SEC Filing | The Toro Company

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e10vq

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended August 1, 2003

THE TORO COMPANY

(Exact name of registrant as specified in its charter)


Delaware (State of Incorporation)		1-8649 (Commission File Number)		41-0580470 (I.R.S. Employer Identification Number)

8111 Lyndale Avenue South
Bloomington, Minnesota 55420
Telephone number: (952) 888-8801

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

The number of shares of Common Stock outstanding as of August 29, 2003 was 24,496,449.

TABLE OF CONTENTS


PART I. ITEM 1. FINANCIAL INFORMATION
		Condensed Consolidated Statements of Earnings
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Cash Flows
		Notes to Condensed Consolidated Financial Statements
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EX-10(n) Multi-Year Credit Agreement
EX-10(o) Amendment No. 1 to Credit Agreement
EX-10(p) Amendment No. 2 to Credit Agreement
EX-10(q) Loan Agreement
EX-31(a) Certification Pursuant to Section 302
EX-31(b) Certification Pursuant to Section 302
EX-32 Certification Pursuant to Section 906

THE TORO COMPANY
INDEX TO FORM 10-Q


			Page Number

PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements
		Condensed Consolidated Statements of Earnings (Unaudited) - Three and Nine Months Ended August 1, 2003 and August 2, 2002		3
		Condensed Consolidated Balance Sheets (Unaudited) - August 1, 2003, August 2, 2002, and October 31, 2002		4
		Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended August 1, 2003 and August 2, 2002		5
		Notes to Condensed Consolidated Financial Statements (Unaudited)		6-11
Item 2.		Management’s Discussion and Analysis of Results of Operations and Financial Condition		12-19
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		20
Item 4.		Controls and Procedures		21
PART II.	OTHER INFORMATION:
Item 6.		Exhibits and Reports on Form 8-K		22
		Signatures		23

PART I. ITEM 1. FINANCIAL INFORMATION

THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(Dollars and shares in thousands, except per-share data)


			Three Months Ended						Nine Months Ended

			August 1,			August 2,			August 1,			August 2,
			2003			2002			2003			2002

Net sales			$	394,524		$	375,632		$	1,186,326		$	1,123,861
Cost of sales				247,574			246,693			758,163			737,562

	Gross profit			146,950			128,939			428,163			386,299
Selling, general, and administrative expense				101,118			92,412			307,618			285,689
Restructuring and other expense				1,655			—			1,476			9,953

	Earnings from operations			44,177			36,527			119,069			90,657
Interest expense				(4,152	)		(4,656	)		(12,564	)		(15,224	)
Other income, net				339			848			6,921			3,916

	Earnings before income taxes and cumulative effect of change in accounting principle			40,364			32,719			113,426			79,349
Provision for income taxes				13,320			10,797			37,430			24,410

		Earnings before cumulative effect of change in accounting principle		27,044			21,922			75,996			54,939
Cumulative effect of change in accounting principle, net of income tax benefit of $509				—			—			—			(24,614	)

		Net earnings	$	27,044		$	21,922		$	75,996		$	30,325

Basic earnings per share of common stock, before cumulative effect of change in accounting principle			$	1.08		$	0.87		$	3.04		$	2.19
Cumulative effect of change in accounting principle, net of income tax benefit				—			—			—			(0.98	)

Basic net earnings per share of common stock			$	1.08		$	0.87		$	3.04		$	1.21

Diluted earnings per share of common stock, before cumulative effect of change in accounting principle			$	1.03		$	0.84		$	2.92		$	2.12
Cumulative effect of change in accounting principle, net of income tax benefit				—			—			—			(0.95	)

Diluted net earnings per share of common stock			$	1.03		$	0.84		$	2.92		$	1.17

Weighted average number of shares of common stock outstanding – Basic				25,070			25,218			24,999			25,136
Weighted average number of shares of common stock outstanding – Dilutive				26,305			26,097			26,062			25,920

Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective April 1, 2003.

See accompanying notes to condensed consolidated financial statements.

THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per-share data)


			August 1,			August 2,			October 31,
			2003			2002			2002

ASSETS
Cash and cash equivalents			$	15,725		$	6		$	62,816
Receivables, net				373,173			341,891			255,739
Inventories, net				236,035			209,320			224,367
Prepaid expenses and other current assets				13,451			10,832			10,497
Deferred income taxes				42,299			36,477			38,722

		Total current assets		680,683			598,526			592,141

Property, plant, and equipment				462,239			432,416			440,714
		Less accumulated depreciation		298,646			277,901			283,935

				163,593			154,515			156,779
Deferred income taxes				4,196			9,721			4,196
Other assets				13,236			14,021			13,264
Goodwill, net				77,955			77,842			77,855
Other intangible assets, net				3,041			2,045			1,905

		Total assets	$	942,704		$	856,670		$	846,140

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt			$	250		$	15,824		$	15,825
Short-term debt				5,784			8,011			1,156
Accounts payable				67,415			67,099			86,180
Accrued liabilities				239,707			216,523			190,589

		Total current liabilities		313,156			307,457			293,750

Long-term debt, less current portion				178,703			178,768			178,756
Other long-term liabilities				10,231			7,429			8,344
Stockholders’ equity:
	Preferred stock, par value $1.00, authorized 1,000,000 voting and 850,000 non-voting shares, none issued and outstanding			—			—			—
	Common stock, par value $1.00, authorized 50,000,000 shares, issued and outstanding 24,470,181 shares as of August 1, 2003 (net of 2,545,929 treasury shares), 24,345,668 shares as of August 2, 2002 (net of 2,670,442 treasury shares), and 24,342,474 shares as of October 31, 2002 (net of 2,673,636 treasury shares)			24,470			24,346			24,342
Additional paid-in capital				13,663			11,584			11,193
Retained earnings				413,851			338,853			342,358
Accumulated other comprehensive loss				(11,370	)		(11,767	)		(12,603	)

		Total stockholders’ equity		440,614			363,016			365,290

		Total liabilities and stockholders’ equity	$	942,704		$	856,670		$	846,140

Shares have been adjusted for all periods presented to reflect a two-for-one stock split effective April 1, 2003.

See accompanying notes to condensed consolidated financial statements.

THE TORO COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)


				Nine Months Ended

				August 1,			August 2,
				2003			2002

Cash flows from operating activities:
Net earnings				$	75,996		$	30,325
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
	Cumulative effect of change in accounting principle				—			24,614
	Non-cash asset impairment write-off				901			4,163
	Provision for depreciation and amortization				22,093			20,609
	Gain on disposal of property, plant, and equipment				(31	)		(718	)
	Increase in deferred income taxes				(3,577	)		(2,550	)
	Tax benefits related to employee stock option transactions				1,916			1,420
	Changes in operating assets and liabilities:
		Receivables, net			(116,838	)		(70,214	)
		Inventories, net			(9,597	)		25,341
		Prepaid expenses and other current assets			(3,004	)		257
		Accounts payable and accrued liabilities			31,119			28,431

			Net cash (used in) provided by operating activities		(1,022	)		61,678

Cash flows from investing activities:
	Purchases of property, plant, and equipment				(32,110	)		(32,866	)
	Proceeds from disposal of property, plant, and equipment				1,969			2,055
	Decrease in investment in affiliates				1,000			—
	Increase in other assets				(1,433	)		(2,847	)
	Proceeds from sale of business				1,016			—
	Acquisition, net of cash acquired				(1,244	)		—

			Net cash used in investing activities		(30,802	)		(33,658	)

Cash flows from financing activities:
	Increase (decrease) in short-term debt				4,628			(26,402	)
	Repayments of long-term debt				(15,825	)		(486	)
	Increase in other long-term liabilities				1,887			280
	Proceeds from exercise of stock options				6,639			11,827
	Purchases of common stock				(9,629	)		(22,558	)
	Dividends on common stock				(4,503	)		(4,538	)

			Net cash used in financing activities		(16,803	)		(41,877	)

Foreign currency translation adjustment					1,536			987

Net decrease in cash and cash equivalents					(47,091	)		(12,870	)
Cash and cash equivalents as of the beginning of the period					62,816			12,876

Cash and cash equivalents as of the end of the period				$	15,725		$	6

See accompanying notes to condensed consolidated financial statements.

THE TORO COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
August 1, 2003

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. Unless the context indicates otherwise, the terms “company” and “Toro” refer to The Toro Company and its subsidiaries. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting primarily of recurring accruals, considered necessary for a fair presentation of the financial position and the results of operations. Since the company’s business is seasonal, operating results for the nine months ended August 1, 2003 cannot be annualized to determine the expected results for the fiscal year ending October 31, 2003. Certain amounts from prior period’s financial statements have been reclassified to conform to this period’s presentation.

The company’s fiscal year ends on October 31, and quarterly results are reported based on three month periods that generally end on the Friday closest to the quarter end. For comparative purposes, however, the company’s second and third quarters always include exactly 13 weeks of results so that the quarter end date for these two quarters is not necessarily the Friday closest to the quarter end.

For further information, refer to the consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2002. The policies described in that report are used for preparing quarterly reports.

Accounting Policies

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management must make decisions which impact the reported amounts and the related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, management applies judgments based on its understanding and analysis of the relevant circumstances, historical experience, and actuarial valuations. Actual amounts could differ from those estimated at the time the consolidated financial statements are prepared. Note 1 to the consolidated financial statements in the company’s Annual Report on Form 10-K provides a summary of the significant accounting policies followed in the preparation of the financial statements. Other footnotes in the company’s Annual Report on Form 10-K describe various elements of the financial statements and the assumptions made in determining specific amounts.

Comprehensive Income

Comprehensive income and the components of other comprehensive income (loss) were as follows:


		Three Months Ended				Nine Months Ended

		August 1,		August 2,		August 1,			August 2,
(Dollars in thousands)		2003		2002		2003			2002

Net earnings		$	27,044	$	21,922	$	75,996		$	30,325
Other comprehensive income (loss):
	Cumulative translation adjustments		310		177		1,536			987
	Unrealized gain (loss) on derivative instruments		464		448		(303	)		234

Comprehensive income		$	27,818	$	22,547	$	77,229		$	31,546

Stock-Based Compensation

The company accounts for stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB No. 25), and related Interpretations. The following table illustrates the effect on net earnings and net earnings per share if the company had applied the fair value recognition provisions of Statement of Financial Accounting Standard (SFAS) No. 123, “Accounting for Stock-Based Compensation.”


		Three Months Ended						Nine Months Ended

		August 1,			August 2,			August 1,			August 2,
(Dollars in thousands, except per share data)		2003			2002			2003			2002

Net earnings, as reported		$	27,044		$	21,922		$	75,996		$	30,325
Add: Stock-based employee compensation costs, net of tax, included in net earnings			2,083			1,020			3,746			2,490
Deduct: Stock-based employee compensation costs, net of tax, if fair value method had been applied			(799	)		(504	)		(6,024	)		(5,584	)

Pro forma net earnings		$	28,328		$	22,438		$	73,718		$	27,231

Net earnings per share data:
	As reported - Basic	$	1.08		$	0.87		$	3.04		$	1.21

	Pro forma - Basic	$	1.13		$	0.89		$	2.95		$	1.08

	As reported - Diluted	$	1.03		$	0.84		$	2.92		$	1.17

	Pro forma – Diluted	$	1.08		$	0.87		$	2.85		$	1.07

Per share data has been adjusted for all periods presented to reflect a two-for-one stock split effective April 1, 2003.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost determined by the last-in, first-out (LIFO) method for most inventories.

Inventories were as follows:


		August 1,		August 2,		October 31,
(Dollars in thousands)		2003		2002		2002

Raw materials and work in process		$	62,679	$	63,256	$	68,296
Finished goods and service parts			215,215		191,823		198,860

			277,894		255,079		267,156
Less: LIFO			26,903		29,264		26,903
	Other reserves		14,956		16,495		15,886

Total		$	236,035	$	209,320	$	224,367

Restructuring and Other Expense

In fiscal 2002, the company announced plans to close its Riverside, California manufacturing operations and its Evansville, Indiana and Madera, California manufacturing facilities. Approximately 550 job positions and related staff reductions were expected to be lost in connection with closing these operations. As of August 1, 2003, of the 550 job position reductions, 531 had been eliminated. In addition, the company will incur ongoing costs after the facilities are closed and until they are sold, which is captioned in “other” below. These actions are part of the company’s overall long-term strategy to reduce production costs and improve long-term competitiveness. The company also incurred a charge for asset impairment related to write-downs of patents and non-compete agreements during the first quarter of fiscal 2002.

Restructuring and Other Expense (continued)

In the second quarter of fiscal 2003, the company recorded a benefit of $0.2 million for the reversal of the remaining accrual for closing a facility in Australia, which was sold March 28, 2003.

In the third quarter of fiscal 2003, the company announced plans to close its two-cycle engine manufacturing facility located in Oxford, Mississippi. Over the past few years, the Environmental Protection Agency (EPA) has lowered the allowable emission standard for hydrocarbon emissions from walk power mower engines to a level that is cost prohibitive for Toro to meet. Therefore, the company will phase out the two-cycle engine walk power mowers sold through the Lawn-Boy product line and is currently evaluating alternative sourcing options for its two-cycle engine utilized in snowthrower products. The company will produce compliant two-cycle engines for snowthrower products through January 31, 2004 that will be used for production of models through early fiscal 2005. Approximately 115 job positions and related staff reductions will be lost in connection with closing this facility, as to which the company recognized $0.8 million of expense in the third quarter of fiscal 2003 for severance and benefits. In addition, the company recognized $0.9 million of expense for asset impairment related to equipment and tooling that is expected to have no future value.

The following is an analysis of the company’s restructuring and other expense and related reserve accounts:


	Severance			Asset
(Dollars in thousands)	& Benefits			Impairment			Other			Total

Balance as of October 31, 2002	$	1,865		$	—		$	872		$	2,737
Changes in estimates		74			28			(295	)		(193	)
Initial charge		763			901			5			1,669
Utilization		(1,721	)		(929	)		(70	)		(2,720	)

Balance as of August 1, 2003	$	981		$	—		$	512		$	1,493

The company expects a majority of the remaining accruals to be utilized by the end of the first quarter of fiscal 2004.

Per Share Data

Reconciliations of basic and dilutive weighted average shares of common stock outstanding are as follows:


	Three Months Ended				Nine Months Ended

	August 1,		August 2,		August 1,		August 2,
(Shares in thousands)	2003		2002		2003		2002

Basic
Weighted average number of shares of common stock outstanding		25,070		25,218		24,985		25,116
Assumed issuance of contingent shares		—		—		14		20

Weighted average number of shares of common stock and assumed issuance of contingent shares		25,070		25,218		24,999		25,136

Dilutive
Weighted average number of shares of common stock and assumed issuance of contingent shares		25,070		25,218		24,999		25,136
Assumed conversion of stock options		1,235		879		1,063		784

Weighted average number of shares of common stock, assumed issuance of contingent shares, and assumed conversion of stock options		26,305		26,097		26,062		25,920

Shares for all periods presented have been adjusted to reflect a two-for-one stock split effective April 1, 2003.

Segment Data

The presentation of segment information reflects the manner in which management organizes businesses for making operating decisions and assessing performance. On this basis, the company has determined it has three reportable business segments: Professional, Residential, and Distribution. The Other segment consists of corporate activities, including corporate financing activities and elimination of intersegment revenues and expenses.

The following table shows the summarized financial information concerning the company’s reportable segments:



(Dollars in thousands)	Professional		Residential¹		Distribution		Other			Total

Three months ended August 1, 2003
Net sales	$	244,111	$	129,043	$	43,039	$	(21,669	)	$	394,524
Intersegment gross sales		25,189		1,948		—		(27,137	)		—
Earnings (loss) before income taxes		42,235		13,205		2,327		(17,403	)		40,364
Three months ended August 2, 2002
Net sales	$	235,301	$	119,907	$	50,452	$	(30,028	)	$	375,632
Intersegment gross sales		31,551		2,711		—		(34,262	)		—
Earnings (loss) before income taxes		34,822		12,161		2,311		(16,575	)		32,719

¹ Includes restructuring and other expense of $1.7 million in fiscal 2003.


	Professional¹		Residential²		Distribution			Other			Total

Nine months ended August 1, 2003
Net sales	$	751,671	$	396,177	$	96,987		$	(58,509	)	$	1,186,326
Intersegment gross sales		64,131		6,407		—			(70,538	)		—
Earnings (loss) before income taxes		133,415		46,215		(423	)		(65,781	)		113,426
Total assets		459,931		195,574		58,057			229,142			942,704
Nine months ended August 2, 2002
Net sales	$	701,267	$	381,858	$	118,825		$	(78,089	)	$	1,123,861
Intersegment gross sales		78,591		10,432		—			(89,023	)		—
Earnings (loss) before income taxes and accounting change		97,119		39,938		1,961			(59,669	)		79,349
Total assets		440,844		155,823		66,173			193,830			856,670

¹ Includes restructuring and other income of $0.1 million in fiscal 2003 and restructuring and other expense of $10.0 million in fiscal 2002.

² Includes restructuring and other expense of $1.6 million in fiscal 2003.

The following table presents the details of the Other segment earnings (loss) before income taxes:


	Three Months Ended						Nine Months Ended

	August 1,			August 2,			August 1,			August 2,
(Dollars in thousands)	2003			2002			2003			2002

Corporate expenses	$	(20,893	)	$	(17,254	)	$	(69,458	)	$	(56,771	)
Finance charge revenue		284			735			2,148			3,052
Elimination of corporate financing expense		4,789			4,415			11,683			11,453
Interest expense, net		(4,152	)		(4,656	)		(12,564	)		(15,224	)
Other income (expense)		2,569			185			2,410			(2,179	)

Total	$	(17,403	)	$	(16,575	)	$	(65,781	)	$	(59,669	)

Goodwill

The changes in the net carrying amount of goodwill for the first nine months of fiscal 2003 were as follows:


	Professional		Residential
(Dollars in thousands)	Segment		Segment		Total

Balance as of October 31, 2002	$	68,942	$	8,913	$	77,855
Translation adjustment		27		73		100

Balance as of August 1, 2003	$	68,969	$	8,986	$	77,955

Other Intangible Assets

The components of other amortizable intangible assets were as follows:


	August 1, 2003					October 31, 2002

	Gross Carrying		Accumulated			Gross Carrying		Accumulated
(Dollars in thousands)	Amount		Amortization			Amount		Amortization

Patents	$	6,553	$	(4,845	)	$	6,104	$	(4,609	)
Non-compete agreements		1,000		(537	)		800		(405	)
Other		1,700		(830	)		800		(785	)

Total	$	9,253	$	(6,212	)	$	7,704	$	(5,799	)

Total other intangible assets, net	$	3,041				$	1,905

Amortization expense for intangible assets during the first nine months of fiscal 2003 was $414,000. Estimated amortization expense for the remainder of fiscal 2003 and succeeding fiscal years is as follows: 2003 (remainder), $186,000; 2004, $648,000; 2005, $628,000; 2006, $601,000; 2007, $407,000; 2008, $281,000 and after 2008, $290,000.

Stock Split

On March 20, 2003, the company’s Board of Directors declared a two-for-one stock split of the company’s common stock, effected in the form of a 100 percent stock dividend issued to stockholders of record as of April 1, 2003 and paid on April 14, 2003. As a result of this action, approximately 12.5 million shares were issued. Par value of the common stock remains at $1.00 per share and accordingly, approximately $12.5 million was transferred from additional paid-in capital to common stock. All references to the number of common shares and per common share amounts have been adjusted to give retroactive effect to the stock split for all periods presented.

Warranty Guarantees

The company’s products are warranted to the end-user to ensure end-user confidence in design, workmanship, and overall quality. Warranty coverage varies by product line, ranging from a period of six months to seven years. The warranties generally cover parts, labor, and other expenses for non-maintenance repairs, provided operator abuse, improper use, or negligence did not necessitate the repair. An authorized distributor or dealer must perform warranty work and submit to the company claims for warranty reimbursement, which the company pays as long as the repairs meet prescribed standards. Warranty expense is accrued at the time of sale based on historical claims experience by individual product lines. Special warranty reserves are also accrued for special major rework campaigns. The company also offers additional warranty coverage on select products when the factory warranty period expires.

Warranty provisions, claims, and changes in estimates for the first nine months of fiscal 2003 and 2002 were as follows:


	Beginning		Warranty		Warranty			Changes in		Ending
(Dollars in Thousands)	Balance		Provisions		Claims			Estimates		Balance

Fiscal 2003	$	53,590	$	32,606	$	(27,524	)	$	2,241	$	60,913
Fiscal 2002	$	57,882	$	32,470	$	(33,131	)	$	4,075	$	61,296

Derivative Instruments and Hedging Activities

The company uses derivative instruments to assist in the management of exposure to currency exchange rates. The company uses derivatives only in an attempt to limit underlying exposure to currency fluctuations, and not for trading purposes. The company documents all relationships between hedging instruments and the hedged items, as well as its risk-management objective and strategy for undertaking various hedges. The company assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged item.

The company enters into foreign currency exchange contracts to hedge the risk from forecasted settlement in local currencies of trade sales and purchases. These contracts are designated as cash flow hedges with the fair value recorded in accumulated comprehensive income (loss) and as a hedge asset or liability in prepaid expenses or accrued liabilities, as applicable. Once the forecasted transaction has been recognized as a sale or inventory purchase and a related asset or liability recorded on the balance sheet, the related fair value of the derivative hedge contract is reclassified from accumulated other comprehensive income (loss) into earnings. During the three and nine months ended August 1, 2003, the amount of losses reclassified to earnings for such cash flow hedges was $1.4 million and $3.9 million, respectively. As of August 1, 2003, the amount of such contracts outstanding was $78.1 million. The unrecognized after-tax loss portion of the fair value of the contracts recorded in accumulated comprehensive loss as of August 1, 2003 was $0.7 million.

The company also enters into other foreign currency exchange contracts. These contracts are intended to hedge intercompany financing transactions and other activities that are not subject to the accounting criteria of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities;” therefore, changes in fair value of these instruments are recorded in other income, net.

New Accounting Pronouncements

SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” requires that a liability for a cost associated with an exit or disposal activity is recognized when the liability is incurred. This statement also establishes that fair value is the objective for initial measurement of the liability. The company applied the provisions of SFAS No. 146 for exit and disposal activities initiated after December 31, 2002, as required.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates disclosure requirements for obligations by a guarantor under certain guarantees. This interpretation also requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of an obligation undertaken in issuing a guarantee. The company will apply the initial recognition and measurement provisions of Interpretation No. 45 to guarantees issued or modified after December 31, 2002, as required. The company has adopted the disclosure requirements in this Interpretation beginning with the first quarter of fiscal 2003, as required.

SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” requires certain pro forma disclosures related to stock-based compensation. This statement also amended the transition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” The company adopted the pro forma disclosures of SFAS No. 148 in the second quarter of fiscal 2003, as required.

Acquisition

During the third quarter of fiscal 2003, the company completed the acquisition of R & D Engineering, a market leader in patented wireless rain and freeze switches for residential irrigation systems. This acquisition was immaterial based on the company’s consolidated financial position and results of operations.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

Nature of Operations

The principal business of The Toro Company and its wholly owned and majority-owned domestic and foreign subsidiaries (“Toro” or “the company”) is the development, manufacturing, and selling of outdoor beautification equipment and systems used in the residential and professional markets. Our products are generally sold through a network of distributors, dealers, hardware retailers, home centers, mass retailers, and through Internet retailers.

Financial Trends

Throughout these financial sections, you will read about both recurring and significant transactions or events. Significant transactions in the current and prior period discussed in this Management’s Discussion and Analysis include the cumulative effect of change in accounting principle in the first quarter of fiscal 2002, a federal tax refund in the second quarter of fiscal 2002, restructuring and other expense, and a gain resulting from a legal settlement in the first quarter of fiscal 2003. These significant transactions result from unique facts and circumstances that likely will not recur with similar materiality or impact on continuing operations. While these items are important in understanding and evaluating financial results and trends, other transactions or events such as those discussed later in this Management’s Discussion and Analysis may also have a material impact. A complete understanding of these transactions is necessary in order to estimate the likelihood that these trends will continue.

Accounting Policies and Critical Accounting Estimates

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, we must make decisions which impact the reported amounts and the related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, historical experience, and actuarial valuations. Actual amounts could differ from those estimated at the time the consolidated financial statements are prepared.

Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2002. Not all of these significant accounting policies require us to make difficult subjective or complex judgments or estimates. However, we believe the following accounting policies, which require some of the more significant judgments and estimates used in the preparation of the consolidated financial statements, could be deemed to be critical within the Securities and Exchange Commission’s (SEC) proposed rules related to critical accounting policy disclosure.

Warranty Reserve. We establish a reserve for future warranty claims at the time of sale by product line. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, and other factors. We also establish reserves for special major rework campaigns. However, adjustments to the initial warranty accrual are recorded if actual claim experience indicates that adjustments are necessary. Actual claims could be higher or lower than amounts estimated, as the amount and value of warranty claims are subject to variation as a result of many factors that cannot be predicted with certainty, including performance of new products, significant manufacturing or design defects not discovered until after the product is delivered to customers, product failure rates, higher than expected service costs for a repair, and other similar factors. We believe that analysis of historical trends and knowledge of potential manufacturing or design problems provide sufficient information to establish a reasonable estimate for warranty claims at the time of sale.

Accounts and Notes Receivable Valuation. We establish a reserve for specific accounts and notes receivable that we believe are uncollectible, as well as an estimate of uncollectible receivables not specifically known. Each quarter, we evaluate past collection history, the age of the receivable, current financial conditions of key customers, and economic conditions when establishing an allowance for doubtful accounts. Portions of the accounts receivable are protected by a security interest in products held by customers, which minimizes our collection exposure. A deterioration in the financial condition of any key customer or a significant continued slow down in the economy could have a material negative impact on our ability to collect a portion or all of the accounts and notes receivable. We believe that analysis of historical trends and current knowledge of potential collection problems provides sufficient information to establish a reasonable estimate for accounts and notes receivable reserve.

Results of Operations

Net Earnings

Third quarter of fiscal 2003 net earnings were $27.0 million or $1.03 per diluted share compared to $21.9 million or $0.84 per diluted share for the third quarter of fiscal 2002. Results for the third quarter of fiscal 2003 included restructuring and other expense that reduced net earnings by $1.7 million pre-tax ($1.0 million net of tax). Year-to-date net earnings in fiscal 2003 were $76.0 million or $2.92 per diluted share compared to $30.3 million or $1.17 per diluted share for the same period last year. Fiscal 2003 year-to-date net earnings benefited from a gain related to a legal settlement of $3.4 million pre-tax ($2.1 million net of tax). However, fiscal 2003 year-to-date net earnings were reduced by restructuring and other expense of $1.5 million pre-tax ($0.9 million net of tax). Fiscal 2002 year-to-date net earnings included the following significant items: (i) the cumulative effect of a change in accounting principle that reduced net earnings by $24.6 million related to the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets;” (ii) restructuring and other expense that also reduced net earnings by $10.0 million pre-tax ($6.7 million net of tax); and (iii) a federal tax refund of $1.8 million that reduced tax expense. Other factors contributing to the net earnings increase include higher sales, an increase in gross margins resulting from our “5 by Five” profit improvement initiatives, and lower interest expense, somewhat offset by higher selling, general, and administrative expense.

Net Sales

Worldwide consolidated net sales for the third quarter and nine-month period of fiscal 2003 were up 5.0 percent and 5.6 percent, respectively, from the same periods in the prior year. Favorable currency rates contributed approximately 1 percent of the sales growth for both the quarter and year-to-date comparison. In addition, professional segment sales increased due primarily to the acceptance of new product introductions as well as a stronger order position and lower field inventory levels entering fiscal 2003 as compared to entering fiscal 2002. Residential segment sales were also up for the quarter and year-to-date comparison due to initial stocking shipments of the new TimeCutter® Z mower and new two-stage snowthrower product as well as strong sales of Toro walk power mowers. However, distribution segment sales were down for the quarter and year-to-date comparison due to the sale of a distribution company during the first quarter of fiscal 2003, which also contributed to the favorable change in the other segment due to a decrease in sales elimination. International sales for the third quarter and nine-month period of fiscal 2003 were up 15.2 percent and 9.9 percent, respectively, from the same periods in the prior year. This increase was driven primarily by favorable currency exchange rates and new product introductions. Disregarding currency effects, international sales increased 6.6 percent and 3.8 percent for the third quarter and nine-month period of fiscal 2003, respectively, compared to the same periods in fiscal 2002.

Gross Profit

Gross profit as a percentage of net sales increased for the third quarter and nine-month period of fiscal 2003 by 2.9 and 1.7 percentage points from the same periods of the prior year, to 37.2 percent and 36.1 percent respectively. The increase was the result of the following factors: (i) cost reduction efforts that included moving production to facilities with lower operating costs; (ii) profit improvement strategies intended to reduce raw material costs as part of our ongoing “5 by Five” initiatives; (iii) increased sales of higher-margin products; (iv) lower manufacturing costs from increased plant utilization as a result of reduced excess manufacturing capacity, mainly related to the closure of two facilities and increased demand for our products; and (v) favorable foreign currency exchange rates compared to the U.S. dollar. Somewhat offsetting these positive factors were: (i) higher resin costs as a result of rising oil costs and (ii) higher inbound freight expense as we transitioned some of our manufacturing to Juarez, Mexico.

Selling, General, and Administrative Expense

Selling, general, and administrative expense (SG&A) increased for the third quarter and nine-month period of fiscal 2003 by 9.4 percent and 7.7 percent, respectively, from the same periods in the prior year. SG&A as a percentage of net sales for the third quarter and first nine months of fiscal 2003 was 25.6 percent and 25.9 percent, respectively, compared to 24.6 percent and 25.4 percent for the comparable periods in fiscal 2002, respectively. These increases were due mainly to: (i) higher administration expenses, mainly from a higher amount of investments in information systems, increased expense for distributor changes, and rising insurance costs; (ii) increased marketing expense; (iii) higher incentive compensation expense; (iv) increased spending on engineering; and (v) higher currency exchange rates. Somewhat offsetting those increases was lower warranty expense due to a higher amount of specific reserves booked for known product modifications in fiscal 2002 compared to fiscal 2003 as well as the reversal of specific reserves in the second quarter of fiscal 2003 due to changes in estimates of claims payable from the original assumptions used when establishing the reserves.

Restructuring and Other Expense

In the third quarter of fiscal 2003, we announced plans to close our two-cycle engine manufacturing facility that resulted in a pre-tax restructuring and other expense charge of $1.7 million. In the second quarter of fiscal 2003, we recorded a benefit of $0.2 million for the reversal of the remaining accrual for closing a facility in Australia, which was sold March 28, 2003. The combination of the charge and the benefit resulted in $1.5 million pre-tax restructuring and other expense for the nine-month period of fiscal 2003.

In the first quarter of fiscal 2002, we incurred $10.0 million of restructuring and other expense. The closure of two manufacturing facilities resulted in a pre-tax restructuring and other expense charge of $8.0 million. In addition, we also incurred a $2.0 million charge for asset impairment related to write-offs of patents and non-compete agreements in the agricultural irrigation business. Based on our evaluation of the recoverability of some acquired intangible assets, we determined that the acquired patents and non-compete agreements in the agricultural irrigation business had no future value due to changes in this industry.

Interest Expense

Interest expense for the third quarter and nine-month period of fiscal 2003 was $4.2 million and $12.6 million, respectively, or a decrease of 10.8 percent and 17.5 percent, respectively, from the same periods in the prior year. These decreases were due primarily to lower levels of average debt.

Other Income, Net

Other income, net for the third quarter and nine-month period of fiscal 2003 was $0.3 million and $6.9 million, respectively. For the third quarter comparison, other income, net was down $0.5 million, mainly due to a gain on the sale of one of our owned facilities located in Riverside, California in the third quarter of fiscal 2002. For the year-to-date comparison, other income, net is up $3.0 million primarily from a gain related to a legal settlement in the first quarter of fiscal 2003.

Provision for Income Taxes

The effective tax rate for the third quarter and nine-month period of fiscal 2003 remained unchanged at 33.0 percent compared to the same prior year periods, before a federal tax refund of $1.8 million. Including the federal tax refund, the effective tax rate was 30.8 percent for the first nine months of fiscal 2002.

Cumulative Effect of Change in Accounting Principle

In connection with the adoption of SFAS No. 142 in the first quarter of fiscal 2002, we performed an evaluation of goodwill. The results of the evaluation indicated that goodwill related to the agricultural irrigation reporting unit was impaired. The performance of this reporting unit has not met our original expectations, mainly due to lower than anticipated growth rates in the drip line market. This is a result of lower industry-wide pricing and margins on product sales. We measured the amount of impairment based on a comparison of the fair value of the reporting unit to its carrying value. Accordingly, we recognized a $24.6 million non-cash charge, net of income tax benefit of $0.5 million, as the cumulative effect of a change in accounting principle.

Business Segments

As described previously, we operate in three reportable segments: professional, residential, and distribution. A fourth segment called “other” consists of corporate and financing functions. Operating earnings (loss) by segment is defined as earnings (loss) from operations plus other income, net for the professional, residential, and distribution segments. The other segment operating loss consists of corporate activities, including corporate financing activities, other income, net, and interest expense. The business segment’s operating profits and losses include direct costs incurred at the segment’s operating level plus allocated expenses, such as profit sharing and manufacturing costs. The allocated expenses represent costs these operations would have incurred, but do not include general corporate expenses, interest expense, and income taxes.

The following table summarizes net sales by segment:


		Three Months Ended

		August 1,			August 2,
(Dollars in thousands)		2003			2002			$ Change			% Change

Professional		$	244,111		$	235,301		$	8,810			3.7	%
Residential			129,043			119,907			9,136			7.6
Distribution			43,039			50,452			(7,413	)		(14.7	)
Other			(21,669	)		(30,028	)		8,359			27.8

	Total *	$	394,524		$	375,632		$	18,892			5.0	%

* Includes international net sales of:		$	69,140		$	60,024		$	9,116			15.2	%


		Nine Months Ended

		August 1,			August 2,
(Dollars in thousands)		2003			2002			$ Change			% Change

Professional		$	751,671		$	701,267		$	50,404			7.2	%
Residential			396,177			381,858			14,319			3.7
Distribution			96,987			118,825			(21,838	)		(18.4	)
Other			(58,509	)		(78,089	)		19,580			25.1

	Total *	$	1,186,326		$	1,123,861		$	62,465			5.6	%

* Includes international net sales of:		$	230,151		$	209,398		$	20,753			9.9	%

Professional

Net Sales. Worldwide net sales for the professional segment in the third quarter and nine-month period of fiscal 2003 were up 3.7 percent and 7.2 percent, respectively, compared to the same periods last year. Worldwide shipments of most product lines were up due to the success of introducing new products such as new lines of Toro® mid-size walk behind mowers, Toro 500 Series and Exmark® zero-turning radius riding mowers, and Toro Groundsmaster® rotary mowers. In addition, favorable currency exchange rates, better product availability of some irrigation products as well as a stronger order position and lower field inventory levels entering fiscal 2003 as compared to entering fiscal 2002 contributed to the sales growth. Worldwide agricultural irrigation product sales also increased as a result of additional manufacturing capacity, mainly in Europe. Shipments of Sitework Systems were down for the quarter comparison but up for the year-to-date comparison due to the addition of new dealers.

Operating Earnings. Operating earnings for the professional segment in the third quarter of fiscal 2003 were $42.2 million compared to $34.8 million in the third quarter of fiscal 2002, an increase of 21.3 percent. Expressed as a percentage of net sales, professional segment operating margins increased to 17.3 percent compared to 14.8 percent in the third quarter of fiscal 2002. Year-to-date operating earnings for the professional segment through the third quarter of fiscal 2003 were $133.4 million compared to $97.1 million last year. However, year-to-date fiscal 2002 operating earnings were reduced by restructuring and other expense of $10.0 million. The increases were due mainly to higher gross margins as a result of the same factors discussed previously in the Gross Profit section. SG&A expense as a percentage of net sales was slightly higher for the quarter comparison primarily from higher marketing and engineering costs as well as the impact of higher currency exchange rates. For the year-to-date comparison, SG&A expense as a percentage of net sales was lower due mainly to leveraging fixed SG&A costs over higher sales volumes. In addition, a gain resulting from a legal settlement contributed to the year-to-date profit improvement.

Residential

Net Sales. Worldwide net sales for the residential segment in the third quarter and nine-month period of fiscal 2003 were up by 7.6 percent and 3.7 percent, respectively, compared to the same periods last year. Riding product sales increased due to initial stocking orders for the new TimeCutter Z mower. However, shipments of other riding product lines were down due to continued strong competition, consumer preference for lower-priced units, and a shift of sales to the new TimeCutter riding mowers. Shipments of Toro walk power mowers were up due to successful retail promotional programs as well as strong retail demand. Snowthrower sales were also up due to initial stocking orders for a new two-stage snowthrower product. Somewhat offsetting these increases were lower electric trimmer sales due to lost shelf space at a home center customer. Electric blower product sales were also down, mainly for the year-to-date comparison, due to the cold fall weather in most markets in 2002 that reduced retail demand compared to the warm fall weather in 2001 that extended the selling season into the first quarter of fiscal 2002. Retail irrigation product sales also declined for the third quarter comparison due to poor weather conditions in key domestic markets, somewhat offset by new product introductions and strong demand in Australia due to dry weather conditions.

Operating Earnings. Operating earnings for the residential segment in the third quarter and nine-month period of fiscal 2003 increased 8.6 percent and 15.7 percent, respectively, compared to the same periods last year. Operating earnings as a percentage of net sales increased for the third quarter and nine-month period of fiscal 2003 by 0.1 and 1.2 percentage points from the same periods of the prior year, to 10.2 percent and 11.7 percent respectively. Fiscal 2003 operating earnings were negatively affected by a third quarter restructuring and other expense charge of $1.7 million related to the announced closure of the two-cycle engine manufacturing facility. The operating profit improvement was mainly due to higher gross margins as a result of the same factors discussed previously in the Gross Profit section. Somewhat offsetting the profit improvement was higher SG&A expense, mainly for the third quarter comparison, due to an increase of marketing and warranty expense.

Distribution

Net Sales. Worldwide net sales for the distribution segment in the third quarter and nine-month period of fiscal 2003 were down 14.7 percent and 18.4 percent, respectively, compared to the same periods last year. The sales decline was primarily the result of selling one of the previously owned distributorships effective December 31, 2002, somewhat offset by the addition of sales from a southeastern-based distributor acquired during the second quarter of fiscal 2003. Factoring out sales from the distribution company sold and the acquired distributorship, net sales for the distribution segment in the third quarter and nine-month period of fiscal 2003 were down 1.4 percent and 3.4 percent, respectively, compared to the same periods last year. The sales decline at the other company-owned distributors was due to continued weak economic conditions.

Operating Earnings (Losses). Operating earnings for the distribution segment for the third quarter comparison were even at $2.3 million. Year-to-date operating losses for fiscal 2003 were $0.4 million compared to operating earnings of $2.0 million last year. This unfavorable change in operating results for the year-to-date comparison was due to lower sales volumes as well as the sale of a previously owned distributorship effective December 31, 2002.

Other

Net Sales. Net sales for the other segment include the elimination of sales from the professional and residential segments to the distribution segment. Professional and residential segment shipments to the company-owned distributorships are eliminated in the other segment because consolidated results reflect those sales in the distribution segment after products are sold by the company-owned distributorships. In addition, elimination of the professional and residential segments’ floor plan interest costs from Toro Credit Company are also included in this segment. The other segment net sales elimination decreased for the third quarter and nine-month period of fiscal 2003 by 27.8 percent and 25.1 percent, respectively, compared to the same periods last year. This decline reflects lower shipments to the distribution companies mainly as a result of selling one of the previously owned distributorships, somewhat offset by the acquisition of a distributorship during the second quarter of fiscal 2003 as discussed above.

Operating Losses. Operating losses for the other segment were up for the third quarter and nine-month period of fiscal 2003 by $0.8 million and $6.1 million, respectively, compared to the same periods last year. This loss increase was due to higher incentive compensation expenses, increased investments in information systems, higher expense for distributor changes, and rising insurance costs. Somewhat offsetting the operating loss increase was lower interest expense, higher litigation recovery, and a reduction of the gross profit elimination percentage due to a change in estimate applied to the ending Toro inventory at our company-owned distributors.

Financial Position

Working Capital

During the third quarter of fiscal 2003, emphasis continued on reducing average short-term debt. However, average inventory and receivables were up for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. Average working capital for the first nine months of fiscal 2003 was $327.3 million compared to $278.5 million for the first nine months of fiscal 2002. The increase of 17.5 percent was due to lower average short-term debt, higher average inventory levels, and higher average receivables, somewhat offset by higher payables and other accrued liabilities. Based on the last twelve months ended August 1, 2003, inventory turns were slightly down compared to the twelve months ended August 2, 2002. This unfavorable change was due to higher average inventory levels in the second and third quarters of fiscal 2003 from the prior year comparable periods as a result of prebuilding some residential segment products together with lower than expected sales. Average days outstanding for receivables slightly improved to 84.3 days based on the last twelve months ended August 1, 2003 compared to 84.7 days based on the last twelve months ended August 2, 2002. This decrease was due to a higher proportion of sales that have shorter payment terms. In addition, higher foreign currency exchange rates also contributed to the higher receivables and inventory values as of the end of the third quarter of fiscal 2003 compared to the end of the third quarter of fiscal 2002.

Liquidity and Capital Resources

Our businesses are working capital intensive and require funding for purchases of production and replacement parts inventory, capital expenditures, expansion and upgrading of existing facilities, and for financing receivables from customers. We believe that cash generated from operations, our medium-term bank credit lines, and cash on hand provide us with adequate liquidity to meet our operating requirements. We believe that the combination of funds available through existing or anticipated financing arrangements, coupled with forecasted cash flows, will provide the necessary capital resources for our anticipated working capital, capital additions, acquisitions, long-term debt repayments, and stock repurchases for the next twelve months.

Cash Flow. Cash used in operating activities for the first nine months of fiscal 2003 was $1.0 million compared to cash provided by operations of $61.7 million for the first nine months of fiscal 2002. This unfavorable change was due primarily to a higher increase of receivables and inventory levels, somewhat offset by higher cash-related earnings and a higher increase of accounts payable and accruals for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. Cash used in investing activities for the first nine months of fiscal 2003 was 8.5 percent lower than the first nine months in fiscal 2002 as a result of slightly lower levels of purchases of property, plant, and equipment, proceeds from an investment and the sale of a previously owned distribution company, and a smaller increase of other assets. This was somewhat offset by cash used for the acquisition of R & D Engineering. Cash used in financing activities for the first nine months of fiscal 2003 was 59.9 percent lower than the first nine months of fiscal 2002 mainly due to higher levels of short-term debt repayments in fiscal 2002 compared to fiscal 2003.

Credit Lines and Other Capital Resources. Our U.S. seasonal working capital requirements are funded with a $175.0 million medium-term committed unsecured bank credit line with various banks, which expires in February 2005. We also had a $75.0 million short-term committed unsecured credit line, which expired in February 2003. During the third quarter of fiscal 2003, we replaced the expired unsecured line of credit with a new $75.0 million secured line of credit backed by a multi-year credit agreement, which is expected to reduce our interest costs. Interest expense on these credit lines is determined from a LIBOR or commercial paper rate plus a basis point spread defined in the credit agreements. In addition, our non-U.S. operations and a domestic subsidiary also maintain unsecured short-term lines of credit of approximately $11 million. These facilities bear interest at various rates depending on the rates in their respective countries of operation. We also have a letter of credit subfacility as part of the above Working Capital Agreements. Average borrowings were $47.9 million in the first nine months of fiscal 2003 compared to $86.0 million in the first nine months of fiscal 2002. The decrease in average short-term debt resulted primarily from the use of cash earnings to pay for working capital requirements and higher levels of accounts payable and other accruals, somewhat offset by higher levels of receivables and inventory. Our business is seasonal, with peak borrowing generally occurring between February and May each year.

Significant financial covenants in the Working Capital Agreements are interest coverage and debt to total capitalization ratios. We were in compliance with all covenants related to the Working Capital Agreements as of August 1, 2003. If we were out of compliance with any debt covenant required by the Working Capital Agreements, the banks could terminate their commitments unless we could negotiate a covenant waiver from the banks. In addition, our long-term public notes and debentures could become due and payable if we were unable to obtain a covenant waiver or refinance our medium-term debt under our Working Capital Agreements. If our credit rating falls below investment grade, the interest rate we currently pay on outstanding debt on the Working Capital Agreements would increase, but the credit commitments could not be cancelled by the banks based only on a ratings downgrade. Our debt rating for long-term unsecured senior, non-credit enhanced debt has been unchanged for the third quarter of fiscal 2003 by Standard and Poor’s Ratings Group at BBB- and by Moody’s Investors Service at Baa3.

Inflation

We are subject to the effects of inflation and changing prices. In our opinion, changes in net sales and net earnings that have resulted from inflation and changing prices have not been material during the periods presented. However, there is no assurance that inflation will not materially affect us in the future. We attempt to deal with these inflationary pressures by actively pursuing internal cost reduction efforts and introducing slight price increases.

Outlook

Based on our performance for the first nine months of fiscal 2003, we anticipate continued revenue and profit growth for the fourth quarter of fiscal 2003 compared to the fourth quarter of fiscal 2002. In addition, we expect to realize continued benefits from our profit improvement initiatives implemented under our “5 by Five” program. We expect a slight improvement in sales growth in fiscal 2003 compared to the sales growth in fiscal 2002, and strong diluted earnings per share growth in fiscal 2003 over fiscal 2002 before the cumulative effect of a change in accounting principle. We will continue, however, to keep a cautionary eye on the challenging and uncertain world economies, weather, and geopolitical conditions that may cause actual results to differ from our outlook.

Forward-Looking Information

Safe Harbor Statement. This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements that are not historical are forward-looking and reflect expectations about our future performance. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on our worldwide web site, or otherwise, in the future by or on our behalf. When used by or on our behalf, the words “expect”, “looking ahead”, “anticipate”, “estimate”, “believe”, “could”, “will”, “may”, “should”, “intend”, and similar expressions generally identify forward-looking statements.

Forward-looking statements involve risks and uncertainties. These uncertainties include factors that affect all businesses operating in a global market as well as matters specific to us. The following are some of the factors that could cause our financial condition to differ materially from what we have anticipated in our forward-looking statements:

•		Continued threat of terrorist acts and war, which may result in heightened security and higher costs for import and export shipments of components or finished goods, reduced business or leisure travel that negatively affects the travel industry, and contraction of the U.S. and worldwide economies.

•		Changes in global and domestic economies, including but not limited to further slowing in growth, slow down in home sales, rise in interest rates and oil costs, inflation, unemployment, and weaker consumer confidence, which could have a negative impact on our financial results.

•		Increased competition, including competitive pricing pressures, new product introductions, and financing programs offered by both domestic and foreign companies.

•		Weather conditions that reduce demand for our products.

•		Our ability to achieve sales growth and strong diluted earnings per share growth in fiscal 2003 compared to fiscal 2002.

•		Our ability to achieve goals of the “5 by Five” profit improvement program, which is intended to improve after-tax return on sales.

•		Unforeseen inventory adjustments, higher field inventory levels, or changes in purchasing patterns by our customers, which could reduce sales and necessitate lowering manufacturing volumes, or increase our inventory above acceptable levels.

•		Our ability to acquire, develop, and integrate new businesses and manage alliances successfully, both of which are important to our revenue growth.

•		Market acceptance of new products as well as sales generated from these new products relative to expectations, based on existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs, and research and development.

•		Market acceptance of existing products based on our commitment to develop and improve existing product lines.

•		Unforeseen product quality problems in the development and production of new and existing products, which could result in loss of market share and higher warranty expense.

•		Degree of success in restructuring and plant consolidation, including our ability to cost-effectively expand existing, open new, move production between, and close manufacturing facilities.

•		Continued slow growth rate in new golf course construction or existing golf course renovations.

•		Changing buying patterns, including but not limited to, a trend away from purchases at dealer outlets to price and value sensitive purchases at hardware retailers, home centers, and mass retailers.

•		Increased dependence on The Home Depot as a customer for the residential segment.

•		Elimination or reduction of shelf space for our products at retailers.

•		Reduced government spending for grounds maintenance equipment due to reduced tax revenue and tighter government budgets.

•		Financial viability of some distributors and dealers, changes in distributor ownership, success in partnering with new dealers, and our customers’ ability to pay amounts owed to us.

•		Changes in laws and regulations, including changes in accounting standards; taxation changes, including tax rate changes, new tax laws, revised tax law interpretations, or the repeal of the foreign export benefit; imposition of new tariffs on commodities such as steel; and environmental laws.

•		Changes in cost of raw materials, including higher oil prices.

•		The effects of litigation, including threatened or pending litigation, on matters relating to patent infringement, employment, and commercial disputes.

•		Adverse changes in currency exchange rates or raw material commodity prices, and the costs we incur in providing price support to international customers and suppliers.

We wish to caution readers not to place undue reliance on any forward-looking statement and to recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning the company and our businesses, including factors that potentially could materially affect our financial results or condition, may emerge from time to time. We assume no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk stemming from changes in foreign currency exchange rates, interest rates, and commodity prices. Changes in these factors could cause fluctuations in our net earnings and cash flows. In the normal course of business, we actively manage the exposure of foreign currency market risk by entering into various hedging instruments, authorized under company policies that place controls on these activities, with counterparties that are highly rated financial institutions. Our hedging activities involve the use of a variety of derivative financial instruments. We use derivatives only in an attempt to limit underlying exposure from currency fluctuations and to minimize earnings and cash volatility associated with foreign exchange rate changes, and not for trading purposes. Our market risk on interest rates relates primarily to short-term debt and the potential increase in fair value of long-term debt resulting from a potential decrease in interest rates. However, we do not have a cash flow or earnings exposure due to market risks on long-term debt. See further discussions on these market risks below.

Foreign Currency Exchange Rate Risk. We are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business, such as sales and loans to wholly owned subsidiaries as well as sales to third party customers, purchases from suppliers, and bank lines of credit with creditors denominated in foreign currencies. Because our products are manufactured or sourced primarily from the United States, a stronger U.S. dollar generally has a negative impact on results from operations outside the United States while a weaker dollar generally has a positive effect. Our primary exchange rate exposure is with the euro, the Japanese yen, the Australian dollar, the Canadian dollar, the British pound, and the Mexican peso against the U.S. dollar.

We enter into various contracts, principally forward contracts that change in value as foreign exchange rates change, to protect the value of existing foreign currency assets, liabilities, anticipated sales, and probable commitments. Decisions on whether to use such contracts are made based on the amount of exposures to the currency involved, and an assessment of the near-term market value for each currency. The gains and losses on these contracts offset changes in the value of the related exposures. Therefore, changes in market values of these hedge instruments are highly correlated with changes in market values of underlying hedged items both at inception of the hedge and over the life of the hedge contract. During the three and nine months ended August 1, 2003, the amount of losses reclassified to earnings for such cash flow hedges was $1.4 million and $3.9 million, respectively.

The following foreign currency exchange contracts held by us have maturity dates in fiscal 2003 and fiscal 2004. All items are non-trading and stated in U.S. dollars. Some derivative instruments we enter into do not meet the hedging criteria of SFAS No. 133; therefore, changes in fair value are recorded in other income, net. The average contracted rate, notional amount, pre-tax value of derivative instruments in accumulated other comprehensive income (loss), and fair value impact of derivative instruments in other income, net as of August 1, 2003 was as follows:


					Value in
					Accumulated
	Average				Other			Fair Value
Dollars in thousands	Contracted		Notional		Comprehensive			Impact
(except average contracted rate)	Rate		Amount		Income (Loss)			Gain (Loss)

Buy US dollar/Sell Australian dollar		0.6292	$	30,563.4	$	(314.4	)	$	(176.0	)
Buy US dollar/Sell Canadian dollar		1.4544		8,680.6		(132.3	)		(107.0	)
Buy US dollar/Sell Euro		1.0884		57,360.3		(535.9	)		(1,804.6	)
Buy British pound/Sell US dollar		1.5915		756.0		4.4			—
Buy Japanese yen/Sell US dollar		117.7166		7,942.8		(107.3	)		0.9
Buy Mexican peso/Sell US dollar		10.8286		17,278.3		40.6			—
Buy Canadian dollar/Sell US dollar		1.4102		354.6		—			2.1

Interest Rate Risk. We are exposed to interest rate risk arising from transactions that are entered into during the normal course of business. Our medium-term debt rates are dependent upon the LIBOR rate plus an additional percentage based on our current borrowing level. See our most recent Annual Report filed on Form 10-K (Item 7A). There has been no material change in this information.

Commodity Price Risk. Some raw materials used in our products are exposed to commodity price changes. We manage some of this risk by using a combination of short-term and long-term agreements with some vendors. The primary commodity price exposures are with aluminum, steel, and plastic resin.

ITEM 4. CONTROLS AND PROCEDURES

The company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the specified time periods. The company’s principal executive officer and principal financial officer evaluated the effectiveness of the company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) with the participation of the company’s management as of the end of the period covered in this Quarterly Report on Form 10-Q. Based on that evaluation, such officers concluded that the company’s disclosure controls and procedures were effective as of the end of such period to provide reasonable assurance that material information relating to the company and its consolidated subsidiaries would be made known to them by others within those entities. There were no significant changes in the company’s internal controls over financial reporting that occurred during the company’s most recent fiscal quarter that have materially affected or are reasonably likely to materially affect the company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits


3(i) and 4(a)		Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 4(b) to Registrant’s Current Report on Form 8-K dated May 28, 2003, Commission File No. 1-8649).

3(ii) and 4(b)		Bylaws of Registrant (incorporated by reference to Exhibit 4(c) to Registrant’s Current Report on Form 8-K dated May 28, 2003, Commission File No. 1-8649).

4(c)		Specimen form of Common Stock certificate (incorporated by reference to Exhibit 4(c) to Registrant’s Registration Statement on Form S-8, Registration No. 2-94417).

4(d)		Rights Agreement dated as of May 20, 1998, between Registrant and Wells Fargo Bank Minnesota, National Association relating to rights to purchase Series B Junior Participating Voting Preferred Stock, as amended (incorporated by reference to Registrant’s Current Report on Form 8-K dated May 27, 1998, Commission File No. 1-8649).

4(e)		Certificate of Adjusted Purchase Price or Number of Shares dated April 14, 2003 filed by Registrant with Wells Fargo Bank Minnesota, N.A., as Rights Agent, in connection with Rights Agreement dated as of May 20, 1998 (incorporated by reference to Exhibit 2 to Registrant’s Amendment No. 1 to Registration Statement on Form 8-A/A dated April 14, 2003, Commission File No. 1-8649).

4(f)		Indenture dated as of January 31, 1997, between Registrant and First National Trust Association, as Trustee, relating to the Registrant’s 7.125% Notes due June 15, 2007 and its 7.80% Debentures due June 15, 2027 (incorporated by reference to Exhibit 4(a) to Registrant’s Current Report on Form 8-K for June 24, 1997, Commission File No. 1-8649).

10(n)		Multi-Year Credit Agreement dated as of February 22, 2002, by and among The Toro Company and Toro Credit Company, the borrowers and other obligated parties named therein, Bank of America, N.A. as Administrative Agent, U.S. Bank National Association and Suntrust Bank as co-syndication agents, Harris Trust and Savings Bank and Wells Fargo Bank, National Association as co-documentation agents, and Banc of America Securities LLC as sole lead arranger and sole book manager.

10(o)		Amendment No. 1 to Multi-Year Credit Agreement dated as of December 11, 2002, by and among The Toro Company and Toro Credit Company, the borrowers, Toro Manufacturing LLC, Bank of America, N.A. as Administrative Agent, and each of the Banks as defined in the Multi-Year Credit Agreement dated as of February 22, 2002.

10(p)		Amendment No. 2 to Multi-Year Credit Agreement dated as of July 9, 2003, by and among The Toro Company and Toro Credit Company, the borrowers, Exmark Manufacturing Company Incorporated, Bank of America, N.A. as Administrative Agent, and each of the Banks as defined in the Multi-Year Credit Agreement dated as of February 22, 2002.

10(q)		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.

31(a)		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(b)		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)		Reports on Form 8-K

		During the fiscal quarter ended August 1, 2003 and through September 10, 2003, Toro furnished a Current Report on Form 8-K dated August 26, 2003 pursuant to Item 12 that attached a press release announcing Toro’s financial results for the fiscal quarter ended August 1, 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	THE TORO COMPANY (Registrant)

Date: September 10, 2003	By	/s/ Stephen P. Wolfe

		Stephen P. Wolfe
		Vice President Finance,
		Treasurer and Chief Financial Officer
		(duly authorized officer and principal financial officer)



                                                                   EXHIBIT 10(n)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

                           MULTI-YEAR CREDIT AGREEMENT

                          Dated as of February 22, 2002

                                      among

                                THE TORO COMPANY,
                            THE SUBSIDIARY BORROWERS
                                       and
                               TORO CREDIT COMPANY
                                  as Borrowers,

                              BANK OF AMERICA, N.A.
  as Administrative Agent, Swing Line Bank, Letter of Credit Issuing Bank and
                                     Bank,

                                       and

                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                                       and

                         U.S. BANK NATIONAL ASSOCIATION
                                       and
                                  SUNTRUST BANK
                            as Co-Syndication Agents,

                                       and

                          HARRIS TRUST AND SAVINGS BANK
                                       and
                     WELLS FARGO BANK, NATIONAL ASSOCIATION
                           as Co-Documentation Agents,

                                       and

                         BANC OF AMERICA SECURITIES LLC
                   as Sole Lead Arranger and Sole Book Manager

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------



                                TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                             
ARTICLE I.            DEFINITIONS

         1.1      Certain Defined Terms......................................................................     1
         1.2      Other Interpretive Provisions..............................................................    23
         1.3      Accounting Principles......................................................................    24

ARTICLE II.           THE CREDITS

         2.1      Amounts and Terms of Commitments...........................................................    27
         2.2      Loan Accounts..............................................................................    28
         2.3      Procedure for Borrowing....................................................................    29
         2.4      Conversion and Continuation Elections for Borrowings.......................................    30
         2.5      The Swing Loan Facility....................................................................    31
         2.6      Voluntary Termination or Reduction of Commitments..........................................    32
         2.7      Optional Prepayments.......................................................................    33
         2.8      Repayment of Loans.........................................................................    33
         2.9      Interest...................................................................................    33
         2.10     Fees.......................................................................................    35
         2.11     Computation of Fees and Interest...........................................................    35
         2.12     Payments by the Companies..................................................................    35
         2.13     Payments by the Banks to the Administrative Agent..........................................    36
         2.14     Sharing of Payments, Etc...................................................................    37
         2.15     Limitations on Borrowings..................................................................    38


                                      -i-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
ARTICLE III.          THE LETTERS OF CREDIT

         3.1      The Letter of Credit Subfacility...........................................................    38
         3.2      Issuance, Amendment and Renewal of Letters of Credit.......................................    39
         3.3      Risk Participations, Drawings and Reimbursements...........................................    41
         3.4      Repayment of Participations................................................................    42
         3.5      Role of the Issuing Bank...................................................................    43
         3.6      Obligations Absolute.......................................................................    44
         3.7      Letter of Credit Fees......................................................................    45
         3.8      Applicability of ISP98.....................................................................    45

ARTICLE IV.           TAXES, YIELD PROTECTION AND ILLEGALITY

         4.1      Taxes......................................................................................    45
         4.2      Illegality.................................................................................    46
         4.3      Increased Costs and Reduction of Return....................................................    47
         4.4      Funding Losses.............................................................................    48
         4.5      Inability to Determine Rates...............................................................    49
         4.6      Certificates of Banks......................................................................    49
         4.7      Substitution of Banks......................................................................    49
         4.8      Survival...................................................................................    49

ARTICLE V.            CONDITIONS PRECEDENT

         5.1      Conditions of Effectiveness................................................................    49
         5.2      Conditions to All Loans, Swing Loans and Letter of Credit Issuances........................    52


                                      -ii-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
ARTICLE VI.           REPRESENTATIONS AND WARRANTIES

         6.1      Corporate Existence and Power..............................................................    52
         6.2      Corporate Authorization; No Contravention..................................................    53
         6.3      Governmental or Third-Party Authorization..................................................    53
         6.4      Binding Effect.............................................................................    53
         6.5      Litigation.................................................................................    53
         6.6      No Default.................................................................................    54
         6.7      ERISA Compliance...........................................................................    54
         6.8      Taxes......................................................................................    54
         6.9      Financial Condition........................................................................    55
         6.10     Environmental Matters......................................................................    55
         6.11     Regulated Entities.........................................................................    55
         6.12     Copyrights, Patents, Trademarks and Licenses, etc..........................................    55
         6.13     Subsidiaries...............................................................................    56
         6.14     Insurance..................................................................................    56
         6.15     Full Disclosure............................................................................    56

ARTICLE VII.          AFFIRMATIVE COVENANTS

         7.1      Financial Statements.......................................................................    56
         7.2      Certificates; Other Information............................................................    57
         7.3      Notices....................................................................................    57
         7.4      Preservation of Corporate Existence, Etc...................................................    58
         7.5      Maintenance of Property....................................................................    59


                                     -iii-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
         7.6      Insurance..................................................................................    59
         7.7      Compliance with Laws and Contractual Obligations...........................................    59
         7.8      Compliance with ERISA......................................................................    59
         7.9      Inspection of Property and Books and Records...............................................    59
         7.10     Use of Proceeds............................................................................    60

ARTICLE VIII.         NEGATIVE COVENANTS

         8.1      Limitation on Liens........................................................................    60
         8.2      Disposition of Assets......................................................................    61
         8.3      Consolidations and Mergers.................................................................    62
         8.4      Loans and Investments......................................................................    62
         8.5      Transactions with Affiliates...............................................................    63
         8.6      Contingent Obligations.....................................................................    63
         8.7      Restricted Payments........................................................................    63
         8.8      Maintenance of Business....................................................................    64
         8.9      Minimum Interest Coverage..................................................................    64
         8.10     Maximum Total Indebtedness to Capitalization...............................................    64
         8.11     Toro and Credit Portion of Assets..........................................................    64
         8.12     Negative Pledge Clause.....................................................................    64
         8.13     Burdensome Contractual Obligation..........................................................    65

ARTICLE IX.           EVENTS OF DEFAULT

         9.1      Events of Default..........................................................................    65


                                      -iv-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
         9.2      Remedies...................................................................................    68
         9.3      Rights Not Exclusive.......................................................................    69

ARTICLE X.            THE ADMINISTRATIVE AGENT

         10.1     Appointment and Authorization of Administrative Agent......................................    70
         10.2     Delegation of Duties.......................................................................    70
         10.3     Liability of Administrative Agent..........................................................    70
         10.4     Reliance by Administrative Agent...........................................................    71
         10.5     Notice of Default..........................................................................    71
         10.6     Credit Decision; Disclosure of Information by Administrative Agent.........................    72
         10.7     Indemnification of Administrative Agent....................................................    72
         10.8     Administrative Agent in its Individual Capacity............................................    73
         10.9     Successor Administrative Agent.............................................................    73
         10.10    Other Agents...............................................................................    74
         10.11    Withholding Tax............................................................................    74

ARTICLE XI.           GUARANTY

         11.1     The Guaranty...............................................................................    75
         11.2     Guaranty Unconditional.....................................................................    76
         11.3     Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances................    77
         11.4     Waiver by Toro.............................................................................    77
         11.5     No Subrogation.............................................................................    77


                                       -v-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
         11.6     Stay of Acceleration.......................................................................    77

ARTICLE XII.          MISCELLANEOUS

         12.1     Amendments, Etc............................................................................    77
         12.2     Notices....................................................................................    78
         12.3     No Waiver; Cumulative Remedies.............................................................    79
         12.4     Costs and Expenses.........................................................................    80
         12.5     Indemnification............................................................................    80
         12.6     Payments Set Aside.........................................................................    81
         12.7     Successors and Assigns.....................................................................    81
         12.8     Confidentiality............................................................................    84
         12.9     Set-off....................................................................................    84
         12.10    Automatic Debits of Principal, Interest Fees...............................................    85
         12.11    Notification of Addresses, Lending Offices, Etc............................................    85
         12.12    Counterparts...............................................................................    85
         12.13    Severability...............................................................................    85
         12.14    No Third Parties Benefited.................................................................    85
         12.15    Governing Laws and Jurisdiction............................................................    85
         12.16    Waiver of Jury Trial.......................................................................    86
         12.17    Entire Agreement...........................................................................    86
         12.18    Liability of the Companies.................................................................    87
         12.19    Judgment Currency..........................................................................    87


                                      -vi-



                                TABLE OF CONTENTS
                                  (continued)



                                                                                                                PAGE
                                                                                                             
         12.20    Interest Rate Limitation...................................................................    87
         12.21    Termination of Existing Facilities.........................................................    88


                                      -vii-



SCHEDULES

Schedule 2.1      Commitments
Schedule 6.5      Litigation
Schedule 6.7      ERISA
Schedule 6.9      Permitted Liabilities
Schedule 6.10     Environmental Matters
Schedule 6.13     Subsidiaries and Minority Interests
Schedule 6.14     Insurance Matters
Schedule 8.1      Permitted Liens
Schedule 12.2     Lending Offices, Addresses for Notices

EXHIBITS

Exhibit A-1       Form of Notice of Borrowing
Exhibit A-2       Form of Swing Loan Notice of Borrowing
Exhibit B         Form of Notice of Conversion/Continuation
Exhibit C         Form of Compliance Certificate
Exhibit D         Form of Assignment and Assumption
Exhibit E-1       Form of Revolving Note for Toro and Credit
Exhibit E-2       Form of Revolving Note for each Subsidiary Borrower
Exhibit E-3       Form of Swing Line Note



                           MULTI-YEAR CREDIT AGREEMENT

         This MULTI-YEAR CREDIT AGREEMENT is entered into as of February 22,
2002, among The Toro Company, a Delaware corporation ("Toro"), the Subsidiary
Borrowers (as defined herein) and Toro Credit Company, a Minnesota corporation
("Credit," together with the Subsidiary Borrowers and Toro sometimes
collectively referred to herein as the "Companies" and individually as a
"Company"), the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of
America, N.A., as Letter of Credit Issuing Bank, Swing Line Bank, a Bank and as
Administrative Agent for the Banks and Banc of America Securities LLC, as Sole
Lead Arranger and Sole Book Manager.

         WHEREAS, the Banks have agreed to make available to the Companies a
$175 million revolving credit facility with a letter of credit subfacility and a
swing line subfacility upon the terms and conditions set forth in this
Agreement.

         NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

         1.1      Certain Defined Terms. The following terms have the following
                  meanings:

                  "364-Day Credit Agreement" means that certain 364-Day Credit
         Agreement dated as of even date herewith by and among Toro, the
         Subsidiary Borrowers and Credit, Bank of America, as Administrative
         Agent, and the other financial institutions party thereto, as such
         agreement may be amended, modified or restated from time to time,
         pursuant to which the Agent and the other financial institutions party
         thereto have agreed to provide to the Companies a 364 day revolving
         credit facility.

                  "Acquisition" means 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.

                  "Administrative Agent" means Bank of America in its capacity
         as administrative agent for the Banks, and any successor administrative
         agent arising under Section 10.9.

                  "Administrative Agent-Related Persons" means Bank of America
         and any successor administrative agent arising under Section 10.9,
         together with their respective Affiliates (including in the case of
         Bank of America the Arranger), and the officers, directors, employees,
         agents and attorneys-in-fact of such Persons and Affiliates.



                  "Administrative Agent's Payment Office" means the address for
         payments set forth on Schedule 12.2 or such other address as the
         Administrative Agent may from time to time specify.

                  "Affected Bank" has the meaning specified in Section 4.7.

                  "Affiliate" means, as to any Person, any other Person which,
         directly or indirectly, is in control of, is controlled by, or is under
         common control with, such Person. A Person shall be deemed to control
         another Person if the controlling Person possesses, directly or
         indirectly, the power to direct or cause the direction of the
         management and policies of the other Person, whether through the
         ownership of voting securities, membership interests, by contract, or
         otherwise.

                  "Agreement" means this Credit Agreement.

                  "Applicable Margin" means, from time to time,

                           (i) with respect to Base Rate Loans, 0%; and

                           (ii) with respect to Offshore Rate Loans, for the
                  purpose indicated, the respective percentages per annum, based
                  upon the Debt Rating, as set forth below:



                                                           OFFSHORE RATE LOANS
                                DEBT RATING               AND LETTER OF CREDIT
PRICING LEVEL                   S&P/MOODY'S                       FEES
- -------------               ------------------            --------------------
                                                    
     1                      > than = BBB+/Baa1                   60.0 bps
     2                               BBB/Baa2                    70.0 bps
     3                               BBB-/Baa3                   77.5 bps
     4                               BB+/Ba1                     95.0 bps
     5                      < than = BB/Ba2                     115.0 bps


         Initially, the Applicable Margin shall be determined based upon the
         Debt Rating specified in the certificate delivered pursuant to Section
         5.1(h). Thereafter, each change in the Applicable Margin resulting from
         a publicly announced change in the Debt Rating shall be effective
         during the period commencing on the date of the public announcement
         thereof and ending on the date immediately preceding the effective date
         of the next such change. In the event that none of the Debt Ratings are
         applicable because Toro ceases to have any Rated Debt outstanding, all
         the Banks, the Administrative Agent and Toro will negotiate in good
         faith to determine an appropriate Applicable Margin or an alternative
         basis for determination thereof.

                  "Approved Fund" means any Person (other than a natural Person)
         that (i) is or will be engaged in making, purchasing, holding or
         otherwise investing in commercial loans and similar extensions of
         credit in the ordinary course of its business and (ii) is administered
         or managed by (x) a Bank, (y) an Affiliate of a Bank or (z) an entity
         or an Affiliate of an entity that administers or manages a Bank.

                                      2



                  "Arranger" means Banc of America Securities LLC.

                  "Assignment and Assumption" has the meaning specified in
         Section 12.7(a).

                  "Attorney Costs" means and includes all reasonable fees and
         disbursements of any law firm or other external counsel, the allocated
         cost of internal legal services and all disbursements of internal
         counsel.

                  "Australian Dollars" means the lawful currency of Australia.

                  "Bank" has the meaning specified in the introductory clause
         hereto, and, as the context requires, includes the Issuing Bank and the
         Swing Line Bank.

                  "Bank of America" shall mean Bank of America, N.A., a national
         banking association, and any successor by purchase or merger.

                  "Bankruptcy Code" means the Federal Bankruptcy Reform Act of
         1978 (11 U.S.C. Section 101, et seq.) as amended from time to time.

                  "Base Rate" means, for any day, the higher of (a) 0.50% per
         annum above the latest Federal Funds Rate; and (b) the rate of interest
         in effect for such day as publicly announced from time to time by Bank
         of America, as its "prime rate." (The "prime rate" is a rate set by
         Bank of America based upon various factors including Bank of America's
         costs and desired return, general economic conditions and other
         factors, and is used as a reference point for pricing some loans, which
         may be priced at, above, or below such announced rate.) Any change in
         the prime rate announced by Bank of America shall take effect at the
         opening of business on the day specified in the public announcement of
         such change.

                  "Base Rate Loan" means a Loan in Dollars that bears interest
         based on the Base Rate.

                  "Borrowing" means a borrowing hereunder consisting of Loans of
         the same Type made to any of the Companies on the same day by the Banks
         ratably according to their respective Pro Rata Shares and, other than
         in the case of Base Rate Loans, having the same Interest Period.

                  "Borrowing Date" means any date on which a Borrowing occurs
         under Section 2.3 or Section 2.5.

                  "British Pounds Sterling" and "(pound)" means the lawful
         currency of the United Kingdom of Britain and Northern Ireland.

                  "Business Day" means (a) for all purposes other than
         transactions referred to in clause (b) below, a day other than Saturday
         or Sunday on which banks are open for

                                      3



         business in New York, New York and on which the Administrative Agent is
         open for business in San Francisco, California, and (b) with respect to
         all notices and determinations in connection with, and payments of
         principal of and interest on Offshore Rate Loans, any day which is a
         Business Day described in clause (a) and is also (i) a day on which
         banks are open for business and quoting interest rates for Dollar
         deposits or the relevant Optional Currency deposits in London, England,
         (ii) if the applicable Business Day relates to an Optional Currency
         Loan other than an Optional Currency Loan denominated in euro, a day on
         which dealings in deposits in the relevant optional currency are
         conducted by and between banks in the London interbank market or (iii)
         if the applicable Business Day relates to an Optional Currency Loan
         denominated in euro, a TARGET Business Day.

                  "Capital Adequacy Regulation" means any guideline, request or
         directive of any central bank or other Governmental Authority, or any
         other law, rule or regulation, whether or not having the force of law,
         in each case, regarding capital adequacy of any bank or of any
         corporation controlling a bank.

                  "Cash Collateral" means all cash, deposit accounts and all
         balances therein pledged or deposited with or delivered to the
         Administrative Agent to Cash Collateralize the L/C Obligations.

                  "Cash Collateralize" means to pledge and deposit with or
         deliver to the Administrative Agent, for the benefit of the Issuing
         Bank and the Banks, as collateral for the L/C Obligations plus all fees
         accrued or to be incurred in connection therewith, Cash Collateral, in
         an amount not less than the sum of such L/C Obligations and fees,
         pursuant to documentation in form and substance satisfactory to the
         Administrative Agent and the Issuing Bank (which documents are hereby
         consented to by the Banks) and to take all such other action as shall
         be necessary for the Administrative Agent to have "control" thereof
         within the meaning of the Uniform Commercial Code applicable thereto.
         Derivatives of such term shall have corresponding meaning. Toro hereby
         grants the Administrative Agent, for the benefit of the Issuing Bank
         and the Banks, a Lien on all such Cash Collateral. Cash Collateral
         shall be maintained in blocked, non-interest bearing deposit accounts
         at Bank of America or other institutions satisfactory to it.

                  "Closing Date" means the date on which all conditions
         precedent set forth in Section 5.1 are satisfied or waived by all Banks
         (or, in the case of subsection 5.1(e), waived by the Person entitled to
         receive such payment) and this Agreement shall become effective.

                  "Code" means the Internal Revenue Code of 1986, and
         regulations promulgated thereunder.

                  "Commitment", as to each Bank, has the meaning specified in
         Section 2.1.

                  "Compliance Certificate" means a certificate substantially in
         the form of Exhibit C.

                                      4



                  "Consolidated EBIT" means, 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, (c) the
         amount of taxes, based on or measured by income, used or included in
         determining such Consolidated Net Income and (d) for any such period
         including the first fiscal quarter of the fiscal year of Toro ending
         October 31, 2002 (the "First Quarter of FY2002"), the sum of (i) a
         non-cash impairment charge related to agricultural irrigation business
         of the Companies incurred during the First Quarter of FY2002 in an
         amount not to exceed $30,000,000 and (ii) restructuring charges related
         to the Evansville, Indiana and Riverside, California manufacturing
         facilities of the Companies incurred during the First Quarter of FY2002
         in an amount not to exceed $8,000,000.

                  "Consolidated Interest Charges" means, 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 any Receivables
         Purchase Facility permitted hereunder, 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.

                  "Consolidated Interest Coverage Ratio" means, 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" means, for any period, for Toro and
         its Subsidiaries on a consolidated basis, the net income of Toro and
         its Subsidiaries for that period.

                  "Contingent Obligation" means, as to any Person, any direct or
         indirect liability of that Person, whether or not contingent, with or
         without recourse, (a) 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 (each, a "Guaranty Obligation"); (b) with respect to any Surety
         Instrument issued for the account of that Person or as to which that
         Person is otherwise liable for reimbursement of drawings or payments;
         (c) to purchase any materials, supplies or other property from, or to
         obtain the services of, another Person

                                      5



         if the relevant contract or other related document or obligation
         requires that payment for such materials, supplies or other property,
         or for such services, shall be made regardless of whether delivery of
         such materials, supplies or other property is ever made or tendered, or
         such services are ever performed or tendered, or (d) in respect of any
         Swap Contract which is not a Permitted Swap Obligation. The amount of
         any Contingent Obligation shall, in the case of Guaranty Obligations,
         be deemed equal to the stated or determinable amount of the primary
         obligation in respect of which such Guaranty Obligation is made or, if
         not stated or if indeterminable, the maximum reasonably anticipated
         liability in respect thereof, and in the case of other Contingent
         Obligations other than in respect of Swap Contracts, shall be equal to
         the maximum reasonably anticipated liability in respect thereof and, in
         the case of Contingent Obligations in respect of Swap Contracts which
         are not Permitted Swap Obligations, shall be equal to the Swap
         Termination Value at any time of determination.

                  "Contractual Obligation" means, as to any Person, any
         provision of any security issued by such Person or of any agreement,
         undertaking, contract, indenture, mortgage, deed of trust or other
         instrument, document or agreement to which such Person is a party or by
         which it or any of its property is bound.

                  "Conversion/Continuation Date" means any date on which, under
         Section 2.4, the Company (a) converts Loans of one Type to another
         Type, or (b) continues as Loans of the same Type, but with a new
         Interest Period, Loans having Interest Periods expiring on such date.

                  "Debt Rating" means, as of any date of determination, the
         rating as determined by both S&P and Moody's (collectively, the "Debt
         Ratings") of the non-credit-enhanced, senior unsecured long-term debt
         ("Rated Debt") of Toro; provided that (i) if a different level of Debt
         Rating is issued by each of the foregoing rating agencies, then the
         higher level of such Debt Ratings shall apply (with Pricing Level 1 in
         the definition of "Applicable Margin" being the highest and Pricing
         Level 5 in the definition of "Applicable Margin" being the lowest),
         unless there is a split in the level of Debt Ratings of more than one
         level, in which case the level that is one level higher than the lower
         level of Debt Rating shall apply and (ii) if a Debt Rating is issued by
         only one of the foregoing rating agencies, then such Debt Rating shall
         apply.

                  "Default" means any event or circumstance which, with the
         giving of notice, the lapse of time, or both, would (if not cured or
         otherwise remedied during such time) constitute an Event of Default.

                  "Distributor Subsidiary" means a Subsidiary of Toro which is a
         distributor of products manufactured by Toro or one of its Subsidiaries
         which has been acquired by Toro or one of its Subsidiaries under
         extraordinary circumstances, not in the ordinary course of business,
         with a view toward divestiture at some future time and to facilitate
         the orderly distribution of such products. Such definition shall not
         apply to Subsidiaries organized or acquired with a view toward
         discontinuing or modifying Toro's historical system of independent
         distributors.

                                      6



                  "Dollar Equivalent Amount" means, in relation to any Optional
         Currency Loan, at any date any determination thereof is made, the
         amount in Dollars of such Loan calculated at the Spot Rate of Exchange
         for the purchase of Dollars with the relevant Optional Currency quoted
         by Bank of America at approximately 11:00 a.m. at the office of Bank of
         America generally applicable to transactions with respect to such
         Optional Currency two (2) Business Days prior to the date of
         determination.

                  "Dollars" "dollars" and "$" each mean lawful currency of the
         United States.

                  "Effective Amount" means (i) with respect to any Loans on any
         date, the aggregate outstanding principal amount thereof after giving
         effect to any Borrowings, advancing of Swing Loans and prepayments or
         repayments of Loans occurring on such date; and (ii) with respect to
         any outstanding L/C Obligations on any date, the amount of such L/C
         Obligations on such date after giving effect to any Issuances of
         Letters of Credit occurring on such date and any other changes in the
         aggregate amount of the L/C Obligations as of such date, including as a
         result of any reimbursements of outstanding unpaid drawings under any
         Letters of Credit or any reductions in the maximum amount available for
         drawing under Letters of Credit taking effect on such date. To the
         extent that the Effective Amount shall be determined on any date with
         respect to any Optional Currency Loan, this calculation shall be based
         upon the Dollar Equivalent Amount of such Optional Currency Loan
         determined as of the most recent Revaluation Date.

                  "Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a
         Bank, (iii) an Approved Fund and (iv) any other Person (other than a
         natural Person) approved by the Administrative Agent, the Swing Line
         Bank, the Issuing Bank and Toro (provided that, if (x) such Person is
         taking delivery of an assignment in connection with physical settlement
         of a credit derivatives transaction or (y) an Event of Default or
         Default has occurred and is continuing at the time any assignment is
         effected in accordance with Section 12.7, the approval of Toro shall
         not be required), each such approval not to be unreasonably withheld
         (provided that the incurrence by the Companies of additional costs
         pursuant to Section 4.3 as a result of such assignment shall constitute
         a reasonable basis for withholding such consent) or delayed; provided,
         however, that neither the Companies nor an Affiliate of the Companies
         shall qualify as an Eligible Assignee.

                  "EMU" means the economic and monetary unit in accordance with
         the Treaty of Rome of 1957, as amended by the Single European Act 1986,
         the Maastricht Treaty of 1992, and the Amsterdam Treaty of 1998, as
         amended from time to time.

                  "Environmental Claims" means all claims, however asserted, by
         any Governmental Authority or other Person alleging potential liability
         or responsibility for violation of any Environmental Law, or for
         release or injury to the environment.

                  "Environmental Laws" means all federal, state or local laws,
         statutes, common law duties, rules, regulations, ordinances and codes,
         together with all administrative orders, directed duties, requests,
         licenses, authorizations and permits of, and agreements

                                      7



         with, any Governmental Authorities, in each case relating to
         environmental, health, safety and land use matters.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, and regulations promulgated thereunder.

                  "ERISA Affiliate" means any trade or business (whether or not
         incorporated) under common control with any Company 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" means (a) a Reportable Event with respect to a
         Pension Plan; (b) a withdrawal by any Company 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 any Company 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
         any Company or any ERISA Affiliate.

                  "euro" means the single lawful currency of the Participating
         Member States introduced in accordance with EMU legislation.

                  "Eurocurrency Reserve Percentage" has the meaning specified in
         the definition of "Offshore Rate".

                  "Event of Default" means any of the events or circumstances
         specified in Section 9.1.

                  "Exchange Act" means the Securities Exchange Act of 1934, and
         regulations promulgated thereunder.

                  "Existing Facilities" means (a) the Credit Agreement dated
         February 12, 1996 by and among Toro, Credit, Bank of America (as
         successor in interest to Bank of America National Trust and Savings
         Association), as Agent, Bank of America (as successor in interest to
         Bank of America Illinois), as Letter of Credit Issuing Bank and other
         financial institutions party thereto, as amended thereafter and (b) the
         Amended and Restated Credit Agreement dated as of January 26, 2001 by
         and among Toro, Credit, the Subsidiary

                                      8



         Borrowers, Bank of America as Agent and as Letter of Credit Issuing
         Bank and the other financial institutions party thereto, as amended
         thereafter.

                  "Facility Fee" shall mean, with respect to each Bank, a per
         annum fee calculated on a 360 day year for actual days elapsed based on
         the amount of such Bank's Commitment, regardless of utilization (or, if
         the Commitment of such Bank has been terminated, based on the principal
         amount of the Loans, Swing Loans or participations in Swing Loans and
         L/C Obligations then owing to or held by such Bank, if any), equal to
         the Facility Fee as set forth below:



                            DEBT RATING
PRICING LEVEL               S&P/MOODY'S             FACILITY FEE
- -------------          ---------------------        ------------
                                              
     1                   > than = BBB+/Baa1           15.0 bps
     2                            BBB/Baa2            17.5 bps
     3                            BBB-/Baa3           22.5 bps
     4                            BB+/Ba1             30.0 bps
     5                   < than = BB/Ba2              35.0 bps


         Initially, the Facility Fee shall be determined based upon the Debt
         Rating specified in the certificate delivered pursuant to Section
         5.1(h). Thereafter, each change in the Facility Fee resulting from a
         publicly announced change in the Debt Rating shall be effective during
         the period commencing on the date of the public announcement thereof
         and ending on the date immediately preceding the effective date of the
         next such change. In the event that none of the Debt Ratings are
         applicable because Toro ceases to have any Rated Debt outstanding, all
         the Banks, the Administrative Agent and Toro will negotiate in good
         faith to determine an appropriate Facility Fee or an alternative basis
         for determination thereof.

                  "FDIC" means the Federal Deposit Insurance Corporation, and
         any Governmental Authority succeeding to any of its principal
         functions.

                  "Federal Funds Rate" means, for any day, the rate set forth in
         the weekly statistical release designated as H.15(519), or any
         successor publication, published by the Federal Reserve Bank of New
         York (including any such successor, "H.15(519)") on the preceding
         Business Day opposite the caption "Federal Funds (Effective)"; or, if
         for any relevant day such rate is not so published on any such
         preceding Business Day, the rate for such day will be the arithmetic
         mean as determined by the Administrative Agent of the rates for the
         last transaction in overnight Federal funds arranged prior to 9:00 a.m.
         (New York City time) on that day by each of three leading brokers of
         Federal funds transactions in New York City selected by the
         Administrative Agent.

                  "Fee Letter" has the meaning specified in Section 2.10.

                                      9



                  "Foreign Currency Equivalent" means, in relation to any amount
         of Dollars, at any date of determination thereof, the amount in any
         Optional Currency calculated at the Spot Rate of Exchange for the
         purchase of Optional Currency with Dollars quoted by Bank of America at
         approximately 11:00 a.m. at the office of Bank of America generally
         applicable to transactions with respect to such Optional Currency two
         (2) Business Days prior to the date of determination.

                  "FRB" means the Board of Governors of the Federal Reserve
         System, and any Governmental Authority succeeding to any of its
         principal functions.

                  "Fund" means any Person (other than a natural person) that is
         (or will be) engaged in making, purchasing, holding or otherwise
         investing in commercial loans and similar extensions of credit in the
         ordinary course of its business.

                  "Further Taxes" means any and all present or future taxes,
         levies, assessments, imposts, duties, deductions, fees, withholdings or
         similar charges (including, without limitation, net income taxes and
         franchise taxes), and all liabilities with respect thereto, imposed by
         any jurisdiction on account of amounts payable or paid pursuant to
         Section 4.1.

                  "GAAP" means generally accepted accounting principles set
         forth from time to time in the opinions and pronouncements of the
         Accounting Principles Board and the American Institute of Certified
         Public Accountants and statements and pronouncements of the Financial
         Accounting Standards Board (or agencies with similar functions of
         comparable stature and authority within the U.S. accounting
         profession), which are applicable to the circumstances as of the
         Closing Date.

                  "Governmental Authority" means any nation or government, any
         state or other political subdivision thereof, any central bank (or
         similar monetary or regulatory authority) thereof, any entity
         exercising executive, legislative, judicial, regulatory or
         administrative functions of or pertaining to government, and any
         corporation or other entity owned or controlled, through stock or
         capital ownership or otherwise, by any of the foregoing.

                  "Guaranty Obligation" has the meaning specified in the
         definition of "Contingent Obligation."

                  "Honor Date" has the meaning specified in subsection 3.3(c).

                  "Indebtedness" of 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

                                      10



         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 Person has not assumed or become liable for the payment of
         such Indebtedness; (h) the unpaid amount of all Receivables sold by any
         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 Liabilities" has the meaning specified in Section
         12.5.

                  "Indemnified Person" has the meaning specified in Section
         12.5.

                  "Independent Auditor" has the meaning specified in subsection
         7.1(a).

                  "Insolvency Proceeding" means, with respect to any Person, (a)
         any case, action or proceeding with respect to such Person before any
         court or other Governmental Authority relating to bankruptcy,
         reorganization, insolvency, liquidation, receivership, dissolution,
         winding-up or relief of debtors, or (b) any general assignment for the
         benefit of creditors, composition, marshalling of assets for creditors,
         or other, similar arrangement in respect of its creditors generally or
         any substantial portion of its creditors; undertaken under U.S.
         Federal, state or foreign law, including the Bankruptcy Code.

                  "Interbank Offered Rate" has the meaning therefor set forth in
         the definition of "Offshore Rate".

                  "Interest Payment Date" means, as to any Offshore Rate Loan,
         the last day of each Interest Period applicable to such Loan and, as to
         any Base Rate Loan, the last Business Day of each calendar quarter and
         each date such Loan is converted into another Type of Loan and in the
         case of a Swing Loan, the date on which payment is demanded, provided,
         however, that if any Interest Period for an Offshore Rate Loan exceeds
         three months, the date that falls three months after the beginning of
         such Interest Period and after each Interest Payment Date thereafter is
         also an Interest Payment Date.

                  "Interest Period" means, as to any Offshore Rate Loan, the
         period commencing on the Borrowing Date of such Loan, or on the
         Conversion/Continuation Date on which the Loan is converted into or
         continued as an Offshore Rate Loan, and ending on the date fourteen
         days or one, two, three or six months thereafter (or, with respect to
         those Offshore Rate Loans requested on the first Borrowing Notice which
         requests Offshore

                                      11



         Rate Loans on or within seven (7) days after the Closing Date, such
         number of days less than one month after the Borrowing Date of such
         Offshore Rate Loans as selected by Toro and agreed to by the
         Administrative Agent) as selected by Toro in its Notice of Borrowing or
         Notice of Conversion/Continuation, as the case may be; provided that:

                  (i)      if any Interest Period would otherwise end on a day
         that is not a Business Day, that Interest Period shall be extended to
         the following Business Day unless the result of such extension would be
         to carry such Interest Period into another calendar month, in which
         event such Interest Period shall end on the preceding Business Day;

                  (ii)     any Interest Period that begins on the last Business
         Day of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of the calendar month at the
         end of such Interest Period; and

                  (iii)    no Interest Period for any Loan shall extend beyond
         the Revolving Termination Date.

                  "IRS" means the Internal Revenue Service, and any Governmental
         Authority succeeding to any of its principal functions under the Code.

                  "Issuance Date" has the meaning specified in subsection
         3.1(a).

                  "Issue" means, with respect to any Letter of Credit, to issue
         or to extend the expiry of, or to renew or increase the amount of, such
         Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have
         corresponding meanings.

                  "Issuing Bank" means Bank of America in its capacity as issuer
         of one or more Letters of Credit hereunder, together with any
         replacement letter of credit issuer arising under subsection 10.1(b) or
         Section 10.9.

                  "Joint Venture" means a corporation, partnership, limited
         liability company, joint venture or other similar legal arrangement
         (whether created by contract or conducted through a separate legal
         entity) now or hereafter formed or entered into by any of the Companies
         or any of their Subsidiaries with another Person in order to conduct a
         common venture or enterprise with such Person, the investment in which
         does not constitute an Acquisition.

                  "L/C Advance" means each Bank's participation in any L/C
         Borrowing in accordance with its Pro Rata Share.

                  "L/C Amendment Application" means an application form for
         amendment of outstanding standby letters of credit as shall at any time
         be in use at the Issuing Bank, as the Issuing Bank shall request.

                                      12



                  "L/C Application" means an application form for issuances of
         standby letters of credit as shall at any time be in use at the Issuing
         Bank, as the Issuing Bank shall request.

                  "L/C Borrowing" means an extension of credit resulting from a
         drawing under any Letter of Credit which shall not have been reimbursed
         on the date when made nor converted into a Borrowing of Loans under
         subsection 3.3(c).

                  "L/C Commitment" means the commitment of the Issuing Bank to
         Issue, and the commitment of the Banks severally to participate in,
         Letters of Credit from time to time Issued or outstanding under Article
         III, in an aggregate amount not to exceed on any date the lesser of the
         amount of $20,000,000, or the aggregate amount of the Commitments as
         the same shall be reduced pursuant to Section 2.6; provided that the
         L/C Commitment is a part of the combined Commitments, rather than a
         separate, independent commitment.

                  "L/C Obligations" means at any time the sum of (a) the
         aggregate undrawn amount of all Letters of Credit then outstanding,
         plus (b) the amount of all unreimbursed drawings under all Letters of
         Credit, including all outstanding L/C Borrowings.

                  "L/C-Related Documents" means the Letters of Credit, the L/C
         Applications, the L/C Amendment Applications and any other document
         relating to any Letter of Credit, including any of the Issuing Bank's
         standard form documents for letter of credit issuances.

                  "Lending Office" means, as to any Bank, the office or offices
         of such Bank specified as its "Lending Office" or "Domestic Lending
         Office" or "Offshore Lending Office", as the case may be, on Schedule
         12.2, or such other office or offices as to which such Bank may from
         time to time notify the Companies and the Administrative Agent.

                  "Letters of Credit" means any standby letters of credit Issued
         by the Issuing Bank pursuant to Article III.

                  "Lien" means any security interest, mortgage, deed of trust,
         pledge, hypothecation, assignment, charge or deposit arrangement,
         encumbrance, lien (statutory or other) or preferential arrangement of
         any kind or nature whatsoever in respect of any property (including
         those created by, arising under or evidenced by any conditional sale or
         other title retention agreement, the interest of a lessor under a
         capital lease, any financing lease having substantially the same
         economic effect as any of the foregoing) and any contingent or other
         agreement to provide any of the foregoing, but not including the
         interest of a lessor under an operating lease.

                  "Loan" means an extension of credit by the Administrative
         Agent or a Bank to any of the Companies under Article II (other than
         Swing Loans) and any L/C Advance under Article III.

                                      13



                  "Loan Documents" means this Agreement, any Notes, the Fee
         Letter, the L/C-Related Documents and all other documents delivered to
         the Administrative Agent or any Bank in connection herewith.

                  "Mandatory Cost" means, with respect to Optional Currency
         Loans advanced in British Pounds Sterling, a rate per annum determined
         by the Administrative Agent calculated in accordance with the following
         formula:

                                                    BY + S(Y-Z) + (F x 0.01)
                                                    ------------------------
                  Mandatory Cost per annum =              100 - (B+S)

                  where on the day of application of the formula:

                           B = The percentage of the Administrative Agent's
                  Eligible Liabilities (in excess of any stated minimum) by
                  reference to which the Bank of England and/or the Financial
                  Services Authority requires the Administrative Agent to hold
                  on a non-interest bearing deposit account in accordance with
                  its cash ratio requirements;

                           Y = The percentage rate per annum at which sterling
                  deposits are offered by the Administrative Agent to leading
                  banks in the London interbank market at or about 11:00 a.m.
                  (London, England time) on that day for the relevant period;

                           F = The rate of charge payable by the Administrative
                  Agent to the Financial Services Authority under Section 2.02
                  or 2.03 (as appropriate) of the Fees Regulations (but where
                  for this purpose the figure at Section 2.02(b) or 2.03(b)
                  shall be deemed to be zero) and expressed in British Pounds
                  Sterling per (pound)1,000,000 of the Fee Base of the
                  Administrative Agent;

                           S = The percentage of the Administrative Agent's
                  Eligible Liabilities which the Bank of England (or other
                  relevant United Kingdom governmental authority or agency)
                  requires the Administrative Agent to place as a Special
                  Deposit; and

                           Z = The interest rate per annum payable by the Bank
                  of England to the Administrative Agent on Special Deposits.

                           (a)      For the purposes of this definition:

                                    (i)      "Eligible Liabilities" and "Special
                                    Deposits" shall have the meanings given to
                                    them at the time of application of the above
                                    formula under or pursuant to the Bank of
                                    England Act 1998 or by the Bank of England
                                    (as appropriate);

                                      14



                                    (ii)     "Fee Base" has the meaning given to
                                    it in the Fees Regulations;

                                    (iii)    "Fees Regulations" means any
                                    regulations governing the payment of fees
                                    for banking supervision;

                           (b)      In the application of the above formula, B,
                  Y, S, and Z are included in the formula as figures and not as
                  percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as
                  0.5 x 15 and not as 0.5% x 15%. A negative result obtained
                  from subtracting Z from Y is to be treated as zero.

                           (c)      The above formula is applied on the first
                  day of each relevant period comprised in the relevant Interest
                  Period. Each rate calculated in accordance with the above
                  formula is, if necessary, rounded upward to four decimal
                  places.

                           (d)      The Administrative Agent may, from time to
                  time, after consultation with Toro and the Banks, determine
                  and notify Toro and the Banks of any amendments or variations
                  which are required to be made to the formula set out above in
                  order to comply with any requirements from time to time
                  imposed by any applicable regulatory authority in relation to
                  Optional Currency Loans denominated in British Pounds Sterling
                  (including, without limitation, any requirements relating to
                  British Pounds Sterling primary liquidity) and any such
                  determination shall, in the absence of manifest error, be
                  conclusive and binding on Toro, the Banks, and the
                  Administrative Agent.

                  "Margin Stock" means "margin stock" as such term is defined in
         Regulation T, U or X of the FRB.

                  "Material Adverse Effect" means (a) a material impairment of
         the ability of Toro or Credit to pay or perform its Obligations under
         any Loan Document; or (b) a material adverse effect upon the legality,
         validity, binding effect or enforceability against any of the Companies
         of any Loan Document.

                  "Material Subsidiary" means, at any time of determination, (a)
         any Subsidiary (other than a Distributor Subsidiary) having at such
         time either (i) total (gross) revenues for the preceding four fiscal
         quarter period in excess $10,000,000 or (ii) total assets, as of the
         last day of the preceding fiscal quarter, having a net book value in
         excess of $10,000,000, in each case, based upon Toro's most recent
         annual or quarterly financial statements delivered to the Banks under
         Section 7.1 and (b) any Distributor Subsidiary having total assets, as
         of the last day of the preceding quarter, having a net book value in
         excess of $10,000,000 based upon Toro's most recent annual or quarterly
         financial statements delivered to the Administrative Agent under
         Section 7.1.

                  "Moody's" means Moody's Investors Service, Inc. or its
         successor or, if Moody's Investors Service, Inc. or its successor shall
         no longer be rating corporate debt

                                      15



         securities generally, such other nationally recognized statistical
         rating organization as shall be selected by the Required Banks.

                  "Multiemployer Plan" means a "multiemployer plan", within the
         meaning of Section 4001(a)(3) of ERISA, to which any Company or any
         ERISA Affiliate makes, is making, or is obligated to make contributions
         or, during the preceding three calendar years, has made, or been
         obligated to make, contributions.

                  "Note" or "Notes" means, collectively, the Revolving Notes and
         the Swing Line Note.

                  "Notice of Borrowing" means a notice in substantially the form
         of Exhibit A-1.

                  "Notice of Borrowing for Swing Loan" means a notice in
         substantially the form of Exhibit A-2.

                  "Notice of Conversion/Continuation" means a notice in
         substantially the form of Exhibit B.

                  "Obligations" means all advances, debts, liabilities,
         obligations, covenants and duties arising under any Loan Document,
         owing by the Companies or any of them to any Bank, the Administrative
         Agent, or any Indemnified Person, whether direct or indirect (including
         those acquired by assignment), absolute or contingent, due or to become
         due, now existing or hereafter arising.

                  "Offshore Rate" means (a) for any Interest Period with respect
         to any Offshore Rate Loan other than one referred to in subsection (b)
         of this definition, a rate per annum determined by Administrative Agent
         pursuant to the following formula:

               Offshore Rate  =                Interbank Offered Rate
                                        ------------------------------------
                                        1.00 - Eurodollar Reserve Percentage

                  Where "Interbank Offered Rate" means, for such Interest
                  Period:

                           (i)      the rate per annum equal to the rate
                  determined by the Administrative Agent to be the offered rate
                  that appears on the page of the Telerate screen (or any
                  successor thereto) that displays an average British Bankers
                  Association Interest Settlement Rate for deposits in the
                  relevant currency (for delivery on the first day of such
                  Interest Period) with a term equivalent to such Interest
                  Period, determined as of approximately 11:00 a.m. (London
                  time) two Business Days prior to the first day of such
                  Interest Period, or

                           (ii)     if the rate referenced in the preceding
                  subsection (i) does not appear on such page or service or such
                  page or service shall not be available, the rate per annum
                  equal to the rate determined by the Administrative Agent to be
                  the offered rate on such other page or other service that
                  displays an average British

                                      16



                  Bankers Association Interest Settlement Rate for deposits in
                  the relevant currency (for delivery on the first day of such
                  Interest Period) with a term equivalent to such Interest
                  Period, determined as of approximately 11:00 a.m. (London
                  time) two Business Days prior to the first day of such
                  Interest Period, or

                           (iii)    if the rates referenced in the preceding
                  subsections (i) and (ii) are not available, the rate per annum
                  determined by the Administrative Agent as the rate of interest
                  at which deposits in the relevant currency for delivery on the
                  first day of such Interest Period in same day funds in the
                  approximate amount of the Offshore Rate Loan being made,
                  continued or converted by Bank of America in its capacity as a
                  Bank and with a term equivalent to such Interest Period would
                  be offered by Bank of America's London branch or London
                  Affiliate to major banks in the applicable offshore Dollar
                  market at their request at approximately 11:00 a.m. (London
                  time) two Business Days prior to the first day of such
                  Interest Period.

                  The determination of the Offshore Rate by the Administrative
         Agent shall be conclusive in the absence of manifest error.

                  (b) for any Interest Period with respect to any Offshore Rate
         Loan advances by a Bank required to comply with the relevant
         requirements of the Bank of England and the Financial Services
         Authority of the United Kingdom, the sum of (i) the rate determined in
         accordance with subsection (a) of this definition and (ii) the
         Mandatory Cost Rate for such Interest Period.

                  "Offshore Rate Loan" means any Loan that bears interest based
         on the Offshore Rate.

                  "Optional Currency" means euros, Australian Dollars, British
         Pounds Sterling and any other lawful currency which is freely
         transferable and freely convertible into Dollars and the deposits of
         which are traded in the London interbank market and that is approved by
         each Bank.

                  "Optional Currency Loan" means any Loan denominated in an
         Optional Currency.

                  "Organizational Documents" means (i) for any corporation, the
         certificate or articles of incorporation, the bylaws, any certificate
         of determination or instrument relating to the rights of preferred
         shareholders of such corporation, any shareholder rights agreement, and
         all applicable resolutions of the board of directors (or any committee
         thereof) of such corporation, (ii) for any limited liability company,
         the operating agreement and articles of organization, and (iii) for any
         limited partnership, the limited partnership agreement and certificate
         of limited partnership.

                  "Original Dollar Amount" means in relation to any Optional
         Currency Loan, at any time any determination thereof is made, the
         amount in Dollars which would have

                                      17



         been outstanding if such Optional Currency Loan had first been
         disbursed and remained denominated in Dollars (taking into account any
         partial repayments thereof) calculated at the Spot Rate of Exchange for
         the purchase of Dollars with the relevant Optional Currency quoted by
         Bank of America at approximately 11:00 a.m. at the office of Bank of
         America generally applicable to transactions with respect to such
         Optional Currency two (2) Business days prior to the Borrowing Date of
         such Optional Currency Loan.

                  "Originators" means any Company and/or any of its domestic
         Wholly-Owned Subsidiaries in their respective capacities as parties to
         any documents related to any Receivables Purchase Facility, as sellers
         or transferors of any Receivables and related security in connection
         with a Permitted Receivables Transfer.

                  "Other Taxes" means any present or future stamp, court or
         documentary taxes or any other excise or property taxes, charges or
         similar levies which arise from any payment made hereunder or from the
         execution, delivery, performance, enforcement or registration of, or
         otherwise with respect to, this Agreement or any other Loan Documents.

                  "Overnight Rate" means, for any day, (a) with respect to any
         amount denominated in Dollars, the Federal Funds Rate and (b) with
         respect to any amount denominated in an Offshore Currency, the rate of
         interest per annum at which overnight deposits in the applicable
         Offshore Currency, in an amount approximately equal to the amount with
         respect to which such rate is being determined, would be offered for
         such day by a branch or Affiliate of Bank of America in the applicable
         interbank market for such currency to major banks in such interbank
         market.

                  "Participating Member State" means each state so described in
         EMU Legislation.

                  "Participant" has the meaning specified in subsection 12.7(d).

                  "PBGC" means the Pension Benefit Guaranty Corporation, or any
         Governmental Authority succeeding to any of its principal functions
         under ERISA.

                  "Pension Plan" means a pension plan (as defined in Section
         3(2) of ERISA) subject to Title IV of ERISA which any Company 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.

                  "Permitted Liens" has the meaning specified in Section 8.1.

                  "Permitted Receivables Transfer" means (i) a sale or other
         transfer by an Originator to a SPV of Receivables for fair market value
         and without recourse (except for limited recourse typical of such
         structured finance transactions), and/or (ii) a sale or other transfer
         by a SPV to (a) purchasers of or other investors in such Receivables
         and related security or (b) any other Person (including a SPV) in a
         transaction in which purchasers or

                                      18



         other investors purchase or are otherwise transferred such Receivables
         and related security, in the case of either (i) or (ii) above pursuant
         to and in accordance with the terms of the documents related to any
         Receivables Purchase Facility.

                  "Permitted Swap Obligation" means all obligations (contingent
         or otherwise) of any Company or any Subsidiary existing or arising
         under Swap Contracts, provided that each of the following criteria is
         satisfied: (a) such obligations are (or were) entered into by such
         Person in the ordinary course of business for the purpose of directly
         mitigating risks associated with liabilities, commitments or assets
         held or reasonably anticipated by such Person, or changes in the value
         of securities issued by such Person in conjunction with a securities
         repurchase program not otherwise prohibited hereunder, and not for
         purposes of speculation or taking a "market view;" and (b) such Swap
         Contracts do not contain any provision ("walk-away" provision)
         exonerating the non-defaulting party from its obligation to make
         payments on outstanding transactions to the defaulting party.

                  "Person" means an individual, partnership, corporation,
         limited liability company, business trust, joint stock company, trust,
         unincorporated association, joint venture or Governmental Authority.

                  "Plan" means an employee benefit plan (as defined in Section
         3(3) of ERISA) which any Company sponsors or maintains or to which any
         Company makes, is making, or is obligated to make contributions and
         includes any Pension Plan.

                  "Pro Rata Share" means, as to any Bank at any time, the
         percentage equivalent (expressed as a decimal, rounded to the ninth
         decimal place) at such time of such Bank's Commitment divided by the
         combined Commitments of all Banks.

                  "Receivables" shall mean, 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
         Records and (e) all proceeds of the foregoing.

                  "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

                                      19



         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.

                  "Records" means, for any Receivable, all contracts, books,
         records and other documents or information (including computer
         programs, tapes, disks, software and related property and rights)
         relating to such Receivable or the related obligor.

                  "Reference Bank" means Bank of America.

                  "Replacement Bank" has the meaning specified in Section 4.7.

                  "Reportable Event" means, 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.

                  "Required Banks" means (a) until the Revolving Termination
         Date, Banks then holding more than 50% of the combined Voting
         Percentages, and (b) on and after the Revolving Termination Date, Banks
         then holding more than 50 % of the aggregate amount of the Voting
         Percentages.

                  "Requirement of Law" means, as to any Person, any law
         (statutory or common), treaty, rule or regulation or determination of
         an arbitrator or of a Governmental Authority, in each case applicable
         to or binding upon the Person or any of its property or to which the
         Person or any of its property is subject.

                  "Responsible Officer" means the secretary of Toro, or any
         other officer having substantially the same authority and
         responsibility; or, with respect to compliance with financial
         covenants, the chief financial officer or the treasurer of Toro, or any
         other officer having substantially the same authority and
         responsibility.

                  "Restricted Payment" shall have the meaning set forth in
         Section 8.7 hereof.

                  "Revaluation Date" means with respect to Loans denominated in
         an Optional Currency, each of the following with respect to such
         Optional Currency: (a) the date a Notice of Borrowing or Notice of
         Conversion/Continuation is delivered to the Administrative Agent with
         respect to each Loan issued that results in such outstanding amount,
         (b) each date on which any such outstanding amount is due, (c) any
         Interest Payment Date applicable thereto, (d) any additional and more
         frequent dates as Administrative Agent in its sole discretion may, or
         at the direction of the Required Banks shall, select from time to time.

                  "Revolving Note" means a promissory note made by Toro, Credit
         or a Subsidiary Borrower, as the case may be, in favor of a Bank
         evidencing the Loans made by such

                                      20



         Bank, substantially in the form of Exhibit E-1 (for Toro or Credit) or
         Exhibit E-2 (for Subsidiary Borrowers).

                  "Revolving Termination Date" means the earlier to occur of:

                  (a)      February 22, 2005; and

                  (b)      the date on which the Commitments terminate in
         accordance with the provisions of this Agreement.

                  "SEC" means the Securities and Exchange Commission, or any
         Governmental Authority succeeding to any of its principal functions.

                  "SPV" means any special purpose entity established for the
         purpose of purchasing receivables in connection with a Receivables
         Purchase Facility.

                  "S&P" means Standard & Poor's Investor Services, a division of
         McGraw Hill Corporation or its successor or, if it or its successor
         shall no longer be rating corporate debt securities generally, such
         other nationally recognized statistical rating organization as shall be
         selected by the Required Banks.

                  "Spot Rate of Exchange" for a currency means the rate quoted
         by Bank of America as the spot rate for the purchase by Bank of America
         of such currency with another currency through its principal foreign
         exchange trading office at approximately 11:00 a.m., at the applicable
         time, on the date two Business Days prior to the date on which the
         foreign exchange transaction is made.

                  "Subsidiary" of a Person means 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. Unless the context otherwise clearly requires,
         references herein to a "Subsidiary" refer to a Subsidiary of Toro.

                  "Subsidiary Borrowers" means collectively, Toro International
         Company, a Minnesota corporation, Tover Overseas B.V., a Netherlands
         company and Toro Factoring Company N.V., a Netherlands Antilles
         company.

                  "Surety Instruments" means all standby letters 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.

                  "Swap Contract" means any agreement, whether or not in
         writing, relating to any transaction that is a rate swap, basis swap,
         forward rate transaction, commodity swap, commodity option, equity or
         equity index swap or option, bond, note or bill option,

                                      21



         interest rate option, forward foreign exchange transaction, cap, collar
         or floor transaction, currency swap, cross-currency rate swap,
         swaption, currency option or any other, similar transaction (including
         any option to enter into any of the foregoing) or any combination of
         the foregoing, and, unless the context otherwise clearly requires, any
         master agreement relating to or governing any or all of the foregoing.

                  "Swap Termination Value" means, in respect of any one or more
         Swap Contracts, after taking into account the effect of any legally
         enforceable netting agreement relating to such Swap Contracts, (a) for
         any date on or after the date such Swap Contracts have been closed out
         and termination value(s) determined in accordance therewith, such
         termination value(s), and (b) for any date prior to the date referenced
         in clause (a) the amount(s) determined as the mark-to-market value(s)
         for such Swap Contracts, as determined based upon one or more mid-
         market or other readily available quotations provided by any recognized
         dealer in such Swap Contracts (which may include any Bank).

                  "Swing Line Bank" means Bank of America in its capacity as
         provider of Swing Loans, or any successor swing line Bank hereunder.

                  "Swing Line Note" means a promissory note made by the Toro and
         Credit in favor of the Issuing Bank evidencing the Swing Loans made by
         the Issuing Bank, substantially in the form of Exhibit E-2.

                  "Swing Loan" means a loan made by the Administrative Agent
         pursuant to Section 2.5 hereof.

                  "TARGET Business Day" means any day on which the
         Trans-European Automated Real-time Gross Settlement Express Transfer
         (TARGET) System (or, if such clearing system ceases to be operative,
         such other clearing system (if any) determined by the Administrative
         Agent to be a suitable replacement) is operating.

                  "Taxes" means any and all present or future taxes, levies,
         assessments, imposts, duties, deductions, fees, withholdings or similar
         charges, and all liabilities with respect thereto, excluding, in the
         case of each Bank and the Administrative Agent, respectively, franchise
         taxes and taxes imposed on or measured by its existence or net income
         by the jurisdiction (or any political subdivision thereof) under the
         laws of which such Bank or the Administrative Agent, as the case may
         be, is organized or maintains a lending office.

                  "Type" means, with respect to each Loan, whether it
         constitutes an Offshore Rate Loan or a Base Rate Loan.

                  "Unfunded Pension Liability " means 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
         assumptions used for funding the Pension Plan pursuant to Section 412
         of the Code for the applicable plan year.

                                      22



                  "United States" and "U.S.," each means the United States of
         America.

                  "Utilization Fee" shall have the meaning specified in Section
         2.9(e).

                  "Voting Percentage" means, as to any Bank, (a) at any time
         when the combined Commitments of all Banks are in effect, such Bank's
         Pro Rata Share and (b) at any time after the termination of the
         combined Commitments of all Banks, the percentage (carried out to the
         ninth decimal place) which (i) the sum of (A) the Dollar Equivalent
         Amount of the outstanding amount of such Bank's Loans, plus (B) such
         Bank's Pro Rata Share of the outstanding amount of L/C Obligations,
         plus (C) such Bank's Pro Rata Share of the outstanding amount of Swing
         Loans, then comprises of (ii) the Dollar Equivalent Amount of the
         aggregate outstanding amount of all Loans, Swing Loans and L/C
         Obligations; provided, however, that if any Bank has failed to fund any
         portion of the Loans, participations in L/C Obligations or
         participations in Swing Loans required to be funded by it hereunder,
         such Bank's Voting Percentage shall be deemed to be zero, and the
         respective Pro Rata Shares and Voting Percentages of the other Banks
         shall be recomputed for purposes of this definition and the definition
         of "Required Banks" without regard to such Bank's Commitment or the
         outstanding amount of its Loans, L/C Advances and funded participations
         in Swing Loans, as the case may be.

                  "Wholly-Owned Subsidiary" means any corporation in which
         (other than directors' qualifying shares required by law) 100% of the
         capital stock of each class having ordinary voting power, and 100% of
         the capital stock of every other class, in each case, at the time as of
         which any determination is being made, is owned, beneficially and of
         record, by one of the Companies, or by one or more of the other
         Wholly-Owned Subsidiaries, or both.

         1.2      Other Interpretive Provisions.

                  (a)      The meanings of defined terms are equally applicable
         to the singular and plural forms of the defined terms.

                  (b)      The words "hereof", "herein", "hereunder" and similar
         words refer to this Agreement as a whole and not to any particular
         provision of this Agreement; and subsection, Section, Schedule and
         Exhibit references are to this Agreement unless otherwise specified.

                  (c)      (i)      The term "documents" includes any and all
         instruments, documents, agreements, certificates, indentures, notices
         and other writings, however evidenced.

                           (ii)     The term "including" is not limiting and
                  means "including without limitation."

                           (iii)    In the computation of periods of time from a
                  specified date to a later specified date, the word "from"
                  means "from and including"; the words "to"

                                      23



                  and "until" each mean "to but excluding", and the word
                  "through" means "to and including."

                  (d)      Unless otherwise expressly provided herein, (i)
         references to agreements (including this Agreement) and other
         contractual instruments shall be deemed to include all subsequent
         amendments and other modifications thereto, but only to the extent such
         amendments and other modifications are not prohibited by the terms of
         any Loan Document, and (ii) references to any statute or regulation are
         to be construed as including all statutory and regulatory provisions
         consolidating, amending, replacing, supplementing or interpreting the
         statute or regulation.

                  (e)      The captions and headings of this Agreement are for
         convenience of reference only and shall not affect the interpretation
         of this Agreement.

                  (f)      This Agreement and other Loan Documents may use
         several different limitations, tests or measurements to regulate the
         same or similar matters. All such limitations, tests and measurements
         are cumulative and shall each be performed in accordance with their
         terms. Unless otherwise expressly provided, any reference to any action
         of the Administrative Agent or the Banks by way of consent, approval or
         waiver shall be deemed modified by the phrase "in its/their sole
         discretion."

                  (g)      This Agreement and the other Loan Documents are the
         result of negotiations among and have been reviewed by counsel to the
         Administrative Agent, the Companies and the other parties, and are the
         products of all parties. Accordingly, they shall not be construed
         against the Banks or the Administrative Agent merely because of the
         Administrative Agent's or Banks' involvement in their preparation.

                  (h)      Each reference to "basis points" or "bps" shall be
         interpreted in accordance with the convention that 100 bps = 1.0%.

         1.3      Accounting Principles.

                  (a)      Unless the context otherwise clearly requires, all
         accounting terms not expressly defined herein shall be construed, and
         all financial computations required under this Agreement shall be made,
         in accordance with GAAP, consistently applied.

                  (b)      References herein to "fiscal year" and "fiscal
         quarter" refer to such fiscal periods of the Companies.

                  (c)      If at any time any change in GAAP would affect the
         computation of any financial ratio or requirement set forth in any Loan
         Document, and either the Companies, the Administrative Agent or the
         Required Banks shall so request, the Administrative Agent, the Banks
         and the Companies shall negotiate in good faith to amend such ratio or
         requirement to preserve the original intent thereof in light of such
         change in GAAP (subject to the approval of the Required Banks);
         provided that, until so amended, (i) such ratio or requirement shall
         continue to be computed in accordance with GAAP prior to such change
         therein and (ii) the Companies shall provide to the Administrative
         Agent and the Banks financial statements and other documents required
         under this Agreement or as

                                      24



         reasonably requested hereunder setting forth a reconciliation between
         calculations of such ratio or requirement made before and after giving
         effect to such change in GAAP.

                  (d)      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 Administrative Agent;

                           (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.

                  (e) 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.

                           (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 Company or Subsidiary in
                  connection with Indebtedness which is either (x) repaid with
                  the proceeds received by the

                                      25



                  applicable 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 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 a
         Receivables Purchase Facility.

         1.4      Exchange Rates; Currency Equivalents.

                  (a)      The Administrative Agent shall determine the Spot
         Rates of Exchange as of each Revaluation Date applicable to any
         Optional Currency to be used for calculating Dollar Equivalent Amounts
         of Loans denominated in such Optional Currency. Spot Rates of Exchange
         shall become effective as of such Revaluation Date and shall be the
         Spot Rates of Exchange employed in converting any amounts between the
         applicable currencies until the next Revaluation Date to occur. Except
         for purposes of financial statements delivered by the Companies
         hereunder or calculating financial covenants hereunder or except as
         otherwise provided herein, the applicable amount of any currency for
         purposes of the Loan Documents shall be such Dollar Equivalent Amount
         as so determined by the Administrative Agent.

                  (b)      Wherever in this Agreement in connection with a
         Borrowing, Conversion, Continuation or prepayment of a Loan, an amount
         such as a required minimum or multiple amount is expressed in Dollars,
         but such Borrowing or Loan is denominated in an Optional Currency, such
         amount shall be the relevant Foreign Currency Equivalent of such Dollar
         amount (rounded to the nearest 1,000 units of such Optional Currency),
         as determined by the Administrative Agent.

         1.5      Redenomination of Certain Alternative Currencies.

                  (a)      Each obligation of the Companies to make a payment
         denominated in the national currency of any member state of the
         European Union that adopts the euro as its lawful currency after the
         date hereof shall be redenominated into euro at the effective date of
         the euro as such lawful currency (in accordance with the EMU
         Legislation). If, in relation to the currency of any such member state,
         the basis of accrual of interest expressed in this Agreement in respect
         of that currency shall be inconsistent with any convention or practice
         in the London interbank market for the basis of accrual of interest in
         respect of the euro, such expressed basis shall be replaced by such
         convention or practice with effect from the date on which such member
         state adopts the euro as its lawful currency; provided that if any
         Borrowing in the currency of such member state is outstanding
         immediately prior to such date, such replacement shall take effect,
         with respect to such Borrowing, at the end of the then current Interest
         Period.

                                      26



                  (b)      Each provision of this Agreement shall be subject to
         such reasonable changes of construction as the Administrative Agent may
         from time to time specify to be appropriate to reflect the adoption of
         the euro by any member state of the European Union and any relevant
         market conventions or practices relating to the euro. The
         Administrative Agent may from time to time further modify the terms of,
         and practices contemplated by, this Agreement with respect to the euro
         to the extent Administrative Agent determines, in its reasonable
         discretion, that such modifications are necessary or convenient to
         reflect new laws, regulations, customs or practices developed in
         connection with the euro. The Administrative Agent may effect such
         modifications, and this Agreement shall be deemed so amended, without
         the consent of the Companies or the Banks to the extent such
         modifications are not materially disadvantageous to the Companies or
         the Banks, upon notice thereto.

                                  ARTICLE II.

                                   THE CREDITS

         2.1      Amounts and Terms of Commitments.

                  (a)      Each Bank severally agrees, on the terms and
         conditions set forth herein, to make loans in Dollars or any Optional
         Currency to any of the Companies from time to time on any Business Day
         during the period from the Closing Date to the Revolving Termination
         Date, in an aggregate amount not to exceed at any time outstanding the
         amount for such Bank set forth on Schedule 2.1 (such amount as the same
         may be reduced under Section 2.6 or as a result of one or more
         assignments under Section 12.7, the Bank's "Commitment"); provided,
         however, that, after giving effect to any Borrowing, the Effective
         Amount of all outstanding Loans (after determining the Dollar
         Equivalent Amount of all Optional Currency Loans) and the Effective
         Amount of all L/C Obligations and Swing Loans shall not at any time
         exceed the combined Commitments and provided further that the Effective
         Amount of the Loans of any Bank plus the participation of such Bank in
         the Effective Amount of outstanding Swing Loans and L/C Obligations
         (or, with respect to the Swing Line Bank and the Issuing Bank, the
         Effective Amount of outstanding Swing Loans and L/C Obligations,
         respectively, after subtracting the participations therein of all other
         Banks) shall not exceed such Bank's Commitment. Within the limits of
         each Bank's Commitment, and subject to the other terms and conditions
         hereof, the Companies may borrow under this Section 2.1, prepay under
         Section 2.7 and reborrow under this Section 2.1. Optional Currency
         Loans may be outstanding in no more than four (4) Optional Currencies
         at any one time.

                  (b)      Unavailability of Optional Currency. If a Bank
         determines that (i) an Optional Currency is not available to it in
         sufficient amount and for a sufficient term to enable it to make any
         Optional Currency Loan requested by or on behalf of any Company
         pursuant to Section 2.3, (ii) making any Optional Currency Loan
         requested by any Company would subject the Bank, in the Bank's sole
         judgment, to any Taxes, duty, or other change with respect to any
         Optional Currency Loan or its obligation to make Optional Currency
         Loans, or change the basis on which taxes are imposed on any amount
         payable to such Bank under this Agreement in respect of such Optional
         Currency Loan,

                                      27



         the result of which would increase the cost to such Bank of making,
         funding or maintaining such Optional Currency Loan or to reduce any sum
         received or receivable by such Bank under this Agreement with respect
         to such Optional Currency Loan, or (iii) exchange controls or similar
         monetary restrictions are imposed or that with certainty will in the
         future be imposed that, in the reasonable judgment of such Bank,
         adversely affect the ability of such Bank to make such Optional
         Currency Loan, and so notifies the Administrative Agent no later than
         3:00 p.m. (Chicago time) on the same day it receives notice from the
         Administrative Agent of such requested Loan, the Administrative Agent
         shall use its best efforts to notify the Companies by 5:00 p.m.
         (Chicago time) on the same day. If the Companies nevertheless desire
         such Optional Currency Loan, they shall notify the Administrative Agent
         by no later than 10:00 a.m. (Chicago time), on the third (3rd) Business
         Day prior to the Borrowing Date. If the Administrative Agent does not
         receive such notice from the Companies by 10:00 a.m. (Chicago time) on
         the (3rd) Business Day prior to the Borrowing Date, the Companies shall
         automatically be deemed to have revoked their request for such Optional
         Currency Loan and the Administrative Agent shall promptly advise the
         Banks of such revocation. If the Companies do give such notice by such
         time, each Bank that did not so notify the Administrative Agent shall,
         subject to Article V, make its Loan in the Optional Currency requested
         in accordance with Section 2.3. Each Bank that did so notify the
         Administrative Agent by 3:00 p.m. (Chicago time), shall, subject to
         Article V, make an Offshore Rate Loan in the amount of the Original
         Dollar Amount of, and with the same Interest Period as, the Optional
         Currency Loan such Bank was originally requested to make. Such Offshore
         Rate Loan shall be made by the affected Bank on the same day as the
         other Banks make their relevant Pro Rata Share of Optional Currency
         Loans and shall be made available in accordance with the procedures for
         disbursing Loans in Dollars under Section 2.3. Any Loan made in an
         Optional Currency shall be advanced in such currency, and all payments
         of principal and interest thereon shall be made in such Optional
         Currency. However, if exchange controls or similar monetary
         restrictions are imposed or that with certainty will in the future be
         imposed that, in the reasonable judgment of any Bank, adversely affect
         the ability of such Bank to transfer or convert such Optional Currency
         payment into Dollars, such Bank will provide the Companies with notice
         and an opportunity to repay in such Optional Currency (including any
         cost incurred by such Bank under Section 4.4) for so long as such Bank
         can transfer or convert such Optional Currency payment into Dollars.
         Thereafter, all payments of principal and interest thereon shall be in
         the Dollar Equivalent Amount of such Optional Currency payment. In
         addition, if a Default or Event of Default exists, then all amounts
         owing with respect to any Optional Currency Loan shall be repaid at the
         end of the Interest Period and, at the option of the applicable
         Company, may be reborrowed as a Base Rate Loan in the Dollar Equivalent
         Amount of the Optional Currency Loan.

         2.2      Loan Accounts.

                  (a)      The Loans made by each Bank shall be evidenced by one
         or more loan accounts or records maintained by such Bank in the
         ordinary course of business. The loan accounts or records maintained by
         each Bank shall be rebuttable presumptive evidence of the amount of the
         Loans made by the Banks to the Companies and the interest and payments
         thereon. Any failure so to record or any error in doing so shall not,

                                      28



         however, limit or otherwise affect the obligation of the Companies
         hereunder to pay any amount owing with respect to the Loans or any
         Letter of Credit. If there is any discrepancy between the loan account
         records kept by a Bank and the loan account records kept by the
         Administrative Agent for such Bank, the records of the Bank shall
         control, absent manifest error.

                  (b)      Upon the request of any Bank made through the
         Administrative Agent, the Loans made by such Bank shall be evidenced by
         a Revolving Note or Swing Line Note, as applicable, instead of or in
         addition to loan accounts. Each such Bank shall endorse on the
         schedules annexed to its Note(s) the date, amount, currency (in the
         case of Optional Currency Loans) and maturity of each Loan made by it
         and the amount of each payment of principal made by the Companies with
         respect thereto. Each Bank is irrevocably authorized by the Companies
         to endorse its Note(s) and each Bank's (or the Administrative Agent's)
         record shall be rebuttable presumptive evidence of the amount of the
         Loans made by the Banks to the Companies; provided, however, that the
         failure of a Bank to make, or an error in making, a notation thereon
         with respect to any Loan shall not limit or otherwise affect the
         obligations of the Companies hereunder or under any such Note to such
         Bank.

                  (c)      In addition to the accounts and records referred to
         in subsection (a), each Bank and the Administrative Agent shall
         maintain in accordance with its usual practice accounts or records
         evidencing the purchases and sales by such Bank of participations in
         Letters of Credit and Swing Loans. In the event of any conflict between
         the accounts and records maintained by the Administrative Agent and the
         accounts and records of any Bank in respect of such matters, the
         accounts and records of the Administrative Agent, in the absence of
         manifest error, shall control.

         2.3      Procedure for Borrowing.

                  (a)      Each Borrowing shall be made upon Toro's irrevocable
         written notice delivered to the Administrative Agent in the form of a
         Notice of Borrowing (which notice must be received by the
         Administrative Agent prior to (i) 12:00 noon (Chicago time) three (3)
         Business Days prior to the requested Borrowing Date, in the case of
         Offshore Rate Loans in Dollars, and four (4) Business Days prior to the
         requested Borrowing Date in the case of Optional Currency Loans, and
         (ii) 10:30 a.m. (Chicago time) on the requested Borrowing Date in the
         case of Base Rate Loans, in each case specifying:

                           (i)      the amount of the Borrowing, which shall be
                  in an aggregate minimum amount of $5,000,000 or any multiple
                  of $1,000,000 in excess thereof for Dollar Borrowings and for
                  Borrowings of Optional Currency Loans in a minimum amount of
                  the Foreign Currency Equivalent of $5,000,000;

                           (ii)     the requested Borrowing Date, which shall be
                  a Business Day;

                           (iii)    the Type of Loans comprising the Borrowing,
                  for which Company the Loan is being requested, and, if the
                  Loan is to be made in currency other than Dollars, the
                  Optional Currency in which such Loan is requested to be made;
                  and

                                      29



                           (iv)     the duration of the Interest Period
                  applicable to such Loans included in such notice. If the
                  Notice of Borrowing fails to specify the duration of the
                  Interest Period for any Borrowing comprised of Offshore Rate
                  Loans, such Interest Period shall be one month.

                  (b)      The Administrative Agent will promptly notify each
         Bank of its receipt of any Notice of Borrowing and of the amount of
         such Bank's Pro Rata Share of that Borrowing.

                  (c)      Each Bank will make the amount of its Pro Rata Share
         of each Borrowing available to the Administrative Agent for the account
         of the applicable Company at the Administrative Agent's Payment Office
         by 12:00 noon (Chicago time) on the requested Borrowing Date in funds
         immediately available to the Administrative Agent. The proceeds of all
         such Loans will then be made available to the applicable Company by the
         Administrative Agent by wire transfer in accordance with written
         instructions provided to the Administrative Agent by Toro of like funds
         as received by the Administrative Agent.

                  (d)      After giving effect to any Borrowing, unless the
         Administrative Agent shall otherwise consent, there may not be more
         than eight different Interest Periods in effect in respect of all Loans
         together then outstanding.

         2.4      Conversion and Continuation Elections for Borrowings. By
delivering a Continuation/Conversion Notice to the Administrative Agent on or
before 10:30 a.m. (Chicago time) on a Business Day, the Companies may from time
to time irrevocably elect, on not less than (a) three (3) Business Days' notice
for Loans denominated in Dollars and (b) four (4) Business Days' notice for
Loans denominated in an Optional Currency, that all, or any portion in an
aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 for
Loans denominated in Dollars (or the Foreign Currency Equivalent of $5,000,000
in the case of Optional Currency Loans), of the Loans be, (i) in the case of
Base Rate Loans, converted into Offshore Rate Loans denominated in Dollars, (ii)
in the case of Offshore Rate Loans denominated in Dollars, be converted into
Base Rate Loans or continued as Offshore Rate Loans, or (iii) in the case of
Offshore Rate Loans denominated in an Optional Currency, continued as Offshore
Rate Loans in the same Optional Currency. Loans may only be converted or
continued as Loans denominated in the same currency as originally borrowed.

         In the absence of delivery of a Continuation/Conversion Notice with
respect to an Offshore Rate Loan at least (a) three (3) Business Days for such
Offshore Rate Loan denominated in Dollars, and (b) four (4) Business Days for
such Offshore Rate Loan denominated in an Optional Currency, before the last day
of the then current Interest Period with respect thereto and unless such
Offshore Rate Loan is repaid on such date,

                  (a)      an Offshore Rate Loan denominated in Dollars shall be
         converted automatically on such last day of such Interest Period to a
         Base Rate Loan, and

                                      30



                  (b)      an Offshore Rate Loan denominated in an Optional
         Currency shall be deemed continued by the Companies on the last day of
         such Interest Period for another Interest Period equal to one month.

         Each such conversion and continuation shall be prorated among the
applicable outstanding Loans of all Banks, and no portion of the outstanding
principal amount of any Loan may be continued as, or be converted into, an
Offshore Rate Loan when any Default or Event of Default has occurred and is
continuing. The Administrative Agent shall promptly notify each Bank of the
applicable Interest Period and interest rate.

         2.5      The Swing Loan Facility.

                  (a)      Making of Swing Loans. During the period from the
         Closing Date to the Business Day immediately preceding the Revolving
         Termination Date, upon receipt of telephonic request from Toro, no
         later than 12:00 noon (Chicago time) on any Business Day, (which shall
         be confirmed immediately in writing by Toro via fax to the Swing Line
         Bank and the Administrative Agent in substantially the form of a Notice
         of Borrowing for Swing Loans) the Swing Line Bank shall make loans in
         Dollars to Toro and Credit solely for the Swing Line Bank's own account
         (except as otherwise provided in Section 2.5(b) (the "Swing Loans")),
         up to an aggregate principal amount at any one time outstanding not to
         exceed the lesser of (i) $20,000,000 and (ii) an amount equal to (A)
         the aggregate amount of the Commitments of all Banks at such time minus
         the Effective Amount of all Loans, Swing Loans and L/C Obligations then
         outstanding. The Swing Line Bank shall make the proceeds of such Loans
         available to Toro and Credit on the requested funding date and shall
         disburse such funds in Dollars and in immediately available funds to an
         account of either Toro or Credit, designated by Toro from time to time.
         Each Swing Loan shall be in a minimum amount of $500,000 and integral
         multiples of $100,000 in excess of that amount. All Swing Loans shall
         be payable on demand with accrued interest thereon and shall otherwise
         be subject to all the terms and conditions applicable to Loans, except
         that all interest thereon shall be at a per annum rate quoted to Toro
         by the Swing Line Bank on the date any Swing Loan shall be requested
         and be payable to the Administrative Agent, solely for the account of
         the Swing Line Bank (except as otherwise provided in Section 2.5(b)).
         The Swing Line Bank shall not make any Swing Loan after it receives
         written notice from either Toro or Credit or a Bank that one or more of
         the conditions precedent contained in Sections 5.2(b) or (c) will not
         on such date be satisfied, until such conditions are satisfied or
         waived by the Required Banks, and the Swing Line Bank shall not
         otherwise be required to determine that, or take notice whether, the
         conditions precedent set forth in Sections 5.2(b) and (c) hereof have
         been satisfied.

                  (b)      Repayment of Swing Loans. Upon demand by the Swing
         Line Bank (through the Administrative Agent) at any time when any Swing
         Loan remains outstanding, Toro and Credit shall and hereby jointly and
         severally promise to promptly repay all Swing Loans to the
         Administrative Agent (for the account of the Swing Line Bank). Upon
         such demand, Toro and Credit shall promptly borrow Loans from all the
         Banks, and the Banks shall promptly make Loans to Toro and Credit
         pursuant to Section 2.1 hereof (and for the purposes solely of such
         Borrowing, the required minimum

                                      31



         amounts for Loans shall not be effective) and Toro and Credit hereby
         authorize the Swing Line Bank to apply the proceeds of such Loans to
         the repayment of such outstanding Swing Loans. The failure of any Bank
         to make available to the Administrative Agent (for the account of the
         Swing Line Bank) its Pro Rata Share of such Loans shall not relieve any
         other Bank of its obligation hereunder to make available to the
         Administrative Agent (for the account of the Swing Line Bank) such
         other Pro Rata Share of such Loans on the date funds are to be made
         available to repay such Swing Loans. If either Toro or Credit
         voluntarily or involuntarily fail to repay any such Swing Loan within
         one (1) Business Day after demand therefor by the Swing Line Bank
         (through the Administrative Agent), such Swing Loan will thereafter
         accrue interest at the per annum rate equal to the Base Rate plus 2%
         and each Bank hereby irrevocably and unconditionally agrees to purchase
         from the Swing Line Bank, without recourse or warranty, an undivided
         interest and participation in such Swing Loan in an amount equal to
         such Bank's Pro Rata Share thereof and shall pay such amount to the
         Administrative Agent (for the account of the Swing Line Bank) in
         Dollars and in immediately available funds. Such purchase shall become
         effective hereunder without the necessity of further action by any
         Person. If the amount required to be paid hereunder for the purchase of
         such participation interest is not paid to the Administrative Agent
         (for the account of the Swing Line Bank) by any Bank, the Swing Line
         Bank (acting through the Administrative Agent) shall be entitled to
         recover such amount on demand from such Bank together with accrued
         interest thereon, for each day from the date of demand therefor, if
         made prior to 12:00 noon (Chicago time) on any Business Day, or, if
         made at any other time, from the next Business Day following the date
         of such demand, until the date such amount is paid to the
         Administrative Agent (for the account of the Swing Line Bank) by such
         Bank, until three (3) Business Days have expired at the Federal Funds
         Rate and thereafter at the Base Rate. Nothing in this Section 2.5(b)
         shall be deemed to relieve any Bank of its obligation hereunder to pay
         the purchase price of its participation interest hereunder.

                  (c)      Each Bank's obligation to make Loans or to purchase
         and fund in Dollars participations in Swing Loans pursuant to this
         Section 2.5 shall be absolute and unconditional and shall not be
         affected by any circumstance, including (A) any set-off, counterclaim,
         recoupment, defense or other right which such Bank may have against the
         Swing Line Bank, the Companies or any other Person for any reason
         whatsoever, (B) the occurrence or continuance of a Default or Event of
         Default, or (C) any other occurrence, event or condition, whether or
         not similar to any of the foregoing; provided, however, that each
         Bank's obligation to make Swing Loans pursuant to this Section 2.5 is
         subject to the conditions set forth in Section 5.2. Any such purchase
         of participations by each Bank from the Swing Line Bank shall not
         relieve or otherwise impair the obligation of Toro and Credit to repay
         Swing Loans, together with interest as provided herein.

         2.6      Voluntary Termination or Reduction of Commitments. Toro may,
upon not less than five Business Days' prior notice from Toro to the
Administrative Agent, terminate the Commitments, or permanently reduce the
Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, (a) the Effective
Amount of all Loans, Swing Loans and L/C Obligations together would exceed the
amount of the combined Commitments then in effect or (b) the Effective Amount of
all L/C Obligations then outstanding

                                      32


would exceed the L/C Commitment. Once reduced in accordance with this Section,
the Commitments may not be increased. Any reduction of the Commitments shall be
applied to each Bank according to its Pro Rata Share. All accrued Facility Fees
and letter of credit fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.

         2.7      Optional Prepayments. Subject to Section 4.4, the Companies
may, at any time or from time to time upon irrevocable notice from Toro to the
Administrative Agent, ratably prepay Loans in whole or in part, in minimum
amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof (or, in
relation to any Optional Currency Loan in a minimum amount of the Foreign
Currency Equivalent of $5,000,000); provided that such notice must be received
by the Administrative Agent not later than 10:30 a.m., Chicago time, (A) three
Business Days prior to any date of prepayment of Offshore Rate Loans denominated
in Dollars, (B) four Business Days prior to any date of prepayment of an
Optional Currency Loan denominated in any Optional Currency, and (C) on the date
of prepayment of Base Rate Committed Loans. Such notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Administrative Agent will promptly notify each Bank of its receipt
of any such notice, and of such Bank's Pro Rata Share of such prepayment. If
such notice is given by Toro, the Companies shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest, to each such date on the
amount prepaid and any amounts required pursuant to Section 4.4.

         2.8      Repayment of Loans. Each of the Companies shall and do hereby
promise to repay to the Banks on the Revolving Termination Date the aggregate
principal amount of Loans outstanding on such date made to it hereunder. If at
any time the Effective Amount of all Loans, Swing Loans and L/C Obligations
outstanding under this Agreement exceeds the combined Commitments of the Banks,
Toro shall, or shall cause the applicable Company, to promptly prepay to the
Administrative Agent for the account of the Banks an amount equal to such excess
plus accrued interest thereon.

         2.9      Interest.

                  (a)      Each Loan, other than Swing Loans and Optional
         Currency Loans, shall bear interest on the outstanding principal amount
         thereof from the applicable Borrowing Date at a rate per annum equal to
         the Offshore Rate or the Base Rate, as the case may be (and subject to
         the Companies' right to convert to other Types of Loans under Section
         2.4), plus the Applicable Margin. Each Optional Currency Loan shall
         bear interest on the outstanding principal amount thereof from the
         applicable Borrowing Date at a rate per annum equal to the Offshore
         Rate plus the Applicable Margin.

                  (b)      Interest on each Loan, other than Swing Loans, shall
         be paid in arrears on each Interest Payment Date. Interest shall also
         be paid on the date of any prepayment of Loans under Section 2.7 for
         the portion of the Loans so prepaid and upon payment (including
         prepayment) in full thereof and, during the existence of any Event of
         Default, interest shall be paid on demand of the Administrative Agent
         at the request or with the consent of the Required Banks.

                                       33


                  (c)      Notwithstanding subsection (a) of this Section, while
         any Event of Default exists or after acceleration, at the request of
         the Required Banks, the Companies shall pay interest (after as well as
         before entry of judgment thereon to the extent permitted by law) on the
         principal amount of all outstanding Obligations, at a rate per annum
         which is determined by adding 2% per annum to the interest rate then in
         effect for such Loans and, in the case of Obligations not subject to an
         Applicable Margin, at a rate per annum equal to the Base Rate plus 2%;
         provided, however, that, on and after the expiration of any Interest
         Period applicable to any Offshore Rate Loan outstanding on the date of
         occurrence of such Event of Default or acceleration, the principal
         amount of such Loan shall, during the continuation of such Event of
         Default or after acceleration, bear interest at a rate per annum equal
         to the Base Rate plus 2%.

                  (d)      Anything herein to the contrary notwithstanding, the
         obligations of the Companies to any Bank hereunder shall be subject to
         the limitation that payments of interest shall not be required for any
         period for which interest is computed hereunder, to the extent (but
         only to the extent) that contracting for or receiving such payment by
         such Bank would be contrary to the provisions of any law applicable to
         such Bank limiting the highest rate of interest that may be lawfully
         contracted for, charged or received by such Bank, and in such event the
         Companies shall pay such Bank interest at the highest rate permitted by
         applicable law.

                  (e)      For any day on which the sum of the outstanding
         principal amount of all Loans, Swing Loans, L/C Obligations and Loans
         (as defined in the 364-Day Agreement) under the 364-Day Agreement shall
         be greater than or equal to 25% of the sum of the combined Commitments
         of the Banks under this Agreement plus the combined Commitments (as
         defined in the 364-Day Credit Agreement) of the Banks under the 364-Day
         Credit Agreement (such determination referred to as the "Utilization
         Percentage"), the Companies shall pay to the Administrative Agent for
         the account of each Bank in accordance with its Pro Rata Share a
         utilization fee (a "Utilization Fee") equal to the percent per annum
         set forth in the chart below according to the applicable Utilization
         Percentage on the aggregate actual daily Dollar Equivalent Amount of
         all outstanding Loans, Swing Loans and L/C Obligations to the Companies
         on such day.



- -----------------------------------     ---------------
      UTILIZATION PERCENTAGE            UTILIZATION FEE
- -----------------------------------     ---------------
                                     
Greater than or equal to 25% but            0.125%
less than 50%
- -----------------------------------     ---------------
Greater than or equal to 50%                0.250%
- -----------------------------------     ----------------


         The accrued Utilization Fees, if any, shall be calculated and payable
         quarterly in arrears on the last Business Day of each March, June,
         September and December commencing on the first such date after the
         Closing Date and on the date or dates on which the Commitments
         terminate and any outstanding Loans are repaid. All Utilization Fees
         shall be computed on the basis of a year of 360 days and shall be
         payable for the actual number of days elapsed (including the first day
         but excluding the last day). The Utilization Fee

                                       34


         shall accrue at all times, including at any time during which one or
         more of the conditions of Article V are not met.

         2.10     Fees.

                  (a)      Toro shall pay the fees to the Administrative Agent
         as required by the letter agreement ("Fee Letter") addressed to Toro
         and acknowledged by the Administrative Agent dated January 3, 2002.

                  (b)      The Companies shall pay to the Administrative Agent
         for the account of each Bank the Facility Fee quarterly, in arrears, on
         the last Business Day of each calendar quarter; provided, however, that
         the Companies shall not be obligated to pay the Facility Fee for the
         account of any Bank which has failed and continues to fail to fund, or
         provide for the funding of, Loans as provided hereunder.

         2.11     Computation of Fees and Interest.

                  (a)      All computations of interest for Base Rate Loans
         shall be made on the basis of a year of 365 or 366 days, as the case
         may be, and actual days elapsed. All other computations of fees and
         interest shall be made on the basis of a 360-day year and actual days
         elapsed, or, in the case of interest in respect of Loans denominated in
         Optional Currencies as to which market practice differs from the
         foregoing, in accordance with such market practice as determined by the
         Administrative Agent. Interest and fees shall accrue during each period
         during which interest or such fees are computed from the first day
         thereof to the last day thereof.

                  (b)      Each determination of an interest rate by the
         Administrative Agent shall be conclusive and binding on the Companies
         and the Banks in the absence of manifest error.

         2.12     Payments by the Companies.

                  (a)      All payments to be made by the Companies shall be
         made without set-off, recoupment, defense or counterclaim. Except as
         otherwise expressly provided herein, all payments by the Companies
         shall be made to the Administrative Agent for the account of the Banks
         at the Administrative Agent's Payment Office, and shall be made in the
         same currency in which such Loan was made and in immediately available
         funds, no later than 1:00 p.m. (Chicago time) on the date specified
         herein. The Administrative Agent will promptly distribute to each Bank
         its Pro Rata Share (or other applicable share as expressly provided
         herein) of such payment in like funds as received. Any payment received
         by the Administrative Agent later than 1:00 p.m. (Chicago time) shall
         be deemed to have been received on the following Business Day and any
         applicable interest or fee shall continue to accrue.

                  (b)      Subject to the provisions set forth in the definition
         of "Interest Period" herein, whenever any payment is due on a day other
         than a Business Day, such payment shall be made on the following
         Business Day, and such extension of time shall in such case be included
         in the computation of interest or fees, as the case may be.

                                       35


                  (c)      Unless the Administrative Agent receives notice from
         Toro prior to the date on which any payment is due to the Banks that
         the Companies will not make such payment in full as and when required,
         the Administrative Agent may assume that the Companies have made such
         payment in full to the Administrative Agent on such date in immediately
         available funds and the Administrative Agent may (but shall not be so
         required), in reliance upon such assumption, distribute to each Bank on
         such due date an amount equal to the amount then due such Bank. If and
         to the extent the Companies have not made such payment in full to the
         Administrative Agent, each Bank shall repay to the Administrative Agent
         on demand such amount distributed to such Bank, together with interest
         thereon at the Overnight Rate until three Business Days have expired,
         and then at the Base Rate, for each day from the date such amount is
         distributed to such Bank until the date repaid.

                  (d)      If at any time insufficient funds are received by and
         available to the Administrative Agent to pay fully all amounts of
         principal, L/C Borrowings, interest and fees then due hereunder, such
         funds shall be applied (i) first, toward costs and expenses (including
         attorney fees and expenses and amounts payable under Article IV)
         incurred by the Administrative Agent and each Bank, (ii) second, toward
         repayment of interest and fees then due hereunder, ratably among the
         parties entitled thereto in accordance with the amounts of interest and
         fees then due to such parties, and (iii) third, toward repayment of
         principal and L/C Borrowings then due hereunder, ratably among the
         parties entitled thereto in accordance with the amounts of principal
         and L/C Borrowings then due to such parties.

         2.13     Payments by the Banks to the Administrative Agent.

                  (a)      Unless the Administrative Agent receives notice from
         a Bank on or prior to the Closing Date or, with respect to any
         Borrowing after the Closing Date, at least one Business Day prior to
         the date of such Borrowing, that such Bank will not make available as
         and when required hereunder to the Administrative Agent for the account
         of the Companies the amount of that Bank's Pro Rata Share of the
         Borrowing, the Administrative Agent may assume that each Bank has made
         such amount available to the Administrative Agent in immediately
         available funds on the Borrowing Date and the Administrative Agent may
         (but shall not be so required), in reliance upon such assumption, make
         available to the Companies on such date a corresponding amount. If and
         to the extent any Bank shall not have made its full amount available to
         the Administrative Agent in immediately available funds and the
         Administrative Agent in such circumstances has made available to the
         Companies such amount, that Bank shall on the Business Day following
         such Borrowing Date make such amount available to the Administrative
         Agent, together with interest at the Overnight Rate until three
         Business Days have expired, and then at the Base Rate, for each day
         during such period. A notice of the Administrative Agent submitted to
         any Bank with respect to amounts owing under this subsection (a) shall
         be conclusive, absent manifest error. If such amount is so made
         available, such payment to the Administrative Agent shall constitute
         such Bank's Loan on the date of Borrowing for all purposes of this
         Agreement. If such amount is not made available to the Administrative
         Agent on the Business Day following the Borrowing Date, the
         Administrative Agent will notify Toro of such failure to fund and, upon
         demand

                                       36


         by the Administrative Agent, the Companies shall pay such amount to the
         Administrative Agent for the Administrative Agent's account, together
         with interest thereon for each day elapsed since the date of such
         Borrowing, at a rate per annum equal to the interest rate applicable at
         the time to the Loans comprising such Borrowing.

                  (b)      The failure of any Bank to make any Loan on any
         Borrowing Date shall not relieve any other Bank of any obligation
         hereunder to make a Loan on such Borrowing Date, but no Bank shall be
         responsible for the failure of any other Bank to make the Loan to be
         made by such other Bank on any Borrowing Date.

                  (c)      If any Bank makes available to the Administrative
         Agent funds for any Loan to be made by such Bank as provided in the
         foregoing provisions of this Article II, and such funds are not made
         available to the Companies by the Administrative Agent because the
         conditions to the applicable Credit Extension set forth in Article V
         are not satisfied or waived in accordance with the terms hereof, the
         Administrative Agent shall return such funds (in like funds as received
         from such Bank) to such Bank, without interest.

                  (d)      Nothing herein shall be deemed to obligate any Bank
         to obtain the funds for any Loan in any particular place or manner or
         to constitute a representation by any Bank that it has obtained or will
         obtain the funds for any Loan in any particular place or manner.

         2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank (including pursuant to any
settlement entered into by the Administrative Agent or any Bank in its
discretion), such purchase shall to that extent be rescinded and each other Bank
shall repay to the purchasing Bank the purchase price paid therefor, together
with an amount equal to such paying Bank's ratable share (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered, without further interest thereon. The Companies agree that any Bank
so purchasing a participation from another Bank may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 12.9) with respect to such participation as
fully as if such Bank were the direct creditor of the Companies in the amount of
such participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments. Each Bank that purchases a participation
pursuant to this Section shall from and after such purchase have the right to
give all notices, requests, demands, directions and other communications under
this Agreement with respect to

                                       37


the portion of the Obligations purchased to the same extent as though the
purchasing Bank were the original owner of the Obligations purchased.

         2.15     Limitations on Borrowings. Notwithstanding anything to the
contrary in this Agreement, (a) no Loans shall be requested by or made to Tover
Overseas B.V. by any Bank until such time as all certificates and other
documents required by Sections 5.1(b) and 5.1(c)(ii) have been received by the
Administrative Agent, and (b) no Loans shall be requested by or made to Toro
Factoring Company N.V. by any Bank until such time as the certificate required
by Section 5.1(c)(ii) has been received by the Administrative Agent.

                                  ARTICLE III.

                              THE LETTERS OF CREDIT

         3.1      The Letter of Credit Subfacility.

                  (a)      On the terms and conditions set forth herein (i) the
         Issuing Bank agrees, (A) from time to time on any Business Day during
         the period from the Closing Date to the date which is seven Business
         Days immediately preceding the Revolving Termination Date to Issue
         Letters of Credit denominated in Dollars for the account of either Toro
         or Credit, and to amend or renew Letters of Credit previously Issued by
         it, in accordance with subsections 3.2(c) and 3.2(d), and (B) to honor
         drafts under the Letters of Credit; and (ii) the Banks severally agree
         to participate in Letters of Credit Issued for the account of either
         Toro or Credit; provided, that the Issuing Bank shall not Issue, and no
         Bank shall be obligated to participate in, any Letter of Credit if as
         of the date of Issuance of such Letter of Credit (the "Issuance Date")
         (1) the Effective Amount of all L/C Obligations plus the Effective
         Amount of all Loans plus the Effective Amount of all Swing Loans
         exceeds the combined Commitments, (2) the participation of any Bank in
         the Effective Amount of all L/C Obligations plus the Effective Amount
         of the Loans plus the Effective Amount of all Swing Loans of such Bank
         exceeds such Bank's Commitment, or (3) the Effective Amount of L/C
         Obligations exceeds the L/C Commitment. Within the foregoing limits,
         and subject to the other terms and conditions hereof, Toro or Credit's
         ability to obtain Letters of Credit shall be fully revolving, and,
         accordingly, Toro or Credit may, during the foregoing period, obtain
         Letters of Credit to replace Letters of Credit which have expired or
         which have been drawn upon and reimbursed.

                  (b)      The Issuing Bank shall not Issue any Letter of Credit
                  if:

                           (i)      any order, judgment or decree of any
                  Governmental Authority or arbitrator shall by its terms
                  purport to enjoin or restrain the Issuing Bank from Issuing
                  such Letter of Credit, or any Requirement of Law applicable to
                  the Issuing Bank or any request or directive (whether or not
                  having the force of law) from any Governmental Authority with
                  jurisdiction over the Issuing Bank shall prohibit, or request
                  that the Issuing Bank refrain from, the Issuance of letters of
                  credit generally or such Letter of Credit in particular or
                  shall impose upon the Issuing Bank with respect to such Letter
                  of Credit any restriction, reserve or

                                       38

                  capital requirement (for which the Issuing Bank is not
                  otherwise compensated hereunder) not in effect on the Closing
                  Date, or shall impose upon the Issuing Bank any unreimbursed
                  loss, cost or expense which was not applicable on the Closing
                  Date and which the Issuing Bank in good faith deems material
                  to it;

                           (ii)     the Issuing Bank has received written notice
                  from any Bank, the Administrative Agent or either Toro or
                  Credit, on or prior to the Business Day prior to the requested
                  date of Issuance of such Letter of Credit, that one or more of
                  the applicable conditions contained in Article V is not then
                  satisfied;

                           (iii)    the expiry date of any requested Letter of
                  Credit occurs after the Revolving Termination Date;

                           (iv)     any requested Letter of Credit does not
                  provide for drafts, or is not otherwise in form and substance
                  acceptable to the Issuing Bank, or the Issuance of a Letter of
                  Credit shall violate any applicable policies of the Issuing
                  Bank; or

                           (v)      such Letter of Credit is in a face amount
                  less than $1,000,000 or to be denominated in a currency other
                  than Dollars.

         3.2      Issuance, Amendment and Renewal of Letters of Credit.

                  (a)      Each Letter of Credit shall be Issued upon the
         irrevocable written request of Toro received by the Issuing Bank (with
         a copy sent by Toro to the Administrative Agent) at least three
         Business Days (or such shorter time as the Issuing Bank may agree in a
         particular instance in its sole discretion) prior to the proposed date
         of Issuance. Each such request for issuance of a Letter of Credit shall
         be by facsimile in the form of an L/C Application, and shall specify in
         form and detail satisfactory to the Issuing Bank: (i) the proposed date
         of Issuance of the Letter of Credit (which shall be a Business Day);
         (ii) the face amount of the Letter of Credit; (iii) the expiry date of
         the Letter of Credit; (iv) the name and address of the beneficiary
         thereof; (v) the documents to be presented by the beneficiary of the
         Letter of Credit in case of any drawing thereunder; (vi) the full text
         of any certificate to be presented by the beneficiary in case of any
         drawing thereunder; and (vii) such other matters as the Issuing Bank
         may require.

                  (b)      Prior to the Issuance of any Letter of Credit, the
         Issuing Bank will confirm with the Administrative Agent (by telephone
         or in writing) that the Administrative Agent has received a copy of the
         L/C Application or L/C Amendment Application from the applicable
         Company and, if not, the Issuing Bank will provide the Administrative
         Agent with a copy thereof. Unless the Issuing Bank has received notice
         on or before the Business Day immediately preceding the date the
         Issuing Bank is to Issue a requested Letter of Credit from the
         Administrative Agent (A) directing the Issuing Bank not to Issue such
         Letter of Credit because such Issuance is not then permitted under
         subsection 3.1 (a) as a result of the limitations set forth in clauses
         (1) through (3) thereof or subsection 3.1(b)(ii); or (B) that one or
         more conditions specified in Article V are not then satisfied; then,
         subject to the terms and conditions hereof, the Issuing Bank shall, on

                                       39


         the requested date, Issue a Letter of Credit for the account of the
         Company designated by Toro in accordance with the Issuing Bank's usual
         and customary business practices.

                  (c)      From time to time while a Letter of Credit is
         outstanding and prior to the Revolving Termination Date, the Issuing
         Bank will, upon the written request of Toro received by the Issuing
         Bank (with a copy sent by Toro to the Administrative Agent) at least
         three Business Days (or such shorter time as the Issuing Bank may agree
         in a particular instance in its sole discretion) prior to the proposed
         date of amendment, amend any Letter of Credit Issued by it. Each such
         request for amendment of a Letter of Credit shall be made by facsimile
         in the form of an L/C Amendment Application and shall specify in form
         and detail satisfactory to the Issuing Bank: (i) the Letter of Credit
         to be amended; (ii) the proposed date of amendment of the Letter of
         Credit (which shall be a Business Day); (iii) the nature of the
         proposed amendment; and (iv) such other matters as the Issuing Bank may
         require. The Issuing Bank shall be under no obligation to amend any
         Letter of Credit if: (A) the Issuing Bank would have no obligation at
         such time to Issue such Letter of Credit in its amended form under the
         terms of this Agreement; or (B) the beneficiary of any such Letter of
         Credit does not accept the proposed amendment to the Letter of Credit.
         The Administrative Agent will promptly notify the Banks of the Issuance
         of a Letter of Credit (or amendment thereto) pursuant to any L/C
         Application or L/C Amendment Application.

                  (d)      The Issuing Bank and the Banks agree that, while a
         Letter of Credit is outstanding and prior to the Revolving Termination
         Date, at the option of Toro and upon the written request of Toro
         received by the Issuing Bank (with a copy sent by Toro to the
         Administrative Agent) at least three Business Days (or such shorter
         time as the Issuing Bank may agree in a particular instance in its sole
         discretion) prior to the proposed date of notification of renewal, the
         Issuing Bank shall be entitled to authorize the automatic renewal of
         any Letter of Credit Issued by it. Each such request for renewal of a
         Letter of Credit shall be made by facsimile, confirmed immediately in
         an original writing, in the form of an L/C Amendment Application, and
         shall specify in form and detail satisfactory to the Issuing Bank: (i)
         the Letter of Credit to be renewed; (ii) the proposed date of
         notification of renewal of the Letter of Credit (which shall be a
         Business Day); (iii) the revised expiry date of the Letter of Credit;
         and (iv) such other matters as the Issuing Bank may require. The
         Issuing Bank shall be under no obligation to renew any Letter of Credit
         if: (A) the Issuing Bank would have no obligation at such time to Issue
         or amend such Letter of Credit in its renewed form under the terms of
         this Agreement; or (B) the beneficiary of any such Letter of Credit
         does not accept the proposed renewal of the Letter of Credit. If any
         outstanding Letter of Credit shall provide that it shall be
         automatically renewed unless the beneficiary thereof receives notice
         from the Issuing Bank that such Letter of Credit shall not be renewed,
         and if at the time of renewal the Issuing Bank would be entitled to
         authorize the automatic renewal of such Letter of Credit in accordance
         with this subsection 3.2(d) upon the request of Toro but the Issuing
         Bank shall not have received any L/C Amendment Application from Toro
         with respect to such renewal or other written direction by the
         Companies with respect thereto, the Issuing Bank shall nonetheless be
         permitted to allow such Letter of Credit to renew, and Toro and the
         Banks hereby authorize such renewal, and, accordingly, the Issuing Bank
         shall be

                                       40


         deemed to have received an L/C Amendment Application from Toro
         requesting such renewal.

                  (e)      The Issuing Bank may, at its election (or as required
         by the Administrative Agent at the direction of the Required Banks),
         deliver any notices of termination or other communications to any
         Letter of Credit beneficiary or transferee, and take any other action
         as necessary or appropriate, at any time and from time to time, in
         order to cause the expiry date of such Letter of Credit to be a date
         not later than the Revolving Termination Date.

                  (f)      This Agreement shall control in the event of any
         conflict with any L/C-Related Document (other than any Letter of
         Credit).

                  (g)      The Issuing Bank will also deliver to the
         Administrative Agent, concurrently or promptly following its delivery
         of a Letter of Credit, or amendment to or renewal of a Letter of
         Credit, to an advising bank or a beneficiary, a true and complete copy
         of each such Letter of Credit or amendment to or renewal of a Letter of
         Credit and the Administrative Agent shall promptly (but in no event
         less than quarterly) provide the Banks a summary of the Letters of
         Credit outstanding.

         3.3      Risk Participations, Drawings and Reimbursements.

                  (a)      Immediately upon the Issuance of each Letter of
         Credit, each Bank shall be deemed to, and hereby irrevocably and
         unconditionally agrees to, purchase from the Issuing Bank a
         participation in such Letter of Credit and each drawing thereunder in
         an amount equal to the product of (i) the Pro Rata Share of such Bank,
         times (ii) the maximum amount available to be drawn under such Letter
         of Credit and the amount of such drawing, respectively. For purposes of
         subsection 2.1(a), each Issuance of a Letter of Credit shall be deemed
         to utilize the Commitment of each Bank by an amount equal to the amount
         of such participation.

                  (b)      In the event of any request for a drawing under a
         Letter of Credit by the beneficiary or transferee thereof, the Issuing
         Bank will promptly notify Toro. The applicable Company shall reimburse
         the Issuing Bank prior to 12:00 noon (Chicago time), on each date that
         any amount is paid by the Issuing Bank under any Letter of Credit (each
         such date, an "Honor Date"), in an amount equal to the amount so paid
         by the Issuing Bank. In the event the applicable Company fails to
         reimburse the Issuing Bank for the full amount of any drawing under any
         Letter of Credit by 12:00 noon (Chicago time) on the Honor Date, the
         Issuing Bank will promptly notify the Administrative Agent and the
         Administrative Agent will promptly notify each Bank thereof, and the
         applicable Company shall be deemed to have requested that Base Rate
         Loans in the amount of the shortfall be made by the Banks to be
         disbursed on the Honor Date under such Letter of Credit, subject to the
         amount of the unutilized portion of the combined Commitments and
         subject to the conditions set forth in Section 5.2. Any notice given by
         the Issuing Bank or the Administrative Agent pursuant to this
         subsection 3.3(b) may be oral if immediately confirmed in writing
         (including by facsimile); provided

                                       41


         that the lack of such an immediate confirmation shall not affect the
         conclusiveness or binding effect of such notice.

                  (c)      Each Bank shall upon any notice pursuant to
         subsection 3.3(b) make available to the Administrative Agent for the
         account of the relevant Issuing Bank an amount in Dollars and in
         immediately available funds equal to its Pro Rata Share of the amount
         of the drawing, whereupon the participating Banks shall (subject to
         subsection 3.3(d)) each be deemed to have made a Base Rate Loan to the
         applicable Company in that amount. If any Bank so notified fails to
         make available to the Administrative Agent for the account of the
         Issuing Bank the amount of such Bank's Pro Rata Share of the amount of
         the drawing by no later than 2:00 p.m. (Chicago time) on the Honor
         Date, then interest shall accrue on such Bank's obligation to make such
         payment, from the Honor Date to the date such Bank makes such payment,
         at a rate per annum equal to the Overnight Rate in effect from time to
         time during such period until three Business Days have expired, and
         then at the Base Rate. The Administrative Agent will promptly give
         notice of the occurrence of the Honor Date, but failure of the
         Administrative Agent to give any such notice on the Honor Date or in
         sufficient time to enable any Bank to effect such payment on such date
         shall not relieve such Bank from its obligations under this Section
         3.3.

                  (d)      With respect to any unreimbursed drawing that is not
         paid with the proceeds of Base Rate Loans to the applicable Company in
         whole or in part, because of the applicable Company's failure to
         satisfy the conditions set forth in Section 5.2 or for any other
         reason, the applicable Company shall be deemed to have incurred from
         the Issuing Bank an L/C Borrowing in the amount of such drawing, which
         L/C Borrowing shall be due and payable on demand (together with
         interest) and shall bear interest at a rate per annum equal to the Base
         Rate plus 2% per annum, and each Bank's payment to the Issuing Bank
         pursuant to subsection 3.3(c) shall be deemed payment in respect of its
         participation in such L/C Borrowing and shall constitute an L/C Advance
         from such Bank in satisfaction of its participation obligation under
         this Section 3.3.

                  (e)      Each Bank's obligation in accordance with this
         Agreement to make the Loans or L/C Advances, as contemplated by this
         Section 3.3, as a result of a drawing under a Letter of Credit, shall
         be absolute and unconditional and without recourse to the Issuing Bank
         and shall not be affected by any circumstance, including (i) any
         set-off, counterclaim, recoupment, defense or other right which such
         Bank may have against the Issuing Bank, the applicable Company or any
         other Person for any reason whatsoever; (ii) the occurrence or
         continuance of a Default, an Event of Default or a Material Adverse
         Effect; or (iii) any other circumstance, happening or event whatsoever,
         whether or not similar to any of the foregoing; provided, however, that
         each Bank's obligation to make Loans under this Section 3.3 is subject
         to the conditions set forth in Section 5.2.

         3.4      Repayment of Participations.

                  (a)      Upon (and only upon) receipt by the Administrative
         Agent or the Issuing Bank for the account of the Issuing Bank of
         immediately available funds from the applicable Company (i) in
         reimbursement of any payment made by the Issuing Bank

                                       42


         under the Letter of Credit with respect to which any Bank has paid the
         Administrative Agent for the account of the Issuing Bank for such
         Bank's participation in the Letter of Credit pursuant to Section 3.3 or
         (ii) in payment of interest thereon, the Administrative Agent will pay
         to each Bank, in the same funds as those received by the Administrative
         Agent for the account of the Issuing Bank, the amount of such Bank's
         Pro Rata Share of such funds, and the Issuing Bank shall receive the
         amount of the Pro Rata Share of such funds of any Bank that did not so
         pay the Administrative Agent for the account of the Issuing Bank as
         required pursuant to Section 3.3.

                  (b)      If the Administrative Agent or the Issuing Bank is
         required at any time to return to the applicable Company, or to a
         trustee, receiver, liquidator, custodian, or any official in any
         Insolvency Proceeding, any portion of the payments made by the
         applicable Company to the Administrative Agent for the account of the
         Issuing Bank, and the Administrative Agent has so paid each Bank its
         Pro Rata Share thereof pursuant to subsection 3.4(a), in reimbursement
         of a payment made under the Letter of Credit or interest or fee
         thereon, each Bank shall, on demand of the Administrative Agent,
         forthwith return to the Administrative Agent or the Issuing Bank the
         amount of its Pro Rata Share of any amounts so returned by the
         Administrative Agent or the Issuing Bank plus interest thereon from the
         date such demand is made to the date such amounts are returned by such
         Bank to the Administrative Agent or the Issuing Bank, at a rate per
         annum equal to the Overnight Rate in effect from time to time during
         such period until three Business Days have expired, and then at the
         Base Rate.

         3.5      Role of the Issuing Bank.

                  (a)      Each Bank, Toro and Credit agree that, in paying any
         drawing under a Letter of Credit, the Issuing Bank shall not have any
         responsibility to obtain any document (other than any sight draft and
         certificates expressly required by the Letter of Credit) or to
         ascertain or inquire as to the validity or accuracy of any such
         document or the authority of the Person executing or delivering any
         such document.

                  (b)      No Administrative Agent-Related Person nor any of the
         respective correspondents, participants or assignees of the Issuing
         Bank shall be liable to any Bank for: (i) any action taken or omitted
         in connection herewith at the request or with the approval of the
         Banks; (ii) any action taken or omitted in the absence of gross
         negligence or willful misconduct; or (iii) the due execution,
         effectiveness, validity or enforceability of any L /C-Related Document.

                  (c)      Toro and Credit hereby assume all risks of the acts
         or omissions of any beneficiary or transferee with respect to its use
         of any Letter of Credit; provided, however, that this assumption is not
         intended to, and shall not, preclude Toro or Credit from pursuing such
         rights and remedies as it may have against the beneficiary or
         transferee at law or under any other agreement. No Administrative
         Agent-Related Person, nor any of the respective correspondents,
         participants or assignees of the Issuing Bank, shall be liable or
         responsible for any of the matters described in clauses (i) through
         (vii) of Section 3.6; provided, however, anything in such clauses to
         the contrary notwithstanding, that the applicable Company may have a
         claim against the Issuing Bank,

                                       43


         and the Issuing Bank may be liable to the applicable Company, to the
         extent, but only to the extent, of any direct, as opposed to
         consequential, indirect, special or punitive damages suffered by the
         applicable Company which the applicable Company proves were caused by
         the Issuing Bank's willful misconduct or gross negligence or the
         Issuing Bank's willful failure to pay under any Letter of Credit after
         the presentation to it by the beneficiary of a sight draft and
         certificate(s) strictly complying with the terms and conditions of a
         Letter of Credit. In furtherance and not in limitation of the
         foregoing: (i) the Issuing Bank may accept documents that appear on
         their face to be in order, without responsibility for further
         investigation, regardless of any notice or information to the contrary;
         and (ii) the Issuing Bank shall not be responsible for the validity or
         sufficiency of any instrument transferring or assigning or purporting
         to transfer or assign a Letter of Credit or the rights or benefits
         thereunder or proceeds thereof, in whole or in part, which may prove to
         be invalid or ineffective for any reason.

         3.6      Obligations Absolute. The obligations of Toro and Credit under
this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:

                           (i)      any lack of validity or enforceability of
                  this Agreement or any L/C-Related Document;

                           (ii)     any change in the time, manner or place of
                  payment of, or in any other term of, all or any of the
                  obligations of the applicable Company in respect of any Letter
                  of Credit or any other amendment or waiver of or any consent
                  to departure from all or any of the L/C-Related Documents;

                           (iii)    the existence of any claim, set-off, defense
                  or other right that the applicable Company may have at any
                  time against any beneficiary or any transferee of any Letter
                  of Credit (or any Person for whom any such beneficiary or any
                  such transferee may be acting), the Issuing Bank or any other
                  Person, whether in connection with this Agreement, the
                  transactions contemplated hereby or by the L/C-Related
                  Documents or any unrelated transaction;

                           (iv)     any draft, demand, certificate or other
                  document presented under any Letter of Credit proving to be
                  forged, fraudulent, invalid or insufficient in any respect or
                  any statement therein being untrue or inaccurate in any
                  respect; or any loss or delay in the transmission or otherwise
                  of any document required in order to make a drawing under any
                  Letter of Credit;

                           (v)      any payment by the Issuing Bank under any
                  Letter of Credit against presentation of a draft or
                  certificate that does not strictly comply with the terms of
                  any Letter of Credit; or any payment made by the Issuing Bank
                  under any Letter of Credit to any Person purporting to be a
                  trustee in bankruptcy, debtor-in-possession, assignee for the
                  benefit of creditors, liquidator, receiver or

                                       44


                  other representative of or successor to any beneficiary or any
                  transferee of any Letter of Credit, including any arising in
                  connection with any Insolvency Proceeding; provided, however,
                  neither Toro nor Credit shall be obligated to reimburse the
                  Issuing Bank for any wrongful payment or disbursements made
                  under any Letter of Credit as a result of acts or omissions
                  constituting gross negligence or willful misconduct on the
                  part of the Issuing Bank;

                           (vi)     any exchange, release or non-perfection of
                  any collateral, or any release or amendment or waiver of or
                  consent to departure from any other guarantee, for all or any
                  of the obligations of Toro or Credit in respect of any Letter
                  of Credit; or

                           (vii)    any other circumstance or happening
                  whatsoever, whether or not similar to any of the foregoing,
                  including any other circumstance that might otherwise
                  constitute a defense available to, or a discharge of, Toro,
                  Credit or a guarantor.

         3.7      Letter of Credit Fees.

                  (a)      On the last Business Day of each calendar quarter,
         Toro and Credit shall pay to the Administrative Agent for the account
         of each of the Banks a letter of credit fee equal to a per annum rate
         equal to the Applicable Margin at such time of the stated amount of all
         Letters of Credit outstanding on each day during such calendar quarter
         as calculated by the Administrative Agent. Such letter of credit fees
         shall be due and payable quarterly in arrears on the last Business Day
         of each calendar quarter during which Letters of Credit are
         outstanding, commencing on the first such quarterly date to occur after
         the Closing Date, through the Revolving Termination Date, with the
         final payment to be made on the Revolving Termination Date.

                  (b)      Toro and Credit shall pay to the Issuing Bank a
         fronting fee for each Letter of Credit Issued by the Issuing Bank equal
         to 0.125% of the amount of such Letter of Credit. Such Letter of Credit
         fronting fee shall be due and payable on the date of Issuance of each
         Letter of Credit.

                  (c)      Toro and Credit shall pay to the Issuing Bank from
         time to time on demand the normal issuance, presentation, amendment and
         other processing fees, and other standard costs and charges, of the
         Issuing Bank relating to letters of credit as from time to time in
         effect.

         3.8      Applicability of ISP98. Unless otherwise expressly agreed by
the Issuing Bank and Toro when a Letter of Credit is Issued, the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit.

                                       45


                                  ARTICLE IV.

                     TAXES, YIELD PROTECTION AND ILLEGALITY

         4.1      Taxes.

                  (a)      Any and all payments by the Companies to each Bank,
         or the Administrative Agent under this Agreement and any other Loan
         Document shall be made free and clear of, and without deduction or
         withholding for, any Taxes. In addition, the Companies shall pay all
         Other Taxes.

                  (b)      If the Companies shall be required by law to deduct
         or withhold any Taxes, Other Taxes or Further Taxes from or in respect
         of any sum payable hereunder to any Bank or the Administrative Agent,
         then:

                           (i)      the sum payable shall be increased as
                  necessary so that, after making all required deductions and
                  withholdings (including deductions and withholdings applicable
                  to additional sums payable under this Section), such Bank or
                  the Administrative Agent, as the case may be, receives and
                  retains an amount equal to the sum it would have received and
                  retained had no such deductions or withholdings been made;

                           (ii)     the Companies shall make such deductions and
                  withholdings;

                           (iii)    the Companies shall pay the full amount
                  deducted or withheld to the relevant taxing authority or other
                  authority in accordance with applicable law; and

                           (iv)     the Companies shall also pay to each Bank or
                  the Administrative Agent for the account of such Bank, at the
                  time interest is paid, Further Taxes in the amount that the
                  respective Bank specifies as necessary to preserve the
                  after-tax yield the Bank would have received if such Taxes,
                  Other Taxes or Further Taxes had not been imposed.

                  (c)      The Companies agree to indemnify and hold harmless
         each Bank and the Administrative Agent for the full amount of (i)
         Taxes, (ii) Other Taxes, and (iii) Further Taxes in the amount that the
         respective Bank specifies as necessary to preserve the after-tax yield
         the Bank would have received if such Taxes, Other Taxes or Further
         Taxes had not been imposed, and any liability (including penalties,
         interest, additions to tax and expenses) arising therefrom or with
         respect thereto, whether or not such Taxes, Other Taxes or Further
         Taxes were correctly or legally asserted. Payment under this
         indemnification shall be made within 30 days after the date the Bank or
         the Administrative Agent makes written demand therefor.

                  (d)      Within 30 days after the date of any payment by the
         Companies or any of them of Taxes, Other Taxes or Further Taxes, the
         Companies shall furnish to each Bank or the Administrative Agent the
         original or a certified copy of a receipt evidencing

                                       46


         payment thereof, or other evidence of payment satisfactory to such Bank
         or the Administrative Agent.

                  (e)      If the Companies, or any of them, are required to pay
         any amount to any Bank or the Administrative Agent pursuant to
         subsection (b) or (c) of this Section, then such Bank shall use
         reasonable efforts (consistent with legal and regulatory restrictions)
         to change the jurisdiction of its Lending Office so as to eliminate any
         such additional payment by the Companies which may thereafter accrue,
         if such change in the sole judgment of such Bank is not otherwise
         disadvantageous to such Bank.

         4.2      Illegality.

                  (a)      If any Bank determines that the introduction of any
         Requirement of Law or any change in any Requirement of Law or in the
         interpretation or administration of any Requirement of Law, has made it
         unlawful, or that any central bank or other Governmental Authority has
         asserted that it is unlawful, for any Bank or its applicable Lending
         Office, to make Offshore Rate Loans, then, on notice thereof by the
         Bank to Toro through the Administrative Agent, any obligation of that
         Bank to make Offshore Rate Loans shall be suspended until the Bank
         notifies the Administrative Agent and Toro that the circumstances
         giving rise to such determination no longer exist.

                  (b)      If a Bank determines that it is unlawful for such
         Bank to maintain any Offshore Rate Loan, the Companies shall, upon
         Toro's receipt of notice of such fact and demand from such Bank (with a
         copy to the Administrative Agent), prepay in full such Offshore Rate
         Loans of that Bank then outstanding, together with interest accrued
         thereon and amounts required under Section 4.4, either on the last day
         of the Interest Period thereof, if the Bank may lawfully continue to
         maintain such Offshore Rate Loans to such day, or immediately, if the
         Bank may not lawfully continue to maintain such Offshore Rate Loan. If
         the Companies are required to so prepay any Offshore Rate Loan, then
         concurrently with such prepayment, the Companies shall borrow from the
         affected Bank, in the amount of such repayment, a Base Rate Loan.

                  (c)      If the obligation of any Bank to make or maintain
         Offshore Rate Loans has been so terminated or suspended, the Companies
         may elect, by Toro giving notice to such Bank through the
         Administrative Agent, that all Loans which would otherwise be made by
         the Bank as Offshore Rate Loans shall be instead Base Rate Loans.

                  (d)      Before giving any notice to the Administrative Agent
         under this Section, the affected Bank shall designate a different
         Lending Office with respect to its Offshore Rate Loans if such
         designation will avoid the need for giving such notice or making such
         demand and will not, in the judgment of the Bank, be illegal or
         otherwise disadvantageous to the Bank.

         4.3      Increased Costs and Reduction of Return.

                  (a)      If any Bank determines that, due to either (i) the
         introduction of or any change in or in the interpretation of any law or
         regulation or (ii) the compliance by that Bank with any guideline or
         request from any central bank or other Governmental

                                       47


         Authority (whether or not having the force of law), there shall be any
         increase in the cost to such Bank of agreeing to make or making,
         funding or maintaining any Offshore Rate Loans or participating in
         Letters of Credit, or in the case of the Issuing Bank, any increase in
         the cost to the Issuing Bank of agreeing to Issue, issuing or
         maintaining any Letter of Credit or of agreeing to make or making,
         funding or maintaining any unpaid drawing under any Letter of Credit,
         then the Companies shall be liable for, and shall from time to time,
         upon demand (with a copy of such demand to be sent to the
         Administrative Agent), pay to the Administrative Agent for the account
         of such Bank, additional amounts as are sufficient to compensate such
         Bank for such increased costs.

                  (b)      If any Bank shall have determined that (i) the
         introduction of any Capital Adequacy Regulation, (ii) any change in any
         Capital Adequacy Regulation, (iii) any change in the interpretation or
         administration of any Capital Adequacy Regulation by any central bank
         or other Governmental Authority charged with the interpretation or
         administration thereof, or (iv) compliance by the Bank (or its Lending
         Office) or any corporation controlling the Bank with any Capital
         Adequacy Regulation, affects or would affect the amount of capital
         required or expected to be maintained by the Bank or any corporation
         controlling the Bank and (taking into consideration such Bank's or such
         corporation's policies with respect to capital adequacy and such Bank's
         desired return on capital) and shall have determined that the amount of
         such capital is increased as a consequence of its Commitment, loans,
         credits or obligations under this Agreement, then, upon demand of such
         Bank or such corporation to Toro through the Administrative Agent, the
         Companies shall pay to the Bank, from time to time as reasonably
         determined by the Bank, additional amounts sufficient to compensate the
         Bank or such corporation for such increase. Each Bank agrees to take
         reasonable steps to reduce the amount of such increase provided no Bank
         shall be required to take any such step, if in its sole opinion, such
         Bank would suffer any economic, legal or regulatory disadvantage in
         connection therewith.

         4.4      Funding Losses. (a) Upon demand of any Bank (with a copy to
the Administrative Agent) from time to time, the Companies shall reimburse each
Bank and hold each Bank harmless from any loss or expense which the Bank may
sustain or incur as a consequence of:

                  (a)      the failure of the Companies to make on a timely
         basis any payment of principal of any Offshore Rate Loan;

                  (b)      the failure of the Companies to borrow, continue or
         convert a Loan after Toro has given (or is deemed to have given) a
         Notice of Borrowing or a Notice of Conversion/Continuation;

                  (c)      the failure of the Companies to make any prepayment
         of any Loan in accordance with any notice delivered under Section 2.7;

                  (d)      the prepayment (including pursuant to either Section
         2.7 or 2.8) or other payment (including after acceleration thereof) of
         any Loan other than a Base Rate Loan on a day that is not the last day
         of the relevant Interest Period; or

                                       48


                  (e)      the automatic conversion under Section 2.4 of any
         Offshore Rate Loan to a Base Rate Loan on a day that is not the last
         day of the relevant Interest Period;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain its Offshore Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained. Each Bank agrees to
take reasonable steps to reduce the amount of such loss or expense, provided no
Bank shall be required to take any such step, if in its sole opinion, such Bank
would suffer any economic, legal or regulatory disadvantage in connection
therewith. For purposes of calculating amounts payable by the Companies to the
Banks under this Section 4.4, each Bank shall be deemed to have funded each
Offshore Rate Loan made by it at the Interbank Offered Rate used in determining
the Offshore Rate for such Loan by a matching deposit or other borrowing in the
applicable offshore interbank market for such currency for a comparable amount
and for a comparable period, whether or not such Offshore Rate Loan was in fact
so funded.

         4.5      Inability to Determine Rates. If the Administrative Agent
determines that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or that the Offshore Rate for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan, the
Administrative Agent will promptly so notify Toro and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans, as the case may
be, hereunder shall be suspended until the Administrative Agent revokes such
notice in writing. Upon receipt of such notice, Toro may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Companies do not revoke such Notice, the Banks shall make, convert or continue
the Loans, as proposed by the Companies, in the amount specified in the
applicable notice submitted by the Companies, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans.

         4.6      Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article IV shall deliver to Toro (with a copy to the
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable, and the basis for the determination of such amount, to the Bank
hereunder and such certificate shall be conclusive and binding on the Companies
in the absence of manifest error.

         4.7      Substitution of Banks. At any time any Bank makes a claim for
compensation under Section 4.3 (each, an "Affected Bank"), the Companies may
replace such Affected Bank (and any Affiliate of such Bank which is a party
hereto) as a party to this Agreement with one or more other Eligible Assignees
and upon notice of such replacement from Toro and the willingness of one or more
Eligible Assignees to become a Bank hereunder, such Affected Bank shall assign
pursuant to Section 12.7, and without recourse or warranty, its Commitment, its
Loans, its Notes, its participation in Letters of Credit and Swing Loans, and
all of its other rights and obligations hereunder to such Eligible Assignees for
a purchase price equal to the sum of the principal amount of the Loans so
assigned, all accrued and unpaid interest thereon, its ratable share of all
accrued and unpaid facility fees and Letter of Credit fees, any amounts payable
under Section 4.4 as a result of such Bank receiving payment of any Offshore
Rate Loan prior to the

                                       49


end of an Interest Period therefor and all other obligations owed to such
Affected Bank hereunder.

         4.8      Survival. The agreements and obligations of the Companies in
this Article IV shall survive the payment of all Obligations.

                                   ARTICLE V.

                              CONDITIONS PRECEDENT

         5.1      Conditions of Effectiveness. This Agreement shall be effective
as of the date hereof upon its execution and delivery by the Administrative
Agent, each Bank and each Company and the obligation of each Bank to make its
initial Loan hereunder to each Company, the obligation of the Issuing Bank to
Issue the initial Letter of Credit for the account of Toro or Credit hereunder,
and the obligation of the Swing Line Bank to make Swing Loans to Toro or Credit
hereunder is subject to the condition that the Administrative Agent shall have
received from such Company all of the following, in form and substance
satisfactory to the Administrative Agent and each Bank, and in sufficient copies
for each Bank:

                  (a)      Credit Agreement and Notes. This Agreement and the
         Notes executed by such Company;

                  (b)      Resolutions; Incumbency.

                           (i)      For such Company, copies of the resolutions
                  of the board of directors of such Company authorizing the
                  transactions contemplated hereby, certified as of the Closing
                  Date by the Secretary or an Assistant Secretary of such
                  Company; and

                           (ii)     For such Company, a certificate of the
                  Secretary or Assistant Secretary of such Company certifying
                  the names and true signatures of the officers of such Company
                  authorized to execute, deliver and perform, as applicable,
                  this Agreement, and all other Loan Documents to be delivered
                  by it hereunder;

                  provided that, subject to the limitations of Section 2.15,
                  such resolutions and certificates with respect to Tover
                  Overseas B.V. may be delivered after the Closing Date;

                  (c)      Organizational Documents; Good Standing. For such
         Company, each of the following documents:

                           (i)      the Organizational Documents of such Company
                  as in effect on the Closing Date, certified by the Secretary
                  or Assistant Secretary of such Company; and

                                       50


                           (ii)     a good standing certificate for such Company
                  from the Secretary of the State (or similar, applicable
                  Governmental Authority) of its jurisdiction of incorporation
                  and its principal place of business, provided that, subject to
                  the limitations of Section 2.15, such certificates with
                  respect to Tover Overseas B.V. and Toro Factoring Company N.V.
                  may be delivered after the Closing Date.

                  (d)      Legal Opinions. An opinion of Oppenheimer, Wolff &
         Donnelly LLP, counsel to the Companies and addressed to the
         Administrative Agent and the Banks, in form and substance satisfactory
         to the Banks.

                  (e)      Payment of Fees and Expenses. Evidence of payment by
         the Companies to the Administrative Agent for its benefit and the
         benefit of the Banks of all accrued and unpaid fees, costs and expenses
         to the extent then due and payable on the Closing Date, including any
         such costs, fees and expenses arising under or referenced in Sections
         2.10 and 12.4;

                  (f)      Certificate. A certificate signed by a Responsible
         Officer, dated as of the Closing Date, stating that:

                           (i)      the representations and warranties contained
                  in Article VI are true and correct on and as of such date, as
                  though made on and as of such date;

                           (ii)     no Default or Event of Default exists;

                           (iii)    there does not exist any pending or
                  threatened action, suit, investigation or proceeding in any
                  court or before any arbitrator or Governmental Authority that
                  purports (A) to have a Material Adverse Effect on any of the
                  Companies or their Subsidiaries, or (B) to affect any
                  transaction contemplated under this Agreement or any Loan
                  Document or the ability of any Company to perform its
                  respective obligations under this Agreement or any Loan
                  Document; and

                           (iv)     there has occurred since October 31, 2001,
                  no 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;

                  (g)      Financial Statements. Receipt and satisfactory review
         by the Administrative Agent of the consolidated financial statements of
         Toro and its Subsidiaries for the fiscal years ended 1999, 2000, and
         2001, including balance sheets, income and cash flow statements audited
         by independent public accountants of recognized national standing
         prepared in conformity with GAAP, and such other financial information
         as the Administrative Agent may request;

                                       51


                  (h)      Confirmation of Ratings. A certificate signed by the
         treasurer of Toro confirming Moody's and S&P's current Debt Rating;

                  (i)      Execution of 364-Day Credit Agreement. The 364-Day
         Credit Agreement has been executed and delivered by all parties thereto
         and the conditions set forth in Sections 5.1 and 5.2 thereof as of the
         Closing Date have been satisfied or waived in accordance with its
         terms;

                  (j)      Compliance Certificate. A Compliance Certificate
         signed by a Responsible Officer dated as of the Closing Date
         demonstrating compliance with the financial covenants contained in
         Article VIII as of the end of the fiscal quarter of Toro most recently
         ended more than 50 days prior to the Closing Date;

                  (k)      Termination of Existing Facilities. Evidence of the
         termination of the Existing Facilities and repayment and satisfaction
         in full of all indebtedness under the Existing Facilities; and

                  (l)      Other Documents. Such other approvals, opinions,
         documents or materials as the Administrative Agent or any Bank may
         reasonably request.

         5.2      Conditions to All Loans, Swing Loans and Letter of Credit
Issuances. Except as otherwise provided in Section 2.5, the obligation of each
Bank and the Administrative Agent to make any Loan to be made by it, the
obligation of the Issuing Bank to Issue any Letter of Credit hereunder, and the
obligation of the Swing Line Bank to make Swing Loans hereunder is subject to
the satisfaction of the following conditions precedent on the Borrowing Date or
Issuance Date:

                  (a)      Notice of Borrowing or Application. In the case of
         any Loan, the Administrative Agent shall have received a Notice of
         Borrowing, in the case of any Swing Loan, the Swing Line Bank and the
         Administrative Agent shall have received a Notice of Borrowing of Swing
         Loan or in the case of any Letter of Credit, the Issuing Bank and the
         Administrative Agent shall have received an L/C Application or L/C
         Amendment Application;

                  (b)      Continuation of Representations and Warranties. The
         representations and warranties in Article VI shall be true and correct
         on and as of such Borrowing Date or Issuance Date with the same effect
         as if made on and as of such disbursement date or Issuance Date (except
         to the extent such representations and warranties expressly refer to an
         earlier date, in which case they shall be true and correct as of such
         earlier date);

                  (c)      No Existing Default. No Default or Event of Default
         shall exist or shall result from such Loan or Issuance; and

                  (d)      Other Documents. The Administrative Agent shall have
         received, in form and substance satisfactory to it, such other
         assurances, certificates, documents or consents related to the
         foregoing as the Administrative Agent or the Required Banks reasonably
         may require.

                                       52


Each Notice of Borrowing, L/C Application and L/C Amendment Application
submitted by Toro on behalf of the Companies hereunder shall constitute a
representation and warranty by the Companies hereunder, as of the date of each
such notice or request and as of each Borrowing Date or Issuance Date as
applicable, that the conditions in this Section 5.2 are satisfied.

                                  ARTICLE VI.

                         REPRESENTATIONS AND WARRANTIES

         The Companies represent and warrant to the Administrative Agent and
         each Bank that:

         6.1      Corporate Existence and Power. Each Company and each of its
         Subsidiaries:

                  (a)      is a corporation duly organized, validly existing and
         in good standing under the laws of the jurisdiction of its
         incorporation;

                  (b)      has the power and authority and all governmental
         licenses, authorizations, consents and approvals to own its assets,
         carry on its business and to execute, deliver, and perform its
         obligations under the Loan Documents;

                  (c)      is duly qualified as a foreign corporation and is
         licensed and in good standing under the laws of each jurisdiction where
         its ownership, lease or operation of property or the conduct of its
         business requires such qualification or license; and

                  (d)      is in compliance with all Requirements of Law;

except, in each case referred to in clause (b), clause (c) or clause (d), to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

         6.2      Corporate Authorization; No Contravention. The execution,
delivery and performance by each Company of this Agreement and each other Loan
Document to which such Company is party, have been duly authorized by all
necessary corporate action, and do not and will not:

                  (a)      contravene the terms of any of such Company's
         Organizational Documents;

                  (b)      conflict with or result in any breach or
         contravention of, or the creation of any Lien under, any document
         evidencing any Contractual Obligation to which such Company is a party
         or any order, injunction, writ or decree of any Governmental Authority
         to which such Company or its property is subject; or

                  (c)      violate any Requirement of Law.

         6.3      Governmental or Third-Party Authorization. No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance

                                       53


by, or enforcement against, one or more of the Companies or any of their
Subsidiaries or the Agreement or any other Loan Document.

         6.4      Binding Effect. This Agreement and each other Loan Document to
which the Companies are a party constitute the legal, valid and binding
obligations of the Companies enforceable against the Companies in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.

         6.5      Litigation. Except as specifically disclosed in Schedule 6.5,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Companies, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against any of the
Companies, or their Subsidiaries or any of their respective properties which:

                  (a)      purport to affect or pertain to this Agreement or any
         other Loan Document, or any of the transactions contemplated hereby or
         thereby; or

                  (b)      if determined adversely to one or more of the
         Companies or any of their Subsidiaries, would reasonably be expected to
         have a Material Adverse Effect. No injunction, writ, temporary
         restraining order or any order of any nature has been issued by any
         court or other Governmental Authority purporting to enjoin or restrain
         the execution, delivery or performance of this Agreement or any other
         Loan Document, or directing that the transactions provided for herein
         or therein not be consummated as herein or therein provided.

         6.6      No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Companies. As of the Closing
Date, none of the Companies or any of their Subsidiaries is in default under or
with respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under subsection 9.1(e).

         6.7      ERISA Compliance. Except as specifically disclosed in Schedule
6.7:

                  (a)      Each Plan is in compliance in all material respects
         with the applicable provisions of ERISA, the Code and other federal or
         state law. Each Plan which is intended to qualify under Section 401(a)
         of the Code has received a favorable determination letter from the IRS
         or an application for such a letter is currently being processed by the
         IRS with respect thereto and to the best knowledge of the Companies,
         nothing has occurred which would prevent, or cause the loss of, such
         qualification. Each Company and each ERISA Affiliate has made all
         required contributions to any Plan subject to Section 412 of the Code,
         and no application for a funding waiver or an extension of any
         amortization period pursuant to Section 412 of the Code has been made
         with respect to any Plan.

                  (b)      There are no pending or, to the best knowledge of any
         of the Companies, threatened claims, actions or lawsuits, or action by
         any Governmental Authority, with

                                       54

         respect to any Plan which has resulted or could reasonably be expected
         to result in a Material Adverse Effect. There has been no prohibited
         transaction or violation of the fiduciary responsibility rules with
         respect to any Plan which has resulted or could reasonably be expected
         to result in a Material Adverse Effect.

                  (c)      (i) No ERISA Event has occurred or is reasonably
         expected to occur; (ii) no Pension Plan has any Unfunded Pension
         Liability; (iii) none of the Companies nor any ERISA Affiliate has
         incurred, or reasonably expects to incur, any liability under Title IV
         of ERISA with respect to any Pension Plan (other than premiums due and
         not delinquent under Section 4007 of ERISA); (iv) none of the Companies
         nor any ERISA Affiliate has incurred, or reasonably expects to incur,
         any liability (and no event has occurred which, with the giving of
         notice under Section 4219 of ERISA, would result in such liability)
         under Section 4201 or 4243 of ERISA with respect to a Multiemployer
         Plan; and (v) none of the Companies nor any ERISA Affiliate has engaged
         in a transaction that could be subject to Section 4069 or 4212(c) of
         ERISA.

         6.8      Taxes. Toro and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against any of the
Companies or any Subsidiary that would, if made, have a Material Adverse Effect.

         6.9      Financial Condition.

                  (a)      The audited consolidated financial statements of Toro
         and its Subsidiaries dated October 31, 2001 (including the footnotes
         thereto), and the related consolidated statements of income or
         operations, shareholders' equity and cash flows for the fiscal year
         ended on that date:

                           (i)      were prepared in accordance with GAAP
                  consistently applied throughout the period covered thereby,
                  except as otherwise expressly noted therein;

                           (ii)     fairly present the financial condition of
                  Toro and its Subsidiaries as of the date thereof and results
                  of operations for the period covered thereby; and

                           (iii)    except as specifically disclosed in Schedule
                  6.9 or Schedule 6.14, reflect all material indebtedness and
                  other liabilities, direct or contingent, of Toro and its
                  consolidated Subsidiaries as of the date thereof, including
                  liabilities for taxes, material commitments and Contingent
                  Obligations where (i) the possible liability to any Company
                  exceeds $10,000,000 for any one of such obligations or
                  liabilities and (ii) the possible liability to any or all of
                  the Companies exceeds $20,000,000 in the aggregate for one or
                  more of such obligations or liabilities.

                  (b)      Since October 31, 2001, there has been no Material
         Adverse Effect.

                                       55


         6.10     Environmental Matters. The Companies conduct in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on their respective business, operations and
properties, and as a result thereof the Companies have reasonably concluded
that, except as specifically disclosed in Schedule 6.10, such Environmental Laws
and Environmental Claims could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

         6.11     Regulated Entities. None of the Companies, any Person
controlling the Companies, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. None of the Companies is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.

         6.12     Copyrights, Patents, Trademarks and Licenses, etc. Each of the
Companies and their Subsidiaries own or are licensed or otherwise have the right
to use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary in the best business judgment of the Companies for the operation of
their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of the Companies, as of the date hereof, no slogan
or other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Companies or
any Subsidiary infringes upon any rights held by any other Person and no claim
or litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Companies,
proposed, which, in any case, could reasonably be expected to have a Material
Adverse Effect.

         6.13     Subsidiaries. As of the Closing Date, the Companies have no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.13 hereto and have no Joint Ventures or other equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of
Schedule 6.13.

         6.14     Insurance. Except as specifically disclosed in Schedule 6.14,
the properties of the Companies and their Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of Toro, in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Companies or such Subsidiaries operates.

         6.15     Full Disclosure. None of the representations or warranties
made by the Companies or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Companies or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Companies to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.

                                       56


                                  ARTICLE VII.

                              AFFIRMATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan,
Swing Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter
of Credit shall remain outstanding, unless the Required Banks waive compliance
in writing:

         7.1      Financial Statements. Toro shall deliver to each of the Banks
and the Administrative Agent, in form and detail satisfactory to the
Administrative Agent and the Required Banks:

                  (a)      as soon as available, but not later than 120 days
         after the end of each fiscal year (commencing with the fiscal year
         ended October 31, 2001), a copy of the audited consolidated balance
         sheet of Toro and its Subsidiaries as at the end of such year and the
         related consolidated statements of income or operations, stockholders'
         equity and cash flows for such year, setting forth in each case 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 periods 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 the
         Companies' or any Subsidiary's records or with respect to Toro and its
         Subsidiaries as a going concern.

                  (b)      as soon as available, but not later than 50 days
         after the end of each of the first three fiscal quarters of each fiscal
         year (commencing with the fiscal quarter ended January 31, 2002), 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.

         7.2      Certificates; Other Information. The Companies shall furnish
to each of the Banks and the Administrative Agent (except in the case of 7.2(c),
to the Administrative Agent only):

                  (a)      concurrently with the delivery of the financial
         statements referred to in subsections 7.1(a) and (b), a Compliance
         Certificate executed by a Responsible Officer;

                  (b)      promptly, copies of all financial statements and
         reports that Toro sends to its shareholders, and copies of all
         financial statements and regular, periodical or special reports
         (including Forms 10K, 10Q and 8K) that any Company or any Subsidiary
         may make to, or file with, the SEC;

                                       57


                  (c)      concurrently with the closing of a Receivables
         Purchase Facility, a copy of the documentation related thereto
         certified by a Responsible Officer as being true, correct and complete;
         and

                  (d)      promptly, such additional information regarding the
         business, financial or corporate affairs of the Companies or any
         Subsidiary as the Administrative Agent, at the request of any Bank, may
         from time to time reasonably request.

         7.3      Notices. Toro shall promptly notify the Administrative Agent
and each Bank:

                  (a)      of the occurrence of any Default or Event of Default,
         and of the occurrence or existence of any event or circumstance that
         foreseeably will become a Default or Event of Default;

                  (b)      of any (i) breach or non-performance of, or any
         default under, a Contractual Obligation of the Companies or any
         Subsidiary; (ii) dispute, litigation, investigation, proceeding or
         suspension affecting any of the Companies or any Subsidiary and any
         Governmental Authority; or (iii) commencement of, or any material
         development in, any litigation or proceeding affecting the Companies
         (or any of them) or any Subsidiary; including any of the above pursuant
         to any applicable Environmental Laws, in each case under (i), (ii) or
         (iii) above, which (A) is reasonably likely to create liability to any
         Company in excess of $10,000,000 in any individual circumstance or in
         excess of $20,000,000 in the aggregate for all such circumstances, or
         (B) is otherwise reasonably likely to have a Material Adverse Effect
         and (iv) other matter that has resulted or is reasonably likely to
         result in a Material Adverse Effect;

                  (c)      of the occurrence of any of the following events
         affecting any of the Companies or any ERISA Affiliate (but in no event
         more than 10 days after such event), and deliver to the Administrative
         Agent and each Bank a copy of any notice with respect to such event
         that is filed with a Governmental Authority and any notice delivered by
         a Governmental Authority to any of the Companies or any ERISA Affiliate
         with respect to such event:

                           (i)      an ERISA Event;

                           (ii)     a material increase in the Unfunded Pension
                  Liability of any Pension Plan;

                           (iii)    the adoption of, or the commencement of
                  contributions to, any Plan subject to Section 412 of the Code
                  by any of the Companies or any ERISA Affiliate; or

                           (iv)     the adoption of any amendment to a Plan
                  subject to Section 412 of the Code, if such amendment results
                  in a material increase in contributions or Unfunded Pension
                  Liability;

                  (d)      of any change in the Debt Rating by Moody's or S&P;
                  and

                                       58


                  (e)      of any material change in accounting policies or
         financial reporting practices by the Companies or any of their
         consolidated Subsidiaries.

         Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Companies propose to take with
respect thereto and at what time. Each notice under subsection 7.3(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been (or foreseeably will be) breached or
violated.

         7.4      Preservation of Corporate Existence, Etc. Each Company shall
preserve and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation and
preserve and maintain in full force and effect all material governmental rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business; provided, however, that Toro shall be permitted
to liquidate and dissolve Credit into Toro and permitted to liquidate and
dissolve any Subsidiary Borrower into Toro or a Wholly-Owned Subsidiary.

         7.5      Maintenance of Property. Each Company shall exercise its best
business judgment to maintain, and shall cause each Subsidiary to maintain, and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted; provided, however,
that nothing in this Section 7.5 shall prevent the Companies from discontinuing
the operation or maintenance of any such property if such discontinuance will
not result in a Material Adverse Effect and the Board of Directors of such
Company determines, in its best business judgment, that the continued use
thereof is no longer desirable to the conduct of the business of such Company.

         7.6      Insurance. Each Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons; provided, however, that nothing in this
Section 7.6 shall be deemed to prevent the Companies from self insuring or
insuring through a captive insurance subsidiary such risks as are customarily
self insured or insured through captive insurance subsidiaries by other
corporations in the same business and similarly situated in accordance with
sound business practices.

         7.7      Compliance with Laws and Contractual Obligations. Each Company
shall comply, and shall cause each Subsidiary to comply, with all Contractual
Obligations and Requirements of Law of any Governmental Authority having
jurisdiction over it or its business including, without limitation, all
Environmental Laws except to the extent that the failure to so comply may not
have a Material Adverse Effect and paying before the same become delinquent, all
taxes, assessments and government charges imposed upon it or upon its property,
income or assets, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP.

         7.8      Compliance with ERISA. Each Company shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the

                                       59


applicable provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) make all required contributions to any Plan subject
to Section 412 of the Code.

         7.9      Inspection of Property and Books and Records. Each Company
shall permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Administrative Agent or any Bank to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom (except to the extent any of such records are proprietary in nature),
and to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Companies; provided, however,
when an Event of Default exists the Administrative Agent or any Bank may do any
of the foregoing at the expense of the Companies at any time during normal
business hours and without advance notice.

         7.10     Use of Proceeds. Each Company shall use the proceeds of the
Loans for (a) general working capital needs and capital expenditures and (b) to
replace and refinance outstanding indebtedness under the Existing Facilities and
(c) and other lawful corporate purposes other than, directly or indirectly, (i)
for purposes of undertaking an Acquisition or Joint Venture in contravention of
any Requirement of Law or of any Loan Document, (ii) to purchase or carry Margin
Stock, (iii) to repay or otherwise refinance indebtedness of any Company or
others incurred to purchase or carry Margin Stock, (iv) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (v) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.

                                 ARTICLE VIII.

                               NEGATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan,
Swing Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter
of Credit shall remain outstanding, unless the Required Banks waive compliance
in writing:

         8.1      Limitation on Liens. None of the Companies shall, or permit
any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon or with respect to any part of their respective property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):

                  (a)      any Lien existing on property of any Company or any
         Subsidiary on the Closing Date and set forth in Schedule 8.1 securing
         Indebtedness outstanding on such date;

                  (b)      any Lien created under any Loan Document;

                                       60


                  (c)      Liens for taxes, fees, assessments or other
         governmental charges which are not delinquent or remain payable without
         penalty, provided that no notice of lien has been filed or recorded
         under the Code;

                  (d)      carriers', warehousemen's, mechanics', landlords',
         materialmen's, repairmen's or other similar Liens arising in the
         ordinary course of business which are not delinquent or remain payable
         without penalty or which are being contested in good faith and by
         appropriate proceedings, which proceedings have the effect of
         preventing the forfeiture or sale of the property subject thereto;

                  (e)      Liens (other than any Lien imposed by ERISA)
         consisting of pledges or deposits required in the ordinary course of
         business in connection with workers' compensation, unemployment
         insurance and other social security legislation;

                  (f)      Liens on the property of any Company or any of its
         Subsidiaries securing (i) the non-delinquent performance of bids, trade
         contracts (other than for borrowed money), leases, statutory
         obligations, (ii) contingent obligations on surety and appeal bonds,
         and (iii) other non-delinquent obligations of alike nature; in each
         case, incurred in the ordinary course of business;

                  (g)      easements, rights-of-way, restrictions and other
         similar encumbrances incurred in the ordinary course of business which,
         in the aggregate, are not substantial in amount, and which do not in
         any case materially detract from the value of the property subject
         thereto or interfere with the ordinary conduct of the businesses of the
         Companies and their Subsidiaries;

                  (h)      Liens on property of a Person subject to an
         Acquisition permitted hereunder existing at the time of such
         Acquisition;

                  (i)      Liens existing on the Closing Date on property of one
         or more Distributor Subsidiaries securing Indebtedness of such
         Distributor Subsidiaries;

                  (j)      Liens on Receivables, lease receivables and other
         obligations owing to any of the Companies or any domestic Wholly-Owned
         Subsidiary to the extent such Receivables, lease receivables and other
         obligations have been sold under a Receivables Purchase Facility
         permitted under Section 8.2(d);

                  (k)      Liens arising solely by virtue of any statutory or
         common law provision relating to banker's liens, rights of set-off or
         similar rights and remedies as to deposit accounts or other funds
         maintained with a creditor depository institution; provided that (i)
         such deposit account is not a dedicated cash collateral account and is
         not subject to restrictions against access by the applicable Company in
         excess of those set forth by regulations promulgated by the FRB, and
         (ii) such deposit account is not intended by any Company or any
         Subsidiary to provide collateral to the depository institution; and

                  (l)      Liens on any property securing Indebtedness; provided
         that the amount of Indebtedness so secured together with Indebtedness
         permitted to be secured pursuant to Section 8.1(a) above shall not
         exceed in the aggregate at any time outstanding 10% of the

                                       61


         consolidated net worth of Toro and its Subsidiaries determined as of
         the end of the most recently ended fiscal quarter of Toro.

         8.2      Disposition of Assets. None of the Companies shall, or shall
suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:

                  (a)      dispositions of inventory, or used, worn-out or
         surplus property, all in the ordinary course of business;

                  (b)      the sale of equipment to the extent that such
         equipment is exchanged for credit against the purchase price of similar
         replacement equipment, or the proceeds of such sale are reasonably
         promptly applied to the purchase price of such replacement equipment;

                  (c)      dispositions of Receivables of Toro to Credit;

                  (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 Moody's of Baa3
         or better;

                  (e)      sale of those Investments described under Section
         8.4(a);

                  (f)      dispositions not otherwise permitted hereunder which
         are made for fair market value; provided, that (i) at the time of any
         such disposition, no Event of Default shall exist or shall result from
         such disposition and (ii) the aggregate value of all assets so sold by
         Toro and its Subsidiaries shall not exceed in any fiscal year 10% of
         the consolidated total assets of Toro and its Subsidiaries determined
         as of the end of the most recently ended fiscal quarter of Toro; and

                  (g)      any Subsidiary, including any Subsidiary Borrower,
         may sell, assign, lease, convey, transfer or otherwise dispose of
         assets to one of the Companies or another Wholly-Owned Subsidiary.

         8.3      Consolidations and Mergers. None of the Companies shall, or
permit any Subsidiary to, merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except:

                  (a)      any Subsidiary (other than Credit), including any
         Subsidiary Borrower, may merge with one of the Companies, provided that
         a Company shall be the continuing or surviving corporation, or with any
         one or more Subsidiaries, provided that if any transaction shall be
         between a Subsidiary and a Wholly-Owned Subsidiary, the surviving
         corporation shall be a Wholly-Owned Subsidiary;

                                       62


                  (b)      Credit may merge with or sell all or substantially
         all of its assets to Toro;

                  (c)      any Subsidiary (other than Credit), including any
         Subsidiary Borrower, may sell all or substantially all of its assets
         (upon voluntary liquidation or otherwise), to one of the Companies or
         another Wholly-Owned Subsidiary; and

                  (d)      those transactions otherwise permitted under Section
         8.4(d).

         8.4      Loans and Investments. None of the Companies shall purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of any of the Companies (collectively, "Investments"),
except for:

                  (a)      Investments held by any of the Companies or any
         Subsidiary in the form of cash equivalents or other liquid investments
         permitted under Toro's Investment Policy issued December 10, 1995;

                  (b)      extensions of credit in the nature of accounts
         receivable or notes receivable arising from the sale or lease of goods
         or services in the ordinary course of business;

                  (c)      extensions of credit by any Company to any of Toro's
         Wholly-Owned Subsidiaries or by any of Toro's Wholly-Owned Subsidiaries
         to any Company or to another of Toro's Wholly-Owned Subsidiaries or
         extensions of credit made in the ordinary course of its business
         consistent with past practices to distributors or dealers of Toro's
         products;

                  (d)      Investments incurred in order to consummate
         Acquisitions, provided that (i) the aggregate purchase price (including
         assumption of liability) in any such individual Acquisition shall not
         exceed $100,000,000, and the aggregate purchase price (including
         assumption of liability) for all Acquisitions undertaken by Toro and
         its Subsidiaries after the Closing Date shall not exceed $200,000,000,
         (ii) such Acquisitions are undertaken in accordance with all applicable
         Requirements of Law; and (iii) the prior, effective written consent or
         approval to such Acquisition of the board of directors or equivalent
         governing body of the acquiree is obtained;

                  (e)      Investments in Joint Ventures not exceeding, in the
         aggregate, at any time, 10% of the consolidated net worth of Toro and
         its Subsidiaries determined as of the end of the most recently ended
         fiscal quarter of Toro;

                  (f)      Investments under Swap Contracts to the extent
         permitted under Section 8.6 hereof; and

                  (g)      Investments made after the date hereof in
         Wholly-Owned Subsidiaries.

                                       63


         8.5      Transactions with Affiliates. None of the Companies shall, or
shall suffer or permit any Subsidiary to, enter into any transaction with any of
their respective Affiliates, except upon fair and reasonable terms no less
favorable to such entity than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Companies or such Subsidiary;
provided, however, that nothing in this Section 8.5 shall restrict (i) the
Companies from entering into transactions with Toro's distributors or dealers,
whether or not Affiliates of the Companies, which the Companies determine in
their best business judgment shall be in the best interests of the Companies and
(ii) any Permitted Receivables Transfer.

         8.6      Contingent Obligations. None of the Companies shall, or shall
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except Contingent Obligations which are not reasonably
likely to have a Material Adverse Effect.

         8.7      Restricted Payments. None of the Companies shall, or shall
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding (each of the foregoing a "Restricted Payment"); except that:

                  (a)      each Company and any Wholly-Owned Subsidiary may
         declare and make dividend payments or other distributions payable
         solely in its common stock;

                  (b)      each Company and any Wholly-Owned Subsidiary may
         purchase, redeem or otherwise acquire shares of its common stock or
         warrants or options to acquire any such shares with the proceeds
         received from the substantially concurrent issue of new shares of its
         common stock;

                  (c)      Toro may declare and pay cash dividends to its
         stockholders and purchase, redeem or otherwise acquire shares of its
         capital stock or warrants, rights or options to acquire any such shares
         for cash up to an amount equal to the sum of (i) 50% of the
         consolidated net income of Toro and its Subsidiaries arising after
         October 31, 2001 and computed on a cumulative consolidated basis, plus
         (ii) $50,000,000, provided, that, immediately after giving effect to
         such proposed action, no Default or Event of Default would exist; and

                  (d)      Credit and any Subsidiary Borrower may declare and
         pay dividends to Toro or its parent company and any Wholly-Owned
         Subsidiary may declare and pay dividends to its parent company.

         8.8      Maintenance of Business. Each Company shall continue to engage
in business of the same general type as now conducted by it, provided, however,
that each Company may discontinue any line of business if the discontinuance of
such line of business will not result in a Material Adverse Effect and the Board
of Directors of such Company determines that the continuance thereof is no
longer desirable to the conduct of the business of the Companies taken as a
whole, and provided further that Toro shall be permitted to liquidate and
dissolve Credit or any Subsidiary Borrower into its parent company or Toro.

                                       64


         8.9      Minimum Interest Coverage. Toro, on a consolidated basis,
shall not 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.

         8.10     Maximum Total Indebtedness to Capitalization. Toro, on a
consolidated basis, shall not 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.

         8.11     Toro and Credit Portion of Assets. The consolidated total
assets of Toro and Credit at the end of each fiscal year shall not be less than
67% of the consolidated total assets of Toro and its Subsidiaries at such time.

         8.12     Negative Pledge Clause. No Company shall enter into or cause,
suffer or permit to exist any agreement with any Person other than the
Administrative Agent and the Banks pursuant to this Agreement or any other Loan
Documents which prohibits or limits the ability of any of the Companies or any
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, provided
that any Company and any Subsidiary may enter into such an agreement in
connection with, and that applies only to, property subject to any Lien
permitted by this Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien.

         8.13     Burdensome Contractual Obligation. Enter into any Contractual
Obligation that limits the ability of any Subsidiary to make Restricted Payments
to Toro or to otherwise transfer property to Toro.

                                  ARTICLE IX.

                                EVENTS OF DEFAULT

         9.1      Events of Default. Any of the following shall constitute an
         "Event of Default":

                  (a)      Non-Payment. Any of the Companies fail to pay, (i) '
         when and as required to be paid herein, any amount of principal of any
         Loan, or (ii) within 5 days after the same becomes due, any interest,
         L/C Obligation, Swing Loan, fee or any other amount payable hereunder
         or under any other Loan Document; or

                  (b)      Representation or Warranty. Any representation or
         warranty by any Company or any Subsidiary made or deemed made herein,
         in any other Loan Document, or which is contained in any certificate,
         document or financial or other statement by any Company, any
         Subsidiary, or any Responsible Officer, furnished at any time under
         this Agreement, or in or under any other Loan Document, is incorrect or
         misleading in any material respect on or as of the date made or deemed
         made; or

                                       65


                  (c)      Specific Defaults. Any of the Companies fail to
         perform or observe any term, covenant or agreement contained in any of
         Section 7.3(a) or 7.9 or in Article VIII; or

                  (d)      Other Defaults. Any of the Companies fail to perform
         or observe any other term or covenant contained in this Agreement or
         any other Loan Document (and such failure does not otherwise constitute
         an Event of Default under this Section 9.1), and such default shall
         continue unremedied for a period of 30 days, provided that, if the
         Companies are diligently and in good faith attempting to cure such
         default, such default is curable and such default will not possibly
         result in a Material Adverse Effect, then the Companies may have
         additional time to cure such default as specified in writing by the
         Required Banks provided that such additional time shall not exceed 60
         days; or

                  (e)      General Cross-Default. (i) Any Company 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 Company 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 repayment 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 a down-grading of the
         credit rating of any bank or financial institution not affiliated with
         the Companies that provides liquidity, credit or other support in
         connection with such facility and (B) within 60 days after the
         effective date of such Receivables Purchase Facility Termination,
         additional financing and/or capitalization of the Companies 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 Banks,
         shall not be completed and funding thereunder shall not be available to
         the Companies; or

                                       66


                  (f)      Insolvency; Voluntary Proceedings. Any Company or any
         Material Subsidiary (i) ceases or fails to be solvent, or generally
         fails to pay, or admits in writing its inability to pay, its debts as
         they become due, subject to applicable grace periods, if any, whether
         at stated maturity or otherwise; (ii) voluntarily ceases to conduct its
         business in the ordinary course; (iii) commences any Insolvency
         Proceeding with respect to itself; or (iv) takes any action to
         effectuate or authorize any of the foregoing; or

                  (g)      Involuntary Proceedings. (i) Any involuntary
         Insolvency Proceeding is commenced or filed against any Company or any
         Material Subsidiary, or any writ, judgment, warrant of attachment,
         execution or similar process, is issued or levied against a substantial
         part of any Company's or any Material Subsidiary's properties, and any
         such proceeding or petition shall not be dismissed, or such writ,
         judgment, warrant of attachment, execution or similar process shall not
         be released, vacated or fully bonded within 60 days after commencement,
         filing or levy; (ii) any Company or any Material Subsidiary admits the
         material allegations of a petition against it in any Insolvency
         Proceeding, or an order for relief (or similar order under non-U.S.
         law) is ordered in any Insolvency Proceeding; or (iii) any Company or
         any Material Subsidiary acquiesces in the appointment of a receiver,
         trustee, custodian, conservator, liquidator, mortgagee in possession
         (or agent therefor), or other similar Person for itself or a
         substantial portion of its property or business; or

                  (h)      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 any Company 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) any Company or any ERISA Affiliate
         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; or

                  (i)      Monetary Judgments. One or more non-interlocutory
         judgments, non-interlocutory orders, decrees or arbitration awards is
         entered against any or all of the Companies or any Material Subsidiary
         involving in the aggregate a liability (to the extent not covered by
         independent third-party insurance as to which the insurer does not
         dispute coverage) as to any single or related series of transactions,
         incidents or conditions, of $10,000,000 or more, and the same shall
         remain unsatisfied, unvacated and unstayed pending appeal for a period
         of 30 days after the entry thereof; or

                  (j)      Non-Monetary Judgments. Any non-monetary judgment,
         order or decree is entered against any Company or any Material
         Subsidiary which does or would reasonably be expected to have a
         Material Adverse Effect, and there shall be any period of 30
         consecutive days during which a stay of enforcement of such judgment or
         order, by reason of a pending appeal or otherwise, shall not be in
         effect; or

                  (k)      Change in Control. (i) Any Person or group within the
         meaning of Section 13(d)(3) of the 1934 Act and the rules and
         regulations promulgated thereunder, shall,

                                       67


         after the Closing Date, acquire beneficial ownership (within the
         meaning of Rule 13d-3 of the 1934 Act), directly or indirectly, of
         securities of Toro (or other securities convertible into such
         securities) representing thirty percent (30%) of the combined voting
         power of all securities of Toro entitled to vote in the election of
         directors, other than securities having such power only by reason of
         the happening of a contingency (hereinafter called a "Controlling
         Person"); or (ii) Toro shall cease to own, directly or indirectly, 100%
         of all of each other Company's issued and outstanding shares of common
         stock (except for any outstanding qualifying director shares); or (iii)
         a majority of the Board of Directors of Toro shall cease for any reason
         to consist of (A) individuals who on the Closing Date were serving as
         directors of Toro and (B) individuals who subsequently become members
         of the Board if such individuals' nomination for election or election
         to the Board is recommended or approved by a majority of the Board of
         Directors of Toro; or (iv) a default or the happening of any event
         shall occur under any charter, indenture, agreement or other instrument
         in connection with which any preferred stock of Toro may be issued, and
         as a result of such default or event the holders of such preferred
         stock shall designate or elect members of the Board of Directors of
         Toro. For purposes of clause (i) above, a Person or group shall not be
         a Controlling Person if such Person or group holds voting power in good
         faith and not for the purpose of circumventing this Section 9.1(k) as
         an agent, bank, broker, nominee, trustee, or holder of revocable
         proxies given in response to a solicitation pursuant to the 1934 Act,
         for one or more beneficial owners who do not individually, or, if they
         are a group acting in concert, as a group, have the voting power
         specified in clause (i).

                  (l)      Invalidity. Any Loan Document, at any time after its
         execution and delivery and for any reason other than the agreement of
         all Banks or satisfaction in full of all the Obligations, ceases to be
         in full force and effect (other than with respect to matters regarding
         Offshore Rate Loans which are subject to the application of, and the
         Companies accordingly comply with the terms of, Section 4.2) or is
         declared by a court of competent jurisdiction to be null and void,
         invalid or unenforceable in any respect; or any Company denies that is
         has any or further liability or obligation under any Loan Document, or
         purports to revoke, terminate or rescind any Loan Document.

                  (m)      Specific Cross-Default. The occurrence and
         continuance of an "Event of Default" as defined in the 364-Day Credit
         Agreement.

         9.2      Remedies. If any Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of the Required Banks:

                  (a)      declare the commitment of each Bank to make Loans,
         the obligation of the Swing Line Bank to make Swing Loans and the
         obligation of the Issuing Bank to issue Letters of Credit to be
         terminated, whereupon such commitments and obligations shall be
         terminated;

                  (b)      declare the unpaid principal amount of all
         outstanding Loans and Swing Loans, all interest accrued and unpaid
         thereon, and all other amounts owing or payable hereunder or under any
         other Loan Document to be immediately due and payable,

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         without presentment, demand, protest or other notice of any kind, all
         of which are hereby expressly waived by each Company;

                  (c)      exercise on behalf of itself and the Banks all rights
         and remedies available to it and the Banks under the Loan Documents or
         applicable law; and

                  (d)      demand immediate payment by the Companies of an
         amount equal to the L/C Obligations to be held in an account to be
         established by Toro with Bank of America at such time over which only
         the Administrative Agent shall have control.

provided, however that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), (i) the obligation of each
Bank to make Loans, the Issuing Bank to Issue Letters of Credit and the Swing
Line Bank to make Swing Loans shall automatically terminate, (ii) the unpaid
principal amount of all outstanding Loans and Swing Loans and all interest and
other amounts as aforesaid shall automatically become due and payable without
further act of the Administrative Agent or any Bank, and (iii) Toro shall
automatically be required to Cash Collateralize the L/C Obligations (in an
amount equal to the aggregate outstanding amount thereof) plus all fees accrued
or to be incurred in connection with such L/C Obligations (calculated at the
Applicable Margin then in effect for the period from the date of such Cash
Collateralization until the expiry date of such Letter of Credit).

         9.3      Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.

                                   ARTICLE X.

                            THE ADMINISTRATIVE AGENT

         10.1     Appointment and Authorization of Administrative Agent.

                  (a)      Each Bank hereby irrevocably appoints, designates and
         authorizes the Administrative Agent to take such action on its behalf
         under the provisions of this Agreement and each other Loan Document and
         to exercise such powers and perform such duties as are expressly
         delegated to it by the terms of this Agreement or any other Loan
         Document, together with such powers as are reasonably incidental
         thereto. Notwithstanding any provision to the contrary contained
         elsewhere herein or in any other Loan Document, the Administrative
         Agent shall not have any duties or responsibilities, except those
         expressly set forth herein, nor shall the Administrative Agent have or
         be deemed to have any fiduciary relationship with any Bank or
         participant, and no implied covenants, functions, responsibilities,
         duties, obligations or liabilities shall be read into this Agreement or
         any other Loan Document or otherwise exist against the Administrative
         Agent. Without limiting the generality of the foregoing sentence, the
         use of the term "agent" herein and in the other Loan Documents with
         reference to the Administrative Agent is not intended to connote any
         fiduciary or other implied (or

                                       69


         express) obligations arising under agency doctrine of any applicable
         law. Instead, such term is used merely as a matter of market custom,
         and is intended to create or reflect only an administrative
         relationship between independent contracting parties.

                  (b)      The Issuing Bank shall act on behalf of the Banks
         with respect to any Letters of Credit Issued by it and the documents
         associated therewith until such time (and except for so long) as the
         Administrative Agent may agree at the request of the Required Banks to
         act for the Issuing Bank with respect thereto; provided, however, that
         the Issuing Bank shall have all of the benefits and immunities (i)
         provided to the Administrative Agent in this Article X with respect to
         any acts taken or omissions suffered by the Issuing Bank in connection
         with Letters of Credit Issued by it or proposed to be Issued by it and
         the application and agreements for letters of credit pertaining to the
         Letters of Credit as fully as if the term "Administrative Agent" as
         used in this Article X included the Issuing Bank with respect to such
         acts or omissions, and (ii) as additionally provided herein with
         respect to the Issuing Bank.

         10.2     Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.

         10.3     Liability of Administrative Agent. None of the Administrative
Agent-Related Persons shall (a) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein), or (b) be responsible in any manner to any Bank or participant
for any recital, statement, representation or warranty made by the Companies or
any Subsidiary or Affiliate of the Companies or any officer thereof, contained
herein or in any other Loan Document, or in any certificate, report, statement
or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Companies or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Administrative Agent-Related Person shall be under
any obligation to any Bank or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Companies or any of the Companies' Subsidiaries or
Affiliates.

         10.4     Reliance by Administrative Agent.

                  (a)      The Administrative Agent shall be entitled to rely,
         and shall be fully protected in relying, upon any writing,
         communication, signature, resolution, representation, notice, consent,
         certificate, affidavit, letter, telegram, facsimile, telex or telephone
         message, statement or other document or conversation believed by it to
         be genuine and correct and to have been signed, sent or made by the
         proper Person or

                                       70


         Persons, and upon advice and statements of legal counsel (including
         counsel to the Companies), independent accountants and other experts
         selected by the Administrative Agent. The Administrative Agent shall be
         fully justified in failing or refusing to take any action under any
         Loan Document unless it shall first receive such advice or concurrence
         of the Required Banks as it deems appropriate and, if it so requests,
         it shall first be indemnified to its satisfaction by the Banks against
         any and all liability and expense which may be incurred by it by reason
         of taking or continuing to take any such action. The Administrative
         Agent shall in all cases be fully protected in acting, or in refraining
         from acting, under this Agreement or any other Loan Document in
         accordance with a request or consent of the Required Banks or all the
         Banks, if required hereunder, and such request and any action taken or
         failure to act pursuant thereto shall be binding upon all the Banks and
         participants. Where this Agreement expressly permits or prohibits an
         action unless the Required Banks otherwise determine, the
         Administrative Agent shall, and in all other instances, the
         Administrative Agent may, but shall not be required to, initiate any
         solicitation for the consent or a vote of the Banks.

                  (b)      For purposes of determining compliance with the
         conditions specified in Section 5.1, each Bank that has signed this
         Agreement shall be deemed to have consented to, approved or accepted or
         to be satisfied with, each document or other matter either sent by the
         Administrative Agent to such Bank for consent, approval, acceptance or
         satisfaction, or required thereunder to be consented to or approved by
         or acceptable or satisfactory to a Bank.

         10.5     Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Banks, unless the Administrative Agent shall have received written notice from a
Bank or Toro referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Banks in accordance with
Article IX; provided, however, that unless and until the Administrative Agent
has received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.

         10.6     Credit Decision; Disclosure of Information by Administrative
Agent. Each Bank acknowledges that none of the Administrative Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Administrative Agent hereafter taken, including any consent to and acceptance of
any assignment or review of the affairs of the Companies and their Subsidiaries
or any Affiliate thereof, shall be deemed to constitute any representation or
warranty by any Administrative Agent-Related Person to any Bank as to any
matter, including whether Administrative Agent-Related Persons have disclosed
material information in their possession. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon any
Administrative Agent-Related Person and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and

                                       71


creditworthiness of the Companies and their Subsidiaries, and all applicable
bank or other regulatory laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit to
the Companies hereunder. Each Bank also represents that it will, independently
and without reliance upon any Administrative Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Companies. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Administrative
Agent herein, the Administrative Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Companies or any of its Affiliates which may come into
the possession of any Administrative Agent-Related Person.

         10.7     Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify upon
demand each Administrative Agent-Related Person (to the extent not reimbursed by
or on behalf of the Companies and without limiting the obligation of the
Companies to do so) according to each Bank's Pro Rata Share, and hold harmless
each Administrative Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Bank shall be
liable for the payment to any Administrative Agent-Related Person of any portion
of such Indemnified Liabilities to the extent determined in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Person's own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Banks shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Bank shall
reimburse the Administrative Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs and the costs and
expenses incurred in connection with the use of GMS Technologies, Inc.,
Intralinks, Inc. or other similar information transmission systems in connection
with this Agreement) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Companies. The undertaking in this Section shall survive
termination of the combined Commitments, the payment of all Obligations
hereunder and the resignation of the Administrative Agent.

         10.8     Administrative Agent in its Individual Capacity. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with any Company and its Subsidiaries and its Affiliates as though Bank
of America were not the Administrative Agent, the Issuing Bank or the Swing Line
Bank hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding the Companies or their Affiliates (including
information that may be subject to confidentiality

                                       72


obligations in favor of the Companies or such Subsidiary) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Bank and may exercise
such rights and powers as though it were not the Administrative Agent, the
Issuing Bank or the Swing Line Bank, and the terms "Bank" and "Banks" include
Bank of America in its individual capacity.

         10.9     Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Banks; provided that
any such resignation by Bank of America shall also constitute its resignation as
Issuing Bank and Swing Line Bank. If the Administrative Agent resigns under this
Agreement, the Required Banks shall appoint from among the Banks a successor
Administrative Agent for the Banks which successor Administrative Agent shall be
consented to by the Companies at all times other than during the existence of an
Event of Default (which consent of the Companies shall not be unreasonably
withheld or delayed). If no successor Administrative Agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and the
Companies, a successor Administrative Agent from among the Banks. Upon the
acceptance of its appointment as successor Administrative Agent hereunder, the
Person acting as such successor Administrative Agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent, Issuing Bank,
Swing Line Bank, and the respective terms "Administrative Agent," "Issuing
Bank", "Swing Line Bank" shall mean such successor Administrative Agent, Letter
of Credit Issuing Bank, Swing Line Bank, and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated and
the retiring Issuing Bank's and Swing Line Bank's powers and duties as such
shall be terminated, without any other or further act or deed on the part of
such retiring Issuing Bank or Swing Line Bank or any other Bank, other than the
obligation of the successor Issuing Bank to Issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 12.4 and
12.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
Administrative Agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Banks
appoint a successor Administrative Agent as provided for above.

         10.10    Other Agents. None of the Banks identified on the facing page
or signature pages of this Agreement as a "syndication agent," "documentation
agent," or "co-agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.

                                       73


         10.11    Withholding Tax.

                  (a)      If any Bank is a "foreign corporation, partnership or
         trust" within the meaning of the Code and such Bank claims exemption
         from, or a reduction of, U.S. withholding tax under Sections 1441 or
         1442 of the Code, such Bank agrees with and in favor of the
         Administrative Agent, to deliver to the Administrative Agent:

                           (i)      if such Bank claims an exemption from, or a
                  reduction of, withholding tax under a United States tax
                  treaty, two properly completed and executed copies of IRS Form
                  W-8 ECI or W-8 BEN, as applicable, before the payment of any
                  interest in the first calendar year and before the payment of
                  any interest in each third succeeding calendar year during
                  which interest may be paid under this Agreement;

                           (ii)     if such Bank claims that interest paid under
                  this Agreement is exempt from United States withholding tax
                  because it is effectively connected with a United States trade
                  or business of such Bank, two properly completed and executed
                  copies of IRS Form W-8 ECI or W-8 BEN, as applicable, before
                  the payment of any interest is due in the first taxable year
                  of such Bank and in each succeeding taxable year of such Bank
                  during which interest may be paid under this Agreement; and

                           (iii)    such other form or forms as may be required
                  under the Code or other laws of the United States as a
                  condition to exemption from, or reduction of, United States
                  withholding tax.

         Such Bank agrees to promptly notify the Administrative Agent of any
         change in circumstances which would modify or render invalid any
         claimed exemption or reduction.

                  (b)      If any Bank claims exemption from, or reduction of,
         withholding tax under a United States tax treaty by providing IRS Form
         W-8 ECI or W-8 BEN, as applicable, and such Bank sells, assigns, grants
         a participation in, or otherwise transfers all or part of the
         Obligations of the Companies to such Bank, such Bank agrees to notify
         the Administrative Agent of the percentage amount in which it is no
         longer the beneficial owner of Obligations of the Companies to such
         Bank. To the extent of such percentage amount, the Administrative Agent
         will treat such Bank's IRS Form W-8 ECI or W-8 BEN, as applicable, as
         no longer valid.

                  (c)      If any Bank claiming exemption from United States
         withholding tax by filing IRS Form W-8 ECI or W-8 BEN, as applicable,
         with the Administrative Agent sells, assigns, grants a participation
         in, or otherwise transfers all or part of the Obligations of the
         Companies to such Bank, such Bank agrees to undertake sole
         responsibility for complying with the withholding tax requirements
         imposed by Sections 1441 and 1442 of the Code.

                  (d)      If any Bank is entitled to a reduction in the
         applicable withholding tax, the Administrative Agent may withhold from
         any interest payment to such Bank an amount equivalent to the
         applicable withholding tax after taking into account such reduction.

                                       74


         However, if the forms or other documentation required by subsection (1)
         of this Section are not delivered to the Administrative Agent, then the
         Administrative Agent may withhold from any interest payment to such
         Bank not providing such forms or other documentation an amount
         equivalent to the applicable withholding tax imposed by Sections 1441
         and 1442 of the Code, without reduction.

                  (e)      If the IRS or any other Governmental Authority of the
         United States or other jurisdiction asserts a claim that the
         Administrative Agent did not properly withhold tax from amounts paid to
         or for the account of any Bank (because the appropriate form was not
         delivered or was not properly executed, or because such Bank failed to
         notify the Administrative Agent of a change in circumstances which
         rendered the exemption from, or reduction of, withholding tax
         ineffective, or for any other reason) such Bank shall indemnify the
         Administrative Agent fully for all amounts paid, directly or
         indirectly, by the Administrative Agent as tax or otherwise, including
         penalties and interest, and including any taxes imposed by any
         jurisdiction on the amounts payable to the Administrative Agent under
         this Section, together with all costs and expenses (including Attorney
         Costs). The obligation of the Banks under this subsection shall survive
         the payment of all Obligations and the resignation or replacement of
         the Administrative Agent.

                                   ARTICLE XI.

                                    GUARANTY

         11.1     The Guaranty. Toro hereby unconditionally guarantees the full
and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each Loan made by the Banks or
any Bank to any Subsidiary Borrower pursuant to this Agreement; and the full and
punctual payment of all other amounts payable by any Subsidiary Borrower under
this Agreement. Upon failure by any Subsidiary Borrower to pay punctually any
such amount, Toro shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in this Agreement.

         11.2     Guaranty Unconditional. The obligations of Toro hereunder are
a guaranty of payment and not of collection, and shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:

                  (a)      any extension, renewal, settlement, compromise,
         waiver or release in respect of any obligation of any Subsidiary
         Borrower under this Agreement or any Note, by operation of law or
         otherwise;

                  (b)      any modification or amendment of or supplement to
         this Agreement or any Note;

                  (c)      any release, non-perfection or invalidity of any
         direct or indirect security for any obligation of any Subsidiary
         Borrower under this Agreement or any Note;

                  (d)      any change in the corporate existence, structure or
         ownership of any Subsidiary Borrower, or any insolvency, bankruptcy,
         reorganization or other similar

                                       75


         proceeding affecting such Subsidiary Borrower or its assets or any
         resulting release or discharge of any obligation of such Subsidiary
         Borrower contained in this Agreement or any Note;

                  (e)      the existence of any claim, set-off or other rights
         which Toro may have at any time against any Subsidiary Borrower, any
         Administrative Agent, any Bank or any other corporation or person,
         whether in connection herewith or any unrelated transactions, provided
         that nothing herein shall prevent the assertion of any such claim by
         separate suit or compulsory counterclaim;

                  (f)      any invalidity or unenforceability relating to or
         against any Subsidiary Borrower for any reason of this Agreement or any
         Note, or any provision of applicable law or regulation purporting to
         prohibit the payment by any Subsidiary Borrower of the principal of or
         interest on any Note or any other amount payable by it under this
         Agreement; or

                  (g)      any other act or omission to act or delay of any kind
         by any Subsidiary Borrower, the Administrative Agent, any Bank or any
         other Person or any other circumstance whatsoever which might, but for
         the provisions of this paragraph, constitute a legal or equitable
         discharge of Toro's obligations hereunder.

         The obligations of Toro under this Article XI are independent of the
obligation of any Subsidiary Borrower pursuant to this Agreement or any Note
issued by such Subsidiary Borrower and a separate action or actions may be
brought and prosecuted against Toro to enforce the provisions of this Article XI
irrespective of whether any action is brought against any Subsidiary Borrower or
whether any Subsidiary Borrower is joined in any such action or actions.

         11.3     Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. Toro's obligations hereunder shall remain in full force and
effect until the Commitments shall have terminated and the principal of and
interest on the Notes and all other amounts payable by any Subsidiary Borrower
under this Agreement shall have been paid in full. If at any time any payment of
the principal of or interest on any Note or any other amount payable by any
Subsidiary Borrower under this Agreement is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of such
Subsidiary Borrower or otherwise, Toro's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.

         11.4     Waiver by Toro. Toro irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
Subsidiary Borrower or any other Person.

         11.5     No Subrogation. Toro irrevocably waives any and all rights to
which it may be entitled, by operation of law or otherwise, upon making any
payments with respect to any Subsidiary Borrower hereunder to be subrogated to
the rights of the payee against such Subsidiary Borrower with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by such
Subsidiary Borrower in respect thereof.

                                       76


         11.6     Stay of Acceleration. If acceleration of the time for payment
of any amount payable by any Subsidiary Borrower under this Agreement or the
Notes is stayed upon the insolvency, bankruptcy or reorganization of such
Subsidiary Borrower, all such amounts otherwise subject to acceleration under
the terms of this Agreement shall nonetheless be payable by Toro hereunder
forthwith on demand by the Administrative Agent made at the request of the
Required Banks.

                                  ARTICLE XII.

                                  MISCELLANEOUS

         12.1     Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
any Company therefrom, shall be effective unless in writing signed by the
Required Banks and the Companies, and acknowledged by the Administrative Agent,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall, unless in writing and signed by all of the
Banks and by the Companies, and acknowledged by the Administrative Agent, do any
of the following:

                  (a)      extend or increase the combined Commitments of all
         Banks (or reinstate such Commitments terminated pursuant to Section
         9.2(a));

                  (b)      extend or postpone any date fixed by this Agreement
         or any other Loan Document for any payment of principal, interest, fees
         or other amounts due to the Banks (or any of them) hereunder or under
         any other Loan Document;

                  (c)      reduce the principal of, or the rate of interest
         specified herein on, any Loan or L/C Borrowing, or (subject to clause
         (iv) of the proviso below) any fees or other amounts payable hereunder
         or under any other Loan Document; provided, however, that only the
         consent of the Required Banks shall be necessary to amend the
         definition of "Default Rate" or to waive any obligation of the
         Companies to pay interest at the Default Rate;

                  (d)      change the percentage of the combined Commitments or
         of the aggregate unpaid principal amount of the Loans, Swing Loans and
         L/C Obligations which is required for the Banks or any of them to take
         any action hereunder;

                  (e)      change the means of determination of Pro Rata Share
         or Voting Percentage of any Bank;

                  (f)      amend this Section, or Section 2.14, or any provision
         herein providing for consent or other action by all the Banks; or

                  (g)      amend or delete Article XI hereof or release Toro as
         the guarantor of the Subsidiary Borrowers' Obligations hereunder
         pursuant to Article XI hereof.

                                       77


and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank in addition to the Required Banks or each
directly-affected Bank, as the case may be, affect the rights or duties of the
Issuing Bank under this Agreement or any L/C Application relating to any Letter
of Credit Issued or to be Issued by it; (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Bank in addition to the
Required Banks or each directly-affected Bank, as the case may be, affect the
rights or duties of the Swing Line Bank under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Required Banks or each directly-affected
Bank, as the case may be, affect the rights or duties of the Administrative
Agent under this Agreement or any other Loan Document; or (iv) the Fee Letter
may be amended, or rights or privileges thereunder waived, in a writing executed
only by the respective parties thereto. Notwithstanding anything to the contrary
herein, any Bank that has a Voting Percentage of zero shall not have any right
to approve or disapprove any amendment, waiver or consent hereunder, except that
the Pro Rata Share of such Bank may not be increased without the consent of such
Bank.

         12.2     Notices.

                  (a)      All notices, requests, consents, approvals, waivers
         and other communications shall be in writing (including, unless the
         context expressly otherwise provides, by facsimile transmission,
         provided that any matter transmitted by the Companies by facsimile
         shall be immediately confirmed by a telephone call to the recipient at
         the number specified on Schedule 12.2) and mailed, faxed or delivered,
         to the address or facsimile number specified for notices on Schedule
         12.2; or, as directed to the Companies or the Administrative Agent, to
         such other address as shall be designated by such party in a written
         notice to the other parties, and as directed to any other party, at
         such other address as shall be designated by such party in a written
         notice to the Companies and the Administrative Agent.

                  (b)      All such notices, requests and communications shall,
         when transmitted by overnight delivery, or faxed, be effective when
         delivered for overnight (next-day) delivery, or transmitted in legible
         form by facsimile machine, respectively, or if mailed, upon the third
         Business Day after the date deposited into the U.S. mail, or if
         delivered, upon delivery; except that notices pursuant to Article 11 or
         X to the Administrative Agent or notices pursuant to Article III to the
         Issuing Bank shall not be effective until actually received.

                  (c)      Any agreement of the Administrative Agent and the
         Banks herein to receive certain notices by telephone or facsimile is
         solely for the convenience and at the request of the Companies. The
         Administrative Agent and the Banks shall be entitled to rely on the
         authority of any Person purporting to be a Person authorized by the
         Companies to give such notice and the Administrative Agent and the
         Banks shall not have any liability to the Companies or other Person on
         account of any action taken or not taken by the Administrative Agent or
         the Banks in reliance upon such telephonic or facsimile notice. The
         obligation of the Companies to repay the Loans, the Swing Loans or the
         L/C Obligations shall not be affected in any way or to any extent by
         any failure by the Administrative Agent and the Banks to receive
         written confirmation of any telephonic

                                       78


         or facsimile notice or the receipt by the Administrative Agent and the
         Banks of a confirmation which is at variance with the terms understood
         by the Administrative Agent and the Banks to be contained in the
         telephonic or facsimile notice.

                  (d)      Effectiveness of Facsimile Documents and Signatures.
         Loan Documents may be transmitted and/or signed by facsimile. The
         effectiveness of any such documents and signatures shall, subject to
         applicable Law, have the same force and effect as manually-signed
         originals and shall be binding on the Companies, the Administrative
         Agent and the Banks. The Administrative Agent may also require that any
         such documents and signatures be confirmed by a manually-signed
         original thereof; provided, however, that the failure to request or
         deliver the same shall not limit the effectiveness of any facsimile
         document or signature.

                  (e)      Limited Use of Electronic Mail. Electronic mail and
         Internet and intranet websites may be used only to distribute routine
         communications, such as financial statements and other information as
         provided in Section 7.2, and to distribute Loan Documents for execution
         by the parties thereto, and may not be used for any other purpose.

         12.3     No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Bank, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.

         12.4     Costs and Expenses. The Companies shall:

                  (a)      whether or not the transactions contemplated hereby
         are consummated, pay or reimburse Bank of America (including in its
         capacity as Administrative Agent, Swing Line Bank, Issuing Bank and
         Bank) and the Arranger within five Business Days after demand for all
         costs and expenses incurred by Bank of America (including in its
         capacity as Administrative Agent, Swing Line Bank, Issuing Bank and
         Bank) and the Arranger in connection with the due diligence conducted
         in connection with, and the development, preparation, delivery,
         administration, syndication and execution of, and any amendment,
         supplement, waiver or modification to (in each case, whether or not
         consummated), this Agreement, any Loan Document and any other documents
         prepared in connection herewith or therewith, and the consummation of
         the transactions contemplated hereby and thereby, including reasonable
         Attorney Costs incurred by Bank of America (including in its capacity
         as Administrative Agent, Swing Line Bank, Issuing Bank and Bank) and
         the Arranger with respect thereto; and

                  (b)      pay or reimburse the Administrative Agent, the Swing
         Line Bank, the Issuing Bank, the Arranger and each Bank within five
         Business Days after demand for all costs and expenses (including
         Attorney Costs and the costs and expenses incurred in connection with
         the use of GMS Technologies, Inc., Intralinks, Inc. or other similar
         information transmission systems in connection with this Agreement)
         incurred by them in connection with the enforcement, attempted
         enforcement, or preservation of any rights or

                                       79


         remedies under this Agreement or any other Loan Document during the
         existence of an Event of Default or after acceleration of the Loans
         (including in connection with any "workout" or restructuring regarding
         the Loans, and including in any Insolvency Proceeding or appellate
         proceeding).

         12.5     Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Companies shall indemnify, defend and hold the
Administrative Agent-Related Persons and each Bank and each of their Affiliates
and each of such Person's respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination of
the Letters of Credit and the termination, resignation or replacement of the
Administrative Agent or replacement of any Bank) be imposed on, incurred by or
asserted against any such Indemnified Person in any way relating to or arising
out of this Agreement or any document contemplated by or referred to herein, or
the transactions contemplated hereby, or the actual or proposed use of proceeds
of any Loan, Swing Loan or Letter of Credit, or the Commitments, or any action
taken or omitted by any such Indemnified Person under or in connection with any
of the foregoing, including with respect to any investigation, arbitration,
litigation or judicial proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Companies shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities to the extent resulting solely from the gross negligence or willful
misconduct of such Indemnified Person as fully determined by a court of
competent jurisdiction. None of the Administrative Agent-Related Persons nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or not taken by it in connection with this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby in the absence of its own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction, and in no event shall
any such Person be liable for special, consequential, punitive or indirect
damages. The agreements in this Section shall survive payment of all other
Obligations.

         12.6     Payments Set Aside. To the extent that any Company makes a
payment to the Administrative Agent or the Banks, or the Administrative Agent or
any of the Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent or such Bank
in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its Pro Rata
Share of any amount so recovered from or repaid by the Administrative Agent.

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         12.7     Successors and Assigns.

                  (a)      The provisions of this Agreement shall be binding
         upon and inure to the benefit of the parties hereto and their
         respective successors and assigns permitted hereby, except that none of
         the Companies may assign or otherwise transfer any of its rights or
         obligations hereunder without the prior written consent of the
         Administrative Agent and each Bank (and any attempted assignment or
         transfer by the Companies without such consent shall be null and void).
         Nothing in this Agreement, expressed or implied, shall be construed to
         confer upon any Person (other than the parties hereto, their respective
         successors and assigns permitted hereby, Participants to the extent
         provided in subsection (d) of this Section and, to the extent expressly
         contemplated hereby, the Indemnitees) any legal or equitable right,
         remedy or claim under or by reason of this Agreement.

                  (b)      Any Bank may at any time assign to one or more
         Eligible Assignees all or a portion of its rights and obligations under
         this Agreement (including all or a portion of its Commitment and the
         Loans (including for purposes of this subsection (b), participations in
         L/C Obligations and participations in Swing Loans) at the time owing to
         it); provided that (i) except in the case of an assignment of the
         entire remaining amount of the assigning Bank's Commitment and the
         Loans at the time owing to it or in the case of an assignment to a Bank
         or an Affiliate of a Bank or an Approved Fund with respect to a Bank,
         the aggregate amount of the Commitment (which for this purpose includes
         Loans outstanding thereunder) subject to each such assignment,
         determined as of the date the Assignment and Assumption with respect to
         such assignment is delivered to the Administrative Agent or, if a
         "Trade Date" is specified in the Assignment and Assumption, as of the
         Trade Date, shall not be less than $5,000,000 unless each of the
         Administrative Agent and, so long as no Default or Event of Default has
         occurred and is continuing, Toro otherwise consents (each such consent
         not to be unreasonably withheld or delayed), (ii) each partial
         assignment shall be made as an assignment of a proportionate part of
         all the assigning Bank's rights and obligations under this Agreement
         with respect to the Loans and the Commitment assigned, except that this
         clause (ii) shall not apply to rights in respect of Swing Loans and
         (iii) the parties to each assignment shall execute and deliver to the
         Administrative Agent an Assignment and Assumption, together with a
         processing and recordation fee of $3,500. Subject to acceptance and
         recording thereof by the Administrative Agent pursuant to subsection
         (c) of this Section, from and after the effective date specified in
         each Assignment and Assumption, the Eligible Assignee thereunder shall
         be a party to this Agreement and, to the extent of the interest
         assigned by such Assignment and Assumption, have the rights and
         obligations of a Bank under this Agreement, and the assigning Bank
         thereunder shall, to the extent of the interest assigned by such
         Assignment and Assumption, be released from its obligations under this
         Agreement (and, in the case of an Assignment and Assumption covering
         all of the assigning Bank's rights and obligations under this
         Agreement, such Bank shall cease to be a party hereto but shall
         continue to be entitled to the benefits of Sections 4.1, 4.3, 4.5 and
         12.5 with respect to facts and circumstances occurring prior to the
         effective date of such assignment). Upon request, the Companies shall
         execute and deliver new or replacement Notes to the assigning Bank and
         the assignee Bank. Any assignment or transfer by a Bank of rights or
         obligations under this Agreement that does not comply with this
         subsection shall be treated for purposes of this Agreement as a sale by
         such Bank of a participation in such rights and obligations in
         accordance with subsection (d) of this Section.

                                       81


                  (c)      The Administrative Agent, acting solely for this
         purpose as an agent of the Companies, shall maintain at the
         Administrative Agent's Office a copy of each Assignment and Assumption
         delivered to it and a register for the recordation of the names and
         addresses of the Banks, and the Commitments of, and principal amounts
         of the Loans, Swing Loans and L/C Obligations owing to, and
         participations in L/C Obligations and Swing Loans of, each Bank
         pursuant to the terms hereof from time to time (the "Register"). The
         entries in the Register shall be conclusive, and the Companies, the
         Administrative Agent and the Banks may treat each Person whose name is
         recorded in the Register pursuant to the terms hereof as a Bank
         hereunder for all purposes of this Agreement, notwithstanding notice to
         the contrary. The Register shall be available for inspection by any
         Company and any Bank, at any reasonable time and from time to time upon
         reasonable prior notice.

                  (d)      Any Bank may at any time, without the consent of, or
         notice to, the Companies or the Administrative Agent, sell
         participations to any Person (other than a natural person or the
         Companies or any of the Companies' Affiliates or Subsidiaries (each, a
         "Participant") in all or a portion of such Bank's rights and/or
         obligations under this Agreement (including all or a portion of its
         Commitment and/or the Loans (including such Bank's participations in
         L/C Obligations and/or Swing Loans) owing to it); provided that (i)
         such Bank's obligations under this Agreement shall remain unchanged,
         (ii) such Bank shall remain solely responsible to the other parties
         hereto for the performance of such obligations and (iii) the Companies,
         the Administrative Agent and the other Banks shall continue to deal
         solely and directly with such Bank in connection with such Bank's
         rights and obligations under this Agreement. Any agreement or
         instrument pursuant to which a Bank sells such a participation shall
         provide that such Bank shall retain the sole right to enforce this
         Agreement and to approve any amendment, modification or waiver of any
         provision of this Agreement; provided that such agreement or instrument
         may provide that such Bank will not, without the consent of the
         Participant, agree to any amendment, waiver or other modification that
         would (i) postpone any date upon which any payment of money is
         scheduled to be paid to such Participant or (ii) reduce the principal,
         interest, fees or other amounts payable to such Participant. Subject to
         subsection (e) of this Section, the Companies agree that each
         Participant shall be entitled to the benefits of Sections 4.1, 4.3, and
         4.5 to the same extent as if it were a Bank and had acquired its
         interest by assignment pursuant to subsection (b) of this Section. To
         the extent permitted by law, each Participant also shall be entitled to
         the benefits of Section 12.9 as though it were a Bank, provided such
         Participant agrees to be subject to Section 2.14 as though it were a
         Bank.

                  (e)      A Participant shall not be entitled to receive any
         greater payment under Section 4.1 or 4.3 than the applicable Bank would
         have been entitled to receive with respect to the participation sold to
         such Participant, unless the sale of the participation to such
         Participant is made with the Companies' prior written consent. A
         Participant that would be a foreign corporation, partnership or trust
         under Section 10.11 if it were a Bank shall not be entitled to the
         benefits of Section 4.1 unless the Companies are notified of the
         participation sold to such Participant and such Participant agrees, for
         the benefit of the Companies, to comply with Section 10.11 as though it
         were a Bank.

                                       82


                  (f)      Any Bank may at any time pledge or assign a security
         interest in all or any portion of its rights under this Agreement
         (including under its Notes, if any) to secure obligations of such Bank,
         including any pledge or assignment to secure obligations to a Federal
         Reserve Bank; provided that no such pledge or assignment shall release
         such Bank from any of its obligations hereunder or substitute any such
         pledgee or assignee for such Bank as a party hereto.

                  (g)      Notwithstanding anything to the contrary contained
         herein, any Bank that is a Fund that invests in bank loans may create a
         security interest in all or any portion of the advances owing to it and
         the Note or Notes held by it to the trustee for holders of obligations
         owed, or securities issued, by such Fund as security for such
         obligations or securities, provided that unless and until such trustee
         actually becomes a Bank in compliance with the other provisions of this
         Section 12.7, (i) no such pledge shall release the pledging Bank from
         any of its obligations under the Loan Documents and (ii) such trustee
         shall not be entitled to exercise any of the rights of a Bank under the
         Loan Documents even though such trustee may have acquired ownership
         rights with respect to the pledged interest through foreclosure or
         otherwise.

                  (h)      Notwithstanding anything to the contrary contained
         herein, if at any time Bank of America assigns all of its Commitment
         and Loans pursuant to subsection (b) above, Bank of America may, (i)
         upon 30 days' notice to the Companies and the Banks, resign as Issuing
         Bank and/or (ii) upon 30 days' notice to the Companies, resign as Swing
         Line Bank. In the event of any such resignation as Issuing Bank or
         Swing Line Bank, the Companies shall be entitled to appoint from among
         the Banks a successor Issuing Bank or Swing Line Bank hereunder;
         provided, however, that no failure by the Companies to appoint any such
         successor shall affect the resignation of Bank of America as Issuing
         Bank or Swing Line Bank, as the case may be. Bank of America shall
         retain all the rights and obligations of the Issuing Bank hereunder
         with respect to all Letters of Credit outstanding as of the effective
         date of its resignation as Issuing Bank and all L/C Obligations with
         respect thereto (including the right to require the Banks to make Loans
         or fund participations in the manner set forth in Section 3.3). If Bank
         of America resigns as Swing Line Bank, it shall retain all the rights
         of the Swing Line Bank provided for hereunder with respect to Swing
         Loans made by it and outstanding as of the effective date of such
         termination, including the right to require the Banks to make Loans or
         fund participations in outstanding Swing Loans in the manner set forth
         in Section 2.5.

         12.8     Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information furnished by any Company and
provided to it by such Company or any Subsidiary, or by the Administrative Agent
on such Company's or such Subsidiary's behalf, under this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Companies or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Companies,
provided that such source is not bound by a confidentiality agreement with the

                                       83



Companies known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Bank or their respective Affiliates may be party; (E)
to the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to such Bank's independent
auditors and other professional advisors; (G) to any Participant or Eligible
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Banks
hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which the
Companies or any Subsidiary is party or is deemed party with such Bank or such
Affiliate; (I) to its Affiliates, which shall be subject to the standards set
forth herein and applicable to such Bank; (J) to any nationally recognized
rating agency to the extent it requires access to information about such
financial institution's investment portfolio; and (K) to Loan Pricing Corp. and
any other similar publication service that publishes "Gold Sheets" or tracks
"league tables" for the financial institution market generally as to the fact of
this transaction and the amount of the combined Commitments.

         12.9 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to any Company, any such notice being waived by Companies 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 by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of any Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Bank
agrees promptly to notify the Companies and the Administrative Agent after any
such set-off and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.

         12.10 Automatic Debits of Principal, Interest Fees. With respect to any
principal, interest, facility fee, arrangement fee, letter of credit fee or
other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Administrative Agent, Bank of America, the Swing Line Bank, the
Issuing Bank or the Arranger under the Loan Documents, the Companies hereby
irrevocably authorize Bank of America to debit any deposit account of any
Company with Bank of America in an amount such that the aggregate amount debited
from all such deposit accounts does not exceed such principal, interest, fee or
other cost or expense. If there are insufficient funds in such deposit accounts
to cover the amount of the fee or other cost or expense then due, such debits
will be reversed (in whole or in part, in Bank of America's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this
Section shall be deemed a set-off.

         12.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank

                                       84


should be directed, of addresses of any Lending Office, of payment instructions
in respect of all payments to be made to it hereunder and of such other
administrative information as the Administrative Agent shall reasonably request.

         12.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument. A facsimile signature shall be
deemed a valid signature for all purposes.

         12.13 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

         12.14 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Companies, the Banks, the
Administrative Agent and the Administrative Agent-Related Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.

         12.15 Governing Laws and Jurisdiction.

               (a)      THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
         AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK;
         PROVIDED THAT THE ADMINISTRATIVE AGENT, THE ARRANGER AND THE BANKS
         SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

               (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
         AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
         THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
         OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
         THE COMPANIES, THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR
         ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
         JURISDICTION OF THOSE COURTS. EACH OF THE COMPANIES, THE ADMINISTRATIVE
         AGENT, AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
         OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
         CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
         ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
         OR ANY DOCUMENT RELATED HERETO. EACH COMPANY, THE ADMINISTRATIVE AGENT,
         AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
         OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
         YORK LAW.

                                       85


         12.16 Waiver of Jury Trial. EACH COMPANY, THE BANKS, THE ARRANGER AND
THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE AGENT-RELATED
PERSON, PARTICIPANT OR ELIGIBLE ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANIES, THE BANKS, THE ARRANGER AND
THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         12.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Companies,
the Banks, the Arranger and the Administrative Agent, and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.

         12.18 Liability of the Companies. All obligations of Toro and Credit or
either 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 Credit, except
only Toro shall be liable 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 Banks to such Subsidiary Borrower and interest,
fees, expenses and other obligations owing by such Subsidiary Borrower in
connection with such Loans.

         12.19 Judgment Currency. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due from any of the Companies
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the specified currency with such other currency at the
Administrative Agent's Payment Office on the Business Day preceding that on
which final, non-appealable judgment is given. The obligations of each of the
Companies in respect of any sum due to any Bank or the Administrative Agent
hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the Business Day
following receipt by such Bank or the Administrative Agent (as the case may be)
of any sum adjudged to be so due

                                       86


in such other currency such Bank or the Administrative Agent (as the case may
be) may in accordance with normal, reasonable banking procedures purchase the
specified currency with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to such Bank or the
Administrative Agent, as the case may be, in the specified currency, the
Companies agree, to the fullest extent that they may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Bank or the Administrative Agent, as the case may be, against such loss, and if
the amount of the specified currency so purchased exceeds (a) the sum originally
due to any Bank or the Administrative Agent, as the case may be, in the
specified currency and (b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank in
accordance with this Agreement, such Bank or the Administrative Agent, as the
case may be, agrees to remit such excess to the Companies.

         12.20 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If the Administrative
Agent or any Bank shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Companies. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Bank exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.

         12.21 Termination of Existing Facilities. In connection with the
delivery of evidence of termination of the Existing Facilities required as a
condition to the effectiveness of this Agreement pursuant to Section 5.1(k),
each of the Lenders, upon delivery of such evidence, in its capacity as a Lender
under the Existing Facilities, waives any notice requirement under the Existing
Facilities with which the Borrower would otherwise be obligated to comply in
order to terminate the Existing Facilities.

                                       87


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                            TORO CREDIT COMPANY

                                            By: ________________________________

                                            Title: _____________________________

                                            THE TORO COMPANY

                                            By: ________________________________

                                            Title: _____________________________

                                            TORO INTERNATIONAL COMPANY

                                            By: ________________________________

                                            Title: _____________________________

                                            TOVER OVERSEAS B.V.

                                            By: ________________________________

                                            Title: _____________________________

                                            TORO FACTORING COMPANY, N. V.

                                            By: ________________________________

                                            Title: _____________________________



                                            BANK OF AMERICA, N.A.
                                            as Administrative Agent, Issuing
                                            Bank, Swing Line Bank and a Bank

                                            By: ________________________________

                                            Title: _____________________________

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION as a Bank

                                            By: ________________________________

                                            Title: _____________________________

                                            THE BANK OF NEW YORK, as a Bank

                                            By: ________________________________

                                            Title: _____________________________

                                            HARRIS TRUST AND SAVINGS BANK, as a
                                            Bank

                                            By: ________________________________

                                            Title: _____________________________

                                            U.S. BANK NATIONAL ASSOCIATION, as a
                                            Bank

                                            By: ________________________________

                                            Title: _____________________________



                                            SUNTRUST BANK, as a Bank

                                            By: ________________________________

                                            Title: _____________________________



                                  SCHEDULE 2.1

                                   COMMITMENTS
                               AND PRO RATA SHARES



- --------------------------------------------------------------------------------
                BANK                           COMMITMENT        PRO RATA SHARE
- --------------------------------------------------------------------------------
                                                           
Bank of America, N.A.                        $  32,200,000           18.4000%
- --------------------------------------------------------------------------------
Harris Trust and Savings Bank                $  31,500,000           18.0000%
- --------------------------------------------------------------------------------
SunTrust Bank                                $  31,500,000           18.0000%
- --------------------------------------------------------------------------------
U.S. Bank National Association               $  31,500,000           18.0000%
- --------------------------------------------------------------------------------
Wells Fargo Bank, National Association       $  31,500,000           18.0000%
- --------------------------------------------------------------------------------
The Bank of New York                         $  16,800,000            9.6000%
- --------------------------------------------------------------------------------
                              TOTAL          $ 175,000,000          100.0000%
- --------------------------------------------------------------------------------




                                  SCHEDULE 6.5

                                   LITIGATION

None.



                                  SCHEDULE 6.7

                                  ERISA MATTERS

The following Qualified Plans of the Toro Company are underfunded as of the date
of this Credit Agreement.

         1.       The Toro Company Plymouth Union Employees Pension Plan

                  Eighty-eight (88) individuals participate in this plan. The
         accrued liability in this plan is $977,732 and the actuarial value of
         the assets in the plan is $976,171. Therefore, the plan is underfunded
         by approximately $1,561.

         2.       The Wheel Horse Products, Inc. Employees Retirement Plan

                  Two hundred sixty-four (264) individuals participate in this
         plan. The accrued liability in this plan is $3,912,452 and the
         actuarial value of the assets in the plan is $3,394,503. Therefore, the
         plan is underfunded by approximately $517,949.

The information set forth herein is based on The Toro Company's most recent
actuarial valuation.



                                  SCHEDULE 6.9

                              PERMITTED LIABILITIES

None.



                                  SCHEDULE 6.10

                              ENVIRONMENTAL MATTERS

None.



                                  SCHEDULE 6.13

                       SUBSIDIARIES AND MINORITY INTERESTS

A.       SUBSIDIARIES

1.   Toro Credit Company

2.   Toro Sales Company

3.   Hahn Equipment Co.

4.   Exmark Manufacturing Company Incorporated

         a.       The Holiman Co., Inc.

5.       Toro Foreign Sales Corporation

6.       Toro Purchasing Company

         a.       Toro International Company

7.       Toro Finance Company

         a.       Toro Finance Ltd.

8.       Toro Professionals Equipment Company

9.       MTI Distributing, Inc.

10.      Professional Turf Products, Inc.

11.      Toro LLC

12.      Tover Overseas I C.V. (limited partnership)

         a.       Tover Overseas II C.V. (limited partnership)

                      1.   Toro Factoring Company N.V.

                      2.   Tover Overseas, B.V.

                           a.       Toro Australia Pty. Limited

                           b.       Toro Europe

                           c.       Irritrol Systems Europe, S.r.L.

13.      Toro Warranty Company

14.      Toro Mexico Holdings, LLC

         a.       Toro Company de Mexico S. de R.L. de C.V.

         b.       Toro Servicos, S. de R.L. de C.V.

15.      Red Iron Insurance, Limited

16.      Electronic Industrial Controls, Inc.



17.      Lawn-Boy Inc. (inactive subsidiary)

18.      ACN 007664315 Pty. Limited (formerly Hardie)

B.    INVESTMENTS

         1.  Investment of $30,000 in Raffles Insurance, Ltd.

         2.  Investment of $1,000,000 (10,000 shares of preferred stock @ $100
             per share) in   Wesco Turf Supply, Inc., an independent distributor



                                  SCHEDULE 6.14

                                INSURANCE MATTERS

Toro self insures against product liability claims up to a total amount of
$2,000,000 per year.



                                  SCHEDULE 8.1

                                 PERMITTED LIENS

Bank of America National Trust and Savings Association holds a deed of trust and
security interest covering certain real property and equipment of Toro acquired
with proceeds of issuance of $3,600,000 Industrial Development Revenue Bonds
(Drip In Irrigation Project) issued by the California Statewide Communities
Development Authority to secure letter of credit obligations with respect to
such bonds. Such bonds were initially issued for the benefit of Drip In
Irrigation Company, a California general partnership which was acquired by and
subsequently liquidated into Toro.

The City of Madera California holds a deed of trust and security agreement
covering certain real property and equipment of Toro acquired with proceeds of
$106,000 Economic Development Loan. The balance of the loan is currently
$42,000. Such loan was initially made to Drip In Irrigation Company, a
California general partnership which was acquired by and liquidated into Toro.

In addition Toro has leased a wide variety of equipment under the terms of
leases which it generally believes to be operating leases. To the extent any
such leases were properly characterized capital leases or leases intended for
security, the lessors of such equipment have retained security interests in the
equipment subject to such leases.



                                  SCHEDULE 12.2

                     OFFSHORE AND DOMESTIC LENDING OFFICES,
                              ADDRESSES FOR NOTICES

THE TORO COMPANY
AND TORO CREDIT COMPANY
c/o The Toro Company
8111 Lyndale
Avenue South Bloomington, MN 55420
Attention: Thomas J. Larson
Telephone: (952) 887-8449
Facsimile: (952) 887-5924

BANK OF AMERICA. N.A.
as Administrative Agent, Issuing Bank, Swing Line Bank and as a Bank

Operational Notices:

         Bank of America, N.A.
         Agency Administration Services
         1850 Gateway Blvd.
         Concord, California 94520
         Attention: Rosalia Escosa
         Telephone: (925) 675-8421
         Facsimile: (925) 969-2901

Other Notices:

         Bank of America, N.A.
         231 South LaSalle Street
         9th Floor
         Chicago, IL 60697
         Attention: Gretchen Spoo,
                    Principal
         Telephone: (312) 828-6654
         Facsimile: (312) 987-1276

Offshore Lending Office

         231 South LaSalle Street
         Chicago, Illinois 60697

Domestic Lending Office

         231 South LaSalle Street
         Chicago, Illinois 60697



Payment Instructions:

         Bank of America, N.A.
         Concord, CA
         ABA No. 111000012
         A/C # 37 50836479
         For account of Credit Services
         Reference: Toro

U.S. BANK NATIONAL ASSOCIATION

Operational Notices:

         U.S. Bank National Association
         601 2nd Avenue South
         MPFP0702
         Minneapolis, MN 55402-4302
         Attention: Karen Johnson
         Telephone: (612) 973-0546
         Facsimile: (612) 973-0825

Other Notices:

         U.S. Bank National Association
         601 Second Avenue South
         MPFP0702
         Minneapolis, MN 55402-4302
         Attention: Elliot J. Jaffee
         Telephone: (612) 973-0548
         Facsimile: (612) 973-0825

Domestic Lending Office

         U.S. Bank National Association
         601 Second Avenue South
         MPFP0702
         Minneapolis, MN 55402-4302

Offshore Lending Office

         U.S. Bank National Association
         601 Second Avenue South
         MPFP0702
         Minneapolis, MN 55402-4302



Payment Instructions:

         U.S. Bank National Association
         Minneapolis, MN
         ABA No. 091000022
         A/C #30000472160600
         Reference: The Toro Company
         Attention: Karen Johnson

THE BANK OF NEW YORK

Operational Notices:

         The Bank of New York
         One Wall Street
         19th Floor
         New York, NY 10286
         Attention: Millicent Hall
         Telephone: (212) 635-7926
         Facsimile: (212) 635-6687

Other Notices:

         The Bank of New York
         One Wall Street
         19th Floor
         New York, New York 10286
         Attention: Central Division
                    John-Paul Marotta
         Telephone: (212) 635-8204
         Facsimile: (212) 635-1208

Offshore Lending Office:

         The Bank of New York
         101 Barclay Street
         New York, New York 10286

Domestic Lending Office:

         The Bank of New York
         101 Barclay Street
         New York, New York 10286



Payment Instructions:

         The Bank of New York
         New York, NY
         ABA No. 021000018
         A/C #11156
         Ref: The Toro Company

WELLS FARGO BANK, NATIONAL ASSOCIATION

Operational Notices:

         Wells Fargo Bank, National Association
         A0187-081
         201 Third Street
         San Francisco, CA 94103
         Attention: Ginnie Padgett
         Telephone: (415) 477-5374
         Facsimile: (415) 977-9489

Other Notices:

         Wells Fargo Bank, National Association
         N9305-031
         Sixth Street and Marquette Avenue
         Minneapolis, MN 55479
         Attention: Scott D. Bjelde
         Telephone: (612) 667-6126
         Facsimile: (612) 667-2276

Offshore Lending Office:

         Wells Fargo Bank, National Association
         N9305-031
         Sixth Street and Marquette Avenue
         Minneapolis, MN 55479
         Attention: Scott D. Bjelde
         Telephone: (612) 667-6126
         Facsimile: (612) 667-2276



Domestic Lending Office:

         Wells Fargo Bank, National Association
         N9305-031
         Sixth Street and Marquette Avenue
         Minneapolis, MN 55479
         Attention: Scott D. Bjelde
         Telephone: (612) 667-6126
         Facsimile: (612) 667-2276

Payment Instructions:

         Wells Fargo Bank
         ABA No. 121-000-248
         Credit Account of : MEMSYN #2712507201
         Reference: The Toro Company
                  Obligor No. 7839500463

HARRIS TRUST AND SAVINGS BANK

Operational Notices:

         Harris Trust and Savings Bank
         111 West Monroe Street
         Chicago, IL 60603
         Attention: Jan Smith, Loan Services Representative
         Telephone (312) 461-3813
         Facsimile (312) 293-5283 or 5884

Other Notices:

         Harris Trust and Savings Bank
         111 West Monroe Street
         Chicago, IL 60603
         Attention: Andrew T. Claar
         Telephone (312) 461-3271
         Facsimile (312) 293-5040

Offshore Lending Office:

         Harris Trust and Savings Bank
         111 West Monroe Street
         Chicago, IL 60603



Domestic Lending Office:

         Harris Trust and Savings Bank
         111 West Monroe Street
         Chicago, IL 60603

Payment Instructions:

         Harris Bank
         Chicago, IL
         ABA No. 071-000-288
         A/C #109-215-4
         Reference: Toro Company
         Attention: Loan Accounting

SUNTRUST BANK

Operational Notices:

         SunTrust Bank
         303 Peachtree Street NE, 10th Floor
         Mail Code 1941
         Atlanta, GA 30308
         Attention: Michael Zeiss
         Telephone: (404) 588-8481
         Facsimile: (404) 575-2370

Other Notices:

         SunTrust Bank
         401 North Michigan Avenue
         Suite 1200
         Chicago, Illinois 60611
         Attention: Molly J. Drennan
         Telephone (312) 840-7982
         Facsimile (312) 840-7983

Offshore Lending Office:

         SunTrust Bank
         303 Peachtree Street, N.E., 10th Floor
         Mail Code 1928
         Atlanta, GA 30308
         Attention: Darren Beck



Domestic Lending Office:

         SunTrust Bank
         303 Peachtree Street, N.E., 10th Floor
         Mail Code 1928
         Atlanta, GA 30308
         Attention: Darren Beck

Payment Instructions:

         SunTrust Bank
         ABA No. 061000104
         Account Name: Wire Clearing
         A/C #9088000112
         Reference: Toro Company
         Attention: Isabelle Trenetham (Corporate Banking Operation)



                                   EXHIBIT A-1

                           FORM OF NOTICE OF BORROWING

                                                                  _________200__

Bank of America, N.A.
as Administrative Agent
1850 Gateway Blvd.
Concord, CA 94520
Attention: Agency Administrative Services

Ladies and Gentlemen:

         Reference is made to the Multi-Year Credit Agreement dated as of
February 22, 2002 (as amended from time to time, the "Credit Agreement"), by and
among THE TORO COMPANY, THE SUBSIDIARY BORROWERS, AND TORO CREDIT COMPANY, the
Banks party thereto, and BANK OF AMERICA, N.A., as Administrative Agent for the
Banks (the "Administrative Agent"). Capitalized terms used herein have the
meanings specified in the Credit Agreement.

         This is a Notice of Borrowing for Loans to be made to [Name of Company]
pursuant to Section 2.3 of the Credit Agreement as follows:

                  (i)      The Borrowing Date of the proposed Borrowing is
         __________, 200__.

                  (ii)     The aggregate amount and proposed currency of the
         proposed Borrowing is $__________.

                  (iii)    The proposed Borrowing to be made pursuant to Section
         2.3 shall be a [Offshore] [Base] Rate Loan.

                  [(iv)    The Interest Period for such Offshore Rate Loan shall
         be ____ [days][months].]

         The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:

         the representations and warranties contained in Article VI of the
Credit Agreement are true and correct as though made on the date hereof (except
to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date); and no Default or Event
of Default has occurred and is continuing, or would result from such proposed
Borrowing.



                                            THE TORO COMPANY

                                            By: ________________________________

                                            Title: _____________________________



                                   EXHIBIT A-2

                   FORM OF NOTICE OF BORROWING FOR SWING LOANS

                                                                   ________200__

Bank of America, N.A.
as Administrative Agent
1850 Gateway Blvd.
Concord, CA 94520
Attention:  Agency Administrative Services

Ladies and Gentlemen:

Reference is made to the Multi-Year Credit Agreement dated as of February 22,
2002 (as amended from time to time, the "Credit Agreement"), by and among THE
TORO COMPANY, THE SUBSIDIARY BORROWERS AND TORO CREDIT COMPANY, the Banks party
thereto, and BANK OF AMERICA, N.A., as Administrative Agent for the Banks (the
"Administrative Agent"). Capitalized terms used herein have the meanings
specified in the Credit Agreement.

         This is a Notice of Borrowing for Loans pursuant to Section 2.5 of the
Credit Agreement as follows:

                  (i)      The Borrowing Date of the proposed borrowing is
         __________, 200__.

                  (ii)     The aggregate amount of the proposed borrowing is
         $__________.

                  (iii)    The Quoted Rate is _________________________________.

                  (iv)     The applicable Company is __________________________.

         The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:

                  the representations and warranties contained in Article VI of
         the Credit Agreement are true and correct as though made on the date
         hereof (except to the extent such representations and warranties relate
         to an earlier date, in which case they are true and correct as of such
         date); and



                  no Default or Event of Default has occurred and is continuing,
or would result from such proposed Borrowing.

                                            THE TORO COMPANY

                                            By: ________________________________

                                            Title: _____________________________



                                    EXHIBIT B

                    FORM OF NOTICE OF CONVERSION/CONTINUATION

                                                               ____________200__

Bank of America, N.A.
as Administrative Agent
1850 Gateway Blvd.
Concord, CA 94520
Attention:  Agency Administrative Services

Ladies and Gentlemen:

         Reference is made to the Multi-Year Credit Agreement dated as of
February 22, 2002 (as amended from time to time, the "Credit Agreement"), by and
among THE TORO COMPANY, THE SUBSIDIARY BORROWERS AND TORO CREDIT COMPANY, the
Banks party thereto, and BANK OF AMERICA, N.A., as Administrative Agent for the
Banks (the "Administrative Agent"). Capitalized terms used herein have the
meanings specified in the Credit Agreement.

         The undersigned hereby gives you notice, irrevocably, pursuant to
Section 2.4 of the Credit Agreement that the undersigned hereby requests to:

convert an aggregate principal amount of $__________ of the outstanding Loans
which are currently Base Rate Loans to an Offshore Rate Loan on __________,
200__. The initial Interest Period for such Offshore Rate Loan is requested to
be a _____ [day][month] period;(1)

convert an aggregate principal amount of $__________ of the outstanding Loans
which are currently Offshore Rate Loans with a current Interest Period ending
__________, 200_, to Base Rate Loans on such date;(2)

continue as Offshore Rate Loans an aggregate principal amount of $__________
(amount and currency) of the Loans which are currently Offshore Rate Loans with
a current Interest Period ending __________ 200__. The succeeding Interest
Period for such Loans is requested to be a _____ month period.(3)

- ---------------

(1) Use if converting all or a portion of Base Rate Loans to Offshore Rate
Loans.

(2) Use if converting all or a portion of Loans which are Offshore Rate Loans to
Base Rate Loans.

(3) Use if continuing all or a portion of the Loans which are Offshore Rate
Loans.



         The undersigned hereby certifies that, in the case of any election
hereby to convert Base Rate Loans to Offshore Rate Loans or to continue Offshore
Rate Loans, no Default or Event of Default exists.

                                            THE TORO COMPANY

                                            By: ________________________________

                                            Title: _____________________________



                                    EXHIBIT C

                         FORM OF COMPLIANCE CERTIFICATE

         This Compliance Certificate is delivered to you pursuant to Section
7.2(a) of the Multi-Year Credit Agreement dated as of February 22, 2002 (as
amended, the "Multi-Year Credit Agreement") and Section 7.2(a) of the 364-Day
Credit Agreement dated as of February 22, 2002 (as amended, the "364-Day Credit
Agreement"), in each case, among The Toro Company ("Toro"), Toro Credit Company
("Credit"), the "Subsidiary Borrowers" (as defined therein), the financial
institutions party thereto (the "Banks") and Bank of America, N.A. in its
capacity as administrative agent for the Banks (the "Agent"). Toro hereby
delivers to each Bank this Compliance Certificate (the "Certificate"), together
with the financial statements being delivered to the Banks for the accounting
period ending __________, 20__. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Multi-Year Credit
Agreement and the 364-Day Credit Agreement (collectively, the "Credit
Agreements"). For purposes hereof, section and subsection references herein
relate to sections and subsections, respectively, of the Credit Agreements.

         1.       I am a duly elected, qualified and acting [__________________]
of Toro.

         2.       I have reviewed and am familiar with the contents of this
Certificate. I am providing this certificate solely in my capacity as an officer
of Toro. The matters set forth herein are true to my knowledge, after a review
in reasonable detail, but I express no personal opinion as to any conclusions of
law or other legal matters.

         3.       I have reviewed the terms of the Credit Agreements and have
made, or caused to be made, under my supervision, a review in reasonable detail
of the transactions and condition of Toro and its Subsidiaries taken as a whole
during the accounting period covered by the attached financial statements
("Financial Statements"). Such review did not disclose the existence during or
at the end of the accounting period covered by the attached Financial
Statements, and I have no knowledge of the existence as of the date of this
Certificate, of any condition or event which constitutes an Event of Default or
Default. [except as set forth below:]

         4.       Demonstration of compliance with certain covenants contained
in Article VIII of the Credit Agreements:

                  (a)      Liens (Section 8.1 of the Multi-Year Credit Agreement
and Section 8.1 of the 364-Day Credit Agreement).

                           (i)      The maximum aggregate amount of Indebtedness
                  secured by Liens on the properties of Toro and its
                  Subsidiaries permitted under clauses (a) and (l) under Section
                  8.1 of the Multi-Year Credit Agreement and Section 8.1 of the
                  364-Day Credit Agreement which Indebtedness was outstanding at
                  any time during the period covered by this Certificate:



                                    Outstanding                     $___________
                                    10% of the consolidated net     $___________
                                    worth of Toro and its
                                    Subsidiaries

                  (b)      Disposition of Assets (Section 8.2 of the Multi-Year
                  Credit Agreement and Section 8.2 of the 364-Day Credit
                  Agreement

                           (i)      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

                           (ii)     Aggregate value received from the sale of
                           properties or assets under clause (f) of Section 8.2
                           of the Multi-Year Credit Agreement and Section 8.2 of
                           the 364-Day Credit Agreement from the inception of
                           the fiscal year or portion thereof covered by the
                           Financial Statements through the end of the period
                           covered by this Certificate:

                                    Aggregate value
                                    for interests under
                                    clause (e)                      $__________

                                    10% of the consolidated total   $__________
                                    assets of Toro and its
                                    Subsidiaries

                  (c)      Loans and Investments (Section 8.4 of the Multi-Year
                  Credit Agreement and Section 8.4 of the 364-Day Credit
                  Agreement).

                           (i)      Aggregate purchase price of any individual
                           Acquisition during the period covered by the
                           Financial Statements:

                                    Amount and identity
                                    of each Acquisition            $_______ and
                                                                    ____________

                                    Maximum amount                  $100,000,000
                                    of each Acquisition

                           (ii)     Aggregate purchase price of all Acquisitions
                           during the period from February 22, 2002 through the
                           end of the period covered by this Certificate:

                                    Amount                          $___________
                                    Maximum                         $200,000,000



                           (iii)    Investments in Joint Ventures:

                                    Amount                          $___________
                                    10% of the consolidated net     $___________
                                    worth of Toro and its
                                    Subsidiaries

                  (d)      Restricted Payments (Section 8.7 of the Multi-Year
                  Credit Agreement and Section 8.7 of the 364-Day Credit
                  Agreement).

                                    Amount                          $___________
                                    Maximum Amount
                                    Available                       $___________

                  (e)      Minimum Interest Coverage Ratio Section 8.9 of the
                  Multi-Year Credit Agreement and Section 8.9 of the 364-Day
                  Credit Agreement).

                           Interest Coverage Ratio of Toro and its Subsidiaries
                  on a consolidated basis as determined at the end of the period
                  covered by this Certificate for the twelve month period ending
                  on the last day of the period covered by this Certificate:

                                    Actual Ratio                    ____________
                                    Minimum Ratio                   2.0 to 1.0

                  (f)      Maximum Total Indebtedness to Capitalization Ratio
                  (Section 8.10 of Multi-Year Credit Agreement and Section 8.10
                  of the 364-Day Credit Agreement).

                           As determined at the end of the period covered by
this Certificate:

                                    Actual                          ____________
                                    Maximum                         ____________

                  (g)      Toro and Credit Portion of Assets (Section 8.11 of
                  Multi-Year Credit Agreement and Section 8.11 of the 364-Day
                  Credit Agreement).(1)

                           The percentage of total consolidated assets of Toro
                           and its Subsidiaries represented by the total
                           consolidated assets of Toro and Credit, as determined
                           at the end of each fiscal year:

                                    Actual percentage of total              ___%
                                    consolidated assets
                                    Minimum Percentage                       67%

- -----------------

(1) Section (g) to be completed only for Certificates delivered at the end of
each fiscal year.



         I hereby certify, in my capacity as an officer of Toro, that the
information set forth above, to my knowledge, is accurate as of __________,
20__.

Dated:  __________, 20__

                                            THE TORO COMPANY

                                            By: ________________________________



                                    EXHIBIT D

                            ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this "Assignment and Assumption") is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, the interest in and to all of the
Assignor's rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below
(including, without limitation, Letters of Credit and Swing Loans included in
such facilities and, to the extent permitted to be assigned under applicable
law, all claims (including, without limitation, contract claims, tort claims,
malpractice claims and all other claims at law or in equity, including claims
under any law governing the purchase and sale of securities or governing
indentures pursuant to which securities are issued), suits, causes of action and
any other right of the Assignor against any other Person) (the "Assigned
Interest"). Such sale and assignment is without recourse to the Assignor and,
except as expressly provided in this Assignment and Assumption, without
representation or warranty by the Assignor.

1.       Assignor:         ______________________________

2.       Assignee:         ______________________________ [which is a
                           Bank/Affiliate/Approved Fund of [identify Bank](1)]

3.       Company(ies):     ______________________________

4.       Administrative Agent:          Bank of America, N.A., as the
                                        Administrative Agent under the Credit
                                        Agreement

5.       Credit Agreement:          The Multi-Year Credit Agreement, dated as of
                                    February 22, 2002, among The Toro Company,
                                    the Subsidiary Borrowers, and Toro Credit
                                    Company, the Banks parties thereto, and Bank
                                    of America, N.A., as Administrative Agent,
                                    Issuing Bank, and Swing Line Bank

- -----------------

(1)  Select as applicable.



6.       Assigned Interest:



- -----------------------------------------------------------------------------------------------------------
      Aggregate Amount of                 Amount of Commitment/Loans          Percentage Assigned of
Commitment/Loans for all Banks*                   Assigned (2)                  Commitment/Loans(5)
- -----------------------------------------------------------------------------------------------------------
                                                                        
$________________                              $________________                  ______________%
- -----------------------------------------------------------------------------------------------------------
$________________                              $________________                  ______________%
- -----------------------------------------------------------------------------------------------------------
$________________                              $________________                  ______________%
- -----------------------------------------------------------------------------------------------------------


[7.      Trade Date:       __________________] (4)

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

                                    ASSIGNOR

                                    [NAME OF ASSIGNOR]

                                    By: _____________________________
                                             Title:

                                    ASSIGNEE

                                    [NAME OF ASSIGNEE]

                                    By: _____________________________
                                             Title:

- ----------------------

(2) Amount to be adjusted by the counterparties to take into account any
payments or prepayments made between the Trade Date and the Effective Date.

(3) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Banks thereunder.

(4) To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.



[Consented to and] (5) Accepted:

BANK OF AMERICA, N.A., as Administrative Agent,
Issuing Bank and Swing Line Bank

By: _________________________________
    Title:

[Consented to:] (6)

[THE TORO COMPANY]

By: _________________________________
    Title:

- ----------------------

(5) To be added only if the consent of the Administrative Agent, Issuing Bank
and Swing Line Bank is required by the terms of the Credit Agreement.

(6) To be added only if the consent of the Borrower and/or other parties (e.g.
Swing Line Bank, Issuing Bank) is required by the terms of the Credit
Agreement.



                                            ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

   Multi-Year Credit Agreement, dated as of February 22, 2002, among The Toro
 Company, the Subsidiary Borrowers, and Toro Credit Company, the Banks parties
 thereto, and Bank of America, N.A., as Administrative Agent, Issuing Bank, and
                                Swing Line Bank

                        STANDARD TERMS AND CONDITIONS FOR

                            ASSIGNMENT AND ASSUMPTION

                  1.       Representations and Warranties.

                  1.1.     Assignor. The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Companies, any of their Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Companies, any of their Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Loan Document.

                  1.2.     Assignee. The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Bank under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required under
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Bank thereunder and, to the
extent of the Assigned Interest, shall have the obligations of a Bank
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 7.1
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Bank, and (v) if it is a
foreign corporation, partnership or trust under Section 10.11 of the Credit
Agreement, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Bank.



                  1.3      Assignee's Address for Notices, etc. Attached hereto
as Schedule 1 is all contact information, address, account and other
administrative information relating to the Assignee.

                  2.       Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to or on or after the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.

                  3.       General Provisions. This Assignment and Assumption
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.



                                         SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION

                                         ADMINISTRATIVE DETAILS

   (Assignee to list names of credit contacts, addresses, phone and facsimile
    numbers, electronic mail addresses and account and payment information)



                                   EXHIBIT E-1

                   FORM OF REVOLVING NOTE FOR TORO AND CREDIT

                                                       Dated:  February 22, 2002

         FOR VALUE RECEIVED, the undersigned, THE TORO COMPANY ("Toro"), a
Delaware corporation, and TORO CREDIT COMPANY ("Credit"), a Minnesota
corporation (Toro and Credit collectively referred to herein as the
"Companies"), jointly and severally hereby promise to pay to the order of
___________________ (the "Bank") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal
amount of each Loan (as defined in the Credit Agreement referred to below) made
by the Bank to the Companies pursuant to the Credit Agreement (as defined below)
when required by the Credit Agreement and in full on the Revolving Termination
Date (as defined in the Credit Agreement).

         The Companies, jointly and severally, promise to pay interest on the
unpaid principal amount of each Loan made to any of them from the date of such
Loan until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Credit Agreement.

         Both principal and interest are payable in lawful money of the United
States of America to Bank of America, N.A., as Administrative Agent, 1850
Gateway Boulevard, Concord, California 94520, in same day funds and in Dollars
and/or the applicable Optional Currency as provided in the Credit Agreement.
Each Loan made by the Bank to the Companies and the maturity thereof, the
currency in which such Loan is made, and all payments made on account of
principal thereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Revolving
Note.

         This Revolving Note is one of the Notes referred to in, and is entitled
to the benefits of, the Multi-Year Credit Agreement dated as of February 22,
2002 (as amended, the "Credit Agreement") among the Companies, the Subsidiary
Borrowers (as defined in the Credit Agreement), the Bank and certain other banks
parties thereto, and Bank of America, N.A., as Administrative Agent for the Bank
and such other banks. The Credit Agreement, among other things, (i) provides for
the making of Loans by the Bank to the Companies and the Subsidiary Borrowers
from time to time in an aggregate amount not to exceed at any time outstanding
the Bank's Commitment, the indebtedness of the Companies resulting from each
such Loan made to the Companies being evidenced by this Revolving Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

                            [Signature page follows.]



         IN WITNESS WHEREOF, the Companies have caused this Revolving Note to be
made, executed and delivered by their duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.

                                            THE TORO COMPANY

                                            By:_________________________________

                                            Title:______________________________

                                            TORO CREDIT COMPANY

                                            By:_________________________________

                                            Title:______________________________



                                   EXHIBIT E-2

               FORM OF REVOLVING NOTE FOR EACH SUBSIDIARY BORROWER

                                                       Dated:  February 22, 2002

         FOR VALUE RECEIVED, the undersigned, [SUBSIDIARY BORROWER] a
[Minnesota] corporation (the "Company"), hereby promises to pay to the order of
__________________ (the "Bank") for the account of its Applicable Lending Office
(as defined in the Credit Agreement referred to below) the principal amount of
each Loan (as defined in the Credit Agreement referred to below) made by the
Bank to the Company pursuant to the Credit Agreement (as defined below) when
required by the Credit Agreement and in full on the Revolving Termination Date
(as defined in the Credit Agreement).

         The Company promises to pay interest on the unpaid principal amount of
each Loan made to it by the Bank from the date of such Loan until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.

         Both principal and interest are payable in lawful money of the United
States of America to Bank of America, N.A., as Administrative Agent, 1850
Gateway Boulevard, Concord, California 94520, in same day funds and in Dollars
and/or the applicable Optional Currency as provided in the Credit Agreement.
Each Loan made by the Bank to the Company and the maturity thereof, the currency
in which such Loan is made, and all payments made on account of principal
thereof, shall be recorded by the Bank and, prior to any transfer hereof,
endorsed on the grid attached hereto which is part of this Revolving Note.

         This Revolving Note is one of the Notes referred to in, and is entitled
to the benefits of, the Multi-Year Credit Agreement dated as of February 22,
2002 (as amended, the "Credit Agreement") among the Company, The Toro Company,
Toro Credit Company, other Subsidiary Borrowers named therein (collectively, the
"Other Borrowers"), the Bank and certain other banks parties thereto, and Bank
of America, N.A., as Administrative Agent for the Bank and such other banks. The
Credit Agreement, among other things, (i) provides for the making of Loans by
the Bank to the Company and the Other Borrowers from time to time in an
aggregate amount not to exceed at any time outstanding the Bank's Commitment,
the indebtedness of the Company resulting from each such Loan being evidenced by
this Revolving Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

                            [Signature page follows.]



         IN WITNESS WHEREOF, the Company has caused this Revolving Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.

                                            [SUBSIDIARY BORROWER]

                                            By:_________________________________

                                            Title:______________________________



                                   EXHIBIT E-3

                            FORM OF SWING LINE NOTE

                                                       Dated:  February 22, 2002

         FOR VALUE RECEIVED, the undersigned, THE TORO COMPANY ("Toro"), a
Delaware corporation, and TORO CREDIT COMPANY ("Credit"), a Minnesota
corporation (Toro and Credit collectively referred to herein as the
"Companies"), jointly and severally hereby promise to pay to the order of
________________ (the "Swing Line Bank") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) the
principal amount of each Swing Loan (as defined in the Credit Agreement referred
to below) made by the Swing Line Bank to the Companies pursuant to the Credit
Agreement (as defined below) when required by the Credit Agreement and in full
on the Revolving Termination Date (as defined in the Credit Agreement).

         The Companies, jointly and severally, promise to pay interest on the
unpaid principal amount of each Swing Loan made to any of them from the date of
such Swing Loan until such principal amount is paid in full, at such interest
rates, and payable at such times, as are specified in the Credit Agreement.

         Both principal and interest are payable in lawful money of the United
States of America to Bank of America, N.A., as Administrative Agent, 1850
Gateway Boulevard, Concord, California 94520, for the account of the Swing Line
Bank, in same day funds and in Dollars. Each Swing Loan made by the Swing Line
Bank to the Companies and the maturity thereof, and all payments made on account
of principal thereof, shall be recorded by the Swing Line Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Swing Line Note.

         This Swing Line Note is one of the Notes referred to in, and is
entitled to the benefits of, the Multi-Year Credit Agreement dated as of
February 22, 2002 (as amended, the "Credit Agreement") among the Companies, the
Subsidiary Borrowers (as defined in the Credit Agreement), the Swing Line Bank
and certain other banks parties thereto, and Bank of America, N.A., as
Administrative Agent for the Swing Line Bank and the other banks. The Credit
Agreement, among other things, (i) provides for the making of Swing Loans by the
Swing Line Bank to the Companies from time to time in an aggregate amount not to
exceed at any time outstanding $20,000,000, the indebtedness of the Companies
resulting from each such Loan made to the Companies being evidenced by this
Swing Line Note, and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.

                            [Signature page follows.]



         IN WITNESS WHEREOF, the Companies have caused this Swing Line Note to
be made, executed and delivered by their duly authorized representative as of
the date and year first above written, all pursuant to authority duly granted.

                                            THE TORO COMPANY

                                            By:_________________________________

                                            Title:______________________________

                                            TORO CREDIT COMPANY

                                            By:_________________________________

                                            Title:______________________________



                                                                   Exhibit 10(o)

                 AMENDMENT NO. 1 TO MULTI-YEAR CREDIT AGREEMENT

         This Amendment No. 1 to Multi-Year Credit Agreement (this "Agreement")
dated as of December 11, 2002 is made by and among THE TORO COMPANY, a Delaware
corporation ("Toro"), the SUBSIDIARY BORROWERS (as defined in the Credit
Agreement, defined below), TORO CREDIT COMPANY, a Minnesota corporation
("Credit" and together with Toro and the Subsidiary Borrowers, the "Companies"),
TORO MANUFACTURING LLC, a Delaware limited liability company ("Manufacturing"),
BANK OF AMERICA, N.A., in its capacity as administrative agent (in such
capacity, the "Agent") and each of the Banks (as defined in the Credit
Agreement, defined below) signatory hereto.

                              W I T N E S S E T H:

         WHEREAS, the Companies, the Agent and the Banks have entered into that
certain Multi-Year Credit Agreement dated as of February 22, 2002 (as hereby
amended and as from time to time hereafter further amended, modified,
supplemented, restated, or amended and restated, the "Credit Agreement"; the
capitalized terms as used in this Agreement not otherwise defined herein shall
have the respective meanings given thereto in the Credit Agreement), pursuant to
which the Banks have made available to the Companies a revolving credit facility
(including a letter of credit facility and a swing line facility); and

         WHEREAS, the Companies have advised the Agent and the Banks that Toro
intends to transfer certain assets of Toro consisting of computer equipment,
machinery and equipment, furniture and fixtures, vehicles and tooling used in
manufacturing and engineering operations, and having an approximate aggregate
original cost of $213,000,000 and an approximate depreciated book value of
$35,000,000, to Manufacturing (the "Asset Transfer"); and

         WHEREAS, the Companies have advised the Agent and the Banks that Toro
Factoring Company N.V., a Curacao company, will be reincorporated (the
"Reincorporation") as Toro Factoring Company Limited ("Factoring") in Guernsey,
Channel Islands; and

         WHEREAS, the Companies have requested the consent of the Agent and the
Banks in connection with the Asset Transfer and the Reincorporation and the
Agent and the Banks signatory to this agreement have agreed to consent to the
Asset Transfer and the Reincorporation; and

         WHEREAS, Manufacturing will become a Subsidiary Borrower under the
Credit Agreement; and

         WHEREAS, the Companies have advised the Agent and the Banks that the
Companies desire to amend certain provisions of the Credit Agreement as set
forth herein, and the Agent and the Banks have agreed so to amend the Credit
Agreement on the terms and conditions set forth herein;



         NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

         1.       Amendments to Credit Agreement. Subject to the terms and
conditions set forth herein, the Credit Agreement is hereby amended as follows:

                  (a)      Section 1.1 is hereby amended by inserting the
         following new definition in the appropriate alphabetical order:

                  "Manufacturing," means Toro Manufacturing LLC, a Delaware
                  limited liability company.

                  (b)      Section 1.1 is hereby amended by deleting the
         definition of "Subsidiary Borrowers" in its entirety and inserting the
         following definition in lieu thereof:

                  "Subsidiary Borrowers" means, collectively, Toro International
                  Company, a Minnesota corporation, Tover Overseas B.V., a
                  Netherlands company, Toro Factoring Company Limited, a
                  Guernsey, Channel Islands company and Manufacturing.

                  (c)      Section 1.1 is hereby amended by deleting the
         definition of "Wholly-Owned Subsidiary" in its entirety and inserting
         the following definition in lieu thereof:

                  "Wholly-Owned Subsidiary" means any corporation, limited
                  liability company or partnership in which (other than
                  directors' qualifying shares required by law) 100% of the
                  capital stock, membership interests or partnership interests,
                  as applicable, of each class having ordinary voting power, and
                  100% of the capital stock, membership interests or partnership
                  interests, as applicable, of every other class, in each case,
                  at the time as of which any determination is being made, is
                  owned, beneficially and of record, by one of the Companies, or
                  by one or more of the other Wholly-Owned Subsidiaries, or
                  both."

                  (d)      Section 8.11 is hereby amended by deleting such
         section in its entirety and inserting the following in lieu thereof:

                  "8.11 Toro, Credit and Manufacturing Portion of Assets. The
                  consolidated total assets of Toro, Credit and Manufacturing at
                  the end of each fiscal year shall not be less than 67% of the
                  consolidated total assets of Toro and its Subsidiaries at such
                  time."

                  (e)      Section 12.18 is hereby amended by deleting such
         section in its entirety and inserting the following in lieu thereof:

                  "12.18 Liability of the Companies. All obligations of Toro,
                  Credit and Manufacturing or any 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, Credit
                  and Manufacturing, except only Toro shall be liable for the

                                       2


                  obligations of the Subsidiary Borrowers under Article XI
                  hereof. All obligations of the Subsidiary Borrowers (other
                  than Manufacturing) 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 (other than
                  Manufacturing) is obligated to repay only those Loans made by
                  the Banks to such Subsidiary Borrower and interest, fees,
                  expenses and other obligations owing by such Subsidiary
                  Borrower in connection with such Loans."

          2.      Consent and Waivers.

                  (a)      Asset Transfer. The Agent and the Banks hereby
         consent to the Asset Transfer and hereby waive any violation of
         Sections 8.2 or 8.3 of the Credit Agreement arising from such Asset
         Transfer.

                  (b)      Reincorporation. The Agent and the Banks hereby
         consent to the Reincorporation.

         3.       Conditions Precedent. The effectiveness of this Agreement and
the amendments to the Credit Agreement herein provided are subject to the
satisfaction of the following conditions precedent:

                  (a)      The Agent shall have received each of the following
         documents or instruments in form and substance reasonably acceptable to
         the Agent:

                           (i)      ten (10) original counterparts of this
                  Agreement, duly executed by the Companies, Manufacturing, the
                  Agent, and the Required Banks, together with all schedules and
                  exhibits thereto duly completed;

                           (ii)     a Revolving Note executed by Manufacturing
                  and delivered to each of the Banks;

                           (iii)    a Revolving Note executed by Factoring and
                  delivered to each of the Banks in replacement of the Revolving
                  Note previously executed and delivered on the Closing Date by
                  Factoring (the "Replaced Note") to each of the Banks, and each
                  Replaced Note shall be marked as cancelled and be returned by
                  each Bank to Toro after its receipt of such Revolving Note
                  from Factoring;

                           (iv)     a copy of each of the resolutions of the
                  board of directors of Factoring and the resolutions of an
                  authorized officer of Manufacturing, in each case authorizing
                  the transactions contemplated under the Loan Documents and
                  this Agreement, certified as of the date hereof by the
                  Secretary or Assistant Secretary of Factoring and
                  Manufacturing, respectively;

                           (v)      a certificate of the Secretary or Assistant
                  Secretary of Factoring and of Manufacturing certifying the
                  names and true signatures of the officers of Factoring and
                  Manufacturing, respectively, authorized to execute, deliver
                  and perform, as applicable, this Agreement, and all other Loan
                  Documents to be delivered by it hereunder;

                                       3


                           (vi)     a copy of the Organizational Documents of
                  Factoring and of Manufacturing as in effect on the date
                  hereof, certified by the Secretary or Assistant Secretary of
                  Factoring and Manufacturing, respectively;

                           (vii)    a certificate of good standing or similar
                  status as may be available for Factoring and for Manufacturing
                  from the applicable Governmental Authority of its jurisdiction
                  of incorporation and its principal place of business;

                           (viii)   a certificate of a Responsible Officer
                  demonstrating compliance with Section 8.11 as amended hereby
                  as of August 2, 2002 together with a consolidating balance
                  sheet of Toro and its Subsidiaries as of such date; and

                           (ix)     such other documents, instruments, opinions,
                  certifications, undertakings, further assurances and other
                  matters as the Agent shall reasonably require.

                  (b)      all fees and expenses payable to the Agent and the
         Banks (including the fees and expenses of counsel to the Agent) accrued
         to date, including all fees associated with this Agreement, shall have
         been paid in full.

         4.       Joinder of Toro Manufacturing LLC. Manufacturing hereby agrees
that, by its execution of this Agreement, Manufacturing hereby becomes a party
to the Credit Agreement, and is and shall be for all purposes a "Subsidiary
Borrower" and a "Company" under the Credit Agreement, and shall have, and hereby
unconditionally, absolutely and irrevocably assumes, joint and several liability
for all of the obligations of a Company and a Subsidiary Borrower thereunder as
if it had manually executed the Credit Agreement. Manufacturing hereby ratifies,
as of the date hereof, and agrees to be bound by, all of the terms, provisions
and conditions contained in the Credit Agreement applicable to each Subsidiary
Borrower, to each Company and specifically to itself.

         5.       Reaffirmation by Toro Factoring Company Limited and each of
the Companies. Toro Factoring Company Limited hereby confirms and ratifies in
all respects its Obligations incurred and agreed to heretofore as Toro Factoring
Company N.V. in its capacity as a Subsidiary Borrower and Company under each of
the Loan Documents and together with each of the Companies hereby consents,
acknowledges and agrees to the amendments of the Credit Agreement set forth
herein.

         6.       Representations and Warranties. In order to induce the Agent
and the Banks to enter into this Agreement, each of the Companies and
Manufacturing represents and warrants to the Agent and the Banks as follows:

                  (a)      The representations and warranties in Article VI of
         the Credit Agreement (after giving effect to this Agreement) and in
         each of the other Loan Documents to which such Company or Manufacturing
         is a party are true and correct in all material respects on and as of
         the date hereof, except to the extent that such representations and
         warranties expressly relate to an earlier date;

                                        4


                  (b)      There does not exist any pending or threatened
         action, suit, investigation or proceeding in any court or before any
         arbitrator or Governmental Authority that purports (A) to have a
         Material Adverse Effect on Manufacturing or any of the Companies or
         their Subsidiaries, or (B) to affect any transaction contemplated under
         this Agreement or any Loan Document or the ability of any Company or
         Manufacturing to perform its respective obligations under this
         Agreement or any Loan Document;

                  (c)      There has occurred since October 31, 2001, no 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;

                  (d)      No Default or Event of Default has occurred and is
         continuing; and

                  (e)      Toro's Debt Rating as of the date hereof is Baa3 by
         Moody's and BBB- by S&P.

         7.       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 12.1 of the Credit Agreement.

         8.       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.

         9.       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.

         10.      Governing Law. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the state of New
York.

         11.      Enforceability. Should any one or more of the provisions of
this Agreement 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.

         12.      References. All references in any of the Loan Documents to the
"Credit Agreement" shall mean the Credit Agreement, as amended hereby.

                                       5


         13.      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Companies, Manufacturing, the Agent and each of
the Banks, and their respective successors, assigns and legal representatives;
provided, however, that neither Manufacturing nor any Company, without the prior
consent of the Required Banks, may assign any rights, powers, duties or
obligations hereunder.

         14.      Expenses. The Companies and Manufacturing agree to pay to the
Agent all reasonable out-of-pocket expenses incurred or arising in connection
with the negotiation and preparation of this Agreement.

                            [SIGNATURE PAGES FOLLOW.]

                                       6


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to Multi-Year Credit Agreement to be made, executed and delivered by their duly
authorized officers as of the day and year first above written.

                           THE TORO COMPANY

                           By: /s/ J. Lawrence McIntyre
                               --------------------------------------------
                           Name:   J. Lawrence McIntyre
                           Title:  Vice President, Secretary General Counsel

                           TORO CREDIT COMPANY

                           By: /s/ Stephen P. Wolfe
                               --------------------------------------------
                           Name:  Stephen P. Wolfe
                           Title: President

                           TORO INTERNATIONAL COMPANY

                           By: /s/ Stephen P. Wolfe
                               --------------------------------------------
                           Name:  Stephen P. Wolfe
                           Title: V. Pres. Treasurer

                           TOVER OVERSEAS B.V.

                           By: /s/ Robert Buitendijk
                               --------------------------------------------
                           Name: Temmes Management Services B.V.
                           Title: Director

                           TORO FACTORING COMPANY LIMITED (formerly
                           TORO FACTORING COMPANY N.V.)

                           By: /s/ Paula Graff
                               --------------------------------------------
                           Name:  Paula Graff
                           Title: Director

                              Signature Page 1 of 9



                           TORO MANUFACTURING LLC

                           By: /s/ Stephen P. Wolfe
                               --------------------------------------------
                           Name:  Stephen P. Wolfe
                           Title: President

                             Signature Page 2 of 9



                           BANK OF AMERICA, N.A., as Administrative Agent

                           By: /s/ Jeffrey A. Armitage
                               --------------------------------------------
                           Name:  Jeffrey A. Armitage
                           Title: Vice President

                              Signature Page 3 of 9



                           BANK OF AMERICA, N.A.,
                           as Issuing Bank, Swing Line Bank and a Bank

                           By: /s/ Jeffrey A. Armitage
                               --------------------------------------------
                           Name:  Jeffrey A. Armitage
                           Title: Vice President

                              Signature Page 4 of 9



                           WELLS FARGO BANK, NATIONAL ASSOCIATION
                           as a Bank

                           By: /s/ Scott D. Bjelde
                               --------------------------------------------
                           Name:  Scott D. Bjelde
                           Title: Vice President and Senior Banker
                                  Wells Fargo Bank, National Association

                           WELLS FARGO BANK, NATIONAL ASSOCIATION
                           as a Bank

                           By: /s/ Christopher A. Cudak
                               --------------------------------------------
                           Name:  Christopher A. Cudak
                           Title: Vice President
                                  Wells Fargo Bank, National Association

                              Signature Page 5 of 9



                           THE BANK OF NEW YORK, as a Bank

                           By: /s/ JOHN-PAUL MAROTTA
                               --------------------------------------
                           Name:  JOHN-PAUL MAROTTA
                           Title: VICE PRESIDENT

                              Signature Page 6 of 9




                           HARRIS TRUST AND SAVINGS BANK, as a Bank

                           By: /s/ ANDREW T. CLAAR
                               --------------------------------------------
                           Name:  ANDREW T. CLAAR
                           Title: VICE PRESIDENT

                              Signature Page 7 of 9



                           U.S. BANK NATIONAL ASSOCIATION, as a Bank

                           By: /s/ Karen Weathers
                               --------------------------------------------
                           Name:  Karen Weathers
                           Title: Vice President

                              Signature Page 8 of 9



                           SUNTRUST BANK, as a Bank

                           By: /s/ Molly J. Drennan
                               --------------------------------------------
                           Name:  Molly J. Drennan
                           Title: Director

                              Signature Page 9 of 9



                                                                   EXHIBIT 10(p)

                 AMENDMENT NO. 2 TO MULTI-YEAR CREDIT AGREEMENT

         This Amendment No. 2 to Multi-Year Credit Agreement (this "Agreement")
dated as of July 9, 2003 is made by and among THE TORO COMPANY, a Delaware
corporation ("Toro"), the SUBSIDIARY BORROWERS (as defined in the Credit
Agreement, defined below), TORO CREDIT COMPANY, a Minnesota corporation
("Credit" and together with Toro and the Subsidiary Borrowers, the "Companies"),
EXMARK MANUFACTURING COMPANY INCORPORATED, a Nebraska corporation ("Exmark"),
BANK OF AMERICA, N.A., in its capacity as administrative agent (in such
capacity, the "Agent") and each of the Banks (as defined in the Credit
Agreement, defined below) signatory hereto.

                              W I T N E S S E T H:

         WHEREAS, the Companies, the Agent and the Banks have entered into that
certain Multi-Year Credit Agreement dated as of February 22, 2002, as amended by
that certain Amendment No. 1 to Multi-Year Credit Agreement dated December 11,
2002 (as hereby further amended and as from time to time hereafter further
amended, modified, supplemented, restated, or amended and restated, the "Credit
Agreement"; the capitalized terms as used in this Agreement not otherwise
defined herein shall have the respective meanings given thereto in the Credit
Agreement), pursuant to which the Banks have made available to the Companies a
revolving credit facility (including a letter of credit facility and a swing
line facility); and

         WHEREAS, the Companies have advised the Agent and the Banks that Toro
intends to enter into, concurrently with the execution and delivery of this
Agreement, a receivables purchase facility providing for the sale of
Receivables; and

         WHEREAS, Exmark will become a Subsidiary Borrower under the Credit
Agreement; and

         WHEREAS, the Companies have advised the Agent and the Banks that the
Companies desire to amend certain provisions of the Credit Agreement as set
forth herein, and the Agent and the Banks have agreed so to amend the Credit
Agreement on the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

         1.       Amendments to Credit Agreement. Subject to the terms and
conditions set forth herein, the Credit Agreement is hereby amended as follows:

                  (a)      Section 1.1 is hereby amended by inserting the
         following new definition in the appropriate alphabetical order:

                  "'Exmark,' means Exmark Manufacturing Company Incorporated, a
                  Nebraska corporation."



                  (b)      Section 1.1 is hereby amended by deleting clause (h)
         from the definition of "Indebtedness" and inserting the following in
         lieu thereof:

                  "(h)(i) the unpaid amount of all Receivables sold by any
                  Company (other than Receivables sold pursuant to the
                  Receivables Purchase Facility) and (ii) the unpaid principal
                  amount of all Loans (as defined in the Receivables Purchase
                  Facility) owing by Toro Receivables Company or any Affiliate
                  thereof or successor thereto as Borrower under the Receivables
                  Purchase Facility; and"

                  (c)      Section 1.1 is hereby amended by adding the following
         language to the end of the definition of "Material Subsidiary":

                  "; provided, that Toro Receivables Company and each successor
                  thereto as purchaser and borrower under the Receivables
                  Purchase Facility shall not be Material Subsidiaries."

                  (d)      Section 1.1 is hereby amended by inserting the
         following definition of "Receivables Loan Agreement" in the appropriate
         alphabetical order:

                  "'Receivables Loan Agreement' shall have the meaning set forth
                  in the definition of 'Receivables Purchase Facility' in
                  Section 1.1."

                  (e)      Section 1.1 is hereby amended by deleting the
         definition of "Receivables Purchase Facility" in its entirety and
         inserting the following definition in lieu thereof:

                  "'Receivables Purchase Facility' means, collectively, (A) that
                  certain Receivables Purchase Agreement dated as of July 9,
                  2003 between Toro Receivables Company, as Purchaser, Toro, as
                  the Originator, and (B) that certain Loan Agreement dated as
                  of July 9, 2003 ('Receivables Loan Agreement') among Toro
                  Receivables Company, as Borrower, Toro, as Servicer, Three
                  Pillars Funding Corporation, as Lender, and SunTrust Capital
                  Markets, Inc., as Administrator, each reasonably acceptable in
                  form and substance to the Administrative Agent and the
                  Required Banks and each of which shall not be amended in any
                  manner disadvantageous to the Banks or the Originator without
                  the prior written consent of the Required Banks."

                  (f)      Section 1.1 is hereby amended by deleting the
         definition of "Subsidiary Borrowers" in its entirety and inserting the
         following definition in lieu thereof:

                  "'Subsidiary Borrowers' means, collectively, Toro
                  International Company, a Minnesota corporation, Tover Overseas
                  B.V., a Netherlands company, Toro Factoring Company Limited, a
                  Guernsey, Channel Islands company, Manufacturing and Exmark."

                  (g)      Article VI is hereby amended by adding the following
         new Section 6.16:

                                       2


                  "6.16 Tax Shelter Regulations. The Companies do not intend to
                  treat the Loans and/or Letters of Credit and related
                  transactions as being a 'reportable transaction' (within the
                  meaning of Treasury Regulation Section 1.6011-4). In the event
                  the Companies determine to take any action inconsistent with
                  such intention, Toro will promptly notify the Administrative
                  Agent thereof. If the Companies so notify the Administrative
                  Agent, the Companies acknowledge that one or more of the Banks
                  may treat its Loans and/or its interest in Swing Line Loans
                  and/or Letters of Credit as part of a transaction that is
                  subject to Treasury Regulation Section 301.6112-1, and such
                  Bank or Banks, as applicable, will maintain the lists and
                  other records required by such Treasury Regulation."

                  (h)      Section 7.2 is hereby amended by adding the following
         new Section 7.2(e):

                  "(e) promptly after Toro has notified the Administrative Agent
                  of any intention by the Companies to treat the Loans and/or
                  Letters of Credit and related transactions as being a
                  "reportable transaction" (within the meaning of Treasury
                  Regulation Section 1.6011-4), a duly completed copy of IRS
                  Form 8886 or any successor form."

                  (i)      Section 8.2(d) is hereby amended by deleting such
         section in its entirety and inserting the following in lieu thereof:

                  "(d) dispositions by the Originator of Receivables pursuant to
                  the Receivables Purchase Facility, provided that (I) the
                  aggregate outstanding principal amount of loans made to the
                  SPV in connection with the Receivables Purchase Facility shall
                  not at any time exceed $100,000,000, and (II) at no time shall
                  the SPV for any reason, whether pursuant to Contractual
                  Obligations, Organizational Documents, or otherwise, be
                  limited or restricted in its ability to make Restricted
                  Payments to Toro or otherwise transfer property to Toro."

                  (j)      Section 8.8 is hereby amended by inserting the
         following language at the end of such Section 8.8:

                  "Toro Receivables Company and each successor thereto as
                  purchaser and borrower under the Receivables Purchase Facility
                  may not engage in any business other than acting as an SPV in
                  connection with a Receivables Purchase Facility."

                  (k)      Section 8.11 is hereby amended by deleting such
         section in its entirety and inserting the following in lieu thereof:

                  "8.11 Toro, Credit, Manufacturing and Exmark Portion of
                  Assets. The consolidated total assets of Toro, Credit,
                  Manufacturing and Exmark at the end of each fiscal year shall
                  not be less than 67% of the consolidated total assets of Toro
                  and its Subsidiaries at such time."

                  (1)      Section 9.1(e)(ii) is hereby amended and restated in
         its entirety as follows:

                                       3


                  "(ii)(A) there occurs any Purchase Termination Event as
                  defined in the Receivables Purchase Facility or any other
                  termination, liquidation, unwind or similar event or
                  circumstance under the Receivables Purchase Facility other
                  than a voluntary termination by any Company or a scheduled
                  termination, as a result of which the SPV has ceased
                  purchasing such Receivables from the Originator and all loans
                  and obligations owing by the SPV have become immediately due
                  and payable (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
                  Companies that provides liquidity, credit or other support in
                  connection with such facility; (ii) termination of the
                  Lender's Commitment by the Lender (as those two terms are
                  defined in the Receivables Loan Agreement) pursuant to the
                  terms of Section 2.5 of the Receivables Loan Agreement; (iii)
                  failure on the part of the Lender to pay amounts due under the
                  Receivables Loan Agreement for reasons stated in Section 15.14
                  of the Receivables Loan Agreement (iv) the occurrence of an
                  Amortization Event (other than those described in subsections
                  10.2(a), 10.2(g) and 10.2(h)(i) and (ii) of the Receivables
                  Loan Agreement) as that term is defined in the Receivables
                  Loan Agreement or (v) breach of a covenant contained in the
                  Receivables Purchase Facility and this Agreement if the Banks
                  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 the Receivables Purchase Facility, it being
                  acknowledged by the Companies that no waiver by the Banks of
                  compliance with the provisions of this Agreement in any
                  particular instance shall constitute a waiver under either
                  this Agreement or the Receivables Purchase Facility of any
                  future non-compliance with such provision and"

                  (m)      Section 12.8 is hereby amended by inserting the
         following language at the end of such Section 12.8:

                  "Notwithstanding anything herein to the contrary, the
                  Administrative Agent and each Bank may disclose without
                  limitation of any kind, any information with respect to the
                  "tax treatment" and "tax structure" (in each case, within the
                  meaning of Treasury Regulation Section 1.6011-4) of the
                  transactions contemplated hereby) and all materials of any
                  kind (including opinions or other tax analyses) that are
                  provided to the Administrative Agent or such Bank relating to
                  such tax treatment and tax structure; provided that with
                  respect to any document or similar item that in either case
                  contains information concerning the tax treatment or tax
                  structure of the transaction as well as other information,
                  this sentence shall only apply to such portions of the
                  document or similar item that relate to the tax treatment or
                  tax structure of the Loans, Letters of Credit and transactions
                  contemplated hereby."

                  (n)      Section 12.18 is hereby amended by deleting such
         section in its entirety and inserting the following in lieu thereof:

                                       4


                  "12.18 Liability of the Companies. All obligations of Toro,
                  Credit, Manufacturing and Exmark or any 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, Credit,
                  Manufacturing and Exmark, except only Toro shall be liable for
                  the obligations of the Subsidiary Borrowers under Article XI
                  hereof. All obligations of the Subsidiary Borrowers (other
                  than Manufacturing and Exmark) 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 (other
                  than Manufacturing and Exmark) is obligated to repay only
                  those Loans made by the Banks to such Subsidiary Borrower and
                  interest, fees, expenses and other obligations owing by such
                  Subsidiary Borrower in connection with such Loans."

                  (o)      Section 4(b)(i) of Exhibit C, the Form of Compliance
         Certificate, is hereby deleted in its entirety.

                  (p)      The Credit Agreement and all exhibits thereto are
         amended to delete the definition of "364-Day Credit Agreement" and all
         uses thereof and references thereto.

         2.       Conditions Precedent. The effectiveness of this Agreement and
the amendments to the Credit Agreement herein provided are subject to the
satisfaction of the following conditions precedent:

                  (a)      The Agent shall have received each of the following
         documents or instruments in form and substance reasonably acceptable to
         the Agent:

                           (i)      ten (10) original counterparts of this
                  Agreement, duly executed by the Companies, Exmark, the Agent,
                  and the Required Banks, together with all schedules and
                  exhibits thereto duly completed;

                           (ii)     a Revolving Note executed by Exmark and
                  delivered to each of the Banks;

                           (iii)    a copy of the resolutions of the board of
                  directors of Exmark authorizing the transactions contemplated
                  under the Loan Documents and this Agreement, certified as of
                  the date hereof by the Secretary or Assistant Secretary of
                  Exmark;

                           (iv)     a certificate of the Secretary or Assistant
                  Secretary of Exmark certifying the names and true signatures
                  of the officers of Exmark authorized to execute, deliver and
                  perform, as applicable, this Agreement, and all other Loan
                  Documents to be delivered by it hereunder;

                           (v)      a copy of the Organizational Documents of
                  Exmark as in effect on the date hereof, certified by the
                  Secretary or Assistant Secretary of Exmark;

                                       5


                           (vi)     a certificate of good standing or similar
                  status as may be available for Exmark from the applicable
                  Governmental Authority of its jurisdiction of incorporation
                  and its principal place of business;

                           (vii)    a certificate of a Responsible Officer
                  demonstrating compliance with Section 8.11 as amended hereby
                  as of January 31, 2003 together with a consolidating balance
                  sheet of Toro and its Subsidiaries as of such date;

                           (viii)   a copy of each of the executed Receivables
                  Purchase Agreement and the executed Receivables Loan Agreement
                  referred to in the definition of Receivables Purchase Facility
                  and permitted under Section 8.2(d) of the Credit Agreement
                  certified by a Responsible Officer as being true, correct and
                  complete; and

                           (ix)     such other documents, instruments, opinions,
                  certifications, undertakings, further assurances and other
                  matters as the Agent shall reasonably require.

                  (b)      all fees and expenses payable to the Agent and the
         Banks (including the fees and expenses of counsel to the Agent) accrued
         to date, including all fees associated with this Agreement, shall have
         been paid in full.

         3.       Joinder of Exmark. Exmark hereby agrees that, by its execution
of this Agreement, Exmark hereby becomes a party to the Credit Agreement, and is
and shall be for all purposes a "Subsidiary Borrower" and a "Company" under the
Credit Agreement, and shall have, and hereby unconditionally, absolutely and
irrevocably assumes, joint and several liability for all of the obligations of a
Company and a Subsidiary Borrower thereunder as if it had manually executed the
Credit Agreement. Exmark hereby ratifies, as of the date hereof, and agrees to
be bound by, all of the terms, provisions and conditions contained in the Credit
Agreement applicable to each Subsidiary Borrower, to each Company and
specifically to itself.

         4.       Reaffirmation by each of the Companies. Each of the Companies
hereby consents, acknowledges and agrees to the amendments of the Credit
Agreement set forth herein.

         5.       Representations and Warranties. In order to induce the Agent
and the Banks to enter into this Agreement, each of the Companies and Exmark
represents and warrants to the Agent and the Banks as follows:

                  (a)      The representations and warranties in Article VI of
         the Credit Agreement (after giving effect to this Agreement) and in
         each of the other Loan Documents to which such Company or Exmark is a
         party are true and correct in all material respects on and as of the
         date hereof, except to the extent that such representations and
         warranties expressly relate to an earlier date;

                  (b)      There does not exist any pending or threatened
         action, suit, investigation or proceeding in any court or before any
         arbitrator or Governmental Authority that purports (A) to have a
         Material Adverse Effect on Exmark or any of the Companies or their
         Subsidiaries, or (B) to affect any transaction contemplated under this
         Agreement or

                                       6


         any Loan Document or the ability of any Company or Exmark to perform
         its respective obligations under this Agreement or any Loan Document;

                  (c)      There has occurred since October 31, 2002, no 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;

                  (d)      No Default or Event of Default has occurred and is
         continuing; and

                  (e)      Toro's Debt Rating as of the date hereof is Baa3 by
         Moody's and BBB- by S&P.

         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 12.1 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 Agreement 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 Companies, Exmark, the Agent and each of the
Banks, and their respective successors, assigns and legal representatives;
provided, however, that neither Exmark nor any

                                       7


Company, without the prior consent of the Required Banks, may assign any rights,
powers, duties or obligations hereunder.

         13.      Expenses. The Companies and Exmark agree to pay to the Agent
all reasonable out-of-pocket expenses incurred or arising in connection with the
negotiation and preparation of this Agreement.

                            [SIGNATURE PAGES FOLLOW.]

                                       8


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to Multi-Year Credit Agreement to be made, executed and delivered by their duly
authorized officers as of the day and year first above written.

                                       THE TORO COMPANY

                                       By: /s/ J. Lawrence McIntyre
                                           -------------------------------------
                                       Name:   J. Lawrence McIntyre
                                       Title:  Vice President, Secretary, and
                                               General Counsel

                                       TORO CREDIT COMPANY

                                       By: /s/ Stephen P. Wolfe
                                           -------------------------------------
                                       Name:   Stephen P. Wolfe
                                       Title:  President

                                       TORO INTERNATIONAL COMPANY

                                       By: /s/ Stephen P. Wolfe
                                           -------------------------------------
                                       Name:   Stephen P. Wolfe
                                       Title:  Vice President and Treasurer

                                       TOVER OVERSEAS, B.V.

                                       By: /s/ Robert Buitendijk
                                           -------------------------------------
                                       Name:   Temmes Management Services B.V.
                                       Title:  Director

                                       TORO FACTORING COMPANY LIMITED (formerly
                                       TORO FACTORING COMPANY, N.V.)

                                       By: /s/ J. Lawrence McIntyre
                                           -------------------------------------
                                       Name:   J. Lawrence McIntyre
                                       Title:  Director

                              Signature Page 1 of 9



                                       TORO MANUFACTURING LLC

                                       By: /s/ Stephen P. Wolfe
                                           -------------------------------------
                                       Name:   Stephen P. Wolfe
                                       Title:  President

                                       EXMARK MANUFACTURING COMPANY INCORPORATED

                                       By: /s/ Stephen P. Wolfe
                                           -------------------------------------
                                       Name:   Stephen P. Wolfe
                                       Title:  Chief Financial Officer

                             Signature Page 2 of 9


                                       BANK OF AMERICA, N.A., as Administrative
                                       Agent

                                       By: /s/ Jeffrey A. Armitage
                                           -------------------------------------
                                       Name:   Jeffrey A. Armitage
                                       Title:  Principal

                              Signature Page 3 of 9



                                       BANK OF AMERICA, N.A.,
                                       as Issuing Bank, Swing Line Bank and a
                                       Bank

                                       By: /s/ Jeffrey A. Armitage
                                           -------------------------------------
                                       Name:   Jeffrey A. Armitage
                                       Title:  Principal

                              Signature Page 4 of 9



                                       WELLS FARGO BANK, NATIONAL ASSOCIATION as
                                       a Bank

                                       By: /s/ Scott D.Bjelde
                                           -------------------------------------
                                       Name:   Scott D.Bjelde
                                       Title:  Vice President and Senior Banker
                                               Wells Fargo Bank, National
                                               Association

                                       By: /s/ Christopher A. Cudak
                                           -------------------------------------
                                       Name:   Christopher A. Cudak
                                       Title:  Senior Vice President
                                               Wells Fargo Bank, National
                                               Association

                              Signature Page 5 of 9



                                       THE BANK OF NEW YORK, as a Bank

                                       By: /s/ JOHN-PAUL MAROTTA
                                           -------------------------------------
                                       Name:   JOHN-PAUL MAROTTA
                                       Title:  VICE PRESIDENT

                              Signature Page 6 of 9



                                       HARRIS TRUST AND SAVINGS BANK, as a Bank

                                       By: /s/ ANDREW T. CLAAR
                                           -------------------------------------
                                       Name:   ANDREW T. CLAAR
                                       Title:  VICE PRESIDENT

                              Signature Page 7 of 9



                                       U.S. BANK NATIONAL ASSOCIATION, as a Bank

                                       By: /s/ Aimee P. Brantseg
                                           -------------------------------------
                                       Name:   Aimee P. Brantseg
                                       Title:  Corporate Banking Officer

                              Signature Page 8 of 9



                                       SUNTRUST BANK, as a Bank

                                       By: /s/ Molly J. Drennan
                                           -------------------------------------
                                       Name:   Molly J. Drennan
                                       Title:  Director

                              Signature Page 9 of 9



                                                                  EXHIBIT 10(q)
                                                                  EXECUTION COPY

================================================================================

                                 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

================================================================================



                                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



                                       ii



                                                                                                                
    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
- --------
               
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
 ---------
               
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


                                       iii



                                 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).

                                       2



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.

                                        3



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 Moody's , 8.0% of the Aggregate Unpaid Balance; (ii) equal to A-2 by S&P
and P-2 by Moody's, 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 Moody's or (ii) has any short term unsecured debt that is not rated
at least A-2- by S&P and P-2 by Moody's, 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.

                                        4



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.

                                        5



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.

                                        6



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 Moody's.

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;

                                        7



         (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

                                        8



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: Moody's 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 McGraw-Hill 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,
Tover 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
                                        30

Yield 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) 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.

                                       21



                           (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. 061000104 at Bank's office at 25 Park Place in Atlanta,
Georgia, Attn: Mary Hinsberg (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, sue 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.

                                       36



         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

                                       43


                  (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

                                       44


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;

                                       45


                           (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.

                                       48


         (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.

                                       49


                                   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

                                       50


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.

                                       51


                  (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.

                                       60


         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]

                                       62


         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
                                            8111 Lyndale Avenue South
                                            Bloomington, MN 55420

                                            Attention: Tom Larson
                                            Facsimile: (952) 887-8449

                                            with a copy to

                                            Toro Receivables Company
                                            8111 Lyndale Avenue South
                                            Bloomington, MN 55420

                                            Attention: Deb Sakalos
                                            Facsimile: (952) 887-8449



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.
6525 Morrison Boulevard
Suite 318
Charlotte, North Carolina 28211

Attention:    Doug Johnson
Facsimile No: (704) 365-1362

SUNTRUST CAPITAL MARKETS, INC.
as Administrator

By: ___________________________
Name: _________________________
Title: ________________________

Address for notice:
24th Floor MC3950
303 Peachtree Street
Atlanta, Georgia 30308

Attention: James Bennison
Facsimile: (404) 230-1344



TORO RECEIVABLES COMPANY,

By: ___________________________
Name: _________________________
Title: ________________________

Address for notice:
Toro Receivables Company
8111 Lyndale Avenue South
Bloomington, MN 55420

Attention: Tom Larson
Facsimile: (952) 887-8449

with a copy to

Toro Receivables Company
8111 Lyndale Avenue South
Bloomington, MN 55420

Attention: Deb Sakalos
Facsimile: (952) 887-8449

[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)                     800 Nicollet Mall
                                         Minneapolis, Minnesota
                                         55402
- ---------------------------------------------------------------------------------------------------
Harris Bank                              Toro Dealer                                      4277554
(Lockbox Account)                        36333 Treasury Center
                                         Chicago, Illinois 60694-6300

                                         GLD Mass Toro Distributor
                                         36346 Treasury Center
                                         Chicago, Illinois 60694-6300
- ---------------------------------------------------------------------------------------------------




                                   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:

                           Berk Jolly
                           SunTrust Capital Markets, Inc.
                           Mail Code 3950
                           303 Peachtree Street, 24th Floor
                           Atlanta, GA 30308

         (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
                           8111 Lyndale Avenue South
                           Bloomington, MN 55420

                           Attention: Tom Larson
                           Facsimile: (952) 887-8449
                           Telephone: (952) 887-5924

                           with a copy to:

                           Toro Receivables Company
                           8111 Lyndale Avenue South
                           Bloomington, MN 55420

                           Attention: Deb Sakalos
                           Facsimile: (952) 887-8125
                           Telephone: (952) 887-5924

                           Principal Place of Business and Chief Executive
                           Office:

Servicer:                  The Toro Company
                           8111 Lyndale Avenue South
                           Bloomington, MN 55420

                           Attention: Tom Larson
                           Facsimile: (952) 887-8449
                           Telephone: (952) 887-5924

                           with a copy to:

                           The Toro Company
                           8111 Lyndale Avenue South
                           Bloomington, MN 55420

                           Attention: Deb Sakalos
                           Facsimile: (952) 887-8125
                           Telephone: (952) 887-5924



Lender:                    Three Pillars Funding Corporation
                           c/o Amacar Group, L.L.C.
                           6525 Morrison Boulevard
                           Suite 318
                           Charlotte, North Carolina 28211

                           Attention: Doug Johnson
                           Facsimile: (704) 365-1362
                           Telephone: (704) 365-0569

Administrator:             SunTrust Capital Markets, Inc.
                           24th Floor MC3950
                           303 Peachtree Street
                           Atlanta, Georgia 30308

                           Attention: James Bennison
                           Facsimile: (404) 230-1344
                           Telephone: (404) 532-0766



                                  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



                                                                   EXHIBIT 31(a)

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kendrick B. Melrose, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Toro Company;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a)       Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         c)       Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         b)       Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: September 10, 2003

/s/ Kendrick B. Melrose
- ------------------------
Kendrick B. Melrose
Chairman and Chief Executive Officer
(Principal Executive Officer)



                                                                   EXHIBIT 31(b)

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen P. Wolfe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Toro Company;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in the report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a)       Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         c)       Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         b)       Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: September 10, 2003

/s/ Stephen P. Wolfe
- ---------------------
Stephen P. Wolfe
Vice President, Finance
Treasurer and Chief Financial Officer
(Principal Financial Officer)



                                                                      EXHIBIT 32

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Toro Company (the "Company") on
Form 10-Q for the quarterly period ended August 1, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), we,
Kendrick B. Melrose, Chairman and Chief Executive Officer of the Company, and
Stephen P. Wolfe, Vice President-Finance, Treasurer and Chief Financial Officer
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

         (1)      The Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.

/s/ Kendrick B. Melrose
- -------------------------------------
Kendrick B. Melrose
Chairman and Chief Executive Officer
September 10, 2003

/s/ Stephen P. Wolfe
- -------------------------------------
Stephen P. Wolfe
Vice President-Finance,
Treasurer and Chief Financial Officer
September 10, 2003

This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.

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