Exhibit 10.7

SECOND AMENDMENT
OF
GRACO INC.
DEFERRED COMPENSATION PLAN RESTATED
(1992 RESTATEMENT)

        WHEREAS, Graco Inc. (“Graco” or the “Company”) has heretofore
established and maintained an unfunded deferred compensation plan (the “Plan”)
which, in its most recent amended and restated for, is embodied in a document
entitled “Graco Inc. Deferred Compensation Plan Restated”, effective December 1,
1992 as amended by a First Amendment dated May 6, 1997 (the Plan as so amended,
is hereinafter referred to as the “Plan Statement”) is hereby amended as
follows:

1.

APPENDIX A. Effective as of May 27, 200, Appendix A of the Plan Statement shall
be amended to read in full as follows. [See Appendix A attached.]

2.

SAVINGS CLAUSE. Save and except as herein above expressly amended, the Plan
Statement shall continue in full force and effect.

        IN WITHNESS WHEREOF, each of the parties hereto has caused these
presents to be executed, all as of the day and year first above written.

  GRACO INC.               By /s/Mark W.
Sheahan                                                                   Vice
President               By /s/Robert M. Mattison
                                                          Robert M. Mattison    
      Vice President