EXHIBIT 10(q)
EXECUTION COPY
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LOAN AGREEMENT
dated as of July 9, 2003
among
TORO RECEIVABLES COMPANY
as Borrower
and
THE TORO COMPANY,
as Servicer
and
THREE PILLARS FUNDING CORPORATION,
as Lender
and
SUNTRUST CAPITAL MARKETS, INC.,
as Administrator
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TABLE OF CONTENTS
Page
----
Article I Definitions............................................................................................ 1
Section 1.1 Defined Terms.............................................................................. 1
Section 1.2 Other Definitional Provisions.............................................................. 20
Section 1.3 Other Terms................................................................................ 21
Section 1.4 Computation of Time Periods................................................................ 22
Article II Lender's Commitment, Borrowing Procedures............................................................. 22
And Lender Note.................................................................................................. 22
Section 2.1 Lender's Commitment........................................................................ 22
Section 2.2 Borrowing Procedures....................................................................... 22
Section 2.3 Funding.................................................................................... 23
Section 2.4 Representation and Warranty................................................................ 23
Section 2.5 Early Termination of Lender's Commitment................................................... 23
Section 2.6 Voluntary Termination of Lender's Commitment; Reduction of Facility Limit.................. 23
Section 2.7 Note....................................................................................... 23
Article III Interest, Fees, Etc.................................................................................. 24
Section 3.1 Interest Rates............................................................................. 24
Section 3.2 Interest, Payment Dates.................................................................... 24
Section 3.3 Interest Allocations....................................................................... 25
Section 3.4 Fees....................................................................................... 25
Section 3.5 Computation of Interest and Fees........................................................... 25
Article IV Repayments and Prepayments; Distribution of Collections............................................... 25
Section 4.1 Repayments and Prepayments................................................................. 25
Section 4.2 Application of Collections................................................................. 26
Section 4.3 Application of Certain Payments............................................................ 27
Section 4.4 Due Date Extension......................................................................... 28
Section 4.5 Making of Payments......................................................................... 28
Section 4.6 Deemed Collections and Other Adjustments................................................... 28
Article V Security Interest...................................................................................... 28
Section 5.1 Grant of Security.......................................................................... 28
Section 5.2 Administrator Appointed Attorney-in-Fact................................................... 29
Section 5.3 Administrator May Perform.................................................................. 30
Section 5.4 Release of Collateral...................................................................... 30
Article VI Increased Costs, Etc.................................................................................. 30
Section 6.1 Increased Costs............................................................................ 30
Section 6.2 Funding Losses............................................................................. 32
Section 6.3 Withholding Taxes.......................................................................... 32
Article VII Conditions to Borrowing.............................................................................. 33
Section 7.1 Initial Loan............................................................................... 33
Section 7.2 All Loans.................................................................................. 34
Article VIII Representations and Warranties...................................................................... 35
Section 8.1 Organization and Good Standing, etc........................................................ 35
Section 8.2 Power and Authority; Due Authorization..................................................... 35
Section 8.3 No Violation............................................................................... 36
Section 8.4 Validity and Binding Nature................................................................ 36
Section 8.5 Government Approvals....................................................................... 36
Section 8.6 Solvency................................................................................... 36
Section 8.7 Margin Regulations......................................................................... 36
Section 8.8 Quality of Title........................................................................... 37
Section 8.9 Offices.................................................................................... 37
Section 8.10 Compliance with Applicable Laws; Licenses, etc............................................. 37
Section 8.11 No Proceedings............................................................................. 37
Section 8.12 Investment Company Act, Etc................................................................ 38
Section 8.13 Eligible Receivables....................................................................... 38
Section 8.14 Accuracy of Information.................................................................... 38
Section 8.15 No Material Adverse Effect................................................................. 38
Section 8.16 Trade Names and Subsidiaries............................................................... 38
Section 8.17 Accounts................................................................................... 38
Section 8.18 Sales by Originator........................................................................ 39
Article IX Covenants of Borrower and Servicer.................................................................... 39
Section 9.1 Affirmative Covenants...................................................................... 39
Section 9.2 Negative Covenants of Borrower and Servicer................................................ 45
Article X Significant Events and Their Effect.................................................................... 47
Section 10.1 Events of Default.......................................................................... 47
Section 10.2 Amortization Events........................................................................ 48
Section 10.3 Effect of Significant Event................................................................ 49
Article XI The Servicer.......................................................................................... 50
Section 11.1 Toro as Initial Servicer................................................................... 50
Section 11.2 Certain Duties of Servicer................................................................. 50
Section 11.3 Servicing Compensation..................................................................... 53
Section 11.4 Agreement Not to Resign.................................................................... 53
Section 11.5 Designation of Servicer.................................................................... 54
Section 11.6 Termination................................................................................ 54
Section 11.7 Servicer Events of Default................................................................. 54
Article XII Administrator........................................................................................ 56
Section 12.1 Authorization and Action................................................................... 56
Section 12.2 Administrator and Affiliates............................................................... 56
Article XIII Assignments......................................................................................... 56
Section 13.1 Restrictions on Assignments................................................................ 56
Section 13.2 Documentation.............................................................................. 57
Section 13.3 Rights of Assignee......................................................................... 57
Section 13.4 Notice of Assignment....................................................................... 57
Article XIV Indemnification...................................................................................... 57
Section 14.1 General Indemnity of Borrower.............................................................. 57
Section 14.2 Indemnity of Servicer...................................................................... 58
Article XV Miscellaneous......................................................................................... 58
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Section 15.1 No Waiver; Remedies........................................................................ 58
Section 15.2 Amendments, Etc............................................................................ 58
Section 15.3 Notices, Etc............................................................................... 59
Section 15.4 Costs, Expenses and Taxes.................................................................. 59
Section 15.5 Binding Effect; Survival................................................................... 60
Section 15.6 Captions and Cross References.............................................................. 60
Section 15.7 Severability............................................................................... 60
Section 15.8 Governing Law.............................................................................. 61
Section 15.9 Counterparts............................................................................... 61
Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury........................................ 61
Section 15.11 No Recourse Against Lender................................................................. 61
Section 15.12 No Proceedings............................................................................. 61
Section 15.13 Confidentiality of Agreement............................................................... 62
Section 15.14 Limitation on Payments..................................................................... 62
Section 15.15 Entire Agreement........................................................................... 62
Exhibits
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Exhibit A Form of Borrowing Request (Section 2.2)
Exhibit B Form of Lender Note (Section 2.7)
Exhibit C Form of Monthly Report (Section 9.1(e)(ii))
Exhibit D Form of Borrowing Base Certificate (Section 7.1(k))
Exhibit E Form of Collection Account Agreement
Exhibit F Collection Policy
Exhibit G Form of Parent Note
Exhibit H Form of Withdrawal Certificate (Section 11.2(d))
Schedules
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Schedule I Description of Collection Account and Lock-Box Accounts
Schedule II [Reserved]
Schedule III [Reserved]
Schedule IV Description of Proceedings
Schedule V Collateral Review Requirements
Schedule VI Notice Addresses
Schedule VII Fiscal Months
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of July 9, 2003, among
TORO RECEIVABLES COMPANY, a Delaware corporation ("Toro Receivables" or the
"Borrower"), THE TORO COMPANY, a Delaware corporation ("Toro"), as initial
Servicer hereunder (in such capacity the "Servicer"), THREE PILLARS FUNDING
CORPORATION ("TPFC"), a Delaware corporation (together with its successors and
permitted assigns, "Lender"), and SUNTRUST CAPITAL MARKETS, INC., a Tennessee
corporation, as agent and administrator for Lender (in such capacity, together
with its successor and assigns in such capacity, the "Administrator.")
BACKGROUND
1. Borrower desires that Lender extend financing to Borrower on
the terms and subject to the conditions set forth herein.
2. Lender is willing to provide such financing on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, the following terms have the following meanings:
Accounts Receivable Turnover Ratio: For any Due Period, the ratio computed as of
the last day of such Due Period by dividing (a) the aggregate amount of Credit
Sales during the most recent twelve Due Periods by (b) the rolling twelve month
average of the aggregate Unpaid Balance of Receivables.
Acquisition: Any investment which involves a transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person that is otherwise
permitted under this Agreement or the Toro Credit Agreement.
Administrator: As defined in the Preamble
Administrator's Account: As defined in Section 4.5.
Advance Rate: The percentage equal to (a) 100% minus (b) the Reserve Percentage.
Affected Party: Each of Lender, any Liquidity Bank, any Credit Bank, any
permitted assignee of Lender, any Credit Bank or any Liquidity Bank, any Support
Provider and any holder of a participation interest in the rights and
obligations of any Liquidity Bank or Credit Bank under the Liquidity Agreement
or the Credit Agreement, as the case may be, Administrator and any holding
company of Bank.
Affiliate: Of any Person means any other Person that (a) directly or indirectly
controls, is controlled by or is under common control with such Person or (b) is
an officer or director of such Person. A Person shall be deemed to be
"controlled by" another Person if such other Person possesses, directly or
indirectly, power (i) to vote 15% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
partners of such other Person, or (ii) to direct or cause the direction of the
management and policies of such other Person whether by contract or otherwise.
Aggregate Unpaid Balance: At any time, the aggregate Unpaid Balance of all
Eligible Receivables at such time.
Agreement: This Loan Agreement, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
Allocations: As defined in Section 3.3.
Alternative Rate: For any Interest Period, an interest rate per annum equal to
either (a) the LIBOR Rate or (b) if the LIBOR Rate is unavailable for any
reason, the Base Rate.
Alternative Rate Allocation: As defined in Section 3.3.
Amortization Event: Any of the events described in Section 10.2.
Applicable Margin: As defined in the Fee Letter.
Bank: SunTrust Bank, a Georgia banking corporation.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, (11
U.S.C. Section 101, et seq.) as amended.
Base Rate: On any date, a fluctuating rate of interest per annum equal to the
greater of (a) the Prime Rate or (b) the Federal Funds Rate most recently
determined by Bank plus 0.50%.
Borrower: As defined in the Preamble.
Borrowing Base: At any time an amount equal to (a) the Advance Rate times (b) an
amount equal to (i) the Aggregate Unpaid Balance at such time, minus (ii) the
aggregate Excess Concentration Amount for all Obligors at such time.
Borrowing Base Certificate: As defined in Section 7.1(k).
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Borrowing Base Deficit: An amount equal to the excess of (a) the aggregate
principal amount of all outstanding Loans under the Lender Note over (b) the sum
of the Borrowing Base plus all Collections on deposit in the Collection Account.
Borrowing Request: As defined in Section 2.2.
Business Day: Any day on which (a) Bank is not authorized or required to be
closed for business in Atlanta, Georgia and (b) commercial banks in New York
City are not authorized or required to be closed and, in the case of a Rate
Setting Day, banks are open for business in London, England.
Charged-Off Receivable: A Receivable which has not been previously deemed a
Defaulted Receivable and has been, or should have been, written off as
uncollectible by the Servicer in accordance with the Collection Policy.
Closing Date: The date of the first Loan hereunder.
Code: The Internal Revenue Code of 1986, as amended, or any successor statute
thereto, including the regulations promulgated thereunder.
Collateral: As defined in Section 5.1(a)(iv).
Collateral Review: As defined in Section 9.1(e)(vi).
Collection Account: That certain bank account numbered 104758074348 maintained
with US Bank National Association in Borrower's name and pledged, on a
first-priority basis, to Administrator pursuant to Section 5.1(a).
Collection Account Agreement: Any agreement by and among Borrower, Servicer,
Originator, Administrator and a Collection Account Bank, in substantially the
form attached hereto as Exhibit E or such other form approved by Administrator,
specifying the rights of Lender and Administrator in the Collection Account or a
Lock-Box Account, as the case may be.
Collection Account Bank: Any bank holding the Collection Account or any Lock-Box
Account.
Collection Policy: Those collection and credit policies of the Originator with
respect to its respective Receivables, as amended from time to time in
accordance with this Agreement attached hereto as Exhibit F.
Collections: (a) all payments received in respect of the Receivables, in the
form of cash, checks, wire transfers, ACH transfers or any other form of payment
in accordance with the terms of a Receivable or otherwise, (b) all proceeds from
the sale or other disposition of any collateral securing a Receivable, (c) any
amounts received from Originator pursuant to Section 2.4 of the Receivables
Purchase Agreement, (d) any insurance proceeds or sales tax refund payments
received in respect of a Receivable and (e) any indemnification, recourse
payments or other amounts payable to Borrower or Originator in respect of a
Receivable pursuant to this Agreement, the Receivables Purchase Agreement or
otherwise.
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Commercial Paper Notes: Short-term promissory notes, having an original maturity
not to exceed 45 days, issued by Lender to fund its Loans or investments in
receivables or other financial assets.
Commercial Paper Rate: For any day during any Interest Period, the per annum
rate equivalent to the sum of (a) the weighted average of the per annum rates
paid or payable by TPFC from time to time as interest on or otherwise in respect
of the Commercial Paper Notes issued by TPFC that are allocated, in whole or in
part, by Administrator (on behalf of TPFC) to fund or maintain the advances
outstanding under Lender Note, and (b) the commissions and charges charged by
placement agents and commercial paper dealers with respect to such Commercial
Paper Notes.
Commitment Termination Date: The earliest to occur of (a) the Scheduled
Commitment Termination Date, (b) the date of any termination of Lender's
Commitment pursuant to Section 2.5, (c) the date of any termination of Lender's
Commitment, in whole, by Borrower pursuant to Section 2.6, and (d) the effective
date on which Lender's Commitment is terminated pursuant to Section 10.3.
Concentration Limit: (a) For any Obligor that is not a Special Obligor whose
short term unsecured debt rating is (i) greater than or equal to A-1 by S&P and
P-1 by Xxxxx'x , 8.0% of the Aggregate Unpaid Balance; (ii) equal to A-2 by S&P
and P-2 by Xxxxx'x, 6.0% of the Aggregate Unpaid Balance and (b) for any Obligor
that is not a Special Obligor who (i) has no short term unsecured debt rating by
both S&P and Xxxxx'x or (ii) has any short term unsecured debt that is not rated
at least A-2- by S&P and P-2 by Xxxxx'x, 5.0% of the Aggregate Unpaid Balance.
If no Obligor Credit Event has occurred, the Concentration Limit for a Special
Obligor shall be 25%; provided, however that if the ratio of (i) the Unpaid
Balance of Receivables owing from the Special Obligor which are greater than 60
days past due to (ii) the aggregate Unpaid Balance of Receivables owing from the
Special Obligor shall be 35% or greater for two consecutive Due Periods, the
Administrator may, in its sole discretion, reduce the Special Obligor
Concentration Limit to 10%.
Consolidated EBIT: For any period, for Toro and its Subsidiaries on a
consolidated basis, an amount equal to the sum of (a) Consolidated Net Income,
(b) Consolidated Interest Charges and (c) the amount of taxes, based on or
measured by income, used or included in determining such Consolidated Net
Income.
Consolidated Interest Charges: For any period, for Toro and its Subsidiaries on
a consolidated basis, the sum of (a) all interest, discounts, premium payments,
commissions, fees (other than fees incurred hereunder or in connection
herewith), charges and related expenses of Toro and its Subsidiaries in
connection with Indebtedness (including capitalized interest) or in connection
with the deferred purchase price of assets or incurred with respect to this
Agreement, in each case to the extent treated as interest in accordance with
GAAP and (b) the portion of rent expense of Toro and its Subsidiaries with
respect to such period under capital leases that is treated as interest in
accordance with GAAP.
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Consolidated Interest Coverage Ratio: As of any date of determination, the ratio
of (a) Consolidated EBIT for the period of four fiscal quarters ending on such
date to (b) Consolidated Interest Charges for such period.
Consolidated Net Income: For any period, for Toro and its Subsidiaries on a
consolidated basis, the net income of Toro and its Subsidiaries for that period.
Consolidated Tangible Net Worth: At any date, with respect to any Person, the
consolidated stockholders' equity of such Person and its consolidated
Subsidiaries, plus the principal amount of subordinated debt of such Person,
minus (to the extent reflected in determining such consolidated stockholders'
equity) all intangible assets (determined in accordance with GAAP) as reported
in the audited consolidated financial statements of such Person for the fiscal
year in question.
Contract: Either a written or electronic agreement between the Originator and a
Person, or an invoice delivered to a Person by the Originator, pursuant to which
such Person is obligated to pay the Originator for goods or services.
Covered Taxes: As defined in Section 6.3(a).
CP Allocation: As defined in Section 3.3.
Credit Advance: A drawing under a letter of credit issued pursuant to a Credit
Agreement for the account of Lender, a loan to Lender under a Credit Agreement
or any other advance or disbursement of funds to Lender or for Lender's account
pursuant to a Credit Agreement or any such letter of credit, in each case to the
extent such drawing, loan, advance or disbursement has not been repaid or
reimbursed to Credit Bank in accordance with the related Credit Agreement.
Credit Agreement: Includes any program-wide agreement entered into by any Credit
Bank providing for the issuance of one or more letters of credit for the account
of Lender, the issuance of one or more surety bonds for which Lender is
obligated to reimburse the applicable Credit Bank for any drawings hereunder,
the sale by Lender to any Credit Bank of receivables or other financial assets
owned or held by Lender (or portions thereof) and/or the making of loans and/or
other extensions of credit to Lender in connection with its commercial paper
program, together with any cash collateral agreement, letter of credit, surety
bond or other agreement or instrument executed and delivered in connection
therewith (but excluding the Liquidity Agreement, or similar agreement, or any
voluntary advance agreement).
Credit Bank: Includes Bank and any other or additional bank or other Person
(other than Borrower or other customer of Lender or any liquidity provider as
such) now or hereafter extending credit or a purchase commitment to or for the
account of Lender or issuing a letter of credit, surety bond or other
instrument, in each case to support any obligations arising under or in
connection with Lender's commercial paper program.
Credit Sales: For any Due Period, the aggregate amount of all Receivables with
credit terms of any kind originated by the Originator during such Due Period.
Cut-Off Date: The last day of each Fiscal Month.
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Days Sales Outstanding Ratio: For any Due Period, the ratio computed as of the
last day of such Due Period by dividing (a) 360 by (b) the Accounts Receivable
Turnover Ratio for such Due Period.
Default Rate: As defined in Section 3.1(c).
Default Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a) the
sum of, without double counting, (i) the Unpaid Balance of Receivables that
became Defaulted Receivables during such Due Period and (ii) the Unpaid Balance
of Receivables that became Charged-Off Receivables during such Due Period by (b)
Credit Sales for the Due Period six (6) months prior to such Due Period.
Defaulted Receivable: Any Receivable (a) which has been deemed uncollectible by
the Servicer in accordance with the Collection Policy, (b) as to which, at the
end of any Due Period, any payment, or part thereof, remains unpaid for 91 days
or more past the due date for such payment, determined by reference to the
original contractual payment terms of such Receivable or (c) as to which the
Obligor thereon has suffered an Event of Bankruptcy.
Delinquency Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a) the
Unpaid Balance of Receivables which are Delinquent Receivables as of the last
day of such Due Period by (b) an amount equal to the Aggregate Unpaid Balance as
of the last day of such Due Period, minus the aggregate Excess Concentration
Amount as of the last day of such Due Period.
Delinquent Receivables: A Receivable (other than a Defaulted Receivable) as to
which all or any part of a scheduled payment remains unpaid for 61 days or more
from the original due date for such payment.
Deposit Date: As defined in Section 11.2(d)(ii).
Dilution Horizon Ratio: With respect to any Due Period, the ratio computed as of
the last day of such Due Period by dividing (a) the sum of (i) Credit Sales for
such Due Period plus (ii) 67% of Credit Sales for the immediately preceding Due
Period by (b) an amount equal to the Aggregate Unpaid Balance as of the last day
of such Due Period, minus the aggregate Excess Concentration Amount as of the
last day of such Due Period.
Dilution Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a)
Variable Dilutions for such Due Period by (b) Credit Sales for the Due Period
two months prior to such Due Period.
Dilution Reserve: With respect to any Due Period the product of (a) the sum of
(i) the product of (A) (1) the Stress Factor, or (2) if a Downgrade Event has
occurred, 3.0 times (B) the Expected Dilution Ratio plus (ii) the product of (A)
the positive difference, if any, between (1) the Dilution Spike Rate less (2)
the Expected Dilution Ratio times (B) a ratio computed by dividing (1) the
Dilution Spike Rate by (2) the Expected Dilution Ratio times (b) the Dilution
Horizon Ratio.
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Dilutions: With respect to any Due Period, the aggregate amount of returns,
allowances, net credits, and any other non-cash reductions to the Credit Sales
that occurred or were made, granted or incurred during such Due Period.
Dilution Spike Rate: With respect to any Due Period, the highest rolling two (2)
month average Dilution Ratio over the most recent twelve-month period.
Distribution Date: The 11th day of each month (beginning in the month
immediately following the month in which the initial Loan is made hereunder) or,
if such day is not a Business Day, the Business Day immediately thereafter.
Documents: All documentation relating to the Receivables including, without
limitation, the Contracts, billing statements and computer records and programs.
Dollar(s) and the sign $: Lawful money of the United States of America.
Downgrade Event: The long-term unsecured debt rating of Toro shall be withdrawn
or downgraded to below BB by S&P or Ba2 by Xxxxx'x.
Due Period: Each Fiscal Month.
Eligible Receivables: Each Receivable:
(a) that was created in compliance with the Collection Policy in
the regular and ordinary course of the business of the Originator;
(b) that was created pursuant to a Contract that complies with the
Originator's standard administration and documentation policies and procedures;
(c) that is not a Delinquent Receivable, a Defaulted Receivable or
a Charged-Off Receivable;
(d) as to which, at the time of the sale of such Receivable to
Borrower, the Originator was the sole owner thereof and had good and marketable
title thereto, free and clear of all Liens, and which was sold or contributed to
Borrower pursuant to the Receivables Purchase Agreement;
(e) that is not an obligation of the government of the United
States or any Governmental Authority;
(f) the assignment of which by the Originator to Borrower pursuant
to the Receivables Purchase Agreement does not contravene or conflict with any
law, rule or regulation or any contractual or other restriction, limitation or
encumbrance, and the sale or assignment of which does not require the consent of
the Obligor thereof;
(g) which is denominated and payable in Dollars and is only
payable in the United States of America;
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(h) the Obligor of which if a natural person, is a resident of the
United States or, if a corporation or other business organization, is organized
under the laws of the United States or any political subdivision thereof and has
its chief executive office in the United States;
(i) the Obligor of which is not an (i) Affiliate of the
Originator, (ii) a Governmental Authority or (iii) an Obligor with whom Toro or
any Affiliate of Toro has executed any letter of intent or similar agreement or
document relating to the purchase of such Obligor by Toro or any of its
Affiliates;
(j) that arises under a Contract which has been duly authorized
and which, together with such Receivable, is in full force and effect and such
Contract, together with such Receivable, constitutes the legal, valid and
binding payment obligation of the Obligor with respect thereto, enforceable
against such Obligor in accordance with its terms and is not subject to any
dispute, right of rescission, setoff, counterclaim or defense (including the
defense of usury) or to any repurchase obligation or return right;
(k) that does not contravene any applicable requirements of law
(including without limitation all laws, rules and regulations relating to truth
in lending, fair credit billing, fair credit reporting, fair debt collection
practices and privacy) and which complies with all applicable requirements of
law and with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given by the Originator in
connection with the creation or the execution, delivery and performance of such
Receivable, have been duly obtained, effected or given and are in full force and
effect;
(l) that complies with all applicable requirements of the
Collection Policy;
(m) as to which each of Borrower's and Administrator's (for the
benefit of the Secured Parties) first priority security interest in such
Receivable has been perfected under the applicable UCC and other applicable
laws;
(n) as to which the Servicer or the Originator is in possession of
the related Receivable File;
(o) which provides for repayment in full of the Unpaid Balance
thereof within 120 days of the date of the creation thereof; provided, however
up to 15% of Receivables which provide for repayment in full of the unpaid
Balance thereof within 121 - 180 days shall be deemed "Eligible Receivables"
provided such Receivables otherwise satisfy all other requirements of this
definition;
(p) the terms of which have not been modified or waived except as
permitted under the Collection Policy and this Agreement;
(q) which constitutes an "account," "chattel paper" or "payment
intangible" under and as defined in Article 9 of the UCC of all applicable
jurisdictions; and
(r) as to which the Originator has (i) generated an invoice and
billed the related Obligor and (ii) satisfied and fully performed all
obligations on its part with respect to such
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Receivable required to be fulfilled by it, and no further action is required to
be performed by any Person with respect thereto other than payment thereon by
the applicable Obligor.
Engagement Letter: That certain letter agreement dated as of October 2, 2002 by
and between Toro and the Administrator.
ERISA: The Employee Retirement Income Security Act of 1974, as it may be amended
from time to time and the regulations promulgated thereunder.
ERISA Affiliate: Any trade or business (whether or not incorporated) under
common control with Borrower, Servicer or the Originator within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
ERISA Event: (a) A Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Borrower, Servicer, the Originator or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower, Servicer,
the Originator or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon Borrower, Servicer, the Originator or any ERISA Affiliate.
Event of Bankruptcy: Shall be deemed to have occurred with respect to a Person
if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall fail to, or
admit in writing its inability to, pay its debts generally as
9
they become due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
Event of Default: Any of the events described in Section 10.1.
Excess Concentration Amount: At any time with respect to any Obligor, the
amount, if any, by which the aggregate Unpaid Balance of all Eligible
Receivables of such Obligor exceeds the product of (a) the Concentration Limit
for such Obligor at such time times (b) the Aggregate Unpaid Balance at such
time.
Expected Dilution Ratio: With respect to any Due Period, the rolling
twelve-month average Dilution Ratio for the most recently ended twelve-month
period.
Face Amount: With respect to outstanding Commercial Paper Notes or Voluntary
Advance Loans, (i) the face amount of any such Commercial Paper Notes issued on
a discount basis, and (ii) the principal amount of, plus the amount of all
interest accrued and to accrue thereon to the stated maturity date of any such
Commercial Paper Notes issued on or interest-buying basis or any such Voluntary
Advance Loans.
Facility Limit: As defined in Section 2.1.
Federal Funds Rate: For any period, a fluctuating interest rate equal for each
day during such period to the weighted average of the federal funds rates as
quoted by Bank and confirmed in the Federal Reserve Board Statistical Release as
H.15(519), or any successor or substitute publication selected by Bank (or, if
such day is not a Business Day, for the next preceding Business Day), or if, for
any reason, such rate is not available on any day, the rate determined in the
sale opinion of Bank, to be the rate at which federal funds are being offered
for sale in the national federal funds market at 9:00 a.m. (New York time).
Federal Reserve Board: The Board of Governors of the Federal Reserve System and
any successor thereto.
Fee Letter: As defined in Section 3.4.
Fees: All fees and other amounts payable by Borrower to Administrator or Lender
pursuant to the Fee Letter.
Fiscal Month: A fiscal month of Toro and its Subsidiaries as described on
Schedule VII, as such exhibit may be updated pursuant to Section 9.1(e)(viii);
provided, if Toro fails to timely deliver an updated Schedule VII, a Fiscal
Month not covered by the existing Schedule VII shall be deemed to be a calendar
month until such date as an updated Schedule VII is provided to the
Administrator.
Fiscal Year: Each fiscal period beginning November 1 and ending on October 31 of
the following year.
GAAP: Generally accepted United States accounting principles as in effect from
time to time.
10
General Receivable: With respect to any Person, all obligations of any obligor
(whether now existing or hereafter arising) under a contract for sale of goods
or services by such Person or any of them, which shall include any obligation of
such obligor (whether now existing or hereafter arising) to pay interest,
finance charges or amounts with respect thereto, and, with respect to any of the
foregoing receivables or obligations, (a) all of the interest of such Person in
the goods (including returned goods) the sale of which gave rise to such
receivable or obligation after the passage of title thereto to any obligor, (b)
all other Liens and property subject thereto from time to time purporting to
secure payment of such receivables or obligations, (c) all guarantees,
insurance, letters of credit and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such
receivables or obligations, (d) all General Receivable Records and (e) all
proceeds of the foregoing.
General Receivable Records: For any General Receivable, all contracts, books,
records and other documents or information (including computer programs, tapes,
disks, software and related property and rights) relating to such General
Receivable or the related obligor.
Governmental Authority: The United States of America, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Guaranty Obligation: As to any Person, any direct or indirect liability of that
Person, whether or not contingent, with or without recourse, with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof.
Indebtedness: With respect to any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital or synthetic
leases; (g) all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
11
Person has not assumed or become liable for the payment of such Indebtedness;
(h) the unpaid amount of all General Receivables sold by any Toro Company; and
(i) all Guaranty Obligations in respect of indebtedness or obligations of others
of the kinds referred to in clauses (a) through (g) above. For all purposes of
this Agreement, the Indebtedness of any Person shall include all recourse
Indebtedness of any partnership or joint venture or limited liability company in
which such Person is a general partner or a joint venturer or a member.
Indemnified Amounts: As defined in Section 14.1.
Indemnified Party: As defined in Section 14.1.
Independent Auditor: As defined in Section 9.1(e)(i)(B).
Initial Cut-Off Date: June 27, 2003.
Initial Purchase Date: The first Purchase Date to occur under the Receivables
Purchase Agreement.
Interest Period: With respect to any Loan and Fees due hereunder, (a) the period
commencing on the date of the initial funding of such Loan (or with respect to
any such Fees, the Closing Date) and ending on, but excluding, the Business Day
immediately preceding the next following Distribution Date; and (b) thereafter,
each period commencing on, and including, the Business Day immediately preceding
a Distribution Date and ending on, but excluding, the Business Day immediately
preceding the next following Distribution Date; provided, however, that if any
Interest Period for any Loan or any Fees that commences before the Commitment
Termination Date would otherwise end on a date occurring after such Commitment
Termination Date, such Interest Period shall end on such Commitment Termination
Date and the duration of each such Interest Period that commences on or after
the Commitment Termination Date, if any, shall be of such duration as shall be
selected by Administrator.
IRS: The Internal Revenue Service.
Lender: As defined in the Preamble.
Lender Note: As defined in Section 2.7.
Lender's Commitment: As defined in Section 2.1.
Liabilities: With respect to any Person, all obligations of such Person which
would, in accordance with GAAP, be classified on a balance sheet as liabilities,
including, without limitation and without duplication, (a) Indebtedness secured
by Liens against property of such Person whether or not such Person is liable
for the payment thereof and (b) deferred liabilities.
LIBOR Rate: For any Interest Period, the rate per annum on the Rate Setting Day
of such Interest Period shown on Telerate Page 3750 or any successor page as the
composite offered rate for London interbank deposits for one month, as shown
under the heading "USD" as of 11:00 a.m. (London time); provided that in the
event no such rate is shown, the LIBOR Rate shall be the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of one percent) based on
12
the rates at which Dollar deposits for one month are displayed on the Reuters
Screen as of 11:00 a.m. (London time) on the Rate Setting Day (it being
understood that if at least two such rates appear on such page, the rate will be
the arithmetic mean of such displayed rates); provided further, that in the
event fewer than two such rates are displayed, or if no such rate is relevant,
the LIBOR Rate shall be the rate per annum equal to the average of the rates at
which deposits in Dollars are offered by Administrator at approximately 11:00
a.m. (London time) on the Rate Setting Day to prime banks in the London
interbank market for a one month.
Lien: Any mortgage, pledge, assignment, lien, security interest or other charge
or encumbrance of any kind, including the retained security title of a
conditional vendor or a lessor or any similar right or claim of any Person.
Liquidity Agreement: Includes (a) the Liquidity Asset Purchase Agreement
(regarding Toro Receivables Company, dated as of July 9, 2003, among Lender, as
borrower, Bank, as liquidity agent for the Liquidity Banks, SunTrust Capital
Markets, Inc., as administrator for Lender, and the Liquidity Banks, and (b) any
other agreement hereafter entered into by Lender providing for the sale by
Lender of Loans (or portions thereof), or the making of loans or other
extensions of credit to Lender secured by security interests in the Loans (or
portions thereof), to support all or part of Lender's payment obligations under
the Commercial Paper Notes or to provide an alternate means of funding Lender's
investments in accounts receivable or other financial assets, in each case as
amended, supplemented or otherwise modified from time to time.
Liquidity Bank: Includes Bank and the various financial institutions as are, or
may become, parties to the Liquidity Agreement, as purchasers thereunder.
Loan: Any amount disbursed as principal by Lender to Borrower under this
Agreement.
LockBox: As defined in Section 11.2(c).
Lock- Box Account: Any bank account established for the purpose of receiving
Collections.
Loss Horizon Ratio: With respect to any Due Period, the ratio computed as of the
last day of such Due Period by dividing (a) the sum of (i) Credit Sales for such
Due Period plus (ii) Credit Sales for the immediately preceding Due Period, plus
(iii) Credit Sales for the second (2nd) immediately preceding Due Period, plus
(iv) Credit Sales for the third (3rd ) immediately preceding Due Period plus (v)
the product of (A) the Weighted Average Payment Terms Factor and (B) Credit
Sales for the fourth immediately preceding Due Period (or, if the Weighted
Average Payment Terms Factor shall be negative, Credit Sales for the third
immediately preceding Due Period), by (b) an amount equal to the Aggregate
Unpaid Balance as of the last day of such Due Period, minus the aggregate Excess
Concentration Amount for all Obligors as of the last day of such Due Period.
Loss Reserve: With respect to any Due Period, the product of (a) the highest
rolling three-month average Default Ratio over the most recent twelve Due
Periods, (b) the Loss Horizon Ratio and (c) the Stress Factor.
Mail Payments: As defined in Section 11.2(c) hereof.
13
Month End Date: The last day of each Fiscal Month.
Monthly Report: As defined in Section 9.1(e)(ii).
Moody's: Xxxxx'x Investors Service, Inc.
Multiemployer Plan: A "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA, to which Borrower, Servicer, the Originator or any ERISA
Affiliate makes, is making, is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
Obligations: All obligations (monetary or otherwise) of Borrower to Lender,
Administrator, any Affected Party or any Indemnified Party and their respective
successors, permitted transferees and assigns arising under or in connection
with this Agreement, Lender Note and each other Transaction Document, in each
case however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, or due or to become due.
Obligor: With respect to any Receivable, the Person or Persons obligated to make
payments with respect to such Receivable, including any guarantor thereof.
Obligor Credit Event: The short term unsecured debt rating of the Special
Obligor shall be withdrawn or downgraded to less than A-1 by S&P and P-1 by
Moody's or the long term unsecured debt rating of the Special Obligor shall be
withdrawn or downgraded to less than A by S&P and A2 by Moody's.
Originator: Toro, in its capacity as originator under the Receivables Purchase
Agreement.
Originator Payables: (a) the obligation of the Originator to make a payment,
pursuant to Section 2.4 of the Receivables Purchase Agreement, for any
Receivable that was represented to be an Eligible Receivable that was not an
Eligible Receivable on the date such Receivable was sold by the Originator to
Borrower, and (b) all other amounts owed by the Originator to Borrower from time
to time pursuant to this Agreement or the Receivables Purchase Agreement.
Parent Loan: As defined in the Receivables Purchase Agreement.
Parent Loan Conditions: As defined in the Receivables Purchase Agreement.
Parent Note: As defined in the Receivables Purchase Agreement.
PBGC: The Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to any of its principal functions under ERISA.
Pension Plan: A pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which Borrower, Servicer or the Originator sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
14
Permitted Investments: At any time:
(a) marketable obligations issued by, or the full and timely
payment of which is directly and fully guaranteed or insured by, the United
States government or any other government with an equivalent rating, or any
agency or instrumentality thereof when such marketable obligations are backed by
the full faith and credit of the United States government or such other
equivalently rated government, as the case may be, but excluding any securities
which are derivatives of such obligations;
(b) time deposits, bankers' acceptances and certificates of
deposit of any domestic commercial bank or any United States branch or agency of
a foreign commercial bank which (i) has capital, surplus and undivided profits
in excess of $100,000,000 and which has a commercial paper or certificate of
deposit rating meeting the requirements specified in clause (c) below (or
equivalent rating from the Rating Agencies) or (ii) is set forth in a list
(which may be updated from time to time) (A) approved by Administrator and (B)
with respect to which a written statement has been obtained from each of the
Rating Agencies to the effect that the rating of the Commercial Paper Notes will
not be downgraded or withdrawn solely as a result of the acquisition of such
investments;
(c) commercial paper which is (i) rated at least as high as the
Commercial Paper Notes by the Rating Agencies, or (ii) set forth in a list
(which may be updated from time to time) (A) approved by Administrator and (B)
with respect to which a written statement has been obtained from each of the
Rating Agencies to the effect that the rating of the Commercial Paper Notes will
not be downgraded or withdrawn solely as a result of the acquisition of such
investments;
(d) secured repurchase obligations for underlying securities of
the types described in clauses (a) and (b) above entered into with any bank of
the type described in clause (b) above; and
(e) freely redeemable shares in money market funds which invest
solely in obligations, bankers' acceptances, time deposits, certificates of
deposit, repurchase agreements and commercial paper of the types described in
clause (a) through (d) above, without regard to the limitations as to the
maturity of such obligations, bankers' acceptances, time deposits, certificates
of deposit, repurchase agreements or commercial paper set forth below, which are
rated at least "AAm" or "AAmg" or their equivalent by each of the Rating
Agencies, provided that there is no r-highlighter affixed to such rating.
Person: An individual, partnership, limited liability company, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government or any agency or political subdivision
thereof or any other entity.
Prime Rate: As of any date of determination, the rate of interest most recently
announced by Bank at its principal office in Atlanta, Georgia as its prime rate
(it being understood that at any one time there shall exist only one such prime
rate so announced, which rate is not necessarily intended to be the lowest rate
of interest determined by Bank in connection with extensions of credit).
15
Program Documents: The Liquidity Agreement, the Credit Agreement, the Voluntary
Advance Agreement, the documents under which Administrator performs its
obligations with respect to Lender's commercial paper program and the other
documents to be executed and delivered in connection therewith, as amended,
supplemented or otherwise modified from time to time.
Purchase Date: As defined in the Receivables Purchase Agreement.
Rate Setting Day: For any Interest Period, two (2) Business Days prior to the
commencement of such Interest Period. In the event such day is not a Business
Day, then the Rate Setting Day shall be the immediately preceding Business Day.
Rating Agencies: S&P and Moody's.
Receivable: With respect to any Obligor, the indebtedness of such Obligor under
a Contract arising in connection with the sale of goods or rendering of services
and designated an "open account receivable" by the Originator, including the
right to payment of any interest, finance, returned check or late charges and
other obligations of such Obligor with respect thereto and shall not include any
installment sales contracts or "floorplan receivables".
Receivable File: With respect to a Receivable, (a) the Contract giving rise to
the Receivable and other evidences of the Receivable including, without
limitation, tapes, discs, punch cards and related property and rights and (b)
each UCC financing statement related thereto, if any.
Receivables Purchase Agreement: The Receivables Purchase Agreement, dated as of
July 9, 2003, by and between Toro and Borrower, as such Receivables Purchase
Agreement may be amended, supplemented or otherwise modified from time to time
with the prior written consent of Administrator.
Regulatory Change: Relative to any Affected Party: (a) any change in (or the
adoption, implementation, change in the phase-in or commencement of
effectiveness of) any: (i) United States Federal or state law or foreign law
applicable to such Affected Party, (ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law) applicable to
such Affected Party of (A) any court or government authority charged with the
interpretation or administration of any law referred to in clause (a)(i), or of
(B) any fiscal, monetary or other authority having jurisdiction over such
Affected Party, or (iii) GAAP or regulatory accounting principles applicable to
such Affected Party and affecting the application to such Affected Party of any
law, regulation, interpretation, directive, requirement or request referred to
in clause (a)(i) or (a)(ii) above; (b) any change in the application to such
Affected Party of any existing law, regulation, interpretation, directive,
requirement, request or accounting principles referred to in clause (a)(i),
(a)(ii) or (a)(iii) above; or (c) the issuance, publication or release of any
regulation, interpretation, directive, requirement or request of a type
described in clause (a)(ii) above to the effect that the obligations of any
Liquidity Bank under the Liquidity Agreement are not entitled to be included in
the zero percent category of off-balance sheet assets for purposes of any
risk-weighted capital guidelines applicable to such Liquidity Bank or any
related Affected Party.
Related Security: With respect to any Receivable, (a) all right, title and
interest, but none of the obligations, of the Originator, in, to and under other
Liens and property subject to Liens from
16
time to time purporting to secure payment of such Receivable, whether pursuant
to the Contract related to such Receivable or otherwise, (b) all UCC financing
statements or similar instruments covering any collateral securing payment of
such Receivable, (c) all guaranties, indemnities, insurance and other agreements
(including the related Receivable File) or arrangement and other collateral of
whatever character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract relating to such Receivable or
otherwise relating to such Receivable and (d) all other instruments and all
rights under the documents in the Receivable File relating to such Receivables
and all rights (but not obligations) relating to such Receivables.
Reportable Event: Any of the events set forth in Section 4043(c) of ERISA or the
regulations thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the PBGC.
Reporting Date: As defined in Section 9.1(e)(ii).
Requirements of Law: For any Person or any of its property shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person or any of its property, and
any statute, law, treaty, rule or regulation, or determination of an arbitrator
or Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or businesses or to which such Person or any of
its property or businesses is subject, whether federal, state or local.
Reserve Floor: For any Due Period, 25.0%.
Reserve Percentage: The percentage equal to the greater of (a) the sum of (i)
the Loss Reserve, (ii) the Dilution Reserve, (iii) the Yield Reserve, and (iv)
the Servicing Reserve and (b) the Reserve Floor.
Responsible Officer: With respect to any Person, the chief financial officer or
treasurer, or any other officer having substantially the same authority and
responsibility.
Reuters Screen: The display page designated as "LIBO" on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to the LIBOR Rate).
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
Scheduled Commitment Termination Date: July 7, 2004.
Secured Obligations: As defined in Section 5.1(b).
Secured Parties: The holders from time to time of the Secured Obligations
including, without limitation, Lender and Administrator.
Servicer: Toro, or its successor in interest, or any successor Servicer
appointed as provided in Section 11.5.
17
Servicer Event of Default: As defined in Section 11.7.
Servicing Fee: As to any Due Period, the monthly fee payable to Servicer, which,
so long as Toro is Servicer, shall be equal to the Servicing Fee Rate divided by
12 multiplied by the aggregate Unpaid Balance of the Receivables at the
beginning of such Due Period. The Servicing Fee for any successor Servicer shall
be equal to the fee reasonably agreed to by Administrator and such successor.
Servicing Fee Rate: 1.80%.
Servicing Reserve: With respect to any Due Period, the product of (a) the
highest Days Sales Outstanding Ratio during the most recent twelve-month period,
(b) the Stress Factor, (c) 2.40% and (d) 1/360.
Significant Event: Any Amortization Event.
Sixty Day Period: Sixty (60) consecutive days designated by Borrower, or
Servicer on Borrower's behalf, during the period beginning on October 1st of
each year and ending of January 31st of the following year.
Solvent: With respect to any Person that as of the date of determination both
(a) (i) the then fair saleable value of the property of such Person is (A)
greater than the total amount of liabilities (including contingent liabilities)
of such Person and (B) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and (b) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
Special Obligor: Home Depot, Inc., or such other Obligor as may be designated by
the Administrator as a "Special Obligor" from time to time by notice to the
Borrower and the Rating Agencies; provided, however the Administrator shall
revoke such Obligor's status as a "Special Obligor" if an Obligor Credit Event
shall occur; provided, further, the Administrator may, in its sole discretion,
revoke such Obligor's status as a "Special Obligor" if the ratio of (a) the
Unpaid Balance of Receivables owing from the Special Obligor that are greater
than 60 days past due to (b) the Unpaid Balance of all Receivables owing from
the Special Obligor shall exceed 35% for two consecutive Due Periods.
Stated Maturity Date: July 7, 2004; provided, however, that such date may be
accelerated pursuant to Section 10.3.
Stress Factor: 2.0.
18
Subsidiary: With respect to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof.
Support Provider: Includes any entity now or hereafter extending credit or
liquidity support or having a commitment to extend credit or liquidity support
to or for the account of, or to make loans to or purchases from, Lender or
issuing a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with the commercial paper program of
Lender.
Surety Instruments: All standby letter of credit, banker's acceptances and bank
guaranties not attributable to the purchase of supplies and inventory in the
ordinary course of business and shipside bonds, surety bonds and similar
instruments.
Telerate Page 3750: The display designated as "Page 3750" on the Telerate
Service (or such other page as may replace "Page 3750" on that service or
another service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rate for Dollars).
Toro: As defined in the Preamble.
Toro Credit Agreement: That certain Multi-Year Credit Agreement, dated as of
February 22, 2002 among Toro, the subsidiary borrowers named therein, Toro
Credit Company, the financial institutions party thereto and Bank of America,
N.A., as the same may be amended, supplemented or otherwise modified from time
to time.
Toro Company: Collectively, Toro International Company, a Minnesota corporation,
Xxxxx Overseas B.V., a Netherlands company and Toro Factoring Company N.V., a
Netherlands Antilles company, Toro Credit Company, a Minnesota corporation,
Exmark Manufacturing Company Incorporated, a Nebraska corporation, and Toro.
Toro Receivables : As defined in the Preamble.
Transaction Documents: This Agreement, the Receivables Purchase Agreement,
Lender Note, the Fee Letter, the Parent Note, the Engagement Letter and the
other instruments, certificates, agreements, reports and documents to be
executed and delivered under or in connection with this Agreement or the
Receivables Purchase Agreement (except the Program Documents), as any of the
foregoing may be amended, supplemented, amended and restated, or otherwise
modified from time to time in accordance with this Agreement and the Receivables
Purchase Agreement. Each such document is a Transaction Document.
UCC: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.
Unfunded Pension Liability: The excess of a Plan's benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Plan's assets,
determined in accordance with the
19
assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.
Unmatured Significant Event: Any event that, if it continues uncured, will, with
lapse of time or notice or lapse of time and notice, constitute a Significant
Event.
Unpaid Balance: With respect to any Receivable the aggregate amount required to
repay in full the principal of, and all interest, finance, prepayment (to the
extent such prepayment fees are determinable) and other fees or charges of any
kind payable in respect of, such Receivable.
Variable Dilutions: With respect to any Due Period, the aggregate amount of
allowances, net credits, non-cash reductions or other adjustments to the Credit
Sales that occurred or were made, granted or incurred by the Originator pursuant
to the terms of the related Contracts during such Due Period.
Voluntary Advance Agreement: The Voluntary Advance Agreement, dated as of March
11, 1999, among Lender, Administrator and Bank, as it may be amended,
supplemented or otherwise modified from time to time.
Voluntary Advance Loan: Each Advance made pursuant to the Voluntary Advance
Agreement.
Weight Average Payment Terms: For any Due Period, the weighted average of
payment terms described in invoices for Receivables generated during such Due
Period.
Weighted Average Payment Terms Factor: For any date of determination, the
percentage determined pursuant to the following formula:
67.0 + Weighted Average Payment Terms
------------------------------------- _4.00
00
Xxxxx Xxxxxxx: With respect to any Due Period, the product of (a) the highest
Days Sales Outstanding Ratio during the most recent twelve-month period, (b) the
Stress Factor, (c) the Prime Rate as in effect on the last day of such Due
Period and (d) 1/360.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in Lender Note or any
other Transaction Document, certificate, report or other document made or
delivered pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or
elsewhere in this Agreement shall mean the plural thereof when the plural form
of such term is used in this Agreement, Lender Note or any other Transaction
Document, certificate, report or other document made or delivered pursuant
hereto, and each term defined in the plural form in Section 1.1 shall mean the
singular thereof when the singular form of such term is used herein or therein.
20
(c) The words "hereof," "herein," "hereunder" and similar terms
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
SECTION 1.3 OTHER TERMS.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC and
not specifically defined herein, are used herein as defined in such Article 9.
(b) With respect to any Acquisition consummated on or after the
Closing Date, the following shall apply:
(i) For each period of four fiscal quarters of Toro and
its Subsidiaries ending next following the date of any Acquisition,
Consolidated EBIT shall include the results of operations of the Person
or assets so acquired on a historical pro forma basis, and which
amounts may include such adjustments as are permitted under Regulation
S-X of the Securities and Exchange Commission and reasonably
satisfactory to the Administrator;
(ii) For each period of four fiscal quarters of Toro and
its Subsidiaries ending next following the date of each Acquisition,
Consolidated Interest Charges shall include the results of operations
of the Person or assets so acquired, which amounts shall be determined
on a historical pro forma basis; provided, however, Consolidated
Interest Charges shall be adjusted on a historical pro forma basis to
(A) eliminate interest expense accrued during such period on any
Indebtedness repaid in connection with such Acquisition and (B) include
interest expense on any Indebtedness (including Indebtedness hereunder)
incurred, acquired or assumed in connection with such Acquisition
("Incremental Debt") calculated (I) as if all such Incremental Debt had
been incurred as of the first day of such four-quarter period and (II)
at the following interest rates: (x) for all periods subsequent to the
date of the Acquisition and for Incremental Debt assumed or acquired in
the Acquisition and in effect prior to the date of Acquisition, at the
actual rates of interest applicable thereto, and (y) for all periods
prior to the actual incurrence of such Incremental Debt, equal to the
rate of interest actually applicable to such Incremental Debt hereunder
or under other financing documents applicable thereto as at the end of
each affected period of such four fiscal quarters, as the case may be.
(c) With respect to any Material Disposition consummated on or
after the Closing Date,
(i) For each period of four fiscal quarters of
Toro and its Subsidiaries ending next following the date of
such Material Disposition, Consolidated EBIT for such period
shall be either (A) reduced by an amount equal to the
Consolidated EBIT (if positive) attributable to the property
that is the subject of such Material Disposition for such
period or (B) increased by an amount equal to the Consolidated
EBIT (if negative) attributable to such property for such
period.
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(ii) For each period of four fiscal quarters of
Toro and its Subsidiaries ending next following the date of
such Material Disposition, Consolidated Interest Charges shall
be reduced by an amount equal to the Consolidated Interest
Charges incurred by the applicable Toro Company or Subsidiary
in connection with Indebtedness which is either (x) repaid
with the proceeds received by the applicable Toro Company or
Subsidiary in connection with such Material Disposition or (y)
assigned or transferred to, and assumed by, the Person to whom
the Material Disposition is made by the applicable Toro
Company or Subsidiary.
For the purposes of this paragraph, "Material Disposition" means any
Disposition, or series of related Dispositions, by Toro and its Subsidiaries of
real or personal property that has a gross book value, as determined in
accordance with GAAP, equal to or greater than 5% of consolidated total assets
of Toro and its Subsidiaries determined as of the last day of the immediately
preceding fiscal quarter of Toro, and "Disposition" means the sale, transfer,
license or other disposition (including any sale and leaseback transaction) of
any property by any Person, other than pursuant to or in connection with the
Transaction Documents.
SECTION 1.4 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding."
ARTICLE II
LENDER'S COMMITMENT, BORROWING PROCEDURES
AND LENDER NOTE
SECTION 2.1 LENDER'S COMMITMENT.
On the terms and subject to the conditions set forth in this Agreement,
Lender agrees to make loans to Borrower on a revolving basis from time to time
(the "Lender's Commitment") before the Commitment Termination Date in such
amounts as may be from time to time requested by Borrower pursuant to Section
2.2; provided, however, that the aggregate principal amount of all Loans from
time to time outstanding hereunder shall not exceed the lesser of (a) (i) during
the Sixty Day Period, $0 or (ii) during any other period, $75,000,000 (clause
(i) and (ii) collectively, the "Facility Limit") and (b) the Borrowing Base.
Within the limits of Lender's Commitment, Borrower may borrow, prepay and
reborrow under this Section 2.1.
SECTION 2.2 BORROWING PROCEDURES.
Borrower (or the Servicer on its behalf) may request a Loan hereunder
by giving notice to Administrator of a proposed borrowing not later than 2:00
p.m. (New York City time), two Business Days prior to the proposed date of such
borrowing (or such lesser period of time as Lender may consent); provided that
Borrower shall not request, and Lender shall not make, Loans more than six times
during any Due Period. Each such notice (herein called a "Borrowing
22
Request") shall be in the form of Exhibit A and shall include the date and
amount of such proposed borrowing. Any Borrowing Request given by Borrower (or
the Servicer on its behalf) pursuant to this Section 2.2 shall be irrevocable
and binding on Borrower.
SECTION 2.3 FUNDING.
Subject to the satisfaction of the conditions precedent set forth in
Article VII with respect to such Loan and the limitations set forth in Section
2.1, Lender shall make the proceeds of such requested Loan available to
Administrator at its office in Atlanta, Georgia in same day funds on the
proposed date of borrowing. Upon receipt by Administrator of such funds,
Administrator will make such funds available to Borrower at such office on such
date. Each borrowing shall be on a Business Day and shall be in an amount of at
least $1,000,000 and in integral multiples of $500,000.
SECTION 2.4 REPRESENTATION AND WARRANTY.
Each request for a borrowing pursuant to Section 2.2 shall
automatically constitute a representation and warranty by Borrower to
Administrator and Lender that on the requested date of such borrowing (a) the
representations and warranties contained in Article VIII will be true and
correct as of such requested date as though made on such date, (b) no
Significant Event or Unmatured Significant Event has occurred and is continuing
or will result from such borrowing, and (c) after giving effect to such
requested borrowing, the aggregate principal balance of the outstanding Loans
hereunder will not exceed the lesser of the Borrowing Base and the Facility
Limit.
SECTION 2.5 EARLY TERMINATION OF LENDER'S COMMITMENT.
Lender's Commitment shall terminate and Lender shall have no obligation
to make any further Loans (or to fund any increase in any existing Loan), on the
earliest date of termination of (a) the Liquidity Banks' commitments under the
Liquidity Agreement or (b) the Credit Banks' commitments under the Credit
Agreement. Administrator agrees to use its reasonable efforts to give Borrower
at least 30 days' prior written notice of the termination of Lender's Commitment
pursuant to clause (a) or (b) above.
SECTION 2.6 VOLUNTARY TERMINATION OF LENDER'S COMMITMENT; REDUCTION OF
FACILITY LIMIT.
Borrower may, in its sole discretion for any reason upon at least 10
days' notice to Administrator (with a copy to Lender), terminate Lender's
Commitment in whole, or, reduce in part the unused portion of the Facility
Limit; provided, however that (a) each such partial reduction will be in a
minimum amount of $5,000,000 or a higher integral multiple of $1,000,000 and
shall not reduce the Facility Limit below $50,000,000, and (b) in connection
therewith Borrower shall comply with Section 3.2(b) and Section 4.1(b).
SECTION 2.7 NOTE.
Each Loan from Lender shall be evidenced by a single promissory grid
note (herein, as amended, modified, extended or replaced from time to time,
called the "Lender Note")
23
substantially in the form set forth in Exhibit B, with appropriate insertions,
payable to the order of Lender. Borrower hereby irrevocably authorizes
Administrator in connection with Lender Note to make (or cause to be made)
appropriate notations on the grid attached to Lender Note (or on any
continuation of such grid, or at Administrator's option, in its records), which
notations, if made, shall evidence, inter alia, the date of, the outstanding
principal of, and the interest rate and Interest Period applicable to the Loans
evidenced thereby. Such notations shall be rebuttably presumptive evidence of
the subject matter thereof, absent manifest error; provided, however, that the
failure to make any such notations shall not limit or otherwise affect any
Obligations of Borrower.
ARTICLE III
INTEREST, FEES, ETC.
SECTION 3.1 INTEREST RATES.
Borrower hereby promises to pay interest on the unpaid principal amount
of each Loan (or each portion thereof) for the period commencing on the date of
such Loan until such Loan is paid in full, as follows:
(a) at all times while the making or maintenance of such Loan (or
the applicable portion thereof) by Lender is funded by the issuance of
Commercial Paper Notes of Lender, during each Interest Period, at a rate per
annum equal to the sum of (i) the Commercial Paper Rate applicable to such
Interest Period, plus (ii) the Applicable Margin;
(b) at all times while the making or maintenance of such Loan (or
the applicable portion thereof) by Lender is funded during each Interest Period
pursuant to the Liquidity Agreement or the Voluntary Advance Agreement, at a
rate per annum equal to the sum of (i) the Alternative Rate applicable to such
Interest Period, plus (ii) the Applicable Margin; and;
(c) notwithstanding the provisions of the preceding clauses (a)
and (b), in the event that a Significant Event or an Unmatured Significant Event
has occurred and is continuing, at a rate per annum (the "Default Rate") equal
to the Base Rate applicable from time to time (but not less than the interest
rate in effect for such Loan as at the date of such Significant Event), plus a
margin of 2.00%.
After the date any principal amount of any Loan is due and payable
(whether on the Stated Maturity Date, upon acceleration or otherwise) or after
any other monetary Obligation of Borrower arising under this Agreement shall
become due and payable, Borrower shall pay (to the extent permitted by law, if
in respect of any unpaid amounts representing interest) interest (after as well
as before judgment) on such amounts at a rate per annum equal to the Default
Rate. No provision of this Agreement or Lender Note shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
SECTION 3.2 INTEREST, PAYMENT DATES.
Interest accrued on each Loan shall be payable, without duplication:
24
(a) on the Stated Maturity Date;
(b) on the date of any payment or prepayment, in whole or in part,
of principal outstanding on such Loan;
(c) on each Distribution Date prior to the Stated Maturity Date
and thereafter on the last day of each Interest Period; and
(d) on that portion of any Loan the Stated Maturity Date of which
is accelerated pursuant to Section 10.3, immediately upon such acceleration.
SECTION 3.3 INTEREST ALLOCATIONS.
Administrator shall from time to time and in its sole discretion
determine whether interest in respect of the Loans then outstanding, or any
portion thereof, shall be calculated by reference to the Commercial Paper Rate
(such portion being herein called a "CP Allocation") or the Alternative Rate
(such portion being herein called an "Alternative Rate Allocation", and together
with a CP Allocation individually called an "Allocation", and collectively,
"Allocations"); provided, however, that, Administrator shall use its reasonable
efforts to allocate all or substantially all of the Loans from Lender to a CP
Allocation; provided further, however, that Administrator may determine, at any
time and in its sole discretion, that the Commercial Paper Rate is unavailable
or otherwise not desirable, in which case the Loans from Lender will be
allocated to an Alternative Rate Allocation (unless the Default Rate is in
effect).
SECTION 3.4 FEES.
Borrower agrees to pay Administrator and Lender certain fees in the
amounts and on the dates set forth in the letter agreement executed in
connection herewith between Borrower, Administrator and Lender (as the same may
be amended, supplemented or otherwise modified, the "Fee Letter").
SECTION 3.5 COMPUTATION OF INTEREST AND FEES.
All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days.
ARTICLE IV
REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS
SECTION 4.1 REPAYMENTS AND PREPAYMENTS.
Borrower shall repay in full the unpaid principal amount of each Loan
on the Stated Maturity Date. Prior thereto, Borrower:
(a) may, from time to time on any Business Day, make a prepayment,
in whole or in part, of the outstanding principal amount of any Loans; provided,
however, that, unless otherwise
25
consented to by Administrator, all such voluntary prepayments shall require at
least two Business Days' (or, in the case of a voluntary prepayment of
$10,000,000 or more, at least seven Business Days') prior written notice to
Administrator and all such voluntary partial prepayments shall be in a minimum
amount of $1,000,000 and an integral multiple of $100,000;
(b) shall, on each date when any reduction in the Facility Limit
shall become effective pursuant to Section 2.6, make a prepayment of the Loans
in an amount equal to the excess, if any, of the aggregate outstanding principal
amount of the Loans over the Facility Limit as so reduced;
(c) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to Section 10.3, repay all Loans, unless,
pursuant to Section 10.3(a), only a portion of all Loans is so accelerated, in
which event Borrower shall repay the accelerated portion of the Loans; and
(d) may, if at any time a Borrowing Base Deficit shall exist, make
a prepayment, prior to a Distribution Date, (out of funds set aside for
distribution pursuant to Section 4.2(b) (fourth))of the Loans in an amount equal
to such Borrowing Base Deficit, such payment to be made within three (3)
Business Days. Each such prepayment shall be subject to the payment of any
amounts required by Section 6.2.
Each payment or prepayment shall be subject to the payment of any
amounts required by Section 6.2 resulting from a prepayment or payment of a Loan
on a day other than the last day of the Interest Period for such Loan.
SECTION 4.2 APPLICATION OF COLLECTIONS.
(a) All Collections deposited in the Collection Account shall be
distributed by the Servicer at such times and in the order of priority set forth
in this Section 4.2.
(b) On each Distribution Date prior to the Commitment Termination
Date, the Servicer shall distribute from Collections on deposit in the
Collection Account on such Distribution Date, the following amounts, without
duplication, in the following order of priority:
first, to Administrator on behalf of Lender, interest accrued on the
Loans during the related Interest Period (plus, if applicable, the amount of
interest on the Loans accrued for any prior Interest Period to the extent such
amount has not been distributed to Lender, and to the extent permitted by law,
interest thereon);
second, to Administrator on behalf of the appropriate Persons, all Fees
accrued during such Interest Period (plus, if applicable, the amount of Fees
accrued for any prior Interest Period to the extent such amount has not been
distributed to Lender or Administrator);
third, if the Servicer is not Toro or an Affiliate of Toro, to the
Servicer, the accrued Servicing Fee payable for the related Due Period (plus, if
applicable, the amount of Servicing Fee payable for any prior Due Period to the
extent such amount has not been distributed to Servicer);
26
fourth, to Administrator on behalf of Lender, as a repayment of
principal of the Loans, an amount equal to the Borrowing Base Deficit, if any;
fifth, to Administrator on behalf of the appropriate Persons, all other
Obligations then due and payable by Borrower under this Agreement;
sixth, if the Servicer is Toro or an Affiliate of Toro, to the
Servicer, the accrued Servicing Fee payable for the related Due Period (plus, if
applicable, the amount of Servicing Fee payable for any prior Due Period to the
extent such amount has not been distributed to Servicer); and
seventh, so long as no Significant Event or Unmatured Significant Event
shall be continuing, the balance, if any, to Borrower for any use permitted by
its certificate of incorporation and the Transaction Documents, including
without limitation, to pay any dividends on its shares of capital stock or make
any distribution to stockholders.
(c) On and after the Commitment Termination Date, Administrator
shall, on the last day of each Interest Period, distribute from the Collection
Account the following amounts, without duplication, in the following order of
priority:
first, to Administrator on behalf of Lender, the accrued but unpaid
interest on the Loans;
second, to Administrator on behalf of the appropriate Persons, all
accrued but unpaid Fees;
third, if the Servicer is not Toro or an Affiliate of Toro, to the
Servicer, the accrued but unpaid Servicing Fee;
fourth, to Administrator on behalf of Lender, the outstanding principal
amount of the Loans;
fifth, to Administrator on behalf of the appropriate Persons, all other
Obligations payable by Borrower under this Agreement;
sixth, if the Servicer is Toro or an Affiliate of Toro, to the
Servicer, the accrued but unpaid Servicing Fee; and
seventh, once all amounts described in clauses first through sixth have
been paid in full, the balance, if any, to Borrower.
SECTION 4.3 APPLICATION OF CERTAIN PAYMENTS.
Each payment of principal of the Loans shall be applied to such Loans
as Borrower shall direct or, in the absence of such notice or during the
existence of a Significant Event or after the Commitment Termination Date, as
Administrator shall determine in its discretion.
27
SECTION 4.4 DUE DATE EXTENSION.
If any payment of principal or interest with respect to any Loan falls
due on a day which is not a Business Day, then such due date shall be extended
to the next following Business Day, and additional interest shall accrue at the
applicable interest rate and be payable for the period of such extension.
SECTION 4.5 MAKING OF PAYMENTS.
All payments of principal of, or interest on, the Loans and of all
Fees, and all amounts to be deposited by Borrower or Servicer hereunder, shall
be made by Borrower or Servicer, as applicable, no later than 12:00 p.m. (New
York City time), on the Business Day when due in lawful money of the United
States of America in same day funds to Bank, as Administrator, Reference: Three
Pillars Funding Corporation/Toro Receivables Company, Transaction, Account No.
880171236, ABA No. 000000000 at Bank's office at 00 Xxxx Xxxxx in Atlanta,
Georgia, Attn: Xxxx Xxxxxxxx (the "Administrator's Account"). Funds received by
Administrator after 10:00 a.m. New York City time, on the date when due, will be
deemed to have been received by Administrator on its next following Business
Day.
SECTION 4.6 DEEMED COLLECTIONS AND OTHER ADJUSTMENTS.
If on any day, any of the representations or warranties in Section 8.8,
Section 8.13 or Section 8.17 was not true with respect to any Receivable,
Borrower shall be deemed to have received a Collection of such Receivable in the
amount of the Unpaid Balance of such Receivable and not later than the next
Business Day, Borrower shall deposit in the Collection Account any such
Collection deemed to have been received for distribution in the same manner as
actual cash collections are distributed under the terms of this Agreement. If on
any day, Borrower, or Servicer on Borrower's behalf, shall make an adjustment in
the principal amount or finance or other charges accrued or payable with respect
to any Receivable, the aggregate amount of such adjustments shall be deposited
in the Collection Account no later than the next Business Day.
ARTICLE V
SECURITY INTEREST
SECTION 5.1 GRANT OF SECURITY.
(a) Borrower hereby assigns and pledges to Administrator (for the
benefit of the Secured Parties), and hereby grants to Administrator (for the
benefit of the Secured Parties) a security interest in all of Borrower's assets,
including without limitation, all of Borrower's right, title and interest in and
to the following, whether now or hereafter existing and wherever located:
(i) all Receivables, Related Security and Receivable
Files;
(ii) all of Borrower's rights, remedies, powers and
privileges in respect of the Parent Note and the Receivables Purchase
Agreement, including a direct right to cause
28
the Originator to make payments with respect to Dilutions or with
respect to Receivables that are not Eligible Receivables pursuant to
the Receivables Purchase Agreement;
(iii) the LockBoxes, the Lock-Box Accounts and the
Collection Account and all funds on deposit therein, together with all
certificates and instruments, if any, from time to time evidencing such
accounts, and funds on deposit and all investments made with such
funds, all claims thereunder or in connection therewith, and interest,
dividends, moneys, instruments, securities and other property from time
to time received, receivable or otherwise distributed in respect of any
or all of the foregoing; and
(iv) all products and proceeds (including, without
limitation, insurance proceeds) of, and additions, improvements and
accessions to, and books and records describing or used in connection
with, all and any of the property described above (items (i) through
(iv) are collectively referred to as the "Collateral").
(b) This grant of security secures the payment and performance of
all Obligations of Borrower now or hereafter existing or arising under, or in
connection with, the Loan Agreement, Lender Note and each other Transaction
Document, whether for principal, interest, costs, fees, expenses or otherwise
(all such obligations of Borrower being called the "Secured Obligations").
(c) This grant of security shall create a continuing security
interest in the Collateral and shall:
(i) remain in full force and effect until Administrator's
(for the benefit of the Secured Parties) interest in the Collateral
shall have been released in accordance with Section 5.4;
(ii) be binding upon Borrower, its successors, transferees
and assigns; and
(iii) inure, together with the rights and remedies of
Administrator (for the benefit of the Secured Parties) hereunder, to
the benefit of Administrator and each Secured Party and their
respective successors, transferees and assigns.
SECTION 5.2 ADMINISTRATOR APPOINTED ATTORNEY-IN-FACT.
Borrower hereby irrevocably appoints Administrator (for the benefit of
the Secured Parties) as Borrower's attorney-in-fact, with full authority in the
place and stead of Borrower and in the name of Borrower or otherwise, from time
to time in Administrator's discretion, after the occurrence and during the
continuation of a Significant Event to take any action and to execute any
instrument which Administrator may deem necessary or advisable to accomplish the
purposes of the Transaction Documents, including, without limitation:
(a) to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) above;
29
(c) to file any claims or take any action or institute any
proceedings which Administrator may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Administrator (for the benefit of the Secured Parties) with respect to any of
the Collateral;
(d) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions hereunder;
and
(e) to perform the affirmative obligations of Borrower under the
Transaction Documents.
Administrator agrees to give Borrower and Servicer written notice of
the taking of any such action, but the failure to give such notice shall not
affect the rights, power or authority of Administrator with respect thereto.
Borrower hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 5.2 is irrevocable and coupled with an
interest.
SECTION 5.3 ADMINISTRATOR MAY PERFORM.
If Borrower fails to perform any agreement contained herein,
Administrator (for the benefit of the Secured Parties) may itself perform, or
cause performance of such agreement, and the expenses of Administrator incurred
in connection therewith shall be payable by Borrower.
SECTION 5.4 RELEASE OF COLLATERAL.
Administrator's (for the benefit of the Secured Parties) right, title
and interest in the Collateral shall be released effective on the date occurring
after the Commitment Termination Date on which all Secured Obligations shall
have been finally and fully paid and performed.
ARTICLE VI
INCREASED COSTS, ETC.
SECTION 6.1 INCREASED COSTS.
If any change in Regulation D of the Board of Governors of the Federal
Reserve System, or any Regulatory Change, in each case occurring after the date
hereof:
(a) shall subject any Affected Party to any tax, duty or other
charge with respect to any Loan made or funded by it, or shall change the basis
of taxation of payments to such Affected Party of the principal of or interest
on any Loan owed to or funded by it or any other amounts due under this
Agreement in respect of any Loan made or funded by it (except for changes in the
rate of tax on the overall net income of such Affected Party imposed by the
jurisdiction in which such Affected Party's principal executive office is
located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of Governors of
the Federal Reserve System, but excluding any reserve included in the
determination of interest rates pursuant to Section 3.1),
30
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Affected Party;
(c) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(d) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
and the result of any of the foregoing is or would be to (i) increase the cost
to or to impose a cost on (A) an Affected Party funding or making or maintaining
any Loan (including extensions of credit under the Liquidity Agreement, the
Voluntary Advance Agreement or any Credit Advance, or any commitment of such
Affected Party with respect to any of the foregoing), or (B) Administrator for
continuing its or Borrower's relationship with Lender, (ii) to reduce the amount
of any sum received or receivable by an Affected Party under this Agreement,
Lender Note, the Liquidity Agreement, the Voluntary Advance Agreement or the
Credit Agreement with respect thereto, or (iii) in the good faith determination
of such Affected Party, to reduce the rate of return on the capital of an
Affected Party as a consequence of its obligations hereunder, or under the
Liquidity Agreement, the Voluntary Advance Agreement or Credit Agreement, or
arising in connection herewith or therewith to a level below that which such
Affected Party could otherwise have achieved, then after demand by such Affected
Party to Borrower (which demand shall be accompanied by a written statement
setting forth the basis of such demand), Borrower shall pay such Affected Party
such additional amount or amounts as will (in the reasonable determination of
such Affected Party) compensate such Affected Party for such increased cost or
such reduction. Such written statement (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be rebuttably
presumptive evidence of the subject matter thereof. The Administrator shall use
its best efforts to cause each Affected Party to use reasonable efforts in
accordance with its normal practices and procedures to reduce amounts payable
under this Section 6.1.
31
SECTION 6.2 FUNDING LOSSES.
Borrower hereby agrees that upon demand by any Affected Party (which
demand shall be accompanied by a statement setting forth the basis for the
calculations of the amount being claimed) Borrower will indemnify such Affected
Party against any net loss or expense which such Affected Party may sustain or
incur (including, without limitation, any net loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Affected Party to fund or maintain any Loan made by Lender to Borrower), as
reasonably determined by such Affected Party, as a result of (a) any payment or
prepayment (including any mandatory prepayment) of any Loan on a date other than
the last day of the Interest Period for such Loan, or (b) any failure of
Borrower to borrow any Loan on a date specified therefor in a related Borrowing
Request. Such written statement shall, in the absence of manifest error, be
rebuttably presumptive evidence of the subject matter thereof.
SECTION 6.3 WITHHOLDING TAXES.
(a) All payments made by Borrower or Servicer hereunder shall be
made free and clear of, and without reduction or withholding for or on account
of, any present or future taxes, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority or other taxing authority
excluding, in the case of Administrator and Lender, net income taxes imposed on
Administrator or Lender by the jurisdiction under the laws of which
Administrator or Lender is organized or any political subdivision or taxing
authority thereof or therein (such taxes, excluding such net income taxes, the
"Covered Taxes"). If any Covered Taxes are required to be withheld from any
amounts payable to Administrator or Lender, the amounts so payable to
Administrator or Lender shall be increased to the extent necessary to yield to
Administrator or Lender (after payment of all taxes) all such amounts payable
hereunder at the rates or in the amounts specified herein. Whenever any Covered
Taxes are payable by Borrower or Servicer, as promptly as possible thereafter,
Borrower or Servicer shall send to Administrator for its own account or for the
account of Lender, as the case may be, a certified copy of an original official
receipt received by Borrower or Servicer showing payment thereof. If Borrower or
Servicer fails to pay any Covered Taxes when due to the appropriate taxing
authority or fails to remit to Administrator the required documentary evidence,
Borrower or Servicer shall indemnify Administrator and Lender for such Covered
Taxes and any incremental taxes that may become payable by Administrator or
Lender as a result of any such failure.
(b) At least five (5) Business Days prior to the first date on
which any payments, including discount or Fees, are payable hereunder for the
account of Lender, if Lender is not incorporated under the laws of the United
States, Lender agrees to deliver to each of Borrower and Administrator two (2)
duly completed copies of (i) United States Internal Revenue Service Form 1001 or
4224 (or successor applicable form) certifying that such Lender is entitled to
receive payments hereunder without deduction or withholding of any United States
federal income taxes or (ii) United States Internal Revenue Service Form W-8 or
W-9 (or successor applicable form) to establish an exemption from United States
backup withholding tax. Lender shall replace or update such forms as is
necessary or appropriate to maintain any applicable exemption or as is requested
by Administrator or Borrower. If Lender does not deliver the forms described in
this Section 6.3(b), Borrower or Administrator shall withhold United States
federal income taxes from any payments made hereunder at the statutory rate
applicable to payments
32
made to Lender. Lender agrees to indemnify and hold Borrower and Administrator
harmless for any United States federal income taxes, penalties, interest and
other costs and losses incurred or payable by Borrower or Administrator as a
result of either (A) Lender's failure to submit any form required to be provided
pursuant to this Section 6.3(b) or (B) Borrower's or Administrator's reliance on
any form that Lender has provided pursuant to this Section 6.3(b).
ARTICLE VII
CONDITIONS TO BORROWING
The making of any Loan hereunder is subject to the following conditions
precedent:
SECTION 7.1 INITIAL LOAN.
The obligation of Lender to make the initial Loan hereunder is, in
addition to the conditions precedent specified in Section 7.2, subject to the
condition precedent that Administrator shall have received all of the following,
each duly executed and dated the date of such Loan (or such earlier date as
shall be satisfactory to Administrator), in form and substance satisfactory to
Administrator:
(a) Resolutions. Certified copies of resolutions of the Board of
Directors of Borrower and Toro authorizing or ratifying the execution, delivery
and performance, respectively, of the Transaction Documents to which it is a
party, together with a certified copy of its articles or certificate of
incorporation and by-laws.
(b) Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
with respect to the Transaction Documents.
(c) Incumbency and Signatures. A certificate of the Secretary or
an Assistant Secretary of each of Borrower and Toro certifying the names of its
officer or officers authorized to sign the Transaction Documents to which it is
a party.
(d) Good Standing Certificates. Good standing certificates for
Borrower and Toro issued as of a recent date acceptable to Administrator by (i)
the Secretary of State of the jurisdiction of such Person's incorporation or
organization, and (ii) the Secretary of State of the jurisdiction where such
Person's chief executive office and principal place of business are located.
(e) Financing Statements. (i) Acknowledgment copies of proper
financing statements (Form UCC-1), filed on or prior to the date of the initial
Loan, naming Borrower as debtor and Administrator (for the benefit of the
Secured Parties) as the secured party as may be necessary or, in the opinion of
Administrator, desirable under the UCC to perfect Administrator's (for the
benefit of the Secured Parties) security interest in the Collateral, (ii)
acknowledgment copies of proper financing statements, filed on or prior to the
date of the initial Loan, naming Toro as seller/debtor, Borrower as
purchaser/secured party and Administrator as assignee as may be necessary or, in
the opinion of Administrator, desirable under the UCC to perfect Borrower's
ownership interest in the Receivables and (iii) executed copies of proper
Uniform Commercial
33
Code Form UCC-3 termination statements, if any, necessary to release all Liens
upon or with respect to the Collateral granted by Borrower or the Originator.
(f) Search Reports. A written search report ("Search Report")
provided to Administrator by a search service acceptable to Administrator
listing all effective financing statements that name Borrower or the Originator
as debtor or assignor and that are filed in the jurisdictions in which filings
were made pursuant to Section 7.1(e) above and in such other jurisdictions that
Administrator shall reasonably request, together with copies of such financing
statements (none of which shall cover any Collateral or interests therein or
proceeds of any thereof), and tax and judgment lien search reports from a Person
satisfactory to Administrator showing no evidence of such lien filed against
Borrower or the Originator.
(g) Fee Letter; Payment of Fees. The Fee Letter, together with all
outstanding Fees payable pursuant to the Fee Letter.
(h) Receivables Purchase Agreement. (i) Duly executed and
delivered counterparts of the Receivables Purchase Agreement and all documents,
agreements and instruments contemplated thereby, and (ii) evidence that each of
the conditions precedent to the execution and delivery of the Receivables
Purchase Agreement has been satisfied to Administrator's satisfaction, and that
the initial assignments and transfers under the Receivables Purchase Agreement
have been consummated.
(i) Opinions of Counsel. Opinions of counsel to Borrower, Servicer
and the Originator in form and substance satisfactory to Administrator.
(j) Lender Note. Lender Note, duly executed by Borrower.
(k) Borrowing Base Certificate. A certificate, substantially in
the form of Exhibit D (a "Borrowing Base Certificate"), duly executed by an
officer of Borrower (or the Servicer on its behalf) showing a calculation of the
Borrowing Base as of the date of such initial Loan.
(l) Collection Account Agreements. The Collection Account
Agreements, duly executed by all of the parties thereto.
(m) Releases. Releases and termination statements duly executed by
each Person, other than Borrower, that has an interest in the Receivables.
(n) Other. Such other documents, certificates and opinions as
Administrator may request.
SECTION 7.2 ALL LOANS.
The making of the initial Loan and each subsequent Loan are subject to
the following further conditions precedent that:
(a) No Default, etc. (i) No Significant Event or Unmatured
Significant Event has occurred and is continuing or will result from the making
of such Loan, (ii) the representations and warranties of Borrower and Servicer
contained in Article VIII are true and correct as of the
34
date of such requested Loan, with the same effect as though made on the date of
such Loan, and (iii) after giving effect to such Loan, the aggregate unpaid
balance of the Loans will not exceed the lesser of the Borrowing Base or the
Facility Limit. By making a Borrowing Request, Borrower shall be deemed to have
represented and warranted that items (i), (ii), and (iii) in the preceding
sentence are true and correct.
(b) Borrowing Request, etc. Administrator shall have received a
Borrowing Base Certificate and Borrowing Request for such Loan in accordance
with Section 2.2, together with all items required to be delivered in connection
therewith.
(c) Commitment Termination Date. The Commitment Termination Date
shall not have occurred.
(d) Collateral Review. Administrator shall have received for all
Loans subsequent to the initial Loan on the Closing Date the most-recent
Collateral Review pursuant to Section 9.1(e)(vi).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
In order to induce Lender and Administrator to enter into this
Agreement and, in the case of Lender, to make Loans hereunder, Borrower hereby
represents and warrants to Administrator and Lender as to itself as follows, and
Servicer hereby represents and warrants to Lender and Administrator as to itself
as follows:
SECTION 8.1 ORGANIZATION AND GOOD STANDING, ETC.
Each of Borrower's and Servicer's jurisdiction of organization is
correctly set forth in the preamble to this Agreement. Each of Borrower and
Servicer is duly organized and is a "registered organization" as defined in the
UCC in effect in such jurisdiction. Each of Borrower and Servicer is validly
existing and in good standing under the laws of its state of organization, with
power and authority to own their respective properties and to conduct their
respective businesses as such properties are presently owned and such businesses
are presently conducted. Each of Borrower and Servicer is duly licensed or
qualified to do business as a foreign entity in good standing in the
jurisdiction where its principal place of business and chief executive office
are located and in each other jurisdiction in which the failure to be so
licensed or qualified has had, or would be reasonably likely to have a material
adverse effect on its ability to pay or perform its obligations hereunder. Toro
owns 100% of the capital stock of Borrower free and clear of any Lien.
SECTION 8.2 POWER AND AUTHORITY; DUE AUTHORIZATION.
Each of Borrower and Servicer has (a) all necessary power, authority
and legal right to (i) execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Documents to which it is a party,
and (ii) in the case of Borrower, to borrow on the terms and subject to the
conditions herein provided, and (b) duly authorized, by all necessary action,
the execution, delivery and performance of this Agreement and the other
Transaction
35
Documents to which it is a party and, in the case of Borrower, the borrowing,
and the granting of security therefor, on the terms and conditions provided
herein. Servicer had at all relevant times, and now has, all necessary power,
authority and legal right to perform its duties as Servicer.
SECTION 8.3 NO VIOLATION.
The consummation of the transactions contemplated by this Agreement and
the other Transaction Documents and the fulfillment of the terms hereof and
thereof will not (a) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, (i) the organizational documents of Borrower or Servicer, or (ii)
any indenture, loan agreement, pooling and servicing agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or instrument to
which Borrower or Servicer is a party or by which any of them or any of their
respective properties is bound, (b) result in or require the creation or
imposition of any Lien upon any of their respective properties pursuant to the
terms of any such indenture, loan agreement, pooling and servicing agreement,
receivables purchase agreement, mortgage, deed of trust, or other agreement or
instrument, other than pursuant to the terms of the Transaction Documents, or
(c) violate any law or any order, rule, or regulation applicable to Borrower or
Servicer or of any court or of any federal, state or foreign regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over Borrower, the Originator or Servicer or any of their respective properties.
SECTION 8.4 VALIDITY AND BINDING NATURE.
This Agreement is, and the other Transaction Documents to which it is a
party when duly executed and delivered by Borrower or Servicer (as applicable)
and the other parties thereto will be, the legal, valid and binding obligation
of Borrower or Servicer (as applicable) enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally and by general principles of equity.
SECTION 8.5 GOVERNMENT APPROVALS.
No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body required for the due
execution, delivery or performance by Borrower or Servicer of any Transaction
Document to which it is a party remains unobtained or unfiled.
SECTION 8.6 SOLVENCY.
Borrower is Solvent.
SECTION 8.7 MARGIN REGULATIONS.
Neither Borrower or Servicer is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock, and no proceeds
of any Loans, directly or indirectly, will be used for a purpose that violates,
or would be inconsistent with, Regulations T, U and X promulgated by the Federal
Reserve Board from time to time.
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SECTION 8.8 QUALITY OF TITLE.
The Collateral, including, without limitation, the Receivables, in
which a security interest is to be granted to Administrator (for the benefit of
the Secured Parties) pursuant to this Agreement is owned by Borrower free and
clear of any Lien. Borrower has a first priority perfected ownership interest in
the Receivables. This Agreement creates a valid first priority security interest
in favor of Administrator (for the benefit of the Secured Parties) in the
Collateral, including without limitation the Receivables, which security
interest has been perfected (free and clear of any Lien) as security for the
Obligations. No effective financing statement or other instrument similar in
effect covering any of the Collateral or any interest therein is on file in any
recording office except for financing statements that may be filed (a) in favor
of Administrator (for the benefit of the Secured Parties) in accordance with
this Agreement, (b) in favor of Borrower in accordance with the Receivables
Purchase Agreement, or (c) UCC-3 termination statements necessary to release all
Liens of any Person in the Collateral granted by Borrower or the Originator.
Borrower's jurisdiction of organization is a jurisdiction whose law generally
requires information concerning the existence of a nonpossessory security
interest to be made generally available in a filing, record or registration
system as a condition or result of such a security interest's obtaining priority
over the rights of a lien creditor which respect to collateral. Borrower is not
aware of any judgment or tax lien filings against it.
SECTION 8.9 OFFICES.
The principal place of business and chief executive office of Borrower
and Servicer is located at the address referred to on Schedule VI to this
Agreement (or at such other locations, notified to Administrator in
jurisdictions where all action required by Section 9.2(f) has been taken and
completed).
SECTION 8.10 COMPLIANCE WITH APPLICABLE LAWS; LICENSES, ETC.
(a) Each of Borrower and Servicer is in compliance with the
requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities, a breach of any of which, individually or in the
aggregate, would be reasonably likely to have a material adverse effect on its
ability to pay or perform its obligations hereunder.
(b) Neither Borrower nor Servicer has failed to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its business, which
violation or failure to obtain has had, or would be reasonably likely to have, a
material adverse effect on its ability to pay or perform its obligations
hereunder.
SECTION 8.11 NO PROCEEDINGS.
Except as described in Schedule IV,
(a) there is no order, judgment, decree, injunction, stipulation
or consent order of or with any court or other government authority to which
Borrower or Servicer is subject, and there is no action, suit, arbitration,
regulatory proceeding or investigation pending, or, to the knowledge of Borrower
or Servicer, threatened, before or by any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality, against Borrower or
37
Servicer that, individually or in the aggregate, has had, or is reasonably
likely to have a material adverse effect on its ability to pay or perform its
obligations hereunder; and
(b) there is no action, suit, proceeding, arbitration, regulatory
or governmental investigation, pending or, to the knowledge of Borrower or
Servicer, threatened, before or by any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, Lender Note or any other Transaction Document,
(ii) seeking to prevent the issuance of Lender Note or the consummation of any
of the other transactions contemplated by this Agreement or any other
Transaction Document or (iii) seeking to adversely affect the federal income tax
attributes of Borrower.
SECTION 8.12 INVESTMENT COMPANY ACT, ETC.
Neither Borrower nor Servicer is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company", of a "holding company", or an "affiliate"
of a "holding company", or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
SECTION 8.13 ELIGIBLE RECEIVABLES.
Each Receivable included in the Borrowing Base as an Eligible
Receivable on the date of any Borrowing Base Certificate, Monthly Report or any
Loan shall be an Eligible Receivable on such date.
SECTION 8.14 ACCURACY OF INFORMATION.
All information heretofore furnished by, or on behalf of, Borrower or
Servicer to Administrator or Lender in connection with any Transaction Document,
or any transaction contemplated thereby, is true and accurate in every material
respect (without omission of any information necessary to prevent such
information from being materially misleading).
SECTION 8.15 NO MATERIAL ADVERSE EFFECT.
Since October 31, 2002, there has been no event or circumstance which
has had, or could reasonably be expected to have, a material adverse effect on
the ability of Borrower or Servicer to pay or perform its obligations hereunder.
SECTION 8.16 TRADE NAMES AND SUBSIDIARIES.
Borrower has not used any other names, trade names or assumed names for
the six year period preceding the date of this Agreement. Borrower has no
Subsidiaries and does not own or hold, directly or indirectly, any equity
interest in any Person.
SECTION 8.17 ACCOUNTS.
Set forth in Schedule I hereto is a complete and accurate description,
as of the Closing Date, of the Collection Account, the Lock-Box Accounts and the
LockBoxes maintained by the
38
Originator, Borrower or Servicer for the purpose of receiving Collections with
respect to Receivables. The Collection Account and each Lock-Box Account has
been validly and effectively assigned to Administrator pursuant to this
Agreement and the Collection Account Agreements. The Collection Account
Agreements continue to be the legal, valid and binding obligations of the
parties thereto, enforceable against such parties in accordance with their
respective terms, and Borrower and Servicer acknowledge that all cash and other
proceeds of the Receivables will be deposited in the Lock-Box Accounts
Collection Account in accordance with this Agreement and are subject to the
terms and conditions of this Agreement. None of the Originator, Servicer or
Borrower has granted any interest in the Collection Account, any Lock-Box
Account or any LockBox to any Person other than Administrator, and Administrator
has exclusive control of the Collection Account, each Lock-Box Account and each
LockBox.
SECTION 8.18 SALES BY ORIGINATOR.
Each sale of Receivables by the Originator to Borrower shall have been
effected under, and in accordance with the terms of, the Receivables Purchase
Agreement, including the payment by Borrower to the Originator of an amount
equal to the purchase price therefor as described in the Receivables Purchase
Agreement, and each such sale shall have been made for "reasonably equivalent
value" (as such term is used under Section 548 of the Bankruptcy Code) and not
for or on account of "antecedent debt" (as such term is used under Section 547
of the Bankruptcy Code) owed by Borrower to the Originator.
ARTICLE IX
COVENANTS OF BORROWER AND SERVICER
SECTION 9.1 AFFIRMATIVE COVENANTS.
From the date hereof until the first day, following the Commitment
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, Borrower hereby covenants and agrees with Lender and
Administrator that as to itself, and Servicer hereby covenants and agrees with
Lender and Administrator as to itself, that it will:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders of all governmental
authorities (including those which relate to the Receivables).
(b) Preservation of Corporate Existence. Preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its
incorporation or organization, and qualify and remain qualified in good standing
as a foreign entity in the jurisdiction where its principal place of business
and its chief executive office are located and in each other jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would have a material adverse effect on its
ability to pay or perform its obligations hereunder.
(c) Performance and Compliance with Receivables. Timely and fully
perform and comply with all provisions, covenants and other promises required to
be observed by it under the Receivables and all other agreements related to such
Receivables.
39
(d) Collection Policy. Comply in all material respects with the
Collection Policy applicable to the Receivables.
(e) Reporting Requirements. Furnish to Administrator and Lender:
(i) Financial Statements.
(A) as soon as available, and in any event
within 120 days after the end of each Fiscal Year of Borrower,
a copy of the annual report for such Fiscal Year of Borrower
including a copy of the balance sheet of Borrower, in each
case, as at the end of such Fiscal Year, together with the
related statements of income or operations, stockholders'
equity and cash flows for such Fiscal Year, certified by the
chief executive officer, chief financial officer or controller
of Borrower (which certification shall state that such balance
sheet and statements fairly present the financial condition
and results of operations for such Fiscal Year in accordance
with GAAP), together with a certificate of such officer
stating that such officer has obtained no knowledge that a
Significant Event or Unmatured Significant Event has occurred
and is continuing, or if, in the opinion of such officer, such
a Significant Event or Unmatured Significant Event has
occurred and is continuing, a statement as to the nature
thereof;
(B) as soon as available and in any event within
120 days after the end of each Fiscal Year of Toro, a copy of
the audited consolidated balance sheet of Toro and its
Subsidiaries as of the end of such year and the related
statements of income or operations, stockholders' equity and
cash flows for such year earnings in each case setting forth
in comparative form the figures for the previous Fiscal Year,
and accompanied by the opinion of KPMG LLP or another
nationally recognized independent public accounting firm
("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial
position for the period indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion
shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material
portion of Toro's or any of its Subsidiaries' records or with
respect to Toro and its Subsidiaries as a going concern; and
(C) as soon as available and in any event within
50 days after the end of each of the first three fiscal
quarters of each Fiscal Year a copy of the unaudited
consolidated balance sheet of Toro and its Subsidiaries as of
the end of such quarter and the related consolidated
statements of income, stockholders' equity and cash flows for
the period commencing on the first day and ending on the last
day of such quarter and certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of Toro and
its Subsidiaries delivery of which balance sheets and
statements shall be accompanied by a certificate of such chief
financial officer or controller to the effect that no
Significant Event or Unmatured Significant Event has occurred
and is continuing.
40
(ii) Monthly Reports. On or before the 9th day of each
calendar month, or if such day is not a Business Day, on the next
following Business Day (each, a "Reporting Date"), Servicer shall
prepare and deliver to Administrator and Lender a report, substantially
in the form of Exhibit C or in such other form acceptable to
Administrator (a "Monthly Report"), as of the immediately preceding
Month End Date signed by an authorized officer of Servicer.
(iii) Weekly Reports. On or before the first Business Day
of each week, Servicer shall prepare and deliver to Administrator and
Lender a Borrowing Base Certificate, as of the last Business Day of
immediately preceding week.
(iv) Significant Events. As soon as possible but in any
event within three days after any officer of Borrower or Servicer
becomes aware of the occurrence of a Significant Event or an Unmatured
Significant Event, or a Purchase Termination Event or Incipient
Purchase Termination Event under (and as defined in) the Receivables
Purchase Agreement, an officer's certificate of Borrower or Servicer,
as the case may be, setting forth details of such event and the action
that Servicer, Borrower or the Originator, as the case may be, proposes
to take with respect thereto.
(v) Servicing Certificate. Servicer shall deliver, or
cause to be delivered, to Administrator, on or before the date that is
120 days after the end of each Fiscal Year, an officer's certificate
signed by the president, chief executive officer or any vice president
of Servicer, dated as of the last day of the preceding Fiscal Year,
stating that (A) a review of the activities of Servicer during the
preceding Fiscal Year and of its performance under this Agreement has
been made under such officer's supervision and (B) to the best of such
officer's knowledge, based on such review, Servicer has fulfilled its
obligations under the Agreement throughout such Fiscal Year and has
complied in all respects with the Collection Policy, or, if there has
been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status
thereof.
(vi) Collateral Review. As soon as possible, and in any
event within 60 days after the Closing Date, and after each semi-annual
period thereafter, a report of the independent certified public
accountants of Toro (each such report, a "Collateral Review") which
satisfies the requirements set forth on Schedule V.
(vii) Collection Policy. On or before February 28th of each
year, a summary of any changes to the Collection Policy made during the
previous year.
(viii) Fiscal Months. On or before July 31st of each
calendar year, an updated Schedule VII, showing each of the Fiscal
Months for the immediately succeeding fiscal year.
(ix) Sixty Day Period. Notice of the commencement of the
Sixty Day Period at least three (3) Business Days prior to the
commencement thereof.
(x) Other. Promptly, from time to time, such other
information, documents, records or reports respecting the Collateral,
the Receivables or the condition or
41
operations, financial or otherwise, of Borrower, the Originator or
Servicer as Administrator may from time to time reasonably request in
order to protect the interests of Administrator or Lender under or as
contemplated by this Agreement or the other Transaction Documents.
(f) Use of Proceeds. Borrower shall use the proceeds of the Loans
made hereunder solely in connection with (i) the acquisition or funding of
Receivables, (ii) making Parent Loans subject to the terms and conditions
contained herein and the other Transaction Documents and (iii) general corporate
purposes, to the extent permitted herein.
(g) Separate Legal Entity. Borrower hereby acknowledges that
Lender and Administrator are entering into the transactions contemplated by this
Agreement and the other Transaction Documents in reliance upon Borrower's
identity as a legal entity separate from any other Person. Therefore, from and
after the date hereof, Borrower shall take all reasonable steps to continue
Borrower's identity as a separate legal entity and to make it apparent to third
Persons that Borrower is an entity with assets and liabilities distinct from
those of any other Person, and is not a division of any other Person. Without
limiting the generality of the foregoing and in addition to and consistent with
the covenant set forth in Section 9.1(b), Borrower shall take such actions as
shall be required in order that:
(i) Borrower will be a special purpose corporation whose
primary activities are restricted in its certificate of incorporation
to owning financial assets and financing the acquisition thereof and
conducting such other activities as it deems necessary or appropriate
to carry out its primary activities;
(ii) Not less than one member of Borrower's Board of
Directors (the "Independent Director") shall be an individual who is
not, and during the past five (5) years has not been,: (A) a creditor,
supplier, director, officer, employee, family member, manager or
contractor of Servicer, the Originator or any of their respective
Subsidiaries or Affiliates (other than Seller), (B) a direct or
indirect or beneficial owner, excluding de minimus ownership interests,
(at the time of such individual's appointment as an Independent
Director or at any time thereafter while serving as an Independent
Director) of any of the outstanding common shares of Borrower,
Servicer, the Originator, or any of their respective Subsidiaries or
Affiliates, having general voting rights, or (C) a person who controls
(whether directly, indirectly or otherwise) Servicer, the Originator or
any of their respective Subsidiaries or Affiliates (other than Seller)
or any creditor, supplier, employee, officer, director, manager or
contractor of Servicer, the Originator or any of their respective
Subsidiaries or Affiliates (other than Seller).
(iii) Any employee, consultant or agent of Borrower will be
compensated from funds of Borrower, as appropriate, for services
provided to Borrower;
(iv) Borrower will allocate and charge fairly and
reasonably overhead expenses shared with any other Person. To the
extent, if any, that Borrower and any other Person share items of
expenses such as legal, auditing and other professional services, such
expenses will be allocated to the extent practical on the basis of
actual use
42
or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered;
(v) Borrower's operating expenses will not be paid by any
other Person except as permitted under the terms of this Agreement or
otherwise consented to by Administrator and Lender;
(vi) Borrower's books and records will be maintained
separately from those of any other Person;
(vii) All audited financial statements of any Person that
are consolidated to include Borrower will contain detailed notes
clearly stating that (A) all of Borrower's assets are owned by
Borrower, and (B) Borrower is a separate corporate entity;
(viii) Borrower's assets will be maintained in a manner that
facilitates their identification and segregation from those of any
other Person;
(ix) Borrower will strictly observe corporate formalities
in its dealings with all other Persons, and funds or other assets of
Borrower will not be commingled with those of any other Person;
(x) Borrower shall not, directly or indirectly, be named
or enter into an agreement to be named, as a direct or contingent
beneficiary or loss payee, under any insurance policy with respect to
any amounts payable due to occurrences or events related to any other
Person;
(xi) Any Person that renders or otherwise furnishes
services to Borrower will be compensated thereby at market rates for
such services it renders or otherwise furnishes thereto. Borrower will
not hold itself out to be responsible for the debts of any other Person
or the decisions or actions respecting the daily business and affairs
of any other Person;
(xii) Borrower will operate its business and activities
such that: it does not engage in any business or activity of any kind,
or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking, other than the
transactions contemplated and authorized by this Agreement and the
Receivables Purchase Agreement; and does not hold out its credit as
being available to satisfy the obligations of others, pledge its assets
for the benefit of any other entity, make loans or advances to any
other entity, acquire obligations or securities of any of its
shareholders or otherwise create, incur, guarantee, assume or suffer to
exist any indebtedness or other liabilities, whether direct or
contingent, other than (A) as a result of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business, (B) the incurrence of obligations under
this Agreement, (C) the making of Parent Loans pursuant to the
Receivables Purchase Agreement subject to the terms and conditions
therein, and (D) the incurrence of operating expenses in the ordinary
course of business of the type otherwise contemplated by this
Agreement; and
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(xiii) Borrower will maintain capitalization adequate for
the conduct of its business.
(h) Liens on Receivables. Defend each Receivable against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to Administrator and the Secured Parties.
(i) Further Assurances. At their expense, perform all acts and
execute all documents reasonably requested by Administrator at any time to
evidence, perfect, maintain and enforce the title or the security interest of
Administrator in the Receivables and the priority thereof. Borrower will, at the
reasonable request of Administrator, execute and deliver financing statements
relating to or covering the Collateral and, where permitted by law, Borrower
shall authorize Administrator to file one or more financing statements signed
only by Administrator. Borrower and Servicer shall cause its computer records,
master data processing records and other books and records relating to the
Receivables to be marked, with a legend stating that the Receivables have been
sold to Borrower and that the Collateral has been pledged to Administrator for
the benefit of the Secured Parties.
(j) Servicing. Servicer shall use all reasonable measures to
prevent or minimize any loss being realized on a Receivable and shall take all
reasonable steps to recover the full amount of such loss. Servicer shall follow
such practices and procedures for servicing the Receivables as would be
customary and usual for a prudent servicer under similar circumstances,
including using reasonable efforts to realize upon any recourse to the Obligors.
(k) Inspection. Servicer and Borrower shall permit Lender,
Administrator or their duly authorized representatives, attorneys or auditors to
inspect the Receivables, the Receivable Files, Documents and the related
accounts, records and computer systems, software and programs used or maintained
by Borrower or Servicer at such times as Lender or Administrator may reasonably
request; provided, that all inspections occurring after a Significant Event has
occurred shall be at the expense of Borrower. Upon instructions from Lender or
Administrator, Borrower or Servicer shall release any Document to Lender or
Administrator, as the case may be.
(l) Cooperation. Borrower and Servicer shall provide such
cooperation, information and assistance, and prepare and supply Administrator
with such data regarding the performance by the Obligors of their obligations
under the Receivables and the performance by Borrower and Servicer of their
respective obligations under the Transaction Documents, as may be reasonably
requested by Administrator from time to time.
(m) Facility. Servicer shall maintain its facility from which it
services the Receivables in its present condition, ordinary wear and tear
excepted, or such other facility of similar quality, security and safety as
Servicer may select from time to time. Servicer shall make all property tax
payments, lease payments and all other payments with respect to such facility.
Servicer shall (i) ensure that Administrator shall have complete and
unrestricted access, at Servicer's expense, to such facility and all computers
and other systems relating to the servicing of the Receivables and all persons
employed at such facility, (ii) use its best efforts to retain employees based
at such facility to provide assistance to Administrator and (iii) continue to
store
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on a daily basis all back-up files relating to the Receivables and the servicing
of the Receivables at the facilities of the Originator, or such other storage
facility of similar quality, security and safety as Servicer may select from
time to time, in the case of each of clauses (i), (ii) and (iii) until the
receipt of all Collections in respect of all Receivables or all Receivables have
been written off in accordance with the Collection Policy.
(n) Accounts. Borrower shall not maintain any bank accounts other
than the Collection Account and each Lock-Box Account described on Schedule I.
Except as set forth in the last sentence of Section 11.2(c)(ii) Borrower shall
not make, nor will it permit the Originator or Servicer to make, any change in
its instructions to Obligors regarding payments to be made to a LockBox or
Lock-Box Account or permit any funds other than Collections be deposited into
any LockBox, Lock-Box Account or the Collection Account. Neither Borrower nor
Servicer shall, nor will it permit the Originator to, add any Collection Account
Bank, Lock-Box Bank or Collection Account, to those listed on Schedule I unless
Administrator shall have consented thereto and received a copy of any new duly
executed Collection Account Agreement. Neither Borrower nor Servicer shall, nor
will it permit the Originator to, terminate any Collection Account Bank or close
any Collection Account or Lock-Box Account unless Administrator shall have
received at least thirty (30) days prior notice of such termination.
SECTION 9.2 NEGATIVE COVENANTS OF BORROWER AND SERVICER.
From the date hereof until the first day, following the Commitment
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, each of Borrower and Servicer hereby covenants and agrees.
(a) Sales, Liens, Etc. Except pursuant to, or as contemplated by,
the Transaction Documents, Borrower shall not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist voluntarily
or, for a period in excess of 5 days, involuntarily any Liens upon or with
respect to any of its assets, including, without limitation, the Collateral, any
interest therein or any right to receive any amount from or in respect thereof.
(b) Mergers, Acquisitions, Sales, Subsidiaries, Etc.
(i) Certain Restrictions on Borrower. Borrower shall not:
(A) be a party to any merger or consolidation,
or directly or indirectly purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of,
or any partnership or joint venture interest in, any other
Person, except for Permitted Investments, or sell, transfer,
assign, convey or lease any of its property and assets (or any
interest therein) other than pursuant to, or as contemplated
by, this Agreement or the other Transaction Documents;
(B) make, incur or suffer to exist an investment
in, equity contribution to, loan or advance to, or payment
obligation in respect of the deferred purchase price of
property from, any other Person, except for Permitted
Investments or pursuant to the Transaction Documents;
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(C) create any direct or indirect Subsidiary or
otherwise acquire direct or indirect ownership of any equity
interests in any other Person other than pursuant to the
Transaction Documents; or
(D) enter into any transaction with any
Affiliate except for the transactions contemplated by the
Transaction Documents and other transactions upon fair and
reasonable terms materially no less favorable to Borrower than
would be obtained in a comparable arm's length transaction
with a Person not an Affiliate.
(c) Change in Business Policy; Change in Collection Policy.
Borrower shall not make any change in the character of its business or permit
Toro to cease to own 100% of the capital stock of Borrower free and clear of any
Lien. Neither Borrower nor Servicer shall make any material adverse change to
the Collection Policy without giving the Administrator at least thirty (30) days
prior notice to the effectiveness thereof and obtaining the written consent of
the Administrator prior to the effectiveness of any such change.
(d) Other Indebtedness. Borrower shall not incur any Indebtedness
to any Person other than pursuant to this Agreement, the Receivables Purchase
Agreement or otherwise in connection with a transaction involving Lender, Bank,
any Credit Bank, any Liquidity Bank or any other Persons providing liquidity or
credit support to Lender.
(e) Certificate of Incorporation and By-Laws. Borrower shall not
amend its certificate of incorporation or by-laws without the prior written
consent of the Administrator.
(f) Chief Executive Office and Corporate Status. The principal
place of business and chief executive office of each of Borrower and Servicer is
located at the address referred to on Schedule VI to this Agreement. Originals
or duplicates of documents and records evidencing all Receivables are kept at,
and only at, said offices, and neither Borrower nor Servicer shall move its
chief executive office or permit the documents and records evidencing the
Receivables to be moved unless (i) Borrower or Servicer, as the case may be,
shall have given to Administrator prior written notice thereof, clearly
describing the new location, and (ii) Borrower shall have taken such action,
satisfactory to Administrator, to maintain the title or ownership of Borrower
and any security interest of Administrator in the Collateral at all times fully
perfected and in full force and effect. Servicer shall not, in any event, move
the location where it conducts the servicing and collection of the Receivables
from the address referred to on Schedule VI to this Agreement, without the prior
written consent of Administrator, which consent shall not be unreasonably
withheld. Borrower will not change (A) its name as it appears in official
filings in the jurisdiction of its organization, (B) its status as a "registered
organization" (within the meaning of Article 9 of any applicable enactment of
the UCC), (C) its organizational identification number, if any, issued by its
jurisdiction of organization, or (iii) its jurisdiction of organization unless
it shall have: (A) given Administrator at least forty-five (45) days' prior
written notice thereof; (B) at least ten (10) days prior to such change,
delivered to Administrator all financing statements, instruments and other
documents requested by Administrator in connection with such change or
relocation and (C) caused an opinion of counsel acceptable to Administrator and
the Secured Parties to be delivered to Administrator on behalf of the Secured
Parties that Administrator's security interest (for the benefit of the Secured
Parties) is perfected
46
and of first priority, such opinion to be in form and substance acceptable to
Administrator and the Secured Parties in their sole discretion.
(g) Financing Statements. Borrower shall not execute any effective
financing statement (or similar statement or instrument of registration under
the laws of any jurisdiction) or statements relating to any Receivables other
than the financing statements described in Section 7.1(e).
(h) Business Restrictions. Borrower shall not (i) engage in any
business or transactions, or be a party to any documents, agreements or
instruments, other than the Transaction Documents or those incidental to the
purposes thereof, or (ii) make any expenditure for any assets (other than
Receivables) if such expenditure, when added to other such expenditures made
during the same calendar year would, in the aggregate, exceed $10,500; provided,
however, that the foregoing will not restrict Borrower's ability to pay
servicing compensation as provided herein and, so long as no Significant Event
or Unmatured Significant Event shall have occurred and be continuing, and that
Borrower's tangible net worth, after giving effect thereto, shall not be less
than $2,250,000, Borrower's ability to make Parent Loans or other payments or
distributions legally made to Borrower's equity owners; provided, further, that
no Parent Loans shall be made by Borrower, if after giving effect thereto, the
Parent Loan Conditions shall not be satisfied.
ARTICLE X
SIGNIFICANT EVENTS AND THEIR EFFECT
SECTION 10.1 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default (an "Event
of Default") under this Agreement:
(a) Non-Payment of Loans, Etc. Borrower shall fail to make any
payment when due of any principal of or interest on any Loan, or payment of any
other amount payable by Borrower hereunder, including, without limitation,
interest on any Loan or any Fees, or shall fail to make any deposit required to
be made hereunder when due and such failure shall continue for three Business
Days.
(b) Non-Compliance with Other Provisions. (i) Borrower shall fail
to perform or observe any term, covenant or agreement contained in Section
9.1(e)(ii), Section 9.1(e)(iii), Section 9.1(e)(v) or Section 9.1(e)(vi) or (ii)
Borrower shall fail to perform or observe any term, covenant or agreement
contained in this Agreement (except as otherwise described in this Section 10.1)
or any other Transaction Document on its part to be performed or observed and,
solely with respect to this clause (ii), any such failure shall remain
unremedied for thirty days.
(c) Breach of Representations and Warranties. Any representation
or warranty of Borrower made or deemed to have been made hereunder or in any
other Transaction Document or any other writing or certificate furnished by or
on behalf of Borrower to Administrator or Lender for purposes of or in
connection with this Agreement or any other Transaction Document shall prove to
have been false or incorrect when made or deemed to have been made; provided,
47
however to the extent that a breach of a representation or warranty has occurred
with respect to any Receivable and either (i) a deposit to the Collection
account has previously been made pursuant to Section 4.6 or (ii) such deposit is
not yet due pursuant to the terms of Section 4.6, no Event of Default shall
occur pursuant to this paragraph (c).
(d) Bankruptcy. An Event of Bankruptcy shall have occurred and
remained continuing with respect to Borrower.
(e) Tax Liens. The IRS shall file notice of a lien pursuant to
Section 6323 of the Code with regard to any of the Receivables or Related
Security or other assets of Borrower and such lien shall not have been released
within seven (7) Business Days or the PBGC shall, or shall indicate its
intention to, file notice of a lien pursuant to Section 4068 of ERISA with
regard to any of the Receivables or Related Security or other assets of
Borrower.
(f) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of Servicer, Borrower or the Originator under
Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $10,000,000; (ii) the aggregate amount of Unfunded
Pension Liability among all Pension Plans at any time exceeds $10,000,000; or
(iii) Servicer, Borrower, the Originator or any ERISA Affiliate thereof shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$10,000,000.
SECTION 10.2 AMORTIZATION EVENTS.
Each of the following shall constitute an Amortization Event (an
"Amortization Event") under this Agreement:
(a) Servicer Event of Default. A Servicer Event of Default shall
have occurred and remained continuing.
(b) Borrowing Base Deficit. A Borrowing Base Deficit shall exist
and Borrower shall fail to make a prepayment pursuant to Section 4.1(d) or
otherwise cause sufficient funds to remedy such Borrowing Base Deficit to be
deposited in the Collection Account pursuant to Section 11.2(d)(v) for three
Business Days.
(c) Default Ratio. The Default Ratio shall be equal to or exceed
8.0% on a rolling three month average basis.
(d) Delinquency Ratio. The Delinquency Ratio shall be equal to or
exceed 8.0% on a rolling three month average basis.
(e) Dilution Ratio. The Dilution Ratio shall be equal to or exceed
8.5% on a rolling three month average basis.
(f) Accounts Receivable Turnover Ratio. The Accounts Receivable
Turnover Ratio is less than 5.16 for any Due Period.
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(g) Event of Default. An Event of Default shall have occurred and
remained continuing;
(h) Validity of Transaction Documents. (i) Any Transaction
Document, or any lien or security interest granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of Borrower, Servicer or the Originator which is a party to such Transaction
Document, (ii) Borrower, the Originator or Servicer shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature
or enforceability or (iii) any security interest securing any Obligation shall,
in whole or in part, cease to be a perfected first priority security interest.
SECTION 10.3 EFFECT OF SIGNIFICANT EVENT.
(a) Optional Termination. Upon the occurrence of a Significant
Event (other than an Event of Default described in Section 10.1(d) or a Servicer
Event of Default described in Section 11.7(g)), Administrator may, and at the
request of Lender shall, by notice to Borrower (a copy of which shall be
promptly forwarded by Administrator to each Rating Agency), declare all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable and/or Lender's Commitment (if not theretofore terminated)
to be terminated by declaring the Commitment Termination Date to have occurred,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be,
Lender's Commitment shall terminate.
(b) Automatic Termination. Upon the occurrence of an Event of
Default described in Section 10.1(d) or a Servicer Event of Default described in
Section 11.7(g)), the Commitment Termination Date shall be deemed to have
occurred automatically, and all outstanding Loans and all other Obligations
shall become immediately and automatically due and payable, all without
presentment, demand, protest, or notice of any kind.
(c) Notice to Rating Agencies. Administrator shall notify each
Rating Agency of the occurrence of any continuing Significant Event, promptly
following its actual knowledge thereof.
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ARTICLE XI
THE SERVICER
SECTION 11.1 TORO AS INITIAL SERVICER.
The servicing, administering and collection of the Receivables shall be
conducted by the Person designated from time to time as Servicer hereunder.
Until such time as Administrator shall notify Toro in writing pursuant to
Section 11.6 hereof of the revocation of such power and authority, Borrower,
Lender and Administrator hereby appoint Toro, and Toro hereby agrees to act, as
Servicer hereunder.
SECTION 11.2 CERTAIN DUTIES OF SERVICER.
(a) Authorization to Act as Borrower's Agent. Borrower hereby
appoints Servicer as its agent for the following purposes: (i) selecting the
amount of each requested Loan and executing Borrowing Requests on behalf of
Borrower, (ii) making transfers among, deposits to and withdrawals from all
deposit accounts of Borrower for the purposes described in the Transaction
Documents, (iii) arranging payment by Borrower of all Fees, expenses, other
Obligations and other amounts payable under the Transaction Documents, (iv)
causing the repayment and prepayment of the Loans as required or permitted
pursuant to Section 4.1 and (v) executing and preparing the Monthly Reports and
Weekly Reports; provided, however, that Servicer shall act in such capacity only
as an agent of Borrower and shall incur thereby no additional obligations with
respect to any Loan. Borrower irrevocably agrees that (A) it shall be bound by
all proper actions taken by Servicer pursuant to the preceding sentence, and (B)
Lender, Administrator and the banks holding all deposit accounts of Borrower are
entitled to accept submissions, determinations, selections, specifications,
transfers, deposits and withdrawal requests, and payments from Servicer on
behalf of Borrower.
(b) Toro to Act as Servicer. (i) Servicer shall service and
administer the Receivables on behalf of Borrower and Administrator (for the
benefit of the Secured Parties) and shall have full power and authority, acting
alone and/or through subservicers as provided in Section 11.2(b)(iii), to do any
and all things which it may deem reasonably necessary or desirable in connection
with such servicing and administration and which are consistent with this
Agreement. Consistent with the terms of this Agreement, Servicer may waive,
modify or vary any term of any Receivable or consent to the postponement of
strict compliance with any such term or in any manner, grant indulgence to any
Obligor if, in Servicer's reasonable determination, such waiver, modification,
postponement or indulgence is not materially adverse to the interests of
Borrower or Administrator (for the benefit of the Secured Parties); provided,
however, that Servicer may not permit any modification with respect to any
Receivable that would reduce the Unpaid Balance (except for actual payments
thereof), or extend the due date thereof, except that Servicer may take such
actions with respect to Defaulted Receivables if such actions will, in
Servicer's reasonable business judgment, maximize the Collections thereof.
Without limiting the generality of the foregoing, Servicer in its own name or in
the name of Borrower is hereby authorized and empowered by Borrower when
Servicer believes it appropriate in its best judgment to execute and deliver, on
behalf of Borrower, any and all instruments of satisfaction or cancellation, or
of
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partial or full release or discharge and all other comparable instruments, with
respect to the Receivables.
(ii) Servicer shall service and administer the Receivables
by employing such procedures (including collection procedures) and
degree of care, in each case consistent with applicable law, with the
Collection Policy and with prudent industry standards, as are
customarily employed by Servicer in servicing and administering
receivables owned or serviced by Servicer comparable to the
Receivables. Servicer shall not take any action to impair
Administrator's (for the benefit of the Secured Parties) security
interest in any Receivable, except to the extent allowed pursuant to
this Agreement or required by law.
(iii) Servicer may perform any of its duties pursuant to
this Agreement, including those delegated to it pursuant to this
Agreement, through subservicers appointed by Servicer, provided that
such subservicing arrangements may be terminated, at Administrator's
discretion, upon the replacement of Toro as Servicer. Such subservicers
may include Affiliates of Servicer. Notwithstanding any such delegation
of a duty, Servicer shall remain obligated and liable for the
performance of such duty as if Servicer were performing such duty.
(iv) Servicer may take such actions as are necessary to
discharge its duties as Servicer in accordance with this Agreement,
including the power to execute and deliver on behalf of Borrower such
instruments and documents as may be customary, necessary or desirable
in connection with the performance of Servicer's duties under this
Agreement (including consents, waivers and discharges relating to the
Receivables).
(v) Servicer shall keep separate records covering the
transactions contemplated by this Agreement, including the identity and
collection status of each Receivable purchased by Borrower from the
Originator and the Originator Payables.
(c) Collections. (i) On or prior to the Closing Date, Borrower and
Servicer shall have established and shall maintain thereafter the following
system of collecting and processing Collections of Receivables. Each Obligor
shall be instructed to make payments of Receivables by wire transfer to a
Lock-Box Account or the Collection Account or by check mailed to a post office
box listed on Schedule I (each a "LockBox" and collectively, the
"LockBoxes")(such payments, upon receipt in a LockBox being referred to herein
as "Mail Payments").
(ii) On or prior to the Closing Date, Administrator shall
have received a consent to assignment of the assignment of each LockBox
and Lock-Box Bank to Administrator. Servicer's right of access thereto
shall be revocable at the option of Administrator upon the occurrence
of Unmatured Significant Event or Significant Event. In addition, after
the occurrence of any Unmatured Significant Event or any Significant
Event, Servicer agrees that it shall, upon the written request of
Administrator, notify all Obligors under Receivables to make payment
thereof to (A) one or more bank accounts and/or post-office boxes
designated by Administrator and specified in such notice or (B) any
successor Servicer appointed hereunder.
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(iii) Servicer shall remove all Mail Payments, or cause all
Mail Payments to be removed, from each LockBox and Lock-Box Account by
the close of business on each Business Day and deposited into the
Collection Account. Servicer shall cause all payments received directly
by Servicer or otherwise to be deposited in the Collection Account
within one (1) Business Day after receipt thereof. Servicer shall
process all such Mail Payments, and all wire transfers, ACH payments
and other payments on the date received by recording the amount of the
payment received from the Obligor and the applicable account or invoice
number.
(iv) All Collections received by the Originator or
Servicer in respect of Receivables will, pending remittance to the
Collection Account as provided herein, be held by the Originator or
Servicer in trust for the exclusive benefit of Administrator, and shall
not be commingled with any other funds or property of the Originator or
Servicer.
(v) Borrower and Servicer hereby irrevocably waive any
right to set off against, or otherwise deduct from, any Collections.
(vi) In performing its duties and obligations hereunder,
Servicer (A) shall not impair the rights of Borrower or Administrator
in any Receivable, (B) shall not amend the terms of any Receivable
other than in accordance with the Collection Policy and this Agreement,
and (C) shall be entitled to commence or settle any legal action to
enforce collection of any Receivable. In the event that Servicer shall
breach any of its covenants set forth in clause (A), (B) or (C) of this
Section 11.2(c)(vi), Servicer shall pay the Unpaid Balance of each
Receivable affected thereby on the Distribution Date following the Due
Period in which such event occurs. For the purposes of Section 11.7
hereof, Servicer shall not be deemed to have breached its obligations
under this Section 11.2(c)(vi) unless it shall fail to make such
payment with respect to any Receivable affected by Servicer's
noncompliance with clause (A), (B) or (C) of this Section 11.2(c)(vi).
(vii) All payments or other amounts collected or received
by Servicer in respect of a Receivable shall be applied to the Unpaid
Balance of such Receivable.
(d) Collection Account. (i) On any Business Day, Borrower may
withdraw, or permit Servicer to withdraw funds that are on deposit in the
Collection Account for any purpose or use permitted hereby, including, without
limitation, making Parent Loans, paying the purchase price of Receivables
acquired by Borrower under the Receivables Purchase Agreement, paying any
dividends on its shares of capital stock and making any distribution to
stockholders, provided that (A) no Significant Event or Unmatured Significant
Event has occurred and is continuing and (B) the Commitment Termination Date has
not occurred. On the first Business Day of each week, the Servicer shall deliver
a certificate to Administrator, which certificate shall be substantially in the
form of Exhibit H hereto and which shall certify to the Administrator that (1)
the requirements set forth in clauses (A) and (B) of the immediately proceeding
sentence were satisfied with respect to each withdrawal made from the Collection
Account on any day during the immediately preceding week and (2) after giving
effect to all withdrawals made during the immediately preceding week, no
Borrowing Base Deficit exists or has occurred and, as of the
52
last day of the previous week, there were funds in the Collection Account at
least equal to the interest on the Loans and the Fees accrued through such date.
(ii) Prior to 3:00 p.m., New York time, on the Business
Day preceding each Distribution Date (a "Deposit Date"), the Servicer
shall deposit or cause to be deposited in the Collection Account, to
the extent not already on deposit therein, an amount equal to, without
duplication, the lesser of (A) (1) the aggregate amount of all
Collections received during the immediately preceding Due Period, plus
(2) the aggregate amounts due from Servicer on such Distribution Date
pursuant to Section 11.2(c)(vi) hereof, plus (3) the aggregate amount
of Originator Payables paid on such Distribution Date and (B) the
amounts due on such Distribution Date pursuant to clauses first through
sixth of Section 4.2(b), and the remainder of the Collections from such
Due Period shall be applied pursuant to the Receivables Purchase
Agreement, provided that if a Significant Event or Unmatured
Significant Event shall exist on such Distribution Date or the
Commitment Termination Date has occurred, then the Servicer shall
deposit all of the amounts described in this Section 11.2(d)(ii) in the
Collection Account on such Deposit Date.
(iii) Servicer shall distribute the amounts on deposit in
the Collection Account in accordance with Section 4.2 hereof.
(iv) Funds deposited in the Collection Account may be
invested by Servicer in Permitted Investments that mature not later
than the Business Day next preceding the Distribution Date. All income,
gain or losses realized from any such investment shall be credited or
debited (as applicable) to the balance of the Collection Account.
Servicer shall have no obligation to reimburse the Collection Account
for any losses realized by reason of such investments.
(v) On any day on which a Borrowing Base Deficit shall
exist, the Servicer shall cause an amount of Collections equal to such
Borrowing Base Deficit to be set aside and retained in the Collection
Account for application in accordance with this subsection (d). Such
funds shall be held in the Collection Account until the earlier of (A)
any prepayment made pursuant to the provisions of Section 4.1(d) and
(B) any payment made pursuant to the provisions of Section 4.2(a) or
4.2(b), as the case may be.
SECTION 11.3 SERVICING COMPENSATION.
Servicer, as compensation for its activities hereunder, shall be
entitled to receive the Servicing Fee, which shall be payable by Borrower on
each Distribution Date from funds on deposit in the Collection Account in
accordance with Section 4.2. Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of the fees and expenses of any subservicer) and shall not be entitled
to reimbursement therefor except as specifically provided herein.
SECTION 11.4 AGREEMENT NOT TO RESIGN.
Toro acknowledges that Lender and Administrator have relied on Toro's
agreement to act as Servicer hereunder in their respective decisions to execute
and deliver the respective
53
Transaction Documents to which they are parties. In recognition of the
foregoing, Toro agrees not to resign as Servicer voluntarily, except as required
by law (as evidenced by the delivery of an outside opinion of counsel to
Administrator, in form and substance satisfactory to Administrator), without the
prior written consent of Administrator.
SECTION 11.5 DESIGNATION OF SERVICER.
Borrower agrees not to designate any Person other than Toro as Servicer
without the prior written consent of Administrator.
SECTION 11.6 TERMINATION.
The authorization of Servicer to act on behalf of Borrower under this
Agreement and the other Transaction Documents shall terminate at the sole
discretion of Administrator upon the replacement of Servicer by a successor
Servicer selected by Administrator.
SECTION 11.7 SERVICER EVENTS OF DEFAULT.
Each of the following shall constitute a Servicer Event of Default (a
"Servicer Event of Default") under this Agreement:
(a) failure by the Servicer to make any payments required to be
made by it hereunder on the day on which such payment is required to be made and
such failure continues for three Business Days;
(b) (i) failure to perform or observe any term, covenant or
agreement contained in Section 9.1(e)(ii), Section 9.1(e)(iii), Section
9.1(e)(v) or Section 9.1(e)(vi) or (ii) failure to perform or observe any term,
covenant or agreement contained in this Agreement (except as otherwise described
in this Section 11.7) or any other Transaction Document on its part to be
performed or observed and, solely with respect to this clause (ii), any such
failure shall remain unremedied for thirty days;
(c) failure on the part of the Servicer to observe or perform in
any respect any other covenants or agreements of the Servicer contained herein
which continues unremedied for a period of 30 days;
(d) the delegation by the Servicer of its duties hereunder other
than to any subservicer as expressly authorized hereby;
(e) any representation, warranty or certification made by the
Servicer herein proves to have been incorrect when made; provided however to the
extent that a breach of representation or warranty has occurred with respect to
any Receivable and either (i) a deposit to the Collection Account has previously
been made pursuant to Section 4.6 or (ii) such deposit is not yet due pursuant
to the terms of Section 4.6, no Servicer Event of Default shall occur pursuant
to this paragraph (e);
(f) so long as Toro shall be the Servicer the Consolidated
Tangible Net Worth of Toro shall be less than or equal to $100,000,000;
54
(g) an Event of Bankruptcy shall have occurred with respect to the
Servicer or the Originator;
(h) a final judgment or judgments for the payment of money in
excess of $10,500 in the aggregate shall have been rendered against Borrower or
$10,000,000 in the aggregate shall have been rendered against Toro and the same
shall have remained unsatisfied and in effect, without stay of execution, for a
period of thirty consecutive days after the period for appellate review shall
have elapsed;
(i) Toro shall fail to pay any Indebtedness in excess of
$10,000,000 when due, or a default shall have occurred and be continuing with
respect to any such Indebtedness which default results in, or would permit, the
acceleration of such Indebtedness;
(j) The IRS shall file notice of a lien pursuant to Section 6323
of the Code with regard to any of the assets of Toro, and such lien shall not
have been released within seven (7) Business Days or PBGC shall, or shall
indicate its intention to, file a notice of lien pursuant to Section 4068 of
ERISA with regard to any of the assets of Toro;
(k) so long as Toro shall be the Servicer, Toro shall, on a
consolidated basis, permit its Consolidated Interest Coverage Ratio, as at the
end of each fiscal quarter for the four consecutive fiscal quarters then ended,
to fall below 2.0 to 1.0; or
(l) so long as Toro shall be the Servicer, Toro shall, on a
consolidated basis, permit its consolidated ratio of total Indebtedness to total
Indebtedness plus shareholders' equity to exceed (i) 0.60 to 1.0 as at the end
of the first fiscal quarter of each Fiscal Year, (ii) 0.65 to 1.00 as at the end
of the second fiscal quarter of each Fiscal Year, (iii) 0.60 to 1.0 as at the
end of the third fiscal quarter of each Fiscal Year and (iv) 0.55 to 1.00 as at
the end of each Fiscal Year.
At any time during the continuance of any Servicer Event of Default,
Administrator may, in its sole discretion, notify Servicer in writing of the
revocation of its appointment as Servicer hereunder. Upon revocation of
Servicer's appointment hereunder, Administrator shall appoint a successor
Servicer.
Servicer agrees that upon receipt of written notification from
Administrator of the revocation of Servicer's appointment as Servicer hereunder,
Servicer shall upon the written request of Administrator (which request may be
contained in the notification of revocation) (i) notify all Obligors under the
Receivables to make payment thereof to a bank account(s) or post office box
designated by Administrator and specified in such notice, and (ii) pay to
Administrator (or its designee) immediately all Collections then held or
thereafter received by Servicer or the Originator of Receivables, together with
all other payment obligations of the Servicer hereunder owing to Lender or
Administrator.
Servicer shall, at its sole cost and expense, cooperate with and assist
the successor Servicer (including, without limitation, providing access to, and
transferring, all Receivable Files and all records (including data-processing
records) relating thereto (which shall be held in trust for the benefit of the
parties hereto in accordance with their respective interests)) and allowing the
successor Servicer to use all licenses, hardware or software necessary or
desirable to collect the Receivables). Toro irrevocably agrees to act (if
requested to do so) as the data-processing
55
agent for the successor Servicer (in substantially the same manner as Toro
conducted such data-processing functions while it acted as Servicer).
ARTICLE XII
ADMINISTRATOR
SECTION 12.1 AUTHORIZATION AND ACTION.
Lender hereby appoints SunTrust Capital Markets, Inc. as its
Administrator for purposes of the Transaction Documents and authorizes SunTrust
Capital Markets, Inc. in such capacity to take such action on its behalf under
each Transaction Document and to exercise such powers hereunder and thereunder
as are delegated to SunTrust Capital Markets, Inc., as Administrator, by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto and SunTrust Capital Markets, Inc. hereby accepts such appointment and
agrees to take such action as necessary in furtherance thereof.
SECTION 12.2 ADMINISTRATOR AND AFFILIATES.
Bank and any of its Affiliates may generally engage in any kind of
business with Borrower, Bank, Servicer, any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of
Borrower, Bank, Servicer, any Obligor or any of their respective Affiliates, all
as if SunTrust Capital Markets, Inc. were not Administrator and without any duty
to account therefor to Lender.
ARTICLE XIII
ASSIGNMENTS
SECTION 13.1 RESTRICTIONS ON ASSIGNMENTS.
Neither Borrower nor Servicer may delegate any of its duties, or assign
its rights, hereunder or any interest herein without the prior written consent
of Administrator and Lender. Lender may not assign its rights hereunder, any
Loan or Lender Note (or any portion thereof) to any Person without the prior
written consent of Borrower; provided, however, that:
(a) Lender may assign, or grant a security interest in, all or any
portion of the Loans and Lender Note to Credit Bank, any Liquidity Bank (or any
successor of any thereof by merger, consolidation or otherwise), any Affiliate
of Credit Bank or any Liquidity Bank in connection with a draw under the
Liquidity Agreement or a Credit Advance (which may then assign all or any
portion thereof so assigned or any interest therein to such party or parties as
it may choose); and
(b) Lender may assign any Loan to any other Person proposed by
Lender and consented to by Borrower (such consent not to be unreasonably
withheld or delayed). Administrator shall promptly provide notice of any such
assignment to each Rating Agency.
56
Within five Business Days after notice to Borrower of any proposed
assignment by Lender for which Borrower's consent is required, Borrower agrees
to advise Administrator of its consent or non-consent thereto. If Borrower does
not consent to such assignment Lender may immediately assign the Loan (or
portion thereof) that was subject to such proposal to Bank, any Liquidity Bank
or any Affiliate of Bank or any Liquidity Bank. Subject to Section 13.2, all of
the aforementioned assignments shall be upon such terms and conditions as Lender
and the assignee may mutually agree.
SECTION 13.2 DOCUMENTATION.
Lender shall deliver to each assignee an assignment, in such form as
Lender and the related assignee may agree, duly executed by Lender, assigning
any such Loan to the assignee, and Lender shall promptly execute and deliver all
further instruments and documents, and take all further action, that the
assignee may reasonably request, in order to perfect, protect or more fully
evidence the assignee's right, title and interest in and to such Loan, and to
enable the assignee to exercise or enforce any rights hereunder or under Lender
Note evidencing such Loan.
SECTION 13.3 RIGHTS OF ASSIGNEE.
Upon the foreclosure of any assignment of any Loans made for security
purposes, or upon any other assignment of any Loan from Lender pursuant to this
Article XIII, the respective assignee receiving such assignment shall have all
of the rights of Lender hereunder to the extent of such assignment with respect
to such Loans and all references to Lender in Section 6.1 shall be deemed to
apply to such assignee to the extent of such assignment.
SECTION 13.4 NOTICE OF ASSIGNMENT.
Lender shall provide notice to Borrower of any assignment hereunder by
Lender to any assignee. Lender authorizes Administrator to, and Administrator
agrees that it shall, endorse Lender Note to reflect any assignments made
pursuant to this Article XIII or otherwise.
ARTICLE XIV
INDEMNIFICATION
SECTION 14.1 GENERAL INDEMNITY OF BORROWER.
Without limiting any other rights which any such Person may have
hereunder or under applicable law, Borrower hereby agrees to indemnify
Administrator, Lender, Servicer, each Liquidity Bank, each Credit Bank, Bank,
each of Bank's Affiliates and each of their respective successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each of the foregoing
Persons being individually called an "Indemnified Party"), forthwith on demand,
on an after-tax basis, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively called "Indemnified
Amounts") awarded against or incurred by any of them arising out of or relating
to any Transaction Document or the transactions contemplated thereby, any
commingling of funds (whether or not permitted hereunder), or the use of
proceeds therefrom by
57
Borrower, including (without limitation) in respect of the funding of any Loan
or in respect of any Receivable; excluding, however, (a) Indemnified Amounts to
the extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party and
(b) any tax upon or measured by net income (except those described in Section
6.1(a)) on any Indemnified Party.
SECTION 14.2 INDEMNITY OF SERVICER.
Without limiting any other rights which any such Person may have
hereunder or under applicable law, Toro as Servicer, hereby agrees to indemnify
each Indemnified Party forthwith on demand, on an after-tax basis, from and
against any and all Indemnified Amounts awarded against or incurred by any of
them arising from, or related to, the negligence or willful misconduct of Toro,
the inaccuracy of any representation or warranty of Toro, or the failure of Toro
to perform its obligations under any Transaction Document; excluding, however,
(a) Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct on the
part of such Indemnified Party, (b) Indemnified Amounts to the extent solely due
to non-payment by any Obligor of an amount due and payable with respect to a
Receivable for credit reasons, and (c) any tax upon or measured by net income on
any Indemnified Party.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 NO WAIVER; REMEDIES.
No failure on the part of Lender, Administrator, any Indemnified Party
or any Affected Party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by any of them of any right, power or remedy hereunder preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, each of Bank, each
Credit Bank and each Liquidity Bank is hereby authorized by Borrower at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by Bank, such
Credit Bank or such Liquidity Bank to or for the credit or the account of
Borrower, now or hereafter existing under this Agreement, to Administrator, any
Affected Party, any Indemnified Party, or Lender or their respective successors
and assigns.
SECTION 15.2 AMENDMENTS, ETC.
No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement and any Schedules hereto, or Lender Note shall
in any event be effective unless the same shall be in writing and signed and
delivered by (a) Borrower, Servicer, Administrator and Lender (with respect to
an amendment), or (b) Administrator and Lender (with respect to a waiver or
consent by them) or Servicer or Borrower (with respect to a waiver or consent by
them), as the case may be, and then any such waiver or consent shall be
effective only in the
58
specific instance and for the specific purpose for which given; provided,
however, that no material amendment of this Agreement (other than an amendment
to extend the Scheduled Commitment Termination Date) shall be effective unless
Lender (or Administrator on its behalf) shall have received written confirmation
by the Rating Agencies that such amendment shall not cause the rating on the
then outstanding Commercial Paper Notes to be downgraded or withdrawn.
Administrator shall provide each Rating Agency with a copy of each amendment to
or consent or waiver under this Agreement promptly following the effective date
thereof.
SECTION 15.3 NOTICES, ETC.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission and electronic mail, provided that
any matter transmitted by Servicer or Borrower by facsimile or electronic mail
shall be immediately confirmed by a telephone call to the recipient at the
number specified on Schedule VI) and mailed, faxed or delivered, to the address
or facsimile number specified for notices on Schedule VI; or, as directed to
Servicer, Borrower, Lender or Administrator, to such other address as shall be
designated by such party in a written notice to the other parties.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, faxed or sent by electronic mail, be
effective when delivered for overnight (next-day) delivery, transmitted in
legible form by facsimile machine, or sent by electronic mail, respectively, or
if mailed, upon the third Business Day after the date deposited into the U.S.
mail, or if delivered, upon delivery.
(c) Any agreement of Administrator and Lender herein to receive
certain notices by telephone, facsimile or electronic mail is solely for the
convenience and at the request of Borrower and Servicer. Administrator and
Lender shall be entitled to rely on the authority of any Person purporting to be
a Person authorized by Borrower or Servicer, as the case may be, to give such
notice and Administrator and Lender shall not have any liability to Borrower
and/or Servicer, as the case may be, or other Person on account of any action
taken or not taken by Administrator or Lender in reliance upon such telephonic,
facsimile or electronic mail notice. The obligation of Borrower to pay the
Obligations shall not be affected in any way or to any extent by any failure by
Administrator, Lender or any Affected Party to receive written confirmation of
any telephonic, facsimile or electronic mail notice or the receipt by
Administrator, Lender or any Affected Party, as the case may be, of a
confirmation which is at variance with the terms understood by Administrator,
Lender or any Affected Party, as the case may be, to be contained in the
telephonic, facsimile or electronic mail notice.
SECTION 15.4 COSTS, EXPENSES AND TAXES.
In addition to its obligations under Section 14.1, Borrower agrees to
pay on demand:
(a) all costs and expenses incurred by Administrator, Lender, each
Liquidity Bank, each Credit Bank and Servicer in connection with (i) the
preparation, execution, delivery, administration and enforcement of, or any
breach of, this Agreement, Lender Note, the other Transaction Documents, the
Liquidity Agreement and, to the extent directly related to this
59
Agreement, the Program Documents (including any amendments or modifications of
or supplements to the Program Documents directly related to this Agreement),
including, without limitation, the reasonable fees and expenses of counsel to
any of such Persons incurred in connection therewith, (ii) the perfection of
Administrator's security interest in the Collateral, (iii) the maintenance of
the Collection Account and each Lock-Box Account, (iv) the audit of the books,
records and procedures of the Originator, Servicer and Borrower by
Administrator's auditors (which may be employees of Administrator), and (v)
Rating Agency fees related to the transactions contemplated by this Agreement;
and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement, Lender Note, the other Transaction Documents, or (to the extent
directly related to this Agreement) the Program Documents, and agrees to
indemnify each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 15.5 BINDING EFFECT; SURVIVAL.
This Agreement shall be binding upon and inure to the benefit of
Borrower, Bank, Toro, Lender, Administrator, and their respective successors and
assigns, and the provisions of Article VI and Article XIV shall inure to the
benefit of the Affected Parties and the Indemnified Parties, respectively, and
their respective successors and assigns; provided, however, nothing in the
foregoing shall be deemed to authorize any assignment not permitted by Article
XIII. This Agreement shall create and constitute the continuing obligations of
the parties hereto in accordance with its terms, and shall remain in full force
and effect until such time, after the Commitment Termination Date, when all
Obligations have been finally and fully paid and performed. The rights and
remedies with respect to any breach of any representation and warranty made by
Borrower or Servicer pursuant to Article VIII and the indemnification and
payment provisions of Article XIV and Article VI, Sections 15.4, 15.11 and 15.12
shall be continuing and shall survive any termination of this Agreement and any
termination of Toro's rights to act as Servicer hereunder or under any other
Transaction Document.
SECTION 15.6 CAPTIONS AND CROSS REFERENCES.
The various captions (including, without limitation, the table of
contents) in this Agreement are provided solely for convenience of reference and
shall not affect the meaning or interpretation of any provision of this
Agreement. Unless otherwise indicated, references in this Agreement to any
Section, Appendix, Schedule or Exhibit are to such Section of or Appendix,
Schedule or Exhibit to this Agreement, as the case may be, and references in any
Section, subsection, or clause to any subsection, clause or subclause are to
such subsection, clause or subclause of such Section, subsection or clause.
SECTION 15.7 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
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SECTION 15.8 GOVERNING LAW.
THIS AGREEMENT AND LENDER NOTE SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
SECTION 15.9 COUNTERPARTS.
This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original but all of which
shall constitute together but one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart Agreement.
SECTION 15.10 SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY.
(a) Borrower and Servicer hereby submit to the nonexclusive
jurisdiction of any United States District Court for the Southern District of
New York and of any New York state court sitting in New York, New York for
purposes of all legal proceedings arising out of, or relating to, the
Transaction Documents or the transactions contemplated thereby. Each of Borrower
and Servicer hereby irrevocably waives, to the fullest extent possible, any
objection it may now or hereafter have to the venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
Nothing in this Section 15.10 shall affect the right of Administrator or Lender
to bring any action or proceeding against Borrower or Servicer or its respective
property in the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR
ANY MATTER ARISING THEREUNDER.
SECTION 15.11 NO RECOURSE AGAINST LENDER.
The obligations of Lender under this Agreement are solely the corporate
obligations of Lender. No recourse shall be had for any obligation, covenant or
agreement (including, without limitation, the payment of any amount owing in
respect to this Agreement or the payment of any fee hereunder or for any other
obligation or claim) arising out of or based upon this Agreement or any other
agreement, instrument or document entered into pursuant hereto or in connection
herewith against any stockholder, employee, officer, director, manager,
administrator, partner or incorporator of Lender, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise.
SECTION 15.12 NO PROCEEDINGS.
Each of the parties hereto hereby agree that it will not institute
against Lender, or join any other Person in instituting against Lender, any
insolvency proceeding (namely, any proceeding of the type referred to in the
definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued
by Lender shall be outstanding and there shall not have elapsed one year plus
one
61
day since the last day on which any such Commercial Paper Notes shall be
outstanding. The provisions of this Section 15.12 shall survive the termination
hereof.
SECTION 15.13 CONFIDENTIALITY OF AGREEMENT.
Unless otherwise consented to by Administrator, each of Borrower and
Servicer hereby agrees that it will not disclose the contents of any Transaction
Document, or any other confidential or proprietary information furnished by
Administrator or Lender to any Person other than its Affiliates (which
Affiliates shall have executed an agreement satisfactory in form and in
substance to Administrator to be bound by this Section 15.13) auditors and
attorneys or as required by applicable law.
SECTION 15.14 LIMITATION ON PAYMENTS.
Notwithstanding any provisions contained in this Agreement to
the contrary, the Lender shall not, and shall not be obligated to, pay any
amount pursuant to this Agreement unless (a) the Lender has received funds which
may be used to make such payment and which funds are not required to repay the
Commercial Paper Notes and Voluntary Advance Loans when due and (b) after giving
effect to such payment, either (i) there is sufficient liquidity availability
(determined in accordance with the Program Documents), under all of the
liquidity facilities for the Lender's commercial paper program, to pay the Face
Amount of all outstanding Commercial Paper Notes and Voluntary Advance Loans
when due or (ii) all Commercial Paper Notes and Voluntary Advance Loans are paid
in full. Any amount which the Lender does not pay pursuant to the operation of
the preceding sentence shall not constitute a claim (as defined in ss.101 of the
Bankruptcy Code) against or corporate obligation of the Lender for any such
insufficiency unless and until such payment may be made in accordance with
clauses (a) and (b) above. The agreements in this Section 15.14 shall survive
termination of this Agreement, the reduction to zero of the Lender Note and
payment of all obligations hereunder.
SECTION 15.15 ENTIRE AGREEMENT.
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND
DELIVERED HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[signature pages begin on next page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
TORO RECEIVABLES COMPANY,
as Borrower
By:____________________________________
Name:__________________________________
Title:_________________________________
THE TORO COMPANY,
as Servicer
By:____________________________________
Name:__________________________________
Title:_________________________________
THREE PILLARS FUNDING CORPORATION,
as Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SUNTRUST CAPITAL MARKETS, INC.,
as Administrator
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
FORM OF BORROWING REQUEST
To: Three Pillars Funding Corporation ("Lender")
SunTrust Capital Markets, Inc. ("Administrator")
From: Toro Receivables Company ("Borrower")
Re: Loan Agreement, dated as of July 9, 2003, between Borrower,
The Toro Company ("Toro") as initial Servicer, Lender and the
Administrator as heretofore amended, (the "Agreement")
A. (i) Pursuant to Section 2.2, the undersigned hereby requests a
Loan from Lender in an amount equal to the following (at least
$1,000,000 and in integral multiples of $500,000 $____________
(ii) The date such Loan is requested is:
(iii) The total principal amount of Loans outstanding under
the Loan Agreement, including the amount in (i) above,
is equal to: $____________
(iv) The amount in (iii) above does not exceed the Borrowing Base
as of the date hereof or the Facility Limit ($75,000,000)
B. (i) The Aggregate Unpaid
Balance as of the date hereof
is equal to: $____________
(ii) The aggregate Excess Concentration Amount as of the date
hereof is: $____________
(iii) (A) The Loss Reserve is: ____________%
(B) The Dilution Reserve is: ____________%
(C) The Yield Reserve is: ____________%
(D) The Servicer Reserve is: ____________%
(E) The sum of (A), plus (B), and (C), plus (D) is: ____________%
(F) The Reserve Floor is: 25.0%
(G) The Advance Rate (100% minus the greater ____________%
of (E) and (F) is:
(iv) The Borrowing Base ([(i) minus (ii)] times (iii) (G)) as of $____________
the date hereof is equal to:
C. As of the date hereof and the date of making of the Loans, (i) each of
the representations and warranties contained in Article VIII of the
Agreement shall be true and correct on and as of the date hereof and,
the date of such Loan, (ii) no Significant Event or Unmatured
Significant Event has occurred and is continuing or shall exist after
giving effect to the Loans requested hereby, (iii) no Servicer Event of
Default has occurred and is continuing and (iv) after giving effect to
the Loan, the aggregate principal balance of the outstanding Loans
hereunder will not exceed the Borrowing Base or the Facility Limit.
Capitalized terms used but not defined herein shall have the meanings
given to them in the Agreement.
The undersigned certifies to the accuracy of the foregoing.
TORO RECEIVABLES COMPANY
Date:________________ By:____________________________________
Name:__________________________________
Title:_________________________________
THE TORO COMPANY,
as Servicer
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT B
FORM OF LENDER NOTE
$75,000,000 July 9, 2003
FOR VALUE RECEIVED, TORO RECEIVABLES COMPANY, a Delaware corporation
(the "Borrower"), promises to pay to THREE PILLARS FUNDING CORPORATION, as
lender (the "Lender") the principal sum of SEVENTY-FIVE MILLION DOLLARS
($75,000,000) or, if less, the unpaid principal amount of the aggregate loans
(each a "Loan") made by the Lender to the Borrower pursuant to the Agreement (as
defined below), as set forth on the attached Schedule, as specified in Section
2.7 of the Agreement, and to pay interest on the unpaid principal amount of each
Loan on each day that such unpaid principal amount is outstanding as provided in
the Agreement on each Distribution Date and each other dates specified in the
Agreement.
This Lender Note is issued pursuant to the Loan Agreement dated as of
July 9, 2003 (as amended, restated or otherwise modified from time to time, the
"Agreement") among the Borrower, The Toro Company, as servicer, Three Pillars
Funding Corporation, as lender and SunTrust Capital Markets, Inc., as
administrator. Capitalized terms used but not defined in this Lender Note are
used with the meanings ascribed to them in the Agreement.
Notwithstanding any other provisions contained in this Lender Note, if
at any time the rate of interest payable by the Borrower under this Lender Note,
when combined with any and all other charges provided for in this Lender Note,
in the Agreement or in any other document (to the extent such other charges
would constitute interest for the purpose of any applicable law limiting
interest that may be charged on this Lender Note), exceeds the highest rate of
interest permissible under applicable law (the "Maximum Lawful Rate"), then so
long as the Maximum Lawful Rate would be exceeded, the rate of interest under
this Lender Note shall be equal to the Maximum Lawful Rate. If at any time
thereafter the rate of interest payable under this Lender Note is less than the
Maximum Lawful Rate, the Borrower shall continue to pay interest under this
Lender Note at the Maximum Lawful Rate until such time as the total interest
paid by the Borrower is equal to the total interest that would have been paid
had applicable law not limited the interest rate payable under this Lender Note.
In no event shall the total interest received by the Lender under this Lender
Note exceed the amount which the Lender could lawfully have received had the
interest due under this Lender Note been calculated since the date of this
Lender Note at the Maximum Lawful Rate.
Payments of the principal of, and interest on, Loans represented by
this Lender Note shall be made by the Borrower to the holder hereof by wire
transfer of immediately available funds in the manner and at the address
specified for such purpose as provided in Section 4.5 of the Agreement, or in
such manner or at such other address as the holder of this Lender Note shall
have specified in writing to the Borrower for such purpose, without the
presentation or surrender of this Lender Note or the making of any notation on
this Lender Note.
If any payment under this Lender Note falls due on a day which is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day and interest shall be payable on any principal so extended at the
applicable interest rate.
If all or a portion of (i) the principal amount hereof or (ii) any
interest payable thereon or (iii) any other amounts payable hereunder shall not
be paid when due (whether at maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum that is equal to the Base
Rate plus 2.00%, in each case from the date of such non-payment to (but
excluding) the date such amount is paid in full.
Portions or all of the principal amount of the Lender Note shall become
due and payable at the time or times set forth in the Agreement. Any portion or
all of the principal amount of this Lender Note may be prepaid, together with
interest thereon (and as set forth in the Agreement, certain costs and expenses
of the Lender) at the time and in the manner set forth in, but subject to the
provisions of, the Agreement.
Except as provided in the Agreement, the Borrower expressly waives
presentment, demand, diligence, protest and all notices of any kind whatsoever
with respect to this Lender Note.
All amounts evidenced by this Lender Note and all payments and
prepayments of the principal hereof and the respective dates and maturity dates
thereof shall be endorsed by the Lender on the schedule attached hereto and made
a part hereof or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by the Lender in its internal records;
provided, however, that the failure of the Lender to make such a notation shall
not in any way limit or otherwise affect the obligations of the Borrower under
this Lender Note as provided in the Agreement.
The holder hereof may sell, assign, transfer, negotiate, grant
participations in or otherwise dispose of all or any portion of any Loans made
by the Lender and represented by this Lender Note and the indebtedness evidenced
by this Lender Note.
This Lender Note is secured by the security interests granted pursuant
to Section 5.1 of the Agreement. The holder of this Lender Note and the Lender,
is entitled to the benefits of the Agreement and may enforce the agreements of
the Borrower contained in the Agreement and exercise the remedies provided for
by, or otherwise available in respect of, the Agreement, all in accordance with,
and subject to the restrictions contained in, the terms of the Agreement. If a
Significant Event shall occur and be continuing, the unpaid balance of the
principal of all Loans, together with accrued interest thereon, shall become due
and payable in the manner and with the effect provided in the Agreement.
This Lender Note is the Lender Note referred to in the Agreement.
THIS LENDER NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned has executed this Lender Note as on
the date first written above.
TORO RECEIVABLES COMPANY
By:____________________________________
Name:
Title:
Schedule to Lender Note
------------------------------------------------------------------------------------------------------------
Principal Principal Outstanding
Date of Loan or Amount of Amount of Principal
Repayment Loan Repayment Amount Interest Rate Interest Period
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Exhibit C
Form of Monthly Report
Exhibit D
Form of Borrowing Base Certificate
Exhibit E
Form of Collection Account Agreement
COLLECTION ACCOUNT AGREEMENT
[LETTERHEAD OF ORIGINATOR]
July [__], 2003
[NAME OF COLLECTION BANK]
[ADDRESS]
Attention: ___________________________
RE: The Toro Company
Ladies and Gentlemen:
Reference is made to our the account numbers [_________________________]
maintained with you (the "Account") pursuant to a collection account agreement
between the undersigned and you, the terms and conditions of which are
incorporated herein by reference (the "Collection Account Agreement"). Pursuant
to a Receivables Purchase Agreement, dated as of July 9, 2003 as amended,
supplemented or otherwise modified from time to time, between The Toro Company
("Toro" or the "Originator") and Toro Receivables Company ("Toro Receivables"),
as purchaser, we have sold and/or may hereafter sell to Toro Receivables certain
of the accounts, chattel paper, instruments or general intangibles
(collectively, "Receivables") with respect to which payments are or may
hereafter be made to the Account. Pursuant to a Loan Agreement, dated as of July
9, 2003 (as amended, supplemented or otherwise modified from time to time, the
"Loan Agreement"), among Toro Receivables, as borrower, The Toro Company, a
Delaware corporation as initial Servicer, Three Pillars Funding Corporation as
lender ("TPFC" or the "Lender") and SunTrust Capital Markets, Inc., as
administrator (the "Administrator"), Lender has agreed to extend financing to
Toro Receivables on the terms and subject to the conditions set forth therein.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Loan Agreement.
For purposes of this letter agreement, SunTrust Capital Markets, Inc. is acting
as Administrator for TPFC. We hereby transfer exclusive ownership and control of
the Account to the Administrator, for the benefit of TPFC, subject only to the
condition subsequent that the Administrator shall have given you notice of its
election to assume such ownership and control, which notice shall be
substantially in the form attached hereto as Annex A. You hereby acknowledge
that Administrator shall have control of the Account in accordance with Section
9-104 of the UCC at all times from and after the date hereof.
We hereby irrevocably instruct you, at all times from and after the date of your
receipt of notice from the Administrator of its assumption of control of the
Account as described above, (i) to make all payments to be made by you out of or
in connection with the Account directly to the Administrator in accordance with
the instructions of the Administrator, (ii) to hold all moneys and instruments
delivered to the Account administered by you for the order of the Administrator
(for the benefit of the TPFC), (iii) to refrain from initiating any transfer
from the Account to any Seller Party and (iv) to change the name of the Account
to "SunTrust Capital Markets, Inc.., as Administrator for Three Pillars Funding
Corporation." The Administrator agrees to execute your standard wire transfer
documentation in effect from time to time, or other customary documentation
related to wire transfers, prior to the initiation of any wire transfers.
We also hereby notify you that, at all times from and after the date of your
receipt of notice from the Administrator as described above, the Administrator
shall be irrevocably entitled to exercise in our place and stead any and all
rights in respect of or in connection with the Account, including, without
limitation, (a) the right to specify when payments are to be made out of or in
connection with the Account and (b) the right to require preparation of
duplicate monthly bank statements on the Account for the Administrator's audit
purposes and mailing of such statements directly to the Administrator at an
address specified by the Administrator.
Notices from the Administrator and other notices or communications under this
letter agreement may be personally served or sent by facsimile or by certified
mail, return receipt requested, or by express mail or courier, to the address or
facsimile number set forth under the signature of the relevant party to this
letter agreement (or to such other address or facsimile number as the relevant
party shall have designated by written notice to the party giving the aforesaid
notice or other communication). Notwithstanding the foregoing, any notice
delivered by you may be delivered by regular mail. If notice is given by
facsimile, it will be deemed to have been received when the notice is sent and
receipt is confirmed by telephone or other electronic means. All other notices
will be deemed to have been received when actually received or, in the case of
personal delivery, delivered.
By executing this letter agreement, you acknowledge the existence of the
Administrator's right to ownership and control of the Account and its ownership
(on behalf of TPFC and Toro Receivables as the parties having interests in such
amounts) of the amounts from time to time on deposit therein, and agree that
from the date hereof the Account shall be maintained by you for the benefit of,
and amounts from time to time therein held by you for, the Administrator (on
behalf of TPFC and Toro Receivables) on the terms provided herein. Except as
otherwise provided in this letter agreement, payments to the Account are to be
processed in accordance with the standard procedures currently in effect. All
service charges and fees with respect to the Account shall continue to be
payable by us as under the arrangements currently in effect.
By executing this letter agreement, you irrevocably waive and agree not to
assert, claim or endeavor to exercise, irrevocably bar and estop yourself from
asserting, claiming or exercising, and acknowledge that you have not heretofore
received a notice, writ, order or any form of legal process from any other party
asserting, claiming or exercising, any right of set-off, banker's lien or other
purported form of claim with respect to the Account or any funds from time to
time therein. Except for your right to payment of your service charges and fees
and your right to
make deductions for returned items, you shall have no rights in the Account or
funds therein. To the extent you may ever have such rights, you hereby expressly
subordinate all such rights to all rights of the Administrator.
Notwithstanding any other provision of this letter agreement, it is agreed by
the parties hereto that you shall not be liable to TPFC or the Administrator for
any action taken by you or any of your directors, officers, agents or employees
in accordance with this letter agreement at the request of the Administrator,
except for your or such person's own gross negligence or willful misconduct.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF _________, WHICH STATE SHALL BE YOUR "LOCATION" FOR PURPOSES OF THE
UNIFORM COMMERCIAL CODE. This letter agreement may be executed by the
signatories hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall together constitute but one and the same
letter agreement. Delivery of an executed counterpart of a signature page to
this letter agreement by facsimile shall be effective as delivery of a manually
executed counterpart to this letter agreement.
You may terminate this letter agreement by canceling the Account maintained with
you, which cancellation and termination shall become effective only upon 30
days' prior written notice thereof from you to the Administrator. Incoming mail
addressed to the Account received after such cancellation shall be forwarded in
accordance with the Administrator's instructions. This letter agreement may also
be terminated upon written notice to you by the Administrator stating that the
Loan Agreement is no longer in effect. Except as otherwise provided in this
paragraph, this letter agreement may not be altered, modified, terminated or
amended in any respect, nor may any right, power or privilege of any party
hereunder be waived or released or discharged, except upon execution by all
parties hereto of a written instrument so providing. In the event that any
provision in this letter agreement is in conflict with, or inconsistent with,
any provision of the Collection Account Agreement, this letter will exclusively
govern and control. Each party agrees to take all actions reasonably requested
by any other party to carry out the purposes of this letter agreement or to
preserve and protect the rights of each party hereunder.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the six copies of this letter agreement enclosed herewith
in the space provided below and returning each of such signed copies to the
Administrator.
Very truly yours,
THE TORO COMPANY,
By: ________________________________
Name: ______________________________
Title: _____________________________
Address for notice:
Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to
Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
Accepted and confirmed as of
the date first written above:
THREE PILLARS FUNDING CORPORATION,
as Lender
By: ___________________________
Name: _________________________
Title: ________________________
Address for notice:
c/o Amacar Group, L.L.C.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile No: (000) 000-0000
SUNTRUST CAPITAL MARKETS, INC.
as Administrator
By: ___________________________
Name: _________________________
Title: ________________________
Address for notice:
00xx Xxxxx XX0000
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
TORO RECEIVABLES COMPANY,
By: ___________________________
Name: _________________________
Title: ________________________
Address for notice:
Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to
Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
[Name of Collection Bank]
as Collection Bank
By: ___________________________
Name: _________________________
Title: ________________________
Address for notice:
Attention:
Facsimile No:
ANNEX A to
Collection Account Agreement
[FORM OF NOTICE OF ASSUMPTION OF CONTROL OF ACCOUNT]
[Letterhead of Collection Bank]
__________________, 200_
[NAME OF COLLECTION BANK]
[ADDRESS OF COLLECTION BANK]
_______________________________
_______________________________
Re: [Name of Originator]
Collection Account No.___________
Ladies and Gentlemen:
Reference is made to the letter agreement dated July 9, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Letter Agreement")
among The Toro Company, Toro Receivables Company, Three Pillars Funding
Corporation (the "Lender"), SunTrust Capital Markets, Inc., as Administrator for
the Lender, and you, concerning the above-described Collection Account (the
"Account").
We hereby give you notice of our assumption of ownership and control of the
Account as provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of or in
connection with the Account [DIRECTLY TO THE UNDERSIGNED, AT [OUR ADDRESS SET
FORTH ABOVE], FOR THE ACCOUNT OF [THREE PILLARS FUNDING CORPORATION] (ACCOUNT
NO. ___________)].
[OTHER INSTRUCTIONS]
Very truly yours,
SUNTRUST CAPITAL MARKETS, INC.,
as Administrator
By: __________________________
Name: ________________________
Title: _______________________
EXHIBIT F
COLLECTION POLICY
2-250 CREDIT POLICY--TORO RESIDENTIAL COMMERCIAL DISTRIBUTORS.
EFFECTIVE 7/31/1995
REVISED: 8/02/2002
I. CREDIT APPROVAL TRCD ACCOUNTS
A. The Credit Department will grant credit approval to Toro TRCD
accounts within a reasonable time after their submission by
the Sales Department. If it is impossible to offer the
extension of credit terms the customer and Sales Department
will be advised as to the reasons for this refusal. The Credit
Department will also monitor the customers financial condition
on an ongoing basis and reserves the right to change the
customers credit terms or limit at its discretion.
B. The Credit Manager will coordinate the securing of all
required credit documents and financial information from the
new TRCD customers and will assign an appropriate credit limit
for each customer. The Credit Manager will review such
extensions of credit with the Director of Credit and obtain
concurrence.
C. Required Documents
1. Application for Credit
2. Financial Statements
3. Security Agreement
4. Financing Statement (UCC-1)
5. Personal Guarantee of Principals (Corporations)
6. Personal Financial Statements
7. Resale Tax Exemption Certificate
D. The Security Agreement and UCC-I will be obtained to secure
Toro's interest in all Toro inventory and proceeds resulting
from the sale of that inventory. If for some reason these
documents are waived, a memo to that effect indicating the
reason and under whose authority these requirements were
waived will be placed in the TRCD's credit file.
E. The Credit Department will use the SAP system to manage TRCD
accounts who are on credit hold.
F. The Order Entry or Sales Department will review the customers
purchase order for the exact compliance with Toro's current
terms and pricing. Any deviation will be noted and the Sales
Department will obtain a correction before the order is
released.
II. CREDIT FILES
The Credit Department will maintain a credit file for each active Toro
TRCD Distributor which will contain the following information:
A. Annual Financial Statement
The Credit Department will maintain a follow-up system to make
certain that a copy of each TRCD's fiscal year end Financial
Statement is obtained and a Financial Statement Analysis form
is prepared and maintained in the credit file. If more
frequent financial information is required, Credit will follow
up as needed.
B. UCC-1 and Security Agreement
A copy of all UCC-1 filings and Security Agreements will be
kept in each TRCD's file. The Credit Department will maintain
a follow-up system to make sure that all continuations are
filed on a timely basis and Purchase Money Security Interest
letters are sent.
C. Personal Guarantees
Copies of the Guarantees will be kept in the credit file.
D. Dun and Bradstreet Reports
The Credit Department will maintain a current (dated within
one year) D&B Report in each TRCD's file.
III. ESTABLISHED AND APPROVING SELLING TERMS
A. Established Terms of Sale
Current terms will be continuous unless a formal request for
change in terms has been made and approved. These requests
will generally originate in the division responsible for the
sale of the product. Approval of all requests are required by
the Divisional Vice President and General Manager and the Vice
President-Controller.
These requests are to be forwarded to the attention of the CFO
for approval and are to be acted upon within two weeks after
the request is received. The rationale supporting the terms
change are to include:
1. Reason for change.
2. Effects on the Toro Company's cash flow.
3. Competitive terms.
4. P & L effect on the Toro Company which would include the
loss or gain in sales volume.
Even though there may be no request for change in terms, an
analysis of current terms should be made annually by each
division's Marketing Department to determine if the present
selling terms are still justified.
B. Temporary Terms of Sale
From time to time, special promotional terms may be introduced
because of competitive forces, inventory levels, or special
market conditions. Approval of these requests are to be made
by the Divisional Vice President and General Manager and
forwarded for approval to the CFO. These requests are to be
acted upon within 48 hours.
These requests should be submitted on the proper deviation
form and are to include:
1. Rationale for change.
2. Length of time the special terms are to be in effect.
3. Qualification requirements.
4. Expected sales volume from special terms.
5. Effect on the quarterly cash flow and year end cash flow.
6. Cost of deviation.
IV. COLLECTION OF TRADE RECEIVABLES
The Credit Department will have all collection responsibility. At the
same time, the Sales Department is responsible for facilitating the
requests of the Credit Department in their actions on past due or
disputed amounts.
An invoice, although technically past due if not paid on its due date,
shall not be considered formally so until 10 working days after its due
date. Collection activities will commence at that time, and at the
Credit Managers discretion the delinquent customer can be placed on a
"Stop Ship" status.
The Credit Manager will take into consideration various factors,
however, during administration of this policy such as:
A. Total of the past due invoice or invoices
B. Account total balance
C. Financial status of the customer
D. Whether or not a dispute may exist regarding the invoice or
invoices in question.
If it is prudent to place the customer on a "Stop Ship" status
before he is formally past due, as previously defined, he may
do so.
V. CASH DISCOUNT ALLOWANCE
Toro presently offers cash discounts to its TRCD's for prompt payment.
It shall be the policy of the company to allow these discounts if the
payment meets the following conditions:
A. For cash application purposes (Manual and Automatic) this
general rule should be followed by Accounts Receivable at all
times to decide if discount will be allowed. "The payment is
received within the approved grace period, and the account is
in a current and up-to-date status with no past due invoices
owing, allow the discount."
If discounts are allowed by Accounts Receivable on any account
which is not eligible for discount by the above criteria, a
written report will be sent to the Credit Manager indicating
the amount of discount allowed, the TRCD, the reason allowed,
and under whose approval. It will be the responsibility if the
Credit Department to collect or resolve all
unallowed/unauthorized discounts.
B. Inasmuch as the purpose of this policy us to maintain a
discipline for payments from TRCD's, it is intended to be
strictly applied when necessary to accomplish this purpose.
However, it should also be flexible enough so that under
certain conditions, discount can be allowed even though the
payment does not meet the above criteria. Given the need for
flexibility, the Credit Manager will rely on his/her judgement
as to the customers intent on complying with the discount
policy, and decide, when appropriate, to clear the
unearned/unauthorized discount from the customers account.
The Credit Manager can authorize unearned/unauthorized
discount amounts less than $5,000. Amounts $5,000 and above
will require approval from the Director of Credit.
VI. FINANCE CHARGES
In the event terms other than cash are granted to the customer, past
due amounts on an account not paid in accordance with such terms shall
be surcharged a service fee at the maximum rate permitted by law, not
to exceed 1 1/2% per month (18% per annum), and will be automatically
charged by the Accounts Receivable system on a monthly basis.
VII. BAD DEBT WRITE OFFS
All bad debts must be approved by:
- Director of Credit - $5,000, formal written request
- Chief Financial Officer or his appointee - Over $5,000
VIII. MANAGEMENT REPORTS
Upon request, the Accounting Department will supply to the CFO,
Divisional General Managers, and the Corporate Controller a computer
generated aged trial balance (on line availability on the SAP system)
of all accounts.
2-240 CREDIT POLICY--DIRECT MASS MERCHANT AND SPECIALTY RETAILERS.
EFFECTIVE 7/31/1995
REVISION DATE: 6/26/2002
Contact Area: Credit Department
I. CREDIT APPROVAL
A. New Accounts
Upon receipt of a signed purchase order and our completed
credit application form from Sales or Order Entry, the Credit
Manager or his designated assistant will initiate a credit
investigation which is to be completed within a maximum of ten
days.
A file will be initiated which will include the credit
application and a copy of the initial order. This file will be
retained in the divisional credit files whether or not the
account is approved for an open line of credit.
In all cases, the investigation will include:
1. The Regional Sales Manager's review of expected sales
volume and type of product to be sold.
2. The references will be contacted and responses
included in the file.
3. Current agency information will be consulted and
results noted in the file. Based on a current rating
of 1A2 or equivalent, an appropriate credit
availability will be established by the Credit
Manager. If the credit availability expected warrants
further investigation and/or if the current rating
does not support immediate granting of the requested
credit availability, D & B and/or NACM will be
contacted for available reports to support additional
credit extension.
a. In all cases where a credit availability is
expected to exceed $25,000, a D & B Business
Report and Paydex Report should be obtained
and maintained in the file.
b. Current financial information will be
maintained (annual statement and quarterly
statements, if possible) on any account that
becomes a major account for the division, or
where Toro's exposure on a company wide
basis is extensive.
If audited statements are not available or do not
show adequate financial strength to support the
expected exposure, a low availability will be set.
Incoming orders will be reviewed by the Credit
Manager continuously against our payment experience
and our present credit exposure and released
accordingly.
4. Upon completion of the credit investigation, the
account will be:
a. Approved by the Credit Department, a credit
availability will be established, a set-up
sheet filled out, the account assigned a
number, and set up in the computer. or
b. In the event that information is inadequate
to support extension of credit, alternate
sales methods will be recommended, e.g.,
cash with order, letters of credit, etc.
In either case, the initial order, the sales review
and either the set-up sheet or the alternate
recommendations will then be routed to Divisional
Finance Department, Sales Management, Order Entry and
Marketing Programs.
Upon completion of the account set-up and routing of
the set-up sheet,
c. Corporate Finance will assign customer type
and inform the Credit Department of the
proper coding.
d. Sales will route a Fact Sheet with
appropriate approvals to ensure compliance
with agreed-upon pricing, terms and any
special agreements. Credit will receive a
copy and maintain a full current file of
Fact Sheets.
e. Marketing Programs will properly code the
new account for commissions.
f. Order Entry will set-up necessary ship-to's.
5. Established Accounts
a. Accounts for which all necessary credit
information is available and the information
indicates both financial strength and
minimal slow payment to trade creditors, a
credit availability will be set at the
expected high exposure for the account.
b. Accounts with weak credit information or
with a history or trend toward slow payment
are to be granted only an appropriate
availability. If there has been any recent
(two years) serious slowness within the
trade reports, or if there has developed a
slow payment trend with Toro, the credit
availability is to be set at $1.00 and each
order released only after review by credit
and resolution has been made for any past
due balance on Toro receivables.
c. Seasonal accounts which do not maintain
balances throughout the year and which do
not have adequate D & B ratings, or other
strong credit history, will carry a credit
availability of $1.00 and will be reviewed
at the point of receipt or shipment of each
order.
d. Current financial information will be
maintained (annual statement and quarterly
statements if possible) on any account that
becomes a major account for the division, or
where Toro's exposure on a company wide
basis is extensive.
If audited statements are not available or
do not show adequate financial strength to
support the expected exposure, a low
availability will be set. Incoming orders
will then be reviewed continuously against
our payment experience and our present
credit exposure.
e. Accounts having recently experienced a
bankruptcy will be shipped on a cash with
order basis until evidence of sound
financial condition is obtained.
6. Management Reports
The Credit Manager will maintain a monthly report
which will include current status of the major
accounts. This will be routed to both credit and
divisional management along with a review of problem
accounts.
II. COLLECTION
A. The normal collection procedures will be as follows:
1. Accounts with invoices past due from 1 to 30 days as
of the month-end aging will be contacted by the first
of two computerized letters to be sent the third week
of the month.
2. Those accounts that do not respond to the first
letter and have the invoices remaining open on the
next aging, will receive the second letter and will
be placed on do-not-ship status.
3. Accounts not responding to the second letter will be
contacted by the Credit Department by phone. If the
phone contact does not resolve the past-due problem,
the credit availability will be withdrawn and both
the Regional Sales Manager and the Commissioned
Representative will be notified and asked for
assistance.
4. If the past-due is resolved at this point, the
account will be reinstated after a review of current
credit information and a new availability will be set
using the current credit information or the account
will be handled on an order by order basis.
5. Accounts past due 120 days will be reviewed for third
party collection as necessary.
B. Accounts that have large balances that remain unpaid after the
due date will be contacted immediately by phone to determine
the reason for nonpayment and to attempt to collect the amount
due.
C. Both major accounts and others deemed necessary by the Credit
Manager will be handled on an exception basis. Collection
emphasis will be earlier and more aggressive - tailored to the
market conditions and type of account.
1. Accounts will be contacted by phone within 30 days of
past due invoices.
2. Reps will be notified of past due balances between 30
and 60 days past due.
3. On major accounts with weak financial condition, the
Credit Manager or Assistant Manager responsible for
the account will work with Sales, Customer Accounts
Payable and Customer Purchasing during the purchasing
seasons to coordinate payment and order release.
III. SALES TERMS AND CONDITIONS
There are published standard terms and conditions for Home Improvement
Division products. Due to the varied markets and competitive pressures,
Regional Sales Managers may need to structure pricing and terms outside
of published programs. Any such deviations to standard programs are to
be approved prior to implementation by proper sign off of a Fact Sheet.
Any extension of terms beyond published program must be approved by the
Credit Manager and Director of Credit.
It is the responsibility of the Sales Department to provide a Fact
Sheet for each account fully stating programs and any deviation from
standard program.
The Credit Department will administer the account based upon the
current Fact Sheets as agreed upon and signed-off by divisional
management.
Any terms change which will increase the due date of invoices beyond
published terms will require the authorization of the Credit Manager
and Director of Credit. Fact Sheets requesting such changes will be
routed to the Credit Department for sign-off.
EXHIBIT G
FORM OF PARENT NOTE
July 9, 2003
FOR VALUE RECEIVED, THE TORO COMPANY, a Delaware corporation ("Toro")
promises to pay on demand to TORO RECEIVABLES COMPANY ("Toro Receivables"), or
its assigns, at such place as the holder of this Parent Note ("Note") may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of SEVENTY-FIVE
MILLION DOLLARS ($75,000,000) or, if less, the aggregate unpaid principal amount
of all Parent Loans (as defined in the Receivables Purchase Agreement defined
below) made to Toro, together with all interest thereon form time to time from
the Closing Date (as defined in the Receivables Purchase Agreement) at the rate
provided therein.
Section 1.01. Receivables Purchase Agreement. This Note is the "Parent
Note" described in, and is subject to the terms and conditions set forth in, the
Receivables Purchase Agreement, dated as of July 9, 2003 (as amended,
supplemented, or otherwise modified from time to time, the "Receivables Purchase
Agreement"), between Toro Receivables, as the Purchaser and Toro, as Originator.
Reference is hereby made to the Receivables Purchase Agreement for a statement
of certain other rights and obligations of Toro Receivables and Toro. In the
case of any conflict between the terms of this Note and the terms of the
Receivables Purchase Agreement, the terms of the Receivables Purchase Agreement
shall control. All of the terms, covenants and conditions of the Receivables
Purchase Agreement and all other instruments evidencing the indebtedness
hereunder, including the other Transaction Documents, are hereby made a part of
this Note and are deemed incorporated herein in full.
Section 1.02. Definitions. Capitalized terms used (but not defined) herein
have the meanings ascribed thereto in the Receivables Purchase Agreement or in
the Loan Agreement (as defined in the Receivables Purchase Agreement).
Section 1.03. Interest. The date, amount and interest rate of each Parent
Loan made by Toro Receivables to Toro, and each payment made by or on behalf of
Toro on account of the principal thereof, shall be recorded by Toro Receivables
on its books and, prior to any transfer of this Note, endorsed by Toro
Receivables on the schedule attached hereto or any continuation thereof.
Section 1.04. Principal Payments. The Receivables Purchase Agreement
provided for repayments of Parent Loans upon the terms and conditions specified
therein. This Note shall be paid in full upon the demand of Toro Receivables. If
any payment or repayment on this Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the Parent Note Interest Rate during such extension.
Section 1.05. Amendments, Etc. No failure or delay on the part of Toro
Receivables, or its assigns, in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No amendment, modification or waiver of,
or
consent with respect to, any provision of this Note shall in any event be
effective unless (a) the same shall be in writing and signed and delivered by
Toro Receivables Company and Toro, and (b) all consents required for such
actions under the Transaction Documents shall have been received by the
appropriate Persons.
Section 1.06. Limitation on Interest. Notwithstanding anything in this Note
to the contrary, Toro shall never be required to pay unearned interest on any
amount outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
interest rate that may be contracted for, charged or received without violating
applicable federal or state law.
Section 1.07. No Negotiation. This Note is not negotiable.
SECTION 1.08. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
Section 1.09. Captions. Paragraph captions used in this Note are provided
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Note. Whenever possible each provision
of this Note shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Note shall be prohibited 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 remaining provisions of this Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by
its officer thereunto duly authorized on the date first above written.
THE TORO COMPANY
By: ____________________________
Name: __________________________
Title: _________________________
EXHIBIT H
FORM OF WITHDRAWAL CERTIFICATE
This Certificate is made pursuant to the provisions of the Loan Agreement, dated
as of July 9, 2003, (the "Agreement") by and among TORO RECEIVABLES COMPANY, a
Delaware corporation, as borrower, THE TORO COMPANY, a Delaware corporation
("Company"), as initial Servicer, THREE PILLARS FUNDING CORPORATION, a Delaware
corporation, ("Lender") and SUNTRUST CAPITAL MARKETS, INC., a Tennessee
corporation, as agent and administrator for Lender. Capitalized terms used
herein and not otherwise defined shall have the meaning set forth in the
Agreement.
The undersigned, as _______________________ of the Company, DOES HEREBY
CERTIFY that:
1. This certificate relates to the week ended on [MONTH] __, 200_.
2. On the following dates, the Company, as Servicer, withdrew funds from
the Collection Account in accordance with the provisions of Section 11.2(d) of
the Agreement (each, a "Withdrawal Date"): [LIST DATES].
3. On each Withdrawal Date, no Significant Event or Unmatured Significant
Event was in existence.
4. On each Withdrawal Date, the Commitment Termination Date had not
occurred.
5. On [INSERT DATE THAT IS LAST WITHDRAWAL DATE FOR WEEK COVERED BY THIS
CERTIFICATE] no Borrowing Base Deficit existed after giving effect to the
withdrawal of funds from the Collection Account on such day and, after giving
effect to such withdrawal, there were funds in the Collection Account at least
equal to the interest on the Loans and the Fees accrued through such date.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, I have signed this certificate as of this _____ day
of _______, 200_.
THE TORO COMPANY,
By: ____________________________
Name:
Title:
Schedule I
Description of Collection Accounts and Lockbox Accounts
---------------------------------------------------------------------------------------------------
LockBox Number and
Name and Address of Bank Address (if applicable) Account Number
---------------------------------------------------------------------------------------------------
US Bank National Association US Bank, N.A 104758074348
(Collection Account) 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx
00000
---------------------------------------------------------------------------------------------------
Xxxxxx Bank Toro Dealer 0000000
(Lockbox Account) 00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
GLD Mass Toro Distributor
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
---------------------------------------------------------------------------------------------------
Schedule II
[Reserved]
Schedule III
[Reserved]
Schedule IV
Description Of Proceedings
None.
Schedule V
Collateral Review Requirements
I. Initial Report of Independent Accountants
(a) the report shall be titled the "Initial Report of Independent
Accountants on Agreed Upon Procedures";
(b) the report shall be addressed to The Toro Company, as Servicer
and to SunTrust Capital Markets, Inc. as Administrator:
Xxxx Xxxxx
SunTrust Capital Markets, Inc.
Mail Code 3950
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
(c) the agreed upon procedures shall be performed by KPMG LLP as
engaged by the Servicer;
(d) the report shall be delivered on or before sixty (60) days
after the Closing Date;
(e) the agreed upon procedures shall entail the selection of a
non-systematic sample of 100 invoices from the receivable
schedule delivered by Borrower pursuant to the initial funding
performance of the following:
(i) agree invoice information including: customer name
and receivables balance to information on the report
generated by the receivable servicing system;
(ii) determine that credit terms are indicated on the
invoice and that no more than 15% are due within 121
- 180 days and that no credit terms exceed 180 days;
and
(iii) determine that the Originator's computer records have
been marked or stamped indicating that the Receivable
has been sold to Toro Receivables Company.
(f) verify invoice information regarding the Weighted Average
Payment Terms corresponds with most recently delivered Monthly
Report.
II. Reports of Independent Accountants
(a) the report shall be titled "Report of Independent Accountants
on Agreed Upon Procedures";
(b) the report shall be addressed as detailed in item I above;
(c) the agreed upon procedures shall be performed by KPMG LLP, or
another nationally recognized independent public accounting
firm acceptable to the Administrator;
(d) the reports shall be delivered within 60 days after each
semi-annual period following this transaction's Closing Date;
and
(e) the agreed upon procedures shall consist of the following:
(i) agree the data on lines 1 through 10 and 11 through
16 from three (3) non-systematically selected Monthly
Reports as shown in Exhibit C for the most recent
semi-annual period to the information contained in
system reports and accounting records used in the
compilation of those Monthly Reports;
(ii) request personnel responsible for the credit and/or
finance function at The Toro Company to (a) identify
whether or not any customers with balances included
as Receivables are in bankruptcy; and (b) provide a
list of the names of such customers. For any such
identified customers, compare the balance of such
Receivables contained in the system reports used in
the compilation of those Monthly Reports with amounts
contained in lines 16 and 17 of the Monthly Reports
in item (i) above and report any differences;
(iii) verify the mathematical accuracy of the Accounts
Receivable information and Aging Report in the
Monthly Reports in item (i) above;
(iv) verify invoice information regarding the Weighted
Average Payment Terms corresponds with two (2)
randomly selected Monthly Reports
(v) non-systematically select a sample of 100 invoices
from the receivable schedule delivered by Borrower
pursuant to the subsequent fundings during the most
recent semi-annual period and perform the following:
(a) agree invoice information including: customer
name and receivables balance to information on a
report generated by the receivables servicing
system;
(b) determine that credit terms are on the invoice
and do not exceed 180 days;
(c) determine that the Originator's computer
records have been marked or stamped to indicate
that the Receivable has been sold to Toro
Receivables Company; and
(d) for invoices for which payments have been
received verify that the Collection was sent by
wire transfer to a Collection Account or by check
to a Lock-Box and deposited into a Collection
Account.
(vi) verify that appropriate notations have been made on the Parent Note
with respect to all Parent Loans made by Toro Receivables Company to
the Originator.
Schedule VI
Notice Addresses
Borrower: Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Toro Receivables Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Principal Place of Business and Chief Executive
Office:
Servicer: The Toro Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
The Toro Company
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Lender: Three Pillars Funding Corporation
c/o Amacar Group, L.L.C.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Administrator: SunTrust Capital Markets, Inc.
00xx Xxxxx XX0000
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Schedule VII
Fiscal Months
TORO FISCAL MONTH-END DATES
FISCAL 2003
November 11/29/02
December 01/03/03
January 01/31/03
February 02/28/03
March 03/28/03
April 05/02/03
May 05/30/03
June 06/27/03
July 08/01/03
August 08/29/03
September 10/03/03
October 10/31/03
FISCAL 2004
November 11/28/03
December 12/26/03
January 01/30/04
February 02/27/04
March 03/26/04
April 04/30/04
May 05/28/04
June 06/25/04
July 07/30/04
August 09/03/04
September 10/01/04
October 10/31/04
FISCAL 2005
November 11/26/04
December 12/24/04
January 01/28/05
February 02/25/05
March 03/25/05
April 04/29/05
May 05/27/05
June 06/24/05
July 07/29/05
August 08/26/05
September 09/23/05
October 10/31/05
FISCAL 2006
November 12/05/05
December 12/30/05
January 02/03/06
February 03/03/06
March 03/31/06
April 05/05/06
May 06/02/06
June 06/30/06
July 08/04/06
August 09/01/06
September 09/29/06
October 10/31/06
