
reasonable satisfaction of Lender for the eventual payment thereof if
subsequently found payable;

 

(e)           Liens of carriers,
warehousemen, mechanics, materialmen, vendors, and landlords incurred in the
ordinary course of business for sums not overdue or being contested in good
faith, provided provision is made to the reasonable satisfaction of Lender for
the eventual payment thereof if subsequently found payable;

 

(f)            Deposits to secure
the performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or to secure statutory obligations of surety or
appeal bonds or to secure indemnity, performance or other similar bonds in the
ordinary course of business;

 

(g)           Liens arising out of
a judgment or award not exceeding $100,000 (exclusive of any amounts covered by
insurance issued by a Person not an Affiliate of Borrower) with respect to
which an appeal is being prosecuted, a stay of execution pending appeal having
been secured; and

 

(h)           Liens in favor of
Lender.

 

“Person” shall mean and include an individual,
a partnership, a corporation (including a business trust), a limited liability
company, a joint stock company, an unincorporated association, a joint venture,
a trust or other entity or a Governmental Authority.

 

“Purchased Receivables” shall have the meaning
given to that term in Section 2.01(e).

 

“Required Equity Investment” shall mean the
minimum amount of Investment in Borrower by the Members pursuant to the LLC
Agreement.

 

5

 

“Requirement of Law” applicable to any Person
shall mean (a) the articles or certificate of incorporation or
organization, bylaws, operating agreement, limited liability company agreement,
partnership agreement or other organizational or governing documents of such
Person, (b) any Governmental Rule applicable to such Person, (c) any
license, permit, approval or other authorization granted by any Governmental
Authority to or for the benefit of such Person and (d) any judgment,
decision or determination of any Governmental Authority or arbitrator, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

 

“Revolving Loan” shall have the meaning given
to that term in Section 2.01(a).

 

“Revolving Loan Borrowing Request” shall have
the meaning given to that term in Section 2.01(b).

 

“Revolving Loan Maturity Date” shall have the
meaning given to that term in Section 2.01(a).

 

“Revolving Loan Note” shall have the meaning
given to that term in Section 2.05(a).

 

“Security Documents” shall mean and include all
instruments, agreements, certificates, opinions and documents (including
Uniform Commercial Code financing statements) delivered to Lender in connection
with any Collateral or to secure the Obligations.

 

“Seller” shall mean each of Toro, TCC, Toro
International, Exmark and their respective Affiliates from whom Borrower
purchases receivables.

 

“Seller Credits” shall mean all of the rights
of Borrower to any price protection payments, rebates, discounts, credits,
factory holdbacks, incentive payments, warranty payments, commissions and other
amounts that at any time are due to Borrower from a Seller that may arise with
respect to, or in connection with, Purchased Receivables.

 

“Subsidiary” of any Person shall mean (a) any
corporation of which more than 50% of the issued and outstanding Equity
Securities having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time capital
stock of any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
of its other Subsidiaries or by one or more of such Person’s other
Subsidiaries, (b) any partnership, joint venture, or other association of
which more than 50% of the equity interest having the power to vote, direct or
control the management of such partnership, joint venture or other association
is at the time owned and controlled by such Person, by such Person and one or
more of the other Subsidiaries or by one or more of such Person’s other
subsidiaries and (c) any other Person included in the Financial Statements
of such Person on a consolidated basis.

 

“Tangible Assets” shall mean, with respect to
any Person at any time, the remainder at such time, determined in accordance
with GAAP, of (a) the total assets of such Person minus (b) all
intangible assets of such Person (to the extent included in calculating total
assets in clause (a) above, including goodwill (including any
amounts, however designated on the balance sheet, 

 

6

 

representing the cost of
acquisition of businesses and Investments in excess of underlying tangible
assets), trademarks, trademark rights, trade name rights, copyrights, patents,
patent rights, licenses, unamortized debt discount, marketing expenses,
organizational expenses, non-compete agreements and deferred research and
development expenses).

 

“Tangible Net Worth” shall mean, with respect
to any Person at any time, the remainder at such time, determined in accordance
with GAAP, of (a) the Tangible Assets of such Person minus (b) the
total liabilities of such Person.

 

“Taxes” shall mean present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (except net income taxes and franchise taxes
imposed on Lender).

 

“TCC” means Toro Credit Company, a Minnesota
corporation.

 

“TCFIF” shall have the meaning given to that
term in clause (2) of the preamble of this Agreement.

 

“TCFIF Rate” shall mean XXXXXXXXXX [PORTIONS
OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.  A COPY OF THIS EXHIBIT WITH ALL
SECTIONS INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

“TCFIF Sub” shall mean TCFIF Joint Venture I,
LLC, a Minnesota limited liability company.

 

“Toro” shall mean The Toro Company, a Delaware
corporation.

 

“Toro International” shall mean Toro
International Company, a Minnesota corporation.

 

“Toro Sub” shall mean Red Iron Holding
Corporation, a Delaware corporation.

 

“UCC” shall mean the Uniform Commercial Code as
in effect in the state of Minnesota.

 

7

 

EXHIBIT A

 

REVOLVING LOAN NOTE

 

	
  $450,000,000

  	
   

  	
  [                            ,
  20     ]

  
	
  Hoffman Estates,
  Illinois

  	
   

  	
   

  

 

FOR VALUE RECEIVED, Red Iron Acceptance, LLC, a
limited liability company organized under the laws of the state of Delaware (“Borrower”),
hereby promises to pay to the order of TCF INVENTORY FINANCE, INC., a Minnesota
corporation (“Lender”), the principal sum of FOUR HUNDRED FIFTY MILLION
DOLLARS ($450,000,000) or such lesser amount as shall equal the aggregate
outstanding principal balance of the Revolving Loans made by Lender to Borrower
pursuant to the Credit and Security Agreement referred to below (the “Credit
Agreement”), on or before the Revolving Loan Maturity Date specified in the
Credit Agreement; and to pay interest on said sum, or such lesser amount, at
the rates and on the dates provided in the Credit Agreement.

 

Borrower shall make all payments hereunder to Lender
as indicated in the Credit Agreement, in lawful money of the United States and
in same day or immediately available funds.

 

Lender shall record on its general ledger the date and
amount of each Revolving Loan and of each payment or prepayment of principal and
each payment of interest or other amounts made by Borrower and Borrower agrees
that all such notations shall constitute prima facie evidence absent manifest
error of the matters noted; provided, however, that the failure of Lender to
make any such notation shall not affect Borrower’s Obligations.

 

This Note is the Revolving Loan Note referred to in
the Credit and Security Agreement, dated as of August 12, 2009, between
Borrower and Lender.

 

This Note is subject to the terms of the Credit
Agreement, including the rights of prepayment and the rights of acceleration of
Maturity. Without limiting the foregoing, the obligations of Borrower under
this Note are secured as described in Section VII of the Credit
Agreement.

 

Borrower shall pay fees and expenses of Lender as
provided in the Credit Agreement. Borrower hereby waives notice of presentment,
demand, protest or notice of any other kind. This Note shall be governed by and
construed in accordance with the laws of the state of Minnesota without regard
to conflict of law principles.

 

	
   

  	
  Red Iron Acceptance,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.2

 

FORM OF
RECEIVABLE PURCHASE AGREEMENT

 

by and
among

 

[TORO
CREDIT COMPANY],

 

[TORO INTERNATIONAL COMPANY],

 

[EXMARK
MANUFACTURING COMPANY INCORPORATED]

 

and

 

THE
TORO COMPANY,

 

 

as
Sellers,

 

and

 

RED
IRON ACCEPTANCE, LLC

 

as Buyer

 

Dated as
of
[                              ,
2009]

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Other
  Interpretive Matters

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE II SALE

  	
  8

  
	
  2.1

  	
  Sale

  	
  8

  
	
  2.2

  	
  Acceptance by
  Buyer

  	
  9

  
	
  2.3

  	
  Purchase Price

  	
  9

  
	
  2.4

  	
  Additional Receivables

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  CONDITIONS PRECEDENT

  	
  9

  
	
  3.1

  	
  Conditions to
  Transfer

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
  10

  
	
  4.1

  	
  Representations
  and Warranties of Seller

  	
  10

  
	
  4.2

  	
  Covenants of
  Seller

  	
  14

  
	
  4.3

  	
  Negative
  Covenants of Seller

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  MISCELLANEOUS

  	
  16

  
	
  5.1

  	
  Notices

  	
  16

  
	
  5.2

  	
  No Waiver;
  Remedies

  	
  18

  
	
  5.3

  	
  Successors and
  Assigns

  	
  18

  
	
  5.4

  	
  No Buyer
  Liability for Contracts

  	
  18

  
	
  5.5

  	
  Survival

  	
  19

  
	
  5.6

  	
  Complete
  Agreement; Modification of Agreement

  	
  19

  
	
  5.7

  	
  Dispute
  Resolution

  	
  19

  
	
  5.8

  	
  Jury Trial

  	
  19

  
	
  5.9

  	
  Submission to
  Jurisdiction

  	
  19

  
	
  5.10

  	
  Counterparts

  	
  19

  
	
  5.11

  	
  Severability

  	
  20

  
	
  5.12

  	
  Section Titles

  	
  20

  
	
  5.13

  	
  No Setoff

  	
  20

  
	
  5.14

  	
  Further
  Assurances

  	
  20

  
	
  5.15

  	
  No Indirect or
  Consequential Damages

  	
  20

  
	
  5.16

  	
  No Assumption in
  Drafting

  	
  21

  
	
  5.17

  	
  Headings; Section
  and Article References

  	
  21

  

 

 

FORM OF
RECEIVABLE PURCHASE AGREEMENT

 

This RECEIVABLE PURCHASE
AGREEMENT, dated as of [                              ,
2009] (this “Agreement”), is entered into by and between [TORO CREDIT COMPANY, a Minnesota corporation (“Toro Credit”)],
[TORO INTERNATIONAL COMPANY, a Minnesota
corporation (“Toro International”)], [EXMARK
MANUFACTURING COMPANY INCORPORATED, a Nebraska corporation (“Exmark”)].
THE TORO COMPANY, a Delaware
corporation  (“Toro” and together
with [Toro Credit], [Toro
International] and [Exmark], each
a “Seller” and collectively the “Sellers”) and RED IRON
ACCEPTANCE, LLC, a Delaware limited liability company (“Buyer”).

 

In consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           Definitions.

 

“Account Debtor” means an obligor on a
Receivable.

 

“Additional Receivables” means those
Receivables described on Schedule 2 that Buyer has agreed to purchase
notwithstanding that such Receivables are not Eligible Receivables.

 

“Affiliate” means, with respect to any Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.  For purposes of this
definition, “Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

“Aggregate Repurchase Amount” means, for any
repurchase of an Ineligible Receivable pursuant to Section 4.1(d),
the Purchase Price paid for such Ineligible Receivable, less any Principal
Collections received by Buyer in respect of such Ineligible Receivable from the
Closing Date.

 

“Agreement” is defined in the preamble.

 

“Authorized Officer” means (a) with
respect to Toro, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the General Counsel, the Secretary, the
Treasurer, the Corporate Controller and each other officer or employee of Toro
specifically authorized in resolutions of the Board of Directors of such
corporation to sign agreements, instruments or other documents on behalf of
such corporation in connection with the transactions contemplated by this
Agreement and the Related Documents; (b) with respect to Toro Credit, the
President, the Secretary, the Treasurer and each other officer or employee of
Toro Credit specifically authorized in resolutions of the Board of Directors of
such corporation to sign agreements, instruments or other documents on behalf
of such corporation in connection 

 

 

with the transactions
contemplated by this Agreement and the Related Documents; (c) with respect
to Toro International, the President, the Secretary, the Treasurer and each
other officer or employee of Toro International specifically authorized in
resolutions of the Board of Directors of such corporation to sign agreements,
instruments or other documents on behalf of such corporation in connection with
the transactions contemplated by this Agreement and the Related Documents; and (d) with
respect to Buyer, its General Manager.

 

“Business Day” shall mean any day on which
commercial banks are not authorized or required to close in either Minneapolis,
Minnesota or Chicago, Illinois.

 

“Buyer” is defined in the preamble.

 

“Closing Date” means [                              ,
2009].

 

“Collateral Security” means, with respect to
any Receivable, (i) any security interest, granted by or on behalf of the
related Account Debtor with respect thereto, including a security interest in
the related Products or assets, (ii) all other security interests or liens
and property subject thereto from time to time purporting to secure payment of
such Receivable, whether pursuant to the agreement giving rise to such Receivable
or otherwise, together with all financing statements filed against an Account
Debtor describing any collateral securing such Receivable, (iii) all
guarantees, insurance and other agreements (including Financing Agreements and
subordination agreements with other lenders) or arrangements of whatever
character from time to time supporting or securing payment of such Receivable
whether pursuant to the agreement giving rise to such Receivable or otherwise,
and (iv) all Records in respect of such Receivable.

 

“Collections” means, without duplication, all
payments by or on behalf of Account Debtors received in respect of the
Receivables (including insurance proceeds and proceeds from the realization
upon any Collateral Security) in the form of cash, checks, wire transfers or
any other form of payment.

 

“Cure Period” is defined in Section 4.1(c).

 

“Debtor Relief Laws” means Title 11 of the
United States Code and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, suspension of payments, readjustment of debt, marshalling of
assets or similar debtor relief laws of the United States, any state or any
foreign country from time to time in effect, affecting the rights of creditors
generally.

 

“Eligible Receivable” means a Receivable:

 

(a)           that was created pursuant to genuine and bona fide
transactions in the ordinary course of a Seller’s business and in compliance
with all applicable Requirements of Law, other than those Requirements of Law
the failure with which to comply could not reasonably be expected to have a
material adverse effect on Buyer or any assigns, and pursuant to a Financing
Agreement that complies with all applicable Requirements of Law, other than
those Requirements of Law the failure with which to comply could not reasonably
be expected to have a material adverse effect on Buyer or any of its creditors
or assigns;

 

2

 

(b)           with respect to which all consents, licenses, approvals
or authorizations of, or registrations with, any Governmental Authority
required to be obtained or made by such Seller in connection with the creation
of such Receivable or the execution, delivery and performance by such Seller of
the related Financing Agreement, have been duly obtained or made and are in
full force and effect as of the date of creation of such Receivable, but
failure to comply with this clause (b) shall not cause a Receivable
not to be an Eligible Receivable if, and to the extent that, the failure to so
obtain or make any such consent, license, approval, authorization or
registration could not reasonably be expected to have a material adverse effect
on Buyer or its assigns;

 

(c)           that is not the subject of any Litigation that is
pending or has been threatened in writing;

 

(d)           as to which, at the time of its transfer to Buyer,
such Seller will have good and 
marketable title free and clear of all Liens (other than Permitted
Encumbrances);

 

(e)           that is freely assignable and is the subject of a
valid transfer and assignment from such Seller to Buyer of all of such Seller’s
right, title and interest therein;

 

(f)            that at and after the time of transfer to Buyer is,
and the Financing Agreement with respect thereto is, the legal, valid and binding
payment obligation of the Account Debtor thereof, legally enforceable against
such Account Debtor in accordance with its terms, except as enforceability may
be limited by applicable Debtor Relief Laws, and by general principles of
equity (whether considered in a suit at law or in equity);

 

(g)           that constitutes an “account”,
“chattel paper” or “general intangible” within the meaning of UCC Section 9-102;

 

(h)           as to which, at the time of its transfer to Buyer,
such Seller has not taken any action which, or failed to take any action the
omission of which, would, at the time of transfer to Buyer, impair Buyer’s
rights therein;

 

(i)            the obligations with respect to which, at the time
of its transfer to Buyer, have not been waived or modified except as permitted
by this Agreement;

 

(j)            that, at the time of its transfer to Buyer, except
as contemplated by Section 4.2(c), is not subject to any right of
rescission, setoff, counterclaim or any other defense of an Account Debtor
(including the defense of usury), other than defenses arising out of Debtor
Relief Laws and except as the enforceability of such Receivable may be limited
by general principles of equity (whether considered in a suit at law or
equity);

 

(k)           which, at the time of transfer to Buyer is secured
by, inter alia, a first priority perfected security interest (whether by prior
filing, purchase money security interest, subordination agreement from prior
filers or otherwise) in any related Product other than with respect to
Receivables due on an unsecured open account basis from Account Debtors in an
aggregate amount not to exceed $4,000,000 whether acquired by Buyer under the
terms of this Agreement or any other agreement with Seller or Seller’s 

 

3

 

Affiliates; provided, that with respect to Receivables relating to
extended service contracts, such Receivables shall only be “Eligible
Receivables” within the scope of this clause (k) to the extent
Seller or Seller’s Affiliate has provided recourse or other credit support upon
such terms as Seller and Buyer shall agree prior to transfer;

 

provided, however, that a Receivable shall not be an “Eligible
Receivable”:

 

(l)            if it is an open account receivable that is due or
unpaid more than ninety (90) days after the original due date unless such past
due or unpaid amount is the subject of a bona fide dispute or represents less
than five percent (5%) of the original invoice amount for such Receivable;

 

(m)          if it is a floor plan receivable (x) that is
related to a Product that has been sold out of trust for more than ninety (90)
days, (y) as to which charges or fees are more than ninety (90) days past
due (in which case, neither such charges or fees nor the related receivable(s) shall
be an Eligible Receivable) or (z) as to which a scheduled payment is more
than ninety (90) days past due;

 

(n)           if the Account Debtor that is obligated on such
Receivable shall have (i) applied for, suffered, or consented to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property; (ii) admitted
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) made a
general assignment for the benefit of creditors, (iv) suffered a
Bankruptcy Event; or (v) taken any action for the purpose of effecting any
of the foregoing;

 

(o)           if the sale to the Account Debtor that is obligated
on such Receivable is outside the United States or Canada;

 

(p)           if it is subject to any claim of offset (unless such
Seller has received a letter from the applicable Account Debtor in form and
substance satisfactory to Buyer indicating that such Account Debtor shall not
exercise its right of offset), deduction, defense, dispute, or counterclaim, or
is owed by an Account Debtor that is also a supplier of such Seller (but only
to the extent of such Seller’s obligations to such Account Debtor from time to
time) or the Receivable is contingent in any respect for any reason;

 

(q)           if any return, rejection or repossession of the
Product to which the Receivable relates has occurred and not reflected in the
determination of the Outstanding Balance of such Receivable; or

 

(r)            if such Receivable is not payable to such Seller or
one of its Affiliates.

 

“Exmark” is defined in the preamble.

 

“Financing Agreement” means any agreement
entered into between a Seller and an Account Debtor in order to finance
Products purchased by such Account Debtor from such Seller.

 

4

 

“GAAP” means generally accepted accounting
principles as in effect in the United States of America from time to time,
consistently applied.

 

“Governmental Authority” means any domestic or
foreign national, state or local government, any political subdivision thereof,
any department, agency, authority or bureau of any of the foregoing, or any
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Ineligible Receivable” is defined in Section 4.1(c).

 

“Insurance Proceeds” with respect to Collateral
Security means any amounts received pursuant to any policy of insurance related
thereto which are required to be paid to a Seller with respect thereto.

 

“Joint Venture Agreement” means that certain
Agreement to Form Joint Venture dated as of August 12, 2009 by and
between Toro and TCFIF.

 

“Knowledge” with respect to a Seller means the
actual knowledge of an Authorized Officer of such Seller.

 

“Lien” means, with respect to any property, any
security interest, mortgage, pledge, lien, claim, charge or other encumbrance
in, of, or on such property or the income therefrom, including the interest of
a vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement, or any agreement to provide any of the foregoing,
and the filing of any financing statement or similar instrument under the UCC
or comparable law of any jurisdiction.

 

“Litigation” means, with respect to any Person,
any action, claim, lawsuit, demand, investigation or proceeding pending or
threatened in writing against such Person before any court, board, commission,
agency or instrumentality of any Governmental Authority or before any
arbitrator or panel of arbitrators.

 

“LLC Agreement” means that certain Limited
Liability Company Agreement dated as of August 12, 2009 by and between
TCFIF Joint Venture I, LLC, a Minnesota limited liability company, and Red Iron
Holding Corporation, a Delaware corporation.

 

“Material Adverse Effect” means a material
adverse effect on (a) the ability of any Seller to perform any of its
obligations under this Agreement in accordance with the terms hereof, or (b) the
Transferred Receivables (including the collectability of the Transferred
Receivables and any Collateral Security).

 

“Officer’s Certificate” means, with respect to
any Person, a certificate signed by an Authorized Officer of such Person.

 

“Outstanding Balance” means, with respect to
any Receivable, the amount of such Receivable at the time of determination
reduced by any credit issued by a Seller as contemplated by Section 4.2(c).

 

5

 

“Permitted Encumbrances” means the following: (a) Liens
for taxes or assessments or other governmental charges not yet due and payable;
(b) inchoate and unperfected workers’, mechanics’, suppliers’ or similar
Liens arising in the ordinary course of business; (c) presently existing
or hereinafter created Liens in favor of, or created by, Buyer; (d) any
Lien created or permitted by any agreement between Buyer and a Seller; (e) any
security interests in assets that are subordinate to the security interests
securing the related Receivables; and (f) Liens in favor of a Seller that
are assigned to Buyer in accordance with the terms of this Agreement.

 

“Person” means and includes an individual, a
partnership, a corporation (including a business trust), a limited liability
company, a joint stock company, an unincorporated association, a joint venture,
a trust, a Governmental Authority or other entity.

 

“Principal Collections” means Collections other
than Collections of interest and all other non-principal charges (including
insurance service fees and handling fees) on the Receivables.

 

“Products” means the commercial, consumer
goods, parts and accessories manufactured or distributed by Toro or one of its
Affiliates.

 

“Purchase Price” is defined in Section 2.3.

 

“Receivable” means all amounts payable
(including interest, finance charges and other charges), and the obligation to
pay such amounts, by the related Account Debtor from time to time in connection
with extensions of credit made by a Seller to Account Debtors in order to
finance Products and services purchased by Account Debtors from such Seller,
together with the group of writings evidencing such amounts and any related
Collateral Security and all of the rights, remedies, powers and privileges
thereunder (including under any related Financing Agreement).

 

“Records” means, with respect to any
Receivable, all Financing Agreements and other documents, books, records and
other information (including tapes, disks and related property and rights)
relating to such Receivable and the related Account Debtor.

 

“Related Documents” means any documents or
instruments evidencing Collateral Security.

 

“Repurchase Agreement” is defined in Section 4.2(f).

 

“Requirements of Law” means, as to any Person, (a) the
articles or certificate of incorporation or organization, bylaws, operating
agreement, limited liability company agreement, partnership agreement or other
organizational or governing documents of such Person, (b) any law, treaty,
rule or regulation applicable to such Person, (c) any license,
permit, approval or other authorization granted by any Governmental Authority to
or for the benefit of such Person and (d) any judgment, decision or
determination of any Governmental Authority or arbitrator, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

 

“Seller”
and “Sellers” are defined in the preamble.

 

6

 

“TCFIF” means TCF Inventory Finance, Inc.,
a Minnesota  corporation.

 

“Toro” is defined in the preamble.

 

“Toro Credit” is defined in the preamble.

 

“Toro International” is defined in the
preamble.

 

“Transferred Assets” is defined in Section 2.1(a).

 

“Transferred Receivables” means the Receivables
described on Schedules 1 and 2 attached hereto.  However, Receivables that are repurchased by
a Seller pursuant to this Agreement shall cease to be considered “Transferred
Receivables” from the date of such repurchase.

 

“UCC” means, with respect to any jurisdiction,
the Uniform Commercial Code as the same may, from time to time, be enacted and
in effect in such jurisdiction.

 

“United States” means the United States of
America, together with its territories and possessions.

 

1.2           Other Interpretive Matters.  All terms defined directly or by
incorporation in this Agreement shall have the defined meanings when used in
any certificate or other document delivered pursuant thereto unless otherwise
defined therein. For purposes of this Agreement and all related certificates
and other documents, unless the context otherwise requires: (a) accounting
terms not otherwise defined in this Agreement, and accounting terms partly
defined in this Agreement to the extent not defined, shall have the respective
meanings given to them under GAAP; (b) unless otherwise provided,
references to any month, quarter or year refer to a calendar month, quarter or
year; (c) terms defined in Article 9 of the UCC as in effect in the
applicable jurisdiction and not otherwise defined in this Agreement are used as
defined in that Article; (d) references to any amount as on deposit or
outstanding on any particular date means such amount at the close of business
on such day; (e) the words “hereof,” “herein” and “hereunder” and words of
similar import refer to this Agreement (or the certificate or other document in
which they are used) as a whole and not to any particular provision of this
Agreement (or such certificate or document); (f) references to any
Section, Schedule or Exhibit are references to Sections, Schedules and
Exhibits in or to this Agreement (or the certificate or other document in which
the reference is made), and references to any paragraph, subsection, clause or
other subdivision within any Section or definition refer to such
paragraph, subsection, clause or other subdivision of such Section or
definition; (g) the words “include” or “including” shall not be construed
to be limiting or exclusive; (h) references to any law or regulation refer
to that law or regulation as amended from time to time and include any
successor law or regulation; (i) references to any agreement refer to that
agreement as from time to time amended, restated or supplemented or as the
terms of such agreement are waived or modified in accordance with its terms; (j)
references to any Person include that Person’s successors and permitted assigns
and (k) the term “or” has the meaning represented by the phrase “and/or.”

 

7

 

ARTICLE II

SALE

 

2.1           Sale.

 

(a)           Each Seller does hereby transfer, assign, set over
and otherwise convey to Buyer, without recourse except as provided herein, all
its right, title and interest (and each Seller hereby agrees to cause each of
its Affiliates, if applicable, to transfer, assign, set over and otherwise
convey to Buyer, without recourse except as provided herein, all of their
respective right, title and interest) in, to and under, the following (the “Transferred
Assets”):

 

(i)            the Transferred Receivables;

 

(ii)           the Collateral Security with respect to all
Transferred Receivables transferred pursuant to clause (i), together
with all monies due or to become due and all amounts received or receivable
with respect thereto and Insurance Proceeds relating thereto;

 

(iii)          without limiting the generality of the foregoing or
the following, all of Seller’s rights to receive payments from any Account
Debtor in respect of such Transferred Receivables;

 

(iv)          all proceeds of all of the foregoing; and

 

(v)           all reports, data, notes, Account Debtor lists and
files and other books and records of Seller that relate exclusively to, or are
used exclusively in connection with, any of the foregoing.

 

The foregoing does not constitute and is not intended
to result in the creation or assumption by Buyer of any obligation of Seller or
any other Person in connection with the Transferred Receivables or under any
agreement or instrument relating thereto, including any obligation under the
Financing Agreements or any other obligation to any Account Debtor. The
foregoing conveyance shall be effective on the Closing Date, as to all
Transferred Assets then existing (it being understood and agreed that, in the
case of clause (iv), the Collections transferred to Buyer shall include
all Collections since [                              ,
2009]).

 

(b)           Each Seller shall irrevocably instruct all Account
Debtors under the Transferred Receivables to make all payments on account
thereof on and after the Closing Date to Buyer.

 

(c)           Any Collections received by a Seller after the
Closing Date with respect to the Transferred Receivables shall be deemed held
by such Seller in trust and as fiduciary for Buyer.  Such Seller shall pay the same over to Buyer
forthwith upon receipt.

 

8

 

(d)           Buyer is hereby authorized and empowered (which
authorization and power, being coupled with an interest, is irrevocable unless
and until a Transferred Receivable is repurchased by a Seller pursuant to the
terms of this Agreement):

 

(i)            to request confirmation from any Account Debtor or
party obligated under or with respect to any Transferred Receivable of the
amount shown by the Transferred Receivable to be payable, or any other matter
stated therein;

 

(ii)           to endorse in a Seller’s name and to collect, any
chattel paper, checks, notes, drafts, instruments or other items of payment
tendered to or received by Buyer in payment of any Transferred Receivable;

 

(iii)          to notify any Account Debtor or other Person
obligated under or in respect of any Transferred Receivable of the sale thereof
to Buyer;

 

(iv)          to direct any Account Debtor or other Person
obligated under or in respect of any Transferred Receivable to make payment
directly to Buyer of any amounts due or to become due thereunder or with
respect thereto.

 

2.2           Acceptance by Buyer.  Buyer hereby acknowledges its acceptance of
all right, title and interest to the property, now existing and hereafter
created, conveyed to Buyer pursuant to Section 2.1.

 

2.3           Purchase Price.  Buyer shall pay a purchase price to each
Seller equal to the sum of (i) for the Transferred Receivables from such
Seller that are Eligible Receivables and the other Transferred Assets related
thereto, equal to the Outstanding Balance of such Transferred Receivables, and (ii) for
the Transferred Receivables from such Seller that are Additional Receivables
and the other Transferred Assets related thereto, the purchase price for such
Additional Receivables set forth in Schedule 2 (in each case, the “Purchase
Price”).

 

2.4           Additional Receivables.  Set forth on Schedule 2 is the reason
each Additional Receivable fails to qualify as an Eligible Receivable.
Warranties contained herein generally applicable to Receivables that are in
direct conflict with such reasons shall not apply to an Additional Receivable
to the extent of the reason expressly set forth in Schedule 2 for such
Additional Receivable.

 

ARTICLE III

CONDITIONS
PRECEDENT

 

3.1           Conditions to Transfer.  The sale by Sellers hereunder shall be
subject to satisfaction of each of the following conditions precedent (any one
or more of which may be waived in writing by Buyer) as of the Closing Date:

 

(a)           Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to, each
Seller and Buyer, and Buyer shall have received such documents, instruments and
agreements as Buyer shall reasonably request in connection 

 

9

 

with the transactions contemplated by this Agreement, each in form and substance
reasonably satisfactory to Buyer.

 

(b)           Governmental Approvals. Buyer shall
have received satisfactory evidence that each Seller has obtained all consents
and approvals of all Persons, including all requisite Governmental Authorities,
if any, required for such Seller to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.

 

(c)           Compliance with Laws. Each Seller shall be in
compliance with all applicable foreign, federal, state and local laws and
regulations, except to the extent that the failure to so comply, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.

 

(d)           Other Agreements.  The Joint Venture Agreement and the LLC
Agreement shall have been executed and delivered and the same shall be in full
force and effect.

 

(e)           Representations and Warranties.  The representations and warranties of each
Seller contained herein shall be true and correct in all material respects as
of the Closing Date, both before and after giving effect to such sale.

 

(f)            Covenants.  Each Seller shall be in compliance in all
material respects with each of its covenants and other agreements set forth
herein.

 

ARTICLE IV

REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

4.1           Representations and
Warranties of Sellers.

 

(a)           To induce Buyer to accept the Transferred Assets,
each Seller, jointly and severally, makes the following representations and
warranties to Buyer, as of the Closing Date.

 

(i)            Valid Existence; Power and Authority. Each Seller (1) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (2) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification and
where the failure to be so qualified or in good standing could not reasonably
be expected to have a Material Adverse Effect; (3) has all requisite power
and authority to execute, deliver and perform its obligations under this
Agreement; and (4) is able to perform its obligations under this
Agreement.

 

(ii)           Authorization of Transaction; No Violation. The
execution, delivery and performance by each Seller of this Agreement and the Related
Documents to which such Seller is a party and, without limiting the foregoing,
the creation of all ownership interests provided for herein: (1) have been
duly 

 

10

 

authorized by all necessary action on the part of such Seller, and (2) do
not violate any provision of any law or regulation of any Governmental
Authority, or contractual or other restrictions binding on such Seller, except
where such violations, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

 

(iii)          Enforceability. Each Seller is in
compliance with all material provisions of this Agreement and any Related
Documents to which such Seller is a party. 
This Agreement and any Related Documents to which such Seller is a party
have been duly executed and delivered by such Seller and constitutes a legal,
valid and binding obligation of such Seller enforceable against it in
accordance with its terms.

 

(iv)          No Proceedings. There are no proceedings or,
to the best Knowledge of each Seller, investigations, pending or threatened in
writing against such Seller, before any Governmental Authority (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement, (iii) seeking
any determination or ruling that, in the reasonable judgment of such Seller,
could reasonably be expected to materially and adversely affect the performance
by such Seller of its obligations under this Agreement or (iv) seeking any
determination or ruling that could reasonably be expected to materially and
adversely affect the validity or enforceability of this Agreement.

 

(v)           Accuracy of Certain Information. All written
factual information heretofore furnished by each Seller to Buyer with respect
to the Transferred Receivables for the purposes of, or in connection with, this
Agreement was true and correct in all material respects on the date as of which
such information was stated or certified.

 

(vi)          Transferred Receivables. With respect
to each Transferred Receivable, the Seller of such Transferred Receivable
represents and warrants that as of the Closing Date:

 

(1)             each
Transferred Receivable satisfies the criteria for an Eligible Receivable as of
the Closing Date, except, with respect to an Additional Receivable, to the
extent expressly set forth in Schedule 2 for such Additional Receivable;
and

 

(2)             all
authorizations, consents, orders or approvals of or  registrations or declarations with any
Governmental Authority required  to be
obtained, effected or given by such Seller in connection with the conveyance by
such Seller of such Transferred Receivable to Buyer have been duly obtained,
effected or given and are in full force and effect.

 

(vii)         Products.  All Products relating to Transferred
Receivables are of merchantable quality and are in conformance with the terms
and conditions of any 

 

11

 

applicable Financing Agreement. 
The original price paid by the Account Debtor for the Products does not
include any amount in respect of other goods or services provided by the
applicable Seller to the Account Debtor, other than for any delivery charges.

 

(viii)        Perfection. Each Seller has caused the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect any
security interest granted by any Account Debtor in property securing the
related Receivables.

 

(ix)           Priority. Other than the ownership
interests transferred to Buyer pursuant to this Agreement, no Seller has
pledged, assigned, sold, granted a security interest in, or otherwise conveyed
any of the Transferred Assets except as permitted by this Agreement. No Seller
has authorized the filing of and no Seller is aware of any financing statements
against such Seller that include a description of collateral covering the
Transferred Assets other than any financing statement that has been terminated.
None of the chattel paper that constitutes or evidences the Receivables has any
marks or notations indicating that they have been pledged, assigned or
otherwise conveyed to any Person other than Buyer. No Seller is aware of any
judgment lien in excess of $100,000 that is final, binding and not subject to
appeal or ERISA lien or tax lien filings against it.

 

(x)            Performance.  Each Seller has performed or, to the extent
applicable, will timely perform, all of its material obligations relating to
the Transferred Receivables and, in particular and without limitation, it has
delivered all Products to the Account Debtor as are due and required with
respect to the Outstanding Balance of the Transferred Receivable.

 

(xi)           Account Debtor Performance.  No amounts due with respect to the
Transferred Receivables have been paid in advance.  No Account Debtor is in breach or default
under any Financing Agreement.

 

(xii)          Financing Agreements.  The Financing Agreement and any other
documents provided to Buyer in connection with a Transferred Receivable (A) constitute
the entire agreement between the applicable Seller and the Account Debtor in
relation to the financing of Products underlying such Transferred Receivable; (B) represent
the legal, valid, binding and enforceable obligation of such Seller and the Account
Debtor; (C) comply with all applicable Requirements of Law and other
requirements for their validity and enforceability; and (D) represent a
final sale.

 

(b)           Upon discovery by any Seller or Buyer of a breach of
any of the representations and warranties by a Seller set forth in this Section 4.1,
the party discovering such breach shall give prompt written notice to the
others. Each Seller, jointly and
severally, agrees to undertake forthwith to cure any such breach and diligently
prosecute such cure to completion.

 

12

 

(c)           If (i) any representation or warranty of a
Seller contained in Section 4.1(a) is not true and correct in
any material respect as of the date specified therein with respect to any
Transferred Receivable and as a result of such breach Buyer’s interest in such
Transferred Receivable is materially and adversely affected, including if Buyer’s
rights in, to or under such Transferred Receivables or the proceeds of such
Transferred Receivables are impaired or such proceeds are not available for any
reason to Buyer free and clear of any Lien other than Permitted Encumbrances,
unless cured within thirty (30) days after the earlier to occur of the
discovery thereof by a Seller or receipt by such Seller of notice thereof given
by Buyer (in either case, the “Cure Period”) or (ii) any
Transferred Receivable other than an Additional Receivable was not an Eligible
Receivable on the Closing Date or any Transferred Receivable identified as an
Additional Receivable does not meet any requirement for an Eligible Receivable
other than those expressly identified on Schedule 2 with respect to such
Additional Receivable, then such Transferred Receivable shall be designated an “Ineligible
Receivable;” provided, that any such Transferred Receivable that becomes an
Ineligible Receivable under clause (i) will not be deemed to be an
Ineligible Receivable but will be deemed an Eligible Receivable or a qualifying
Additional Receivable if on any day prior to the end of the Cure Period, (i) the
relevant representation and warranty shall be true and correct in all material
respects as if made on such day and (ii) such Seller shall have delivered
an Officer’s Certificate describing the nature of such breach and the manner in
which the relevant representation and warranty became true and correct.

 

(d)           Sellers shall repurchase such Ineligible Receivable
(as to which the Cure Period has expired, as applicable) from Buyer as provided
below, which repurchase, subject to Sellers’ performance thereof, shall be
Buyer’s sole and exclusive remedy for a breach of Sections 4.1(a), 4.2(a),
4.2(b), 4.3(a) or 4.3(c) as to individual
Transferred Receivables. In connection with such repurchase, Sellers shall pay
to Buyer in immediately available funds not later than five (5) Business
Days after Sellers’ receipt from Buyer of notice of such Ineligible Receivable’s
ineligibility, in payment for such repurchase, an amount equal to the Aggregate
Repurchase Amount. The payment of such deposit amount in immediately available
funds shall otherwise be considered payment in full of all of such Transferred
Receivables.  Each Seller’s obligation to
repurchase an Ineligible Receivable hereunder is joint and several with each
other Seller.

 

(e)           Upon the payment, if any, required to be made to
Buyer as provided in Section 4.1(d), Buyer shall automatically and
without further action be deemed to transfer, assign, set over and otherwise
convey to the applicable Seller or its designee, without recourse,
representation or warranty, except as set forth in the following sentence, all
the right, title and interest of Buyer in and to the applicable Ineligible
Receivables, all moneys due or to become due and all Collateral Security with
respect thereto and all amounts received with respect thereto and all proceeds
thereof. Such transfer shall be free and clear of any Liens created by or
through Buyer.  Any collections received
by Buyer with respect to any Ineligible Receivables transferred to a Seller, as
well as any amounts received by Buyer from an Account Debtor at any time which
do not constitute Collections, shall be deemed held by Buyer in trust and as
fiduciary for such Seller and Buyer shall pay the same over to such Seller
forthwith upon receipt.  Buyer will
irrevocably instruct all Account Debtors with respect to such Ineligible
Receivables 

 

13

 

to make all payments on account thereof after such assignment to such
Seller.  Buyer shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by a Seller to effect the conveyance of such
Ineligible Receivables pursuant to this Section.

 

(f)            Notwithstanding any other provision of this
Agreement or any Related Document, the representations contained in Section 4.1(a) shall
be continuing and remain in full force and effect.

 

4.2           Covenants of Sellers.

 

(a)           Product Warranties.  All Products underlying the Transferred
Receivables shall be subject to applicable product warranties of Toro and Toro
agrees to perform, or cause to be performed, all repairs, modifications and/or
other acts required by Toro pursuant to the product warranties.  All expenses of performance by Toro under
this Section 4.2(a) shall be paid by Toro.  If Toro does not perform, or cause to be
performed, any act required by Toro pursuant to such product warranties on any
Product underlying a Transferred Receivable or pay the expenses therefor within
a reasonable time after demand therefor, such Transferred Receivable shall
become an “Ineligible Receivable,” immediately subject to the repurchase
obligations set forth under Section 4.1(d), without giving effect
to the Cure Period.

 

(b)           Returns.  If a Seller accepts the return from any
Account Debtor of any Product covered by any Transferred Receivable,
voluntarily or otherwise, whether or not any substitution is made for such
returned Product, such Seller will pay to Buyer the Outstanding Balance of such
Transferred Receivable or the portion thereof attributable to the returned
Product within ten (10) Business Days of the approval by Toro of the
return of the Product by an Account Debtor. 
If such Seller does not pay to Buyer the Outstanding Balance (or portion
thereof) of such Transferred Receivable as required by this Section 4.2(b),
such Transferred Receivable shall become an “Ineligible Receivable,”
immediately subject to the repurchase obligations set forth under Section 4.1(d),
without giving effect to the Cure Period.

 

(c)           Credits.  If a Seller in the ordinary course of
business issues any credit to any Account Debtor that reduces any amount due
with respect to a Transferred Receivable, such Seller shall pay to Buyer an
amount equal to such credit within two (2) Business Days of the issuance
thereof.

 

(d)           Notification and Resolution of Disputes.  Each Seller shall promptly notify Buyer of
all facts or circumstances of which such Seller has Knowledge and are material
to Buyer’s interests under this Agreement in relation to the terms and
conditions of any Financing Agreement, a Transferred Receivable and/or the
relevant Products including any dispute or threatened dispute with an Account
Debtor in relation thereto of which such Seller has Knowledge.  Each Seller will, if requested to do so by
Buyer, use commercially reasonable efforts to assist Buyer, at no cost to such
Seller, in resolving any disputes between Buyer and any Account Debtor and in
collecting the Transferred Receivables of such Seller.

 

14

 

(e)           Repossession of Products.  If an Account Debtor defaults on any of its
obligations to Buyer, Buyer may appoint a Seller as its agent (without
compensation) to recover possession of the relevant Products from the Account
Debtor and such Seller shall, if it accepts such appointment in its sole
discretion, on such appointment, at its own risk, cost and expense, repossess,
transport, store and insure such Products. 
Such Seller shall keep any Products repossessed by it in a safe and
suitable environment.  In case a Seller
declines to act as Buyer’s agent, such Seller shall cooperate with Buyer to
appoint a third party, at such Seller’s cost and expense, in connection with
the repossession, transportation, storage and insurance of such Products.

 

(f)            Limited Repurchase Obligation.  With respect to the Transferred Receivables,
Buyer shall be entitled to the benefits to which Red Iron is entitled described
in Sections 3 and 4(b) of the form of Repurchase Agreement attached as Exhibit A
hereto (the “Repurchase Agreement”), subject to the limits set forth in Section 4(a) of
the Repurchase Agreement, and the Sellers jointly and severally agree to
perform any obligations of Seller (as defined in the Repurchase Agreement) set
forth in Sections 3 and 4(b) of the Repurchase Agreement, subject to the
limits set forth in Section 4(a) of the Repurchase Agreement.

 

4.3           Negative Covenants of
Sellers.  Each Seller covenants and
agrees that, without the prior written consent of Buyer:

 

(a)           Liens. Sellers shall not create,
incur, assume or permit to exist any Lien, other than Permitted Encumbrances,
on or with respect to the Transferred Assets. 
If a Transferred Receivable is subject to such a Lien and such Lien is
not released within the Cure Period, such Transferred Receivable shall become
an “Ineligible Receivable,” immediately subject to the repurchase obligations
set forth under Section 4.1(d), without giving effect to the Cure
Period.

 

(b)           Amendments to Financing Agreements. Sellers shall
not amend the Financing Agreements.

 

(c)           Non Disturbance of Buyer’s Rights. Sellers shall
not take any action over the Transferred Receivables and, in particular, except
as contemplated by Section 4.2(c), will not grant discounts or
grace periods to the Account Debtors nor will they agree to any compromise with
respect to the Transferred Receivables. 
If a Seller takes any of the foregoing actions with respect to a
Transferred Receivable, such Transferred Receivable shall become an “Ineligible
Receivable,” immediately subject to the repurchase obligations set forth under Section 4.1(d) without
giving effect to the Cure Period.

 

(d)           Sale Characterization. For accounting purposes,
no Seller shall account for the transactions contemplated by this Agreement in
any manner other than, with respect to the sale of each Transferred Receivable,
as a true sale and absolute assignment of its full right, title and ownership
interest in the related Transferred Assets to Buyer. Sellers shall also
maintain their respective records and books of account in a manner which
clearly reflects each such sale of the Transferred Receivables to Buyer.

 

15

 

ARTICLE V

MISCELLANEOUS

 

5.1           Notices.  Notices and all other communication provided
for herein shall be in writing and shall be deemed to have been given to a
party at the earlier of (a) when personally delivered, (b) 72 hours
after having been deposited into the custody of the U.S. Postal Service, sent
by first class certified mail, postage prepaid, (c) one business day after
deposit with a national overnight courier service, (d) upon receipt of a
confirmation of facsimile transmission, or (e) upon receipt of electronic
mail (with a notice contemporaneously given by another method specified in this
Section 5.1); in each case addressed as follows:

 

	
  If to Buyer:

  	
  Red Iron Acceptance, LLC

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN
  55420

  
	
   

  	
  Attention:
  General Manager

  
	
   

  	
  Telephone: (952)
  888-8801

  
	
   

  	
  Facsimile: (952)
  887-8258

  
	
   

  	
  Email:

  
	
   

  	
   

  
	
   

  	
  with copies to:

  
	
   

  	
   

  
	
   

  	
  TCF Inventory Finance, Inc.

  
	
   

  	
  2300 Barrington Road, Suite 600

  
	
   

  	
  Hoffman Estates, IL 60169

  
	
   

  	
  Attention: Vincent E. Hillery, General Counsel

  
	
   

  	
  Telephone: (847) 252-6616

  
	
   

  	
  Facsimile: (847) 285-6012

  
	
   

  	
  Email:
  vhillery@tcfif.com

  

 

16

 

	
   

  	
  and:

  
	
   

  	
   

  
	
   

  	
  TCF National Bank

  
	
   

  	
  200 E. Lake Street

  
	
   

  	
  Wayzata, MN 55391

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telephone: (952) 475-6498

  
	
   

  	
  Facsimile: (952) 475-7975

  
	
   

  	
  Email: jgreen@tcfbank.com

  
	
   

  	
   

  
	
   

  	
  and:

  
	
   

  	
   

  
	
   

  	
  Kaplan, Strangis and Kaplan, P.A.

  
	
   

  	
  5500 Wells Fargo Center

  
	
   

  	
  90 South Seventh Street

  
	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
  Attention: Harvey F. Kaplan, Esq.

  
	
   

  	
  Telephone: (612) 375-1138

  
	
   

  	
  Facsimile: (612) 375-1143

  
	
   

  	
  Email:
  hfk@kskpa.com

  
	
   

  	
   

  
	
  If to Sellers:

  	
  The Toro Company

  
	
   

  	
  Toro Credit Company

  
	
   

  	
  Toro International Company

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN 55420

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Telephone: (952) 887-8449

  
	
   

  	
  Facsimile: (952) 887-8920

  
	
   

  	
  Email:
  Tom.Larson@toro.com

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  The Toro Company

  
	
   

  	
  8111 Lyndale Avenue South

  
	
   

  	
  Bloomington, MN 55420

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telephone: (952) 887-8178

  
	
   

  	
  Facsimile: (952) 887-8920

  
	
   

  	
  Email:
  Tim.Dordell@toro.com

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Oppenheimer
  Wolff & Donnelly LLP

  
	
   

  	
  3300 Plaza VII
  Building

  
	
   

  	
  45 South Seventh
  Street

  
	
   

  	
  Attention: C. Robert
  Beattie, Esq.

  

 

17

 

	
   

  	
  Telephone: 
  (612) 607-7395

  
	
   

  	
  Facsimile: 
  (612) 607-7100

  
	
   

  	
  Email: 
  RBeattie@Oppenheimer.com

  

 

or to such other
address as any party hereto may have furnished to the other party hereto in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

 

5.2           No Waiver; Remedies.

 

(a)           The failure of any party hereto, at any time or
times, to require strict performance by any other party hereto of any provision
of this Agreement shall not waive, affect or diminish any right of such party
thereafter to demand strict compliance and performance with this Agreement. Any
suspension or waiver of any breach or default hereunder shall not suspend,
waive or affect any other breach or default whether the same is prior or
subsequent thereto and whether of the same or a different type. None of the
undertakings, agreements, warranties, covenants and representations of any
party contained in this Agreement, and no breach or default by any party under
this Agreement, shall be deemed to have been suspended or waived or amended by
any other party hereto unless such waiver or suspension or amendment is by an
instrument in writing signed by an officer of or other duly authorized
signatory of such party and, in the case of a suspension or waiver, directed to
the defaulting party specifying such suspension or waiver.

 

(b)           Each party’s rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that such party may have under any other agreement, including the Related
Documents, by operation of law or otherwise.

 

5.3           Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of Sellers and Buyer and their respective successors
and permitted assigns, except as otherwise provided herein. No party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder without having obtained the prior express
written consent of the other party. Any such purported assignment, transfer,
hypothecation or other conveyance by any Seller without the prior express written
consent of Buyer shall be void. The terms and provisions of this Agreement are
for the purpose of defining the relative rights and obligations of Sellers and
Buyer with respect to the transactions contemplated hereby and, except as set
forth in Section 7.10 of the Joint Venture Agreement, no Person shall be a
third-party beneficiary of any of the terms and provisions of this Agreement.

 

5.4           No Buyer Liability for
Contracts.  Sellers
hereby acknowledge and agree that Buyer shall not be in any way responsible for
the performance of any contract for the sale of Products by any Seller to an
Account Debtor giving rise to any Transferred Receivable and Buyer shall not
have any obligation to intervene in any dispute arising out of the performance
of any such contract. Sellers shall, jointly and severally, indemnify Buyer and
hold Buyer harmless from and against any and all losses, damages, penalties,
costs, expenses (including reasonable attorneys’ fees) and liabilities
(including  product liabilities) incurred
by Buyer in connection with any claim or demand by an Account Debtor or any
third party arising directly or indirectly 

 

18

 

from the design, manufacture or sale of the
Products, any warranty with respect to the Products or any failure of the
Products to comply with the terms and conditions of this Agreement.

 

5.5           Survival.  Except as otherwise expressly provided herein
or in any Related Document, all undertakings, agreements, covenants, warranties
and representations of or binding upon Sellers and Buyer, and all rights of
Sellers and Buyer hereunder shall not terminate or expire upon the closing of
the transactions contemplated hereby, but rather shall survive.

 

5.6           Complete Agreement;
Modification of Agreement.  This
Agreement and the Related Documents  constitute the
complete agreement between the parties with respect to the subject matter
hereof, supersede all prior agreements and understandings relating to the
subject matter hereof and thereof, and may not be modified, altered or amended
except by written agreement of the parties hereto.

 

5.7           Dispute Resolution.  In the event the parties hereto cannot
mutually reach a decision on an issue arising under this Agreement, then such
dispute shall be deemed to be an “Arbitrable Dispute” subject to the dispute
resolution procedures set forth in Article VI of the Joint Venture
Agreement.

 

5.8           Jury Trial.  EACH OF SELLERS AND BUYER, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING TO THIS AGREEMENT OR
ANY RELATED DOCUMENT IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR OUR ENTERING
INTO THIS AGREEMENT.

 

5.9           Governing Law; Submission to
Jurisdiction.  This
Agreement shall be subject to and governed by the laws of the state of
Minnesota, without regard to conflicts of laws principles. Each of Sellers and
Buyer hereby irrevocably submits to the non-exclusive jurisdiction of the
Federal courts sitting in Minneapolis or St. Paul, Minnesota or any state court
located in Hennepin County, Minnesota, and by execution and delivery of this
Agreement, each party hereto accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of
such courts with respect to any Litigation concerning this Agreement or the
Related Documents or the transactions contemplated hereby and thereby or any
matters related thereto not subject to the provisions of Section 5.7.
Each party hereto irrevocably waives any objection (including  any objection to the laying of venue or any
objection on the grounds of forum non conveniens) which it may now or hereafter
have to the bringing of any proceeding with respect to this Agreement or the
Related Documents to the courts set forth above. Each party hereto agrees to
the personal jurisdiction of such courts and that service of process may be
made on it at the address indicated in Section 5.1 above. Nothing
herein shall affect the right to serve process in any other manner permitted by
law.

 

5.10         Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.

 

19

 

5.11         Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

5.12         Section Titles.  The section titles and table of contents
contained in this Agreement are provided for ease of reference only and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.

 

5.13         No Setoff.  Each Seller’s obligations under this
Agreement shall not be affected by any right of setoff, counterclaim,
recoupment, defense or other right such Seller might have against Buyer, all of
which rights are hereby expressly waived by such Seller.

 

5.14         Further Assurances.

 

(a)           Each Seller shall, at its sole cost and expense,
upon request of Buyer, promptly and duly authorize, execute and/or deliver, as
applicable, any and all further instruments and documents and take such further
actions that Buyer may reasonably request to carry out more effectively the
provisions and purposes of this Agreement or to obtain the full benefits of
this Agreement and of the rights and powers herein granted, including
authorizing and filing amendments to financing statements under the UCC with
respect to the ownership interest of Buyer created by this Agreement. Each
Seller hereby authorizes Buyer to file any such financing statements without
the signature of such Seller to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this Agreement or of any notice
or financing statement covering the Transferred Assets or any part thereof
shall be sufficient as a notice or financing statement where permitted by law.
If any amount payable under or in connection with any of the Transferred Assets
is or shall become evidenced by any instrument, such instrument, other than
checks and notes received in the ordinary course of business, shall be duly
endorsed in a manner satisfactory to Buyer immediately upon such Seller’s
receipt thereof and promptly delivered to or at the direction of Buyer.

 

(b)           If a Seller fails to perform any agreement or
obligation under this Section 5.14, Buyer may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the reasonable expenses of Buyer incurred in connection
therewith shall be payable by such Seller upon demand of Buyer.

 

5.15         No Indirect or Consequential
Damages.  NO PARTY TO THIS AGREEMENT
SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR PUNITIVE,
EXEMPLARY OR, EXCEPT IN THE CASE OF FRAUD, BAD FAITH, WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE, INDIRECT OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS
A RESULT OF ANY TRANSACTION CONTEMPLATED HEREUNDER.

 

20

 

5.16         No Assumption in Drafting.  The parties hereto acknowledge and agree that
(a) each party has reviewed and negotiated the terms and provisions of
this Agreement and has had the opportunity to contribute to its revision, and (b) each
party has been represented by counsel in reviewing and negotiating such terms
and provisions.  Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be
construed fairly as to both parties hereto and not in favor or against either
party.

 

5.17         Headings; Section and Article References.  The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation or
construction of the provisions hereof. 
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement: (a) the
words “hereof,” “herein” and “hereunder” and words of similar import shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement; (b) the words “include” and “including” and words of similar
import shall not be construed to be limiting or exclusive and (c) the word
“or” shall have the meaning represented by the phrase “and/or.”  Any pronoun used herein shall be deemed to
cover all genders.

 

[Signature
page follows]

 

21

 

IN WITNESS WHEREOF, Sellers and Buyer have
caused this Agreement to be duly executed as of the day and year first above
written.

 

 

	
   

  	
  [TORO CREDIT COMPANY, as Seller]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE TORO COMPANY, as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [TORO INTERNATIONAL COMPANY, as Seller]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [EXMARK MANUFACTURING COMPANY INCORPORATED, as Seller]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RED IRON ACCEPTANCE, LLC, as Buyer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

22

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