Install a new DB2 client that is supported by the version of Toad being used.
Here is a link where a DB2 client can be downloaded from:
http://www-01.ibm.com/support/docview.wss?uid=swg24036706
Download the package noted as:
"IBM Data Server Runtime Client" (2nd item)
Note: If there are any issues with the download or install of the client itself, please follow up with IBM DB2 Support for further assistance with the client.