Toad is replacing the caret return and space with \xOD\xOA in the script that it generated. Select the procedure(s) you need to have a script for, right mouse and click 'send to' (for procedures the menu choice of generate sql directly to a file is not an option), then select 'editor as script'. You can see the special characters in this text, also you have to click on each tab the 'generate proc script' created and manually create a file to disk for each procedure. The way it worked for tables was ideal and so far have not found errors in the syntax for table scripts generated
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