Table of Contents

 

		Page
ARTICLE I DEFINITIONS		1
1.1	Definitions	1
1.2	Other Interpretive Matters	7
ARTICLE II SALE		8
2.1	Sale	8
2.2	Acceptance by Buyer	9
2.3	Purchase Price	9
2.4	Additional Receivables	9
ARTICLE III CONDITIONS PRECEDENT		9
3.1	Conditions to Transfer	9
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS		10
4.1	Representations and Warranties of Seller	10
4.2	Covenants of Seller	14
4.3	Negative Covenants of Seller	15
ARTICLE V MISCELLANEOUS		16
5.1	Notices	16
5.2	No Waiver; Remedies	18
5.3	Successors and Assigns	18
5.4	No Buyer Liability for Contracts	18
5.5	Survival	19
5.6	Complete Agreement; Modification of Agreement	19
5.7	Dispute Resolution	19
5.8	Jury Trial	19
5.9	Submission to Jurisdiction	19
5.10	Counterparts	19
5.11	Severability	20
5.12	Section Titles	20
5.13	No Setoff	20
5.14	Further Assurances	20
5.15	No Indirect or Consequential Damages	20
5.16	No Assumption in Drafting	21
5.17	Headings; Section and Article References	21

 

 

FORM OF RECEIVABLE PURCHASE AGREEMENT

 

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

 

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

 

ARTICLE I

DEFINITIONS

 

1.1            Definitions .

 

“ Account Debtor ” means an obligor on a Receivable.

 

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

 

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

 

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

 

“ Agreement ” is defined in the preamble.

 

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

 

 

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

 

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

 

“ Buyer ” is defined in the preamble.

 

“ Closing Date ” means [                              , 2009] .

 

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

 

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

 

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

 

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

 

“ Eligible Receivable ” means a Receivable:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Exmark ” is defined in the preamble.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Purchase Price ” is defined in Section 2.3 .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Toro ” is defined in the preamble.

 

“ Toro Credit ” is defined in the preamble.

 

“ Toro International ” is defined in the preamble.

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE II

SALE

 

2.1            Sale .

 

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

 

(i)             the Transferred Receivables;

 

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

 

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

 

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

 

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

 

The foregoing does not constitute and is not intended to result in the creation or assumption by Buyer of any obligation of Selle