Exhibit 2.2
REPURCHASE
AGREEMENT
(Two Step)
This Repurchase Agreement
(“Agreement”) is entered into as of
October 1, 2009 (“Effective Date”) by and
between THE TORO COMPANY , a Delaware corporation, a
manufacturer (hereinafter “Seller”) , and
RED IRON ACCEPTANCE, LLC , a Delaware limited liability
company (“Red Iron”) , to set forth the terms
and conditions under which Red Iron will provide financing for
certain dealers and distributors as set forth below. In
consideration of the matters and mutual agreements herein
contained, Red Iron and Seller agree as follows:
1.
Definitions
.
(a)
“Approval” herein shall mean Red Iron’s
agreement, whether in writing, by electronic transmission or orally
(provided, however, that such oral agreement be promptly confirmed
in writing), to provide floorplan inventory financing for the sale
of Inventory by Seller or an affiliate of Seller to a Dealer and/or
Distributor, which agreement shall be in effect for a period of
sixty (60) days from the date issued.
(b)
“Dealer” herein shall mean any person, firm or
corporation which buys Inventory at wholesale from Seller or an
affiliate of Seller and sells Inventory at retail.
(c) “Dealer
Invoice” herein shall mean an invoice, bill of sale or
other evidence, whether in writing or electronically transmitted,
of the sale or delivery of Inventory by Seller or an affiliate of
Seller to a Dealer.
(d)
“Distributor” herein shall mean any person,
firm, corporation or buying group which buys Inventory from Seller
or an affiliate of Seller and sells Inventory at
wholesale.
(e) “Distributor
Invoice” herein shall mean an invoice, bill of sale or
other evidence, whether in writing or electronically transmitted,
of the sale or delivery of Inventory by Seller or an affiliate of
Seller to a Distributor.
(f) “Distributor to
Dealer Invoice” herein shall mean an invoice, bill of
sale or other evidence, whether in writing or electronically
transmitted, of the sale or delivery of Inventory by a Distributor
to a Dealer.
(g)
“Inventory” herein shall mean any and all
products, including parts and accessories, software and related
services manufactured, distributed or sold at wholesale by Seller
or an affiliate of Seller.
(h)
“Invoice” herein shall mean a Dealer Invoice, a
Distributor Invoice and/or a Distributor to Dealer Invoice, either
collectively or individually, as the case may be.
(i) “Wholesale
Instrument” herein shall mean an Invoice, billing
statement, inventory schedule or other evidence of indebtedness,
including the books and records of Red Iron, arising out of the
financing by Red Iron of an Invoice.
2.
Financing Program.
(a) If Seller or an affiliate
of Seller requests an Approval or sends to Red Iron an Invoice, and
the Dealer and/or Distributor related to such Approval or Invoice
is eligible for floorplan inventory financing in accordance with
the credit and operational policies of Red Iron, then Red Iron
shall, from time to time in its commercially reasonable discretion
consistent with such credit and operational policies, issue such
Approvals and advance against such Invoices, all under the terms of
this Agreement. Upon issuance of an Approval by Red Iron, Seller
shall (or, as applicable, shall cause its affiliate to) deliver an
original Invoice to Red Iron. Provided Red Iron receives the
Invoice within sixty (60) days of the date Red Iron issued the
Approval and within thirty (30) days of the ship date referred to
in the Invoice, Red Iron shall pay Seller or its affiliate, as
applicable, the amount of the Invoice, subject to the terms of the
financing program then in effect between Seller and Red Iron. If
the Invoice is not received within said 60- and 30-day periods, or
is not acceptable in form or content once received, Red Iron has
the right, without notice to Seller or its affiliate, as
applicable, to cancel the Approval related to said Invoice. Prior
to funding any Approval, Red Iron has the right to cancel said
Approval upon oral or written notice (provided, however, that oral
notice be promptly confirmed in writing) to Seller or its
affiliate, as applicable, should Dealer or Distributor be in
default of any of its obligations to Red Iron and provided that
Seller or its affiliate, as applicable, has not shipped Inventory
in reliance on Red Iron’s Approval. Advances on Invoices and
Approvals for such advances issued by Red Iron as provided
hereunder shall constitute an acceptance of the terms and
conditions hereof by Seller (for itself or on behalf of its
affiliate, as applicable) and Red Iron as to each such advance, and
no other act or notice shall be required on the part of Red Iron or
Seller (or its affiliate, as applicable) to entitle such advances
and Approvals to the benefits of this Agreement. Red Iron may
deduct, set-off, withhold and/or apply any sums from payments due
to Seller (either on behalf of
itself or its affiliate, as
applicable) from Red Iron under this Agreement any sums or payments
due to Red Iron from Seller and/or its affiliates in respect of any
advance to be made by Red Iron against any Invoice. Seller
and Red Iron may from time to time enter into written agreements
for any Seller sponsored special financing program for Dealers
and/or Distributors.
(b) If Seller or an affiliate
of Seller delivers to Red Iron an original Invoice that is the
subject of open account financing of inventory and related items
and the amount of such Invoice is within (i) pre-established
credit limits applicable to the Dealer and/or Distributor related
to such Invoice and (ii) unsecured credit limits established
by Red Iron from time to time (which shall not be less than
$4,000,000 in the aggregate at any time unless otherwise agreed by
the parties hereto), then Red Iron shall, from time to time in its
commercially reasonable discretion consistent with the credit and
operational policies of Red Iron, make an advance against such
Invoice under the terms of this Agreement. Subject to the
foregoing, if Red Iron receives the Invoice within thirty (30) days
of the ship date referred to in the Invoice, Red Iron shall pay
Seller or its affiliate, as applicable, the amount of the Invoice,
subject to the terms of the financing program then in effect
between Seller and Red Iron. Advances on Invoices issued by
Red Iron as provided hereunder shall constitute an acceptance of
the terms and conditions hereof by Seller (for itself or on behalf
of its affiliate, as applicable) and Red Iron as to each such
advance, and no other act or notice shall be required on the part
of Red Iron or Seller (or its affiliate, as applicable) to entitle
such advances to the benefits of this Agreement. Red Iron may
deduct, set-off, withhold and/or apply any sums from payments due
to Seller (either on behalf of itself or its affiliate, as
applicable) from Red Iron under this Agreement any sums or payments
due to Red Iron from Seller and/or its affiliates in respect of any
advance to be made by Red Iron against any Invoice.
(c) If (i) Seller or an
affiliate of Seller requests an Approval or sends to Red Iron an
Invoice or requests that Red Iron accept a group of Invoices
attributable to a single Dealer or Distributor, which would
otherwise be subject to Section 2(a) above but for the
fact that the Dealer and/or Distributor related to such Approval or
Invoice is not eligible for floorplan inventory financing in
accordance with the credit and operational policies of Red Iron or
(ii) Seller or an affiliate of Seller delivers to Red Iron an
original Invoice or requests that Red Iron accept a group of
Invoices attributable to a single Dealer or Distributor, which
would otherwise be subject to Section 2(b) above but for
the fact that such Invoice fails to meet the requirements of
Section 2(b) (in either case whether as part of an
individual request or group request a “Non-conforming
Invoice”), then, provided such request indicates that any
such Non-conforming Invoice is subject to the Recourse Obligation
set forth below, Red Iron shall, from time to time in its
commercially reasonable discretion, issue such Approval and advance
against such Non-conforming Invoice, all under the terms of this
Agreement including the applicable terms set forth in
Section 2(a) and 2(b) above but subject to the
Recourse Obligation. Seller hereby requests that Red Iron accept
all Invoices which would otherwise be subject to
Section 2(a) or Section 2(b) with respect to
the Dealers/Distributors listed on Schedule 1 attached hereto and
agrees that all such Invoices are subject to the Recourse
Obligation. If a Dealer or Distributor shall default in the
payment of any Non-conforming Invoice, after the expiration of any
cure period applicable to such Non-conforming Invoice and upon
demand by Red Iron which shall set forth in reasonable detail the
nature of such default, Seller shall repurchase such Non-conforming
Invoice from Red Iron as provided below, which repurchase, subject
to Seller’s performance thereof, shall be Red Iron’s
sole and exclusive remedy with respect to such defaulted
Non-conforming Invoice (such repurchase obligation being referred
to herein as the “Recourse Obligation”). In connection
with such repurchase, Seller or Toro, as appropriate, shall pay to
Red Iron in immediately available funds not later than five
(5) Business Days after Seller’s receipt from Red Iron
of demand for the repurchase of such Non-conforming Invoice, in
payment for such repurchase, an amount equal to the outstanding
balance (including accrued but unpaid interest) remaining unpaid
under such Non-conforming Invoice. The payment of such amount in
immediately available funds shall otherwise be considered payment
in full of such Non-conforming Invoice. Upon the payment required
to be made to Red Iron as provided in this Section 2(c), Red
Iron shall automatically and without further action be deemed to
transfer, assign, set over and otherwise convey to Seller or its
designee, without recourse, representation or warranty, except as
set forth in the immediately following sentence, all the right,
title and interest of Red Iron in and to the applicable
Non-conforming Invoice, all moneys due or to become due and all
collateral security with respect thereto and all amounts received
with respect thereto and all proceeds thereof. Such transfer shall
be free and clear of any liens created by or through Red
Iron. Any collections received by Red Iron after the date of
transfer with respect to any Non-conforming Invoices transferred to
Seller or its designee pursuant to this Section 2(c), as well
as any amounts received by Red Iron after the date of transfer from
an account debtor with respect thereto shall be deemed held by Red
Iron in trust and as fiduciary for Seller or its designee and Red
Iron shall pay the same over to Seller or its designee promptly
upon receipt. Red Iron will irrevocably instruct any account
debtor with respect to such repurchased Non-
2
conforming Invoice to make all
payments on account thereof after such assignment to Seller or its
designee. Red Iron shall execute such documents and
instruments of transfer or assignment and take such other actions
as shall reasonably be requested by Seller or its designee to
effect the conveyance of such Non-conforming Invoice pursuant to
this Section 2(c). Red Iron’s rights under this
paragraph with regard to Non-conforming Invoices are in lieu of Red
Iron’s rights under the provisions of Sections 3(a) and
3(b) of this Agreement and are not subject to the limitation
set forth in Section 4(a) of this Agreement.
Notwithstanding the foregoing, if Red Iron notifies Seller, as a
result of its own determination or in response to a request from
Seller, that due to changed circumstances any Non-conforming
Invoice or any group of Non-conforming Invoices attributable to a
single Dealer or Distributor sold to Red Iron pursuant to this
Section 2(c) is no longer subject to any condition
requiring that it or they be treated as Non-conforming
Invoice(s) such that it or they would qualify for sale
pursuant to either Section 2(a) or 2(b) above, the
subject Invoice(s) shall no longer be considered as
Non-conforming Invoice(s) and Seller shall no longer be
subject to the Recourse Obligation with respect thereto; provided,
however, that such Invoice shall be subject to the provisions of
Section 3(a), 3(b) and 4(a) of this Agreement.
Red Iron agrees to respond to any request from Seller made pursuant
to the preceding sentence, which request shall specify with
reasonable detail the basis for such request, indicating Red
Iron’s acceptance of such request or rejection of such
request and the reason for such rejection, in writing within [five
(5) Business Days] after Red Iron’s receipt of such
request from Seller. At such time as all Invoices due from any of
the Dealers/Distributors listed on Schedule 1 attached hereto are
determined in accordance with the foregoing procedure no longer to
be Non-conforming Invoices, such Schedule 1 shall be amended to
delete reference to such Dealer/Distributor. Likewise, at such time
as Seller requests that Red Iron accept a group of Invoices
attributable to a single Dealer or Distributor as Non-conforming
Invoices in accordance with the provisions of this
Section 2(c), such Schedule 1 shall be amended to add a
reference to such Dealer/Distributor.
(d) Upon payment to Seller or
an affiliate of Seller of the amount of an Invoice pursuant to the
terms of the preceding paragraphs (a), (b)or (c), Seller or its
affiliate, as applicable, shall be deemed, without the necessity of
any further action, to have transferred, assigned, set over and
otherwise conveyed to Red Iron, without recourse except as provided
herein, all its right, title and interest in, to and under, such
Invoice and any related Wholesale Instrument, any collateral
security securing payment thereof and any other credit support
together with all monies due or to become due and all amounts
received or receivable with respect thereto, including all rights
to receive payments thereon from any Dealer and/or
Distributor. For accounting purposes, no Seller or affiliate
of Seller, as applicable, shall account for the transactions
contemplated by this Agreement in any manner other than, with
respect to the sale of each Invoice, as a true sale and
abso
