AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT
NO. 3 TO CREDIT AGREEMENT
This
Amendment No. 3 to Credit Agreement (this “Amendment”),
effective as of February 28, 2007, is made by and among THE
TORO COMPANY,
a
Delaware corporation (“Toro”),
TORO
CREDIT COMPANY,
a
Minnesota corporation, TORO MANUFACTURING
LLC,
a
Delaware limited liability company, EXMARK MANUFACTURING COMPANY
INCORPORATED,
a
Nebraska corporation, TORO
INTERNATIONAL COMPANY,
a
Minnesota corporation, XXXXX
OVERSEAS B.V.,
a
Netherlands company, and TORO FACTORING
COMPANY LIMITED, a
Guernsey, Channel Islands company (all of the foregoing, collectively, the
“Borrowers”),
each
lender from time to time party hereto (collectively the “Lenders”),
and
BANK
OF AMERICA, N.A.,
as
Administrative Agent, Swing Line Lender and L/C Issuer (the “Administrative
Agent”).
WHEREAS,
the Borrowers, the Administrative Agent and the Lenders have entered into that
certain Credit Agreement dated as of September 8, 2004 (as amended by Amendment
No. 1 to Credit Agreement dated as of October 25, 2005 and Amendment No. 2
to
Credit Agreement dated as of January 10, 2007, as hereby amended and as from
time to time hereafter further amended, modified, supplemented, restated or
amended and restated, the “Credit
Agreement”
(capitalized terms used and not otherwise defined in this Amendment shall have
the respective meanings given thereto in the Credit Agreement), pursuant to
which the Lenders have made available to the Borrowers a revolving credit
facility (including a letter of credit facility and a swing line facility);
and
WHEREAS,
the Borrowers have requested that the Administrative Agent and the Required
Lenders (i) waive the Default (resulting from the Borrowers’ failure to
accurately account deferred compensation plans on the financial statements
required by the Credit Agreement), and (ii) amend certain provisions of the
Credit Agreement as set forth herein;
WHEREAS,
all conditions necessary to authorize the execution and delivery of this
Amendment and to make this Amendment valid and binding have been complied with
or have been done or performed;
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Waiver
and Consent.
On
February 28, 2007, Toro filed a current report on Form 8-K that disclosed that
it would be restating previously issued financial statements due to reporting
errors (the “Reporting
Errors”)
primarily arising with respect to the accounting for deferred compensation
plans
(the “Restatement”).
Copies of this Form 8-K and related press release have been provided to the
Lenders. Pursuant to the request of Toro and subject to the terms and conditions
set forth herein, the Lenders, pursuant to Amendment, hereby waive all Defaults,
if any, existing under the Credit Agreement due to the Restatement or the
Reporting Errors, including any that may have resulted under Section
6.01
thereof
from the past delivery of financial statements to the Lenders containing such
Reporting Errors. Additionally, each Lender hereby approves and consents to
the
satisfaction of the condition precedent in Section
4.02(a)
of the
Credit Agreement with respect to the representation and warranty in Section
5.05
of the
Credit Agreement after giving effect to the Restatement. The
waiver and approval set forth in this Waiver Letter is limited solely to the
effects of the Restatement.
2. Amendments.
Subject
to the terms and conditions set forth herein, the Credit Agreement is hereby
amended as follows:
(a) The
definitions of the following terms and references thereto are deleted in the
following sections of the Credit Agreement:
“Receivables
Loan Agreement” in Section
1.01;
and
“Toro
Receivables Company” in the definition of “Material Subsidiary” and Section
7.08.
(b) Clause
(g) of the definition of “Indebtedness” in Section
1.01
is
hereby amended by deleting such clause in its entirety and inserting the
following in lieu thereof:
(g) the
unpaid amount of all Receivables sold by any Borrower for
which such Borrower has recourse liability or portion thereof for which such
Borrower has recourse liability in cases where such recourse liability is not
full;
and
(c) The
definition of “Receivables Purchase Facility” in Section
1.01
is
hereby amended by deleting the definition in its entirety and inserting the
following in lieu thereof:
“Receivables
Purchase Facility”
shall mean any agreement of any Originator, approved by the Administrative
Agent
(such approval not to be unreasonably withheld), providing for sales, transfers
or conveyances of Receivables of such Originator purporting to be sales (and
considered sales under GAAP) that do not provide, directly or indirectly, for
recourse against the seller of such Receivables (or against any of such seller’s
Affiliates) by way of a guaranty or any other support arrangement, with respect
to the amount of such Receivables (based on the financial condition or
circumstances of the obligor thereunder), other than such limited recourse
as is
reasonable given market standards for transactions of a similar type, taking
into account such factors as historical bad debt loss experience and obligor
concentration levels.
(d) Section
7.02(d)
of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
(d) dispositions
by any Originator of Receivables pursuant to Receivables Purchase Facilities
provided that the outstanding unpaid amount of all such Receivables so sold
in
the aggregate shall not at any time exceed $125,000,000 and such Receivables
Purchase Facilities may be established only at a time when Toro has a Debt
Rating by S&P of BBB- or better or by Xxxxx’x of Baa3 or
better;
(e) Section
7.11
of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
7.11.
Toro and TCC Portion of Sales Revenues.
The
consolidated total sales revenue of Toro and TCC at the end of each fiscal
year
shall not be less than 50% of the consolidated total sales revenue of Toro
and
its Subsidiaries at such time.
(f) Section
8.01(e)
of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
(e)
Cross-Default.
(i)
Any Borrower or any Material Subsidiary (A) fails to make any payment in
respect of any Indebtedness or Contingent Obligation, having an aggregate
principal amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in
the
relevant document on the date of such failure; or (B) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, and such failure continues after the
applicable grace, cure or notice period, if any, specified in the relevant
document on the date of such failure and if the effect of such failure, event
or
condition is to allow the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness
to
be declared to be due and payable prior to its stated maturity or such
Contingent Obligation to become payable or cash collateral in respect thereof
to
be demanded; or (ii)(A) there occurs any termination, liquidation, unwind or
similar event or circumstance under any Receivables Purchase Facility other
than
a voluntary termination by any Borrower or a scheduled termination, as a result
of which any purchaser of receivables thereunder has ceased purchasing such
Receivables and
such purchaser may apply all collections on previously purchased Receivables
thereunder to the payment of such purchaser’s interest in such previously
purchased Receivables (any such event or circumstance referred to as a
“Receivables Purchase Facility Termination”) other than any such Receivables
Purchase Facility Termination that arises solely as a result of (i) a
down-grading of the credit rating of any bank or financial institution not
affiliated with the Borrowers that provides liquidity, credit or other support
in connection with such facility; or (ii) breach of a covenant contained in
any
Receivables Purchase Facility and this Agreement if the Lenders have previously
waived compliance with such covenant under the terms of this Agreement with
respect to the particular instance of non-compliance giving rise to the breach
of such covenant under such Receivables Purchase Facility, it being acknowledged
by the Borrowers that no waiver by the Lenders of compliance with the provisions
of this Agreement in any particular instance shall constitute a waiver under
either this Agreement or any Receivables Purchase Facility of any future
non-compliance with such provision and (B) within 60 days after the effective
date of such Receivables Purchase Facility Termination, additional financing
and/or capitalization of the Borrowers in replacement of such Receivables
Purchase Facility, in an amount substantially similar to the amount of the
Receivables Purchase Facility and upon such terms as are acceptable to the
Required Lenders, shall not be completed and funding thereunder shall not be
available to the Borrowers; or
(g) Section
11.17(a)
of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
All
obligations of Toro and TCC or either one of them under this Agreement and
the
other Loan Documents to which they are a party, shall be joint and several
obligations of Toro and TCC (each of the foregoing, a “Joint Borrower”). Only
Toro shall be liable as a guarantor under Article X hereof for the obligations
of the Subsidiary Borrowers under Article XI hereof. All obligations of the
Subsidiary Borrowers under this Agreement and all of the other Loan Documents
shall be several and not joint, the result of which shall be that each
Subsidiary Borrower is obligated to repay only those Loans made by the Lenders
to such Subsidiary Borrower and interest, fees, expenses and other obligations
owing by such Subsidiary Borrower in connection with such Loans.
(h) Section
1(b) of Schedule
2
to
Exhibit
D
of the
Credit Agreement is hereby amended by deleting such section in its entirety
and
inserting the following in lieu thereof:
Aggregate
outstanding unpaid amount of all Receivables sold by any Company pursuant to
a
Receivables Purchase Facility at any time:
Amount $__________
Maximum $125,000,000
3. Conditions
Precedent.
The
effectiveness of this Amendment is subject to the satisfaction of the following
conditions precedent:
(a) The
Administrative Agent shall have received each of the following documents or
instruments in form and substance reasonably acceptable to the Administrative
Agent:
(i) ten
(10)
original counterparts of this Amendment, duly executed by the Borrowers, the
Administrative Agent and the Required Lenders, together with all schedules
and
exhibits thereto duly completed; and
(ii) such
other documents, instruments, opinions, certifications, undertakings, further
assurances and other matters as the Administrative Agent shall reasonably
require.
4. Reaffirmation
by each of the Borrowers.
Each of
the Borrowers hereby consents, acknowledges and agrees to the amendments of
the
Credit Agreement set forth herein.
5. Representations
and Warranties.
In
order to induce the Administrative Agent and the Lenders to enter into this
Amendment, each of the Borrowers represents and warrants to the Administrative
Agent and the Lenders as follows:
(a) The
representations and warranties of (i) the Borrowers contained in Article
V
(after
giving effect to this Amendment) and (ii) each Loan Party contained in each
other Loan Document or in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the
date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this Amendment,
the representations and warranties contained in subsections (a) and (b) of
Section
5.05
shall be
deemed to refer to the most recent statements furnished pursuant to clauses
(a)
and (b), respectively, of Section
6.01.
(b) There
does not exist any pending or threatened action, suit, investigation or
proceeding in any court or before any arbitrator or Government Authority that
purports to affect any transaction contemplated under this Agreement or the
ability of any Borrower to perform its respective obligations under this
Agreement.
(c) There
has
not occurred since January 11, 2007 any event or circumstance that has resulted
or could reasonably be expected to result in a Material Adverse Effect or a
material adverse change in or a material adverse effect upon the business,
assets, liabilities (actual or contingent), operations, condition (financial
or
otherwise), or prospects of Toro and its Subsidiaries taken as a whole;
and
(d) No
Default or Event of Default has occurred and is continuing.
6. Entire
Agreement.
This
Agreement, together with all the Loan Documents (collectively, the “Relevant
Documents”),
sets
forth the entire understanding and agreement of the parties hereto in relation
to the subject matter hereof and supersedes any prior negotiations and
agreements among the parties relative to such subject matter. No promise,
condition, representation or warranty, express or implied, not herein set forth,
shall bind any party hereto and not one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto acknowledges
that, except as otherwise expressly stated in the Relevant Documents, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Agreement
may
be changed, modified, waived or canceled orally or otherwise, except as
permitted pursuant to Section
11.01
of the
Credit Agreement.
7. Full
Force and Effect of Agreement.
Except
as hereby specifically amended, modified or supplemented, the Credit Agreement
and all other Loan Documents are hereby confirmed and ratified in all respects
by each party hereto and shall be and remain in full force and effect according
to their respective terms.
8. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original as against any party whose signature appears thereon, and
all
of which shall together constitute one and the same instrument.
9. Governing
Law.
This
Agreement shall in all respects be governed by, and construed in accordance
with
the laws of the State of New York.
10. Enforceability.
Should
any one or more of the provisions of this Amendment be determined to be illegal
or unenforceable as to one or more of the parties hereto, all other provisions
nevertheless shall remain effective and binding on the parties
hereto.
11.
References.
All
references in any of the Loan Documents to the “Credit Agreement” shall mean the
Credit Agreement as amended hereby.
12. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the Borrowers,
the
Administrative Agent and each of the Lenders, and their respective successors,
assigns and legal representatives; provided,
however, that no Borrower, without the prior consent of the Required Lenders,
may assign any rights, powers, duties or obligations hereunder.
13. Expenses.
Toro
agrees to pay to the Administrative Agent all reasonable out-of-pocket expenses
incurred or arising in connection with the negotiation and preparation of this
Amendment.
Remainder
of page left blank intentionally.
IN
WITNESS WHEREOF,
the
parties hereto have caused this Amendment No. 3 to Credit Agreement to be made,
executed and delivered by their duly authorized officers or representatives
as
of the day and year first above written.
THE
TORO COMPANY
By:
/s/
Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Treasurer
TORO
CREDIT COMPANY
By:
/s/
Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Secretary-Treasurer
TORO
MANUFACTURING COMPANY
By:
/s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
President
EXMARK
MANUFACTURING COMPANY INCORPORATED
By:
/s/
Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx X. Xxxxxxx
Title:
Vice President & Secretary
TORO
INTERNATIONAL COMPANY
By:
/s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
Vice President & Treasurer
XXXXX
OVERSEAS B.V.
By:
/s/
Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Authorized Signatory
TORO
FACTORING COMPANY LIMITED
By:
/s/
Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Managing Director
BANK
OF AMERICA, N.A.,
as
Administrative Agent
By:
/s/
Xxxxxxxx Xxxxxx-Xxxxx
Name:
Xxxxxxxx Xxxxxx-Xxxxx
Title:
Assistant Vice President
BANK
OF AMERICA, N.A.,
as a
Lender, L/C Issuer and Swing Line Lender
By:
/s/
Xxxxxxx X. Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Managing Director
SUNTRUST
BANK,
as a
Lender and a Co-Syndication Agent
By:
/s/
Xxxxxxx Xxxxxxx
Name:
Xxxxxxx Xxxxxxx
Title:
Managing Director
U.S.
BANK NATIONAL ASSOCIATION,
as a
Lender and a Co-Syndication Agent
By:
/s/
Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx X. Stoloch
Title:
Senior Vice President
XXXXXX
TRUST AND SAVINGS BANK,
as a
Lender and a Co-Documentation Agent
By:
/s/
Xxxxxx Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Director
XXXXX
FARGO BANK, NATIONAL ASSOCIATION,
as a
Lender and a
Co-Documentation
Agent
By:
/s/
Xxxxxxx X. Xxxxxxx
Name:
Xxxxxxx X. Xxxxxxx
Title:
Vice President
THE
BANK OF NEW YORK,
as a
Lender
By:
/s/
Xxxxxx X. Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
Vice President
