Document:

Exhibit

Exhibit 10.1    
EXECUTION VERSION 

May 23, 2017
Graco Inc. 
88 11th Avenue NE 
Minneapolis, Minnesota  55413
Re:    Amendment No. 4 to Note Agreement
Ladies and Gentlemen:
Reference is made to that certain Note Agreement, dated as of March 11, 2011 (as amended by the Amendment and Restatement of Amendment No. 1 to Note Agreement, dated as of March 27, 2012, by the Amendment No. 2 to Note Agreement, dated as of June 26, 2014 and by the Amendment No. 3 to Note Agreement, dated as of December 15, 2016, the “Note Agreement”), between Graco Inc., a Minnesota corporation (the “Company”), on the one hand, and The Prudential Insurance Company of America, Gibraltar Life Insurance Co., Ltd., The Prudential Life Insurance Company, Ltd., Forethought Life Insurance Company, RGA Reinsurance Company, MTL Insurance Company and Zurich American Insurance Company, on the other hand.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Note Agreement.
The Company has requested an amendment to the Note Agreement set forth below.  Subject to the terms and conditions hereof, the undersigned holders of the Notes are willing to agree to such request.  Accordingly, and in accordance with the provisions of paragraph 11C of the Note Agreement, the parties hereto agree as follows:
SECTION 1.    Amendment to the Note Agreement.  Effective upon the Effective Date (as defined in Section 2 below), the parties hereto agree that the Note Agreement is amended as follows:
1.1.    The definition of “Material Subsidiary” in paragraph 10B of the Note Agreement is amended and restated in its entirety to read as follows: 
“Material Subsidiary” means any Subsidiary designated as such by the Company to the holders of the Notes from time to time; provided, that if, upon delivery of the annual or quarterly consolidated financial statements of the Company under paragraph 5A(i) or (ii), the book value (net of reserves) of the assets of all Subsidiaries that are not Material Subsidiaries (determined based on the consolidated quarterly or annual balance sheet of the Company and its Subsidiaries, but after giving effect, without duplication, to the elimination of the asset component of minority interests, if any in such Subsidiaries) shall exceed 15% of Consolidated Assets as determined based on such quarterly or annual balance sheet, the Company shall promptly designate an additional

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Exhibit 10.1    
EXECUTION VERSION 

Material Subsidiary or additional Material Subsidiaries so that, after giving effect to such designation, such requirement shall have been met.  So long as (i) no Event of Default has occurred and is continuing, (ii) removal of the Material Subsidiary designation of a Subsidiary will not cause the book value of the assets of all Subsidiaries that are not Material Subsidiaries to exceed 15% of Consolidated Assets as of the date of such removal, and (iii) such Material Subsidiary is not a “Material Subsidiary” under the Credit Agreement (or the designation of such subsidiary as a “Material Subsidiary” is concurrently being removed), the Company may remove the Material Subsidiary designation of such Subsidiary.  Solely for purposes of making any determination under this definition, the book value (net of reserves) of any First-Tier Foreign Subsidiary shall be determined on a combined basis with the book value (net of reserves) of each Second-Tier Foreign Subsidiary in which such First-Tier Foreign Subsidiary directly or indirectly holds stock or other Ownership Interests, and the book value (net of reserves) of each Second-Tier Foreign Subsidiary shall in all other respects be disregarded.  In no event shall any Second-Tier Foreign Subsidiary itself be deemed a Material Subsidiary.
SECTION 2.    Effectiveness.  The amendment in Section 1 of this letter agreement shall become effective as of May 15, 2017 (the “Effective Date”) when each of the following conditions has been satisfied:
2.1.    Documents.  Each holder of a Note shall have received original counterparts of this letter agreement executed by the holders of the Notes, the Company and each Guarantor.
2.2.    Credit Agreement Amendment.  Each holder of a Note shall have received copies of an executed amendment to or restatement of the Credit Agreement in form and substance satisfactory to each holder of a Note and such amendment or restatement shall be in full force and effect.
2.3.    Representations.  All representations set forth in Section 3 shall be true and correct as of the Effective Date, except for such representations and warranties that speak of an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date.
2.4.    Proceedings.  All corporate and other proceedings taken or to be taken in connection with the transactions contemplated by this letter agreement shall be satisfactory to each holder of a Note and its counsel, and each holder of a Note shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.
SECTION 3.    Representations and Warranties.  The Company represents and warrants to each holder of a Note that (i) the execution and delivery of this letter agreement has been duly authorized by all necessary corporate action on behalf of the Company and each Guarantor, this letter agreement has been executed and delivered by a duly authorized officer of the Company and each Guarantor, and all necessary or required consents to and approvals of this letter have been obtained and are in full force and effect, (ii) immediately before and after giving effect to the amendment to the Note Agreement in Section 1 hereof, (a) each representation and warranty set forth in paragraph 8 of the Note Agreement is true and correct other than those 

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Exhibit 10.1    
EXECUTION VERSION 

representations and warranties that speak as of a certain date, in which case such representation and warranty was true and correct as of such earlier date and (b) no Event of Default or Default exists and (iii) neither the Company, any Guarantor nor any of their Subsidiaries has paid or agreed to pay, or will pay or agree to pay, any fees or other consideration other than upfront fees, arrangement fees, commitment fees, extension fees and administrative fees relating to the extension of the commitments thereunder and other than reimbursement of legal fees, costs and expenses in accordance with the terms thereof, with respect to the amendment to the Credit Agreement referenced in Section 2.2 above.
SECTION 4.    Reference to and Effect on Note Agreement.  Upon the effectiveness of the amendment made in this letter agreement, each reference to the Note Agreement in any other document, instrument or agreement shall mean and be a reference to the Note Agreement as modified by this letter agreement.  Except as specifically set forth in Section 1 hereof, the Note Agreement and the Notes shall remain in full force and effect and are hereby ratified and confirmed in all respects.  Except as specifically stated in Section 1 of this letter agreement, the execution, delivery and effectiveness of this letter agreement shall not (a) amend the Note Agreement, any Note or any other Transaction Document, (b) operate as a waiver of any right, power or remedy of the holder of any Note, or (c) constitute a waiver of, or consent to any departure from, any provision of the Note Agreement, any Note or any of the other Transaction Documents at any time.  The execution, delivery and effectiveness of this letter agreement shall not be construed as a course of dealing or other implication that any holder of Notes has agreed to or is prepared to grant any amendment to, waiver of or consent under the Note Agreement, any Note or any other Transaction Document in the future, whether or not under similar circumstances.
SECTION 5.    Expenses.  The Company hereby confirms its obligations under the Note Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by the holders of the Notes, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and expenses, incurred by such holders in connection with this letter agreement or the transactions contemplated hereby, in enforcing any rights under this letter agreement, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this letter agreement or the transactions contemplated hereby.  The obligations of the Company under this Section 5 shall survive transfer by any holder of any Note and payment of any Note.
SECTION 6.    Reaffirmation.  Each Guarantor hereby consents to the foregoing amendment to the Note Agreement and hereby ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under the Guaranty Agreement after giving effect to such amendment.  Each Guarantor hereby acknowledges that, notwithstanding the foregoing amendment, that the Guaranty Agreement remains in full force and effect and is hereby ratified and confirmed.  Without limiting the generality of the foregoing, each Guarantor agrees and confirms that the Guaranty Agreement continues to guaranty the obligations arising under or in connection with the Note Agreement, as the same may be amended by this letter agreement.
SECTION 7.    Governing Law.  THIS LETTER AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF 

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Exhibit 10.1    
EXECUTION VERSION 

THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS LETTER TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
SECTION 8.    Counterparts; Section Titles.  This letter agreement 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 when taken together  shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this letter agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this letter agreement. The section titles contained in this letter agreement are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.
(Signature Page Follows)

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Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 
 
 
 
By:    /s/ J. Alex Stuart      
    Vice President
GIBRALTAR LIFE INSURANCE CO., LTD. 
THE PRUDENTIAL LIFE INSURANCE 
  COMPANY, LTD. 
 
By:    Prudential Investment Management Japan
Co., Ltd., as Investment Manager

By:    PGIM, Inc.,
as Sub-Adviser

By:    /s/ J. Alex Stuart     ____            
Vice President

RGA REINSURANCE COMPANY 
ZURICH AMERICAN INSURANCE COMPANY 
 
By:    Prudential Private Placement Investors, L.P. 
    (as Investment Advisor) 
 
By:    Prudential Private Placement Investors, Inc. 
    (as its General Partner) 
 
 
 
By:    /s/ J. Alex Stuart     

Accepted and Agreed to:
GRACO INC. 
 
 
 
By:    /s/ Christian E. Rothe      
Name:    Christian E. Rothe 
Title:    Chief Financial Officer and Treasurer
GRACO MINNESOTA INC. 
GRACO OHIO INC. 
 
 
 
By:    /s/ Christian E. Rothe      
Name:    Christian E. Rothe 
Title:    Chief Financial Officer and Treasurer
GEMA USA INC. (formerly known as Graco  
Holdings Inc.) 
GRACO HIGH PRESSURE EQUIPMENT INC. 
Q.E.D. ENVIRONMENTAL SYSTEMS, INC. 
GRACO FLUID HANDLING (A) INC. 
LANDTEC NORTH AMERICA, INC. 
 
 
 
By:    /s/ Christian E. Rothe      
Name:    Christian E. Rothe 
Title:    PresidentExhibit

Exhibit 10.2
EXECUTION VERSION

FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), is entered into as of May 23, 2017, with an effective date as of the Fourth Amendment Effective Date (as defined below), by and among GRACO INC. (the “Company”), the Banks (as defined in the Credit Agreement) signatory hereto and U.S. Bank National Association, as administrative 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 Company, the Borrowing Subsidiaries party thereto from time to time, the Banks and the Agent are party to that certain Credit Agreement, dated as of May 23, 2011 (as amended, restated, supplemented, or otherwise modified prior to the date hereof, the “Credit Agreement”);
WHEREAS, the Company has requested that certain modifications be made to the Credit Agreement; and
WHEREAS, the Banks party hereto 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.Amendment.      Effective as of the Fourth Amendment Effective Date (as defined in Section 2 below), but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the definition of “Material Subsidiary” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“Material Subsidiary” means any Subsidiary designated as such by the Company to the Agent from time to time, and in any case in each quarterly Compliance Certificate; provided, that if, upon delivery of the annual or quarterly consolidated financial statements of the Company under Section 8.1(a) or (b), the book value (net of reserves) of the assets of all Subsidiaries that are not Material Subsidiaries (determined based on the consolidated quarterly or annual balance sheet of the Company and its Subsidiaries, but after giving effect, without duplication, to the elimination of the asset component of minority interests, if any in such Subsidiaries) shall exceed 15% of Consolidated Assets as determined based on such quarterly or annual balance sheet, the Company shall:  (a) promptly designate an additional Material Subsidiary or additional Material Subsidiaries so that, after giving effect to such designation, such requirement shall have been met, and (b) comply, and cause such additional Material Subsidiary or Material Subsidiaries to comply, with the requirements of Section 8.11 promptly thereafter (and in any case within 45 days after delivery of the relevant annual or quarterly financial statements).  So long as (a) no Event of Default has occurred and is 

continuing, (b) removal of the Material Subsidiary designation of a Subsidiary will not cause the book value of the assets of all Subsidiaries that are not Material Subsidiaries to exceed 15% of Consolidated Assets as of the date of such removal and (c) such Material Subsidiary is not a “Material Subsidiary” under the Senior Note Agreements (or the designation of such Subsidiary as a “Material Subsidiary” is concurrently being removed), the Company may remove the Material Subsidiary designation of such Subsidiary.  No Subsidiary may be designated as a Borrowing Subsidiary that is not a Material Subsidiary; provided, however, that if there are no Loans outstanding to a Subsidiary that had been a Borrowing Subsidiary, the Company is permitted not to designate such Subsidiary as a Material Subsidiary.  Solely for purposes of making any determination under this definition, the book value (net of reserves) of any First-Tier Foreign Subsidiary shall be determined on a combined basis with the book value (net of reserves) of each Second-Tier Foreign Subsidiary in which such First-Tier Foreign Subsidiary directly or indirectly holds stock or other Ownership Interests, and the book value (net of reserves) of each Second-Tier Foreign Subsidiary shall in all other respects be disregarded.  In no event shall any Second-Tier Foreign Subsidiary itself be deemed a Material Subsidiary.
SECTION 2.    Conditions of Effectiveness.  This Amendment shall become effective as of May 15, 2017 (the “Fourth Amendment Effective Date”) when, and only when:
(a)    the Agent shall have received counterparts of this Amendment duly executed by the Company, the Required Banks and the Agent; 
(b)    all of the Agent’s accrued costs, fees and expenses through the date hereof shall be fully paid; and
(c)    the Senior Note Agreements shall have been amended in a manner satisfactory to the Agent.
SECTION 3.    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.  This Amendment shall constitute a Loan Document.
SECTION 4.    Reaffirmation.  The Company hereby ratifies and reaffirms the Pledge Agreement and its pledge of stock or Ownership Interests of Foreign Subsidiaries thereunder.
SECTION 5.    Reference to and the Effect on the Credit Agreement.
(a)    On and after the Fourth Amendment Effective Date, 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.

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(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.  
(c)    The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or the Banks, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
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, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart.  Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by e-mail transmission of a PDF or similar copy shall be equally as effective as delivery of an original 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.
SECTION 9.    Expenses.  The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent (including, without limitation, the reasonable fees and expenses of outside counsel to the Agent) incurred in connection with the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith.
SECTION 10.    Severability.    Any provision of this Amendment 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 hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 11.    Successors; Enforceability.  The terms and provisions of this Amendment shall be binding upon the Borrowers, the Agent and the Banks and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Agent and the Banks and the successors and assigns of the Agent and the Banks.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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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. 

By:    /s/ Christian E. Rothe    
Name:    Christian E. Rothe
Title:    Chief Financial Officer and Treasurer

Signature Page to
Amendment No. 4 to Graco Credit Agreement

U.S. BANK NATIONAL ASSOCIATION 
as Agent and a Bank 
 
 
By:  /s/ Mila Yakovlev    
Name:    Mila Yakovlev
Title:    Vice President

Signature Page to
Amendment No. 4 to Graco Credit Agreement

JPMORGAN CHASE BANK, N.A. 
as a Bank 

By:  /s/ Suzanne Ergastolo    
Name:    Suzanne Ergastolo
Title:    Executive Director

Signature Page to
Amendment No. 4 to Graco Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION 
as a Bank 

By:  /s/Mark H. Halldorson    
Name:    Mark H. Halldorson
Title:    Director

Signature Page to
Amendment No. 4 to Graco Credit Agreement

BANK OF AMERICA, N.A. 
as a Bank 

By:  /s/ Leif Olson    
Name:    Leif Olson
Title:    Vice President

Signature Page to
Amendment No. 4 to Graco Credit Agreement

PNC BANK, NATIONAL ASSOCIATION 
as a Bank 

By:  /s/ David B. Mitchell    
Name:    David B. Mitchell
Title:    Executive Vice President

Signature Page to
Amendment No. 4 to Graco Credit Agreement

CITIZENS BANK, N.A. 
as a Bank 

By:  /s/ Thomas S. Lass    
Name:    Thomas S. Lass
Title:    Senior Vice President

Signature Page to
Amendment No. 4 to Graco Credit Agreement

ING BANK N.V., DUBLIN BRANCH 
as a Bank 

By:  /s/ Sean Hassett    
Name:    Sean Hassett
Title:    Director

By:  /s/ Shaun Hawley    
Name:    Shaun Hawley
Title:    Director

Signature Page to
Amendment No. 4 to Graco Credit Agreement

THE NORTHERN TRUST COMPANY 
as a Bank 

By:  /s/ Molly Drennan    
Name:    Molly Drennan
Title:    Senior Vice President

Signature Page to
Amendment No. 4 to Graco Credit Agreement

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