Second Amendment to Revolving Credit Agreement and Waiver



 Exhibit 10.5 
 SECOND AMENDMENT TO REVOLVING 
 CREDIT AGREEMENT AND WAIVER 

THIS SECOND AMENDMENT AND WAIVER (this “Amendment”), is entered into as of February 15, 2012, by and among
GRACO INC. (the “Borrower”), the Banks (as defined in the Credit Agreement) signatory hereto and U.S. BANK NATIONAL ASSOCIATION, as Agent for the Banks (in such capacity, the “Agent”). Capitalized terms used herein
but not defined herein shall have the meaning given such terms in the Credit Agreement (as defined below). 
 W I T
N E S S E T H 
 WHEREAS, the Borrower, the Banks and the Agent are
party to that certain Revolving Credit Agreement, dated as of July 12, 2007 (as amended, restated, supplemented, or otherwise modified prior to the date hereof, the “Credit Agreement”); 

WHEREAS, the Borrower has requested that certain modifications be made to the Credit Agreement; and 

WHEREAS, the Banks have agreed to amend the Credit Agreement on the terms and conditions set forth herein. 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree to amend the Credit Agreement as follows: 
 SECTION 1. Amendments to Credit Agreement. 

(a) The definition of “Reportable Event” appearing in Section 1.1 of the Credit Agreement is amended and restated in
its entirety to read as follows: 
 “‘Reportable Event’ means a reportable event as
defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulations issued and in effect as of the date of this Agreement has waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided that a material failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA
shall be a reportable event regardless of the 








 Exhibit 10.5 

 

 issuance of any such waivers in accordance with Section 412(c) of the
Code.” 
 (b) The definition of “Funding Threshold” appearing in Section 1.1 of the Credit Agreement
is hereby deleted in its entirety. 
 (c) Section 7.9 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows: 
 “ERISA. Each Plan complies in all material respects with all
applicable requirements of ERISA and the Code and with all applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements, except for any noncompliance that could not reasonably be expected to
result in an Adverse Event. No Reportable Event that is an Adverse Event has occurred and is continuing with respect to a Plan. All of the minimum funding standards applicable to such Plans have been satisfied and there exists no event or condition
which would permit the institution of proceedings to terminate any Plan under Section 4042 of ERISA (except for immaterial failures).” 
 (d) Clause (e) of Section 8.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

“(e) Immediately upon a Responsible Employee becoming aware of the occurrence, with respect to any Plan, of
any Reportable Event that is an Adverse Event, a notice specifying the nature thereof and what action the Company proposes to take with respect thereto, and, when received, copies of any notice from PBGC of intention to terminate or have a trustee
appointed for any Plan.” 
 (e) Section 8.9 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows: 
 “ERISA. Maintain each Plan in compliance in all material
respects with all applicable requirements of ERISA and of the Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Code, except for any noncompliance that could not reasonably be expected to result in
an Adverse Event.” 
 (f) Section 9.3 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows: 








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 “Plans. Permit any condition to exist in connection
with any Plan which might constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a trustee appointed to administer such Plan, permit any Plan to terminate under any circumstances which would cause the lien provided
for in Section 4068 of ERISA to attach to any property, revenue or asset of the Company or any Subsidiary or permit any Plan to be in “at-risk status” (within the meaning of Section 430(i)(4) of the Code) under circumstances
where the present value of liabilities of the Plan exceed the value of the assets of the Plan by more than $50,000,000 (with liabilities and assets valued in the manner used to determine the funding target attainment percentage under
Section 430 of the Code (disregarding the special rules contained in Section 430(i)(1)(b))).” 
 (g) Clause
(i) of Section 10.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
 “(i) The institution by the Company or any ERISA Affiliate of steps to terminate any Plan if in order to effectuate such termination, the Company or any ERISA Affiliate would be required to make a contribution
to such Plan, or would incur a liability or obligation to such Plan, in excess of $50,000,000, if the payment of such liability would constitute an Adverse Event, or the institution by the PBGC of steps to terminate any Plan;” 

SECTION 2. Waiver. The Borrower has informed the Agent and the Banks that as of December 30, 2011, the Borrower was not
in compliance with Section 9.3 of the Credit Agreement. The Agent and the Banks are aware that, notwithstanding such non-compliance, the Borrower has borrowed Loans under the Credit Agreement, and borrowing while not in compliance with
Section 9.3 constitutes non-compliance with Section 6.2 of the Credit Agreement (such non-compliance with Section 9.3 and Section 6.2, the “Existing Defaults”). The Borrower has requested that the Banks waive the
Existing Defaults. As of the Effective Date, the Banks waive the Existing Defaults, and waive any Default or Event of Default arising from the Existing Defaults. Except as expressly provided herein, all provisions of the Credit Agreement remain in
full force and effect and this waiver shall not apply to any other or subsequent failure to comply with such sections or any other provision of the Credit Agreement. 

SECTION 3. Conditions of Effectiveness. This Amendment shall become effective as of the date hereof (the “Effective
Date”) when, and only when, the Agent 








 Exhibit 10.5 

 

 shall have received an executed counterpart of this Amendment from the Borrower, the Required
Banks and the Agent. 
 SECTION 4. Representations and Warranties. Each of the parties hereto represents and
warrants that this Amendment and the Credit Agreement, as amended by this Amendment, constitute legal, valid and binding obligations of such party enforceable against such party in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles. 
 SECTION 5. Reference to and the Effect on the Agreement. 
 (a) On and after the
effective date of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement and each reference to the
Credit Agreement in any certificate delivered in connection therewith, shall mean and be a reference to the Credit Agreement as amended hereby. 
 (b) Each of the parties hereto hereby agrees that, except as specifically amended above, the Credit Agreement is hereby ratified and confirmed and shall continue to be in full force and effect and enforceable,
except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and general equitable principles. 

SECTION 6. Headings. Section headings in this Amendment are included herein for convenience only and shall not constitute a
part of this Amendment for any other purpose. 
 SECTION 7. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart to this Amendment by facsimile, electronic mail, portable document format (PDF) or similar means shall be effective as delivery of a manually executed counterpart of this Amendment. 

SECTION 8. Governing Law. The validity, construction and enforceability of this Amendment shall be governed by the internal
laws of the State of Minnesota, without giving effect to conflict of laws principles thereof, but giving effect to federal laws of the United States applicable to national banks. 








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 Exhibit 10.5 

 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the day and year first above written. 
 GRACO INC. 

as Borrower 
 By:   /s/
Christian E. Rothe                                    

 Name: Christian E. Rothe 

Title: Vice President and Treasurer 








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 U.S. BANK NATIONAL ASSOCIATION 

as Agent and a Bank 
 By:
  /s/ Ludmila
Yakovlev                                     

Name: Ludmila Yakovlev 
 Title:
Assistant Vice President 








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 JPMORGAN CHASE BANK, N.A. 
 as a Bank 
 By:  /s/ Suzanne Ergastolo
                         
 Name: Suzanne Ergastolo 
 Title: Vice President 








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 WELLS FARGO BANK, NATIONAL ASSOCIATION, 

as a Bank 
 By:   /s/
Peter Kiedrowski                             

Name: Peter Kiedrowski 
 Title:
Director 








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 BANK OF AMERICA, N.A., 
 as a Bank 
 By:   /s/ Steven K.
Kessler                                 

Name: Steven K. Kessler 
 Title:
Senior Vice President