Document:

exv10w1

Exhibit 10.1

EXECUTION VERSION

 

CREDIT AGREEMENT

Dated as of May 23, 2011

among

GRACO INC.,

THE BORROWING SUBSIDIARIES,

as defined herein,

THE BANKS,

as defined herein,

U.S. BANK NATIONAL ASSOCIATION,

as Administrative Agent,

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents, and

U.S. BANK NATIONAL ASSOCIATION and J.P. MORGAN SECURITIES LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS, CONSTRUCTION, ACCOUNTING TERMS AND ALTERNATIVE CURRENCIES
	 	 	1	 
	 
	 	 	 	 
	Section 1.1    Defined Terms
	 	 	1	 
	Section 1.2    Accounting Terms and Calculations
	 	 	16	 
	Section 1.3    Computation of Time Periods
	 	 	17	 
	Section 1.4    Other Definitional Terms
	 	 	17	 
	 
	 	 	 	 
	ARTICLE II TERMS OF LENDING
	 	 	17	 
	 
	 	 	 	 
	Section 2.1     The Commitments
	 	 	17	 
	Section 2.2     Advance Options
	 	 	18	 
	Section 2.3     Borrowing Procedures
	 	 	18	 
	Section 2.4     Continuation or Conversion of Loans
	 	 	19	 
	Section 2.5     Evidence of Loans; Request for Note
	 	 	20	 
	Section 2.6     Funding Losses
	 	 	20	 
	Section 2.7     Letters of Credit
	 	 	21	 
	Section 2.8     Refunding of Swing Line Loans
	 	 	24	 
	Section 2.9     Borrowing Subsidiaries
	 	 	25	 
	Section 2.10   Increase to Commitments
	 	 	26	 
	Section 2.11   Defaulting Banks
	 	 	26	 
	Section 2.12   Purpose of Loans
	 	 	28	 
	 
	 	 	 	 
	ARTICLE III INTEREST AND FEES
	 	 	28	 
	 
	 	 	 	 
	Section 3.1     Interest
	 	 	28	 
	Section 3.2     Commitment Fee
	 	 	29	 
	Section 3.3     Computation
	 	 	29	 
	Section 3.4     Fees
	 	 	29	 
	Section 3.5     Limitation of Interest
	 	 	29	 
	 
	 	 	 	 
	ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE CREDIT AND SETOFF
	 	 	30	 
	 
	 	 	 	 
	Section 4.1     Repayment
	 	 	30	 
	Section 4.2     Prepayments
	 	 	30	 
	Section 4.3     Optional Reduction or Termination of Commitments
	 	 	31	 
	Section 4.4     Payments
	 	 	31	 
	Section 4.5     Proration of Payments
	 	 	31	 
	 
	 	 	 	 
	ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
	 	 	32	 
	 
	 	 	 	 
	Section 5.1     Increased Costs
	 	 	32	 
	Section 5.2     Deposits Unavailable or Interest Rate Unascertainable
or Inadequate; Impracticability
	 	 	33	 

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TABLE OF CONTENTS

(Continued)

	 	 	 	 	 
	 	 	Page	 
	Section 5.3     Changes in Law Rendering LIBOR Advances Unlawful
	 	 	33	 
	Section 5.4     Discretion of the Banks as to Manner of Funding
	 	 	34	 
	Section 5.5     Taxes
	 	 	34	 
	Section 5.6     Judgment Currency
	 	 	35	 
	Section 5.7     Mitigation
	 	 	36	 
	Section 5.8     No Advisory or Fiduciary Responsibility
	 	 	36	 
	 
	 	 	 	 
	ARTICLE VI CONDITIONS PRECEDENT
	 	 	36	 
	 
	 	 	 	 
	Section 6.1     Conditions to Effectiveness
	 	 	36	 
	Section 6.2     Conditions Precedent to Initial Loans
	 	 	38	 
	Section 6.3     Conditions Precedent to all Loans
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES
	 	 	39	 
	 
	 	 	 	 
	Section 7.1     Organization, Standing, Etc.
	 	 	39	 
	Section 7.2     Authorization and Validity
	 	 	39	 
	Section 7.3     No Conflict; No Default
	 	 	40	 
	Section 7.4     Government Consent
	 	 	40	 
	Section 7.5     Financial Statements and Condition
	 	 	40	 
	Section 7.6     Litigation
	 	 	40	 
	Section 7.7     Compliance
	 	 	41	 
	Section 7.8     Environmental, Health and Safety Laws
	 	 	41	 
	Section 7.9     ERISA
	 	 	41	 
	Section 7.10   Regulation U
	 	 	41	 
	Section 7.11   Ownership of Property; Liens
	 	 	41	 
	Section 7.12   Taxes
	 	 	41	 
	Section 7.13   Trademarks, Patents
	 	 	42	 
	Section 7.14   Investment Company Act
	 	 	42	 
	Section 7.15   Subsidiaries
	 	 	42	 
	Section 7.16   Solvency
	 	 	42	 
	Section 7.17   Disclosure
	 	 	43	 
	 
	 	 	 	 
	ARTICLE VIII AFFIRMATIVE COVENANTS
	 	 	43	 
	 
	 	 	 	 
	Section 8.1     Financial Statements and Reports
	 	 	43	 
	Section 8.2     Corporate Existence
	 	 	45	 
	Section 8.3     Insurance
	 	 	45	 
	Section 8.4     Payment of Taxes and Claims
	 	 	45	 
	Section 8.5     Inspection
	 	 	45	 
	Section 8.6     Maintenance of Properties
	 	 	46	 
	Section 8.7     Books and Records
	 	 	46	 
	Section 8.8     Compliance
	 	 	46	 
	Section 8.9     ERISA
	 	 	46	 

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TABLE OF CONTENTS

(Continued)

	 	 	 	 	 
	 	 	Page	 
	Section 8.10   Environmental Matters
	 	 	46	 
	Section 8.11   Subsidiaries
	 	 	46	 
	Section 8.12   Most Favored Lender
	 	 	46	 
	Section 8.13   Post-Closing Covenant
	 	 	48	 
	 
	 	 	 	 
	ARTICLE IX NEGATIVE COVENANTS
	 	 	48	 
	 
	 	 	 	 
	Section 9.1     Merger
	 	 	48	 
	Section 9.2     Sale of Assets
	 	 	48	 
	Section 9.3     Plans
	 	 	49	 
	Section 9.4     Change in Nature of Business
	 	 	49	 
	Section 9.5     Other Agreements
	 	 	49	 
	Section 9.6     Investments
	 	 	49	 
	Section 9.7     Use of Proceeds
	 	 	50	 
	Section 9.8     Secured Indebtedness
	 	 	50	 
	Section 9.9     Cash Flow Leverage Ratio
	 	 	50	 
	Section 9.10   Interest Coverage Ratio
	 	 	51	 
	Section 9.11   Material Subsidiaries
	 	 	51	 
	 
	 	 	 	 
	ARTICLE X EVENTS OF DEFAULT AND REMEDIES
	 	 	51	 
	 
	 	 	 	 
	Section 10.1     Events of Default
	 	 	51	 
	Section 10.2     Remedies
	 	 	53	 
	Section 10.3     Letters of Credit
	 	 	53	 
	Section 10.4     Security Agreement in Accounts and Setoff
	 	 	54	 
	 
	 	 	 	 
	ARTICLE XI GUARANTY
	 	 	54	 
	 
	 	 	 	 
	Section 11.1     Unconditional Guaranty
	 	 	54	 
	Section 11.2     Guaranty Absolute
	 	 	54	 
	Section 11.3     Waivers
	 	 	55	 
	Section 11.4     Subrogation
	 	 	55	 
	Section 11.5     Survival
	 	 	56	 
	 
	 	 	 	 
	ARTICLE XII THE AGENTS
	 	 	56	 
	 
	 	 	 	 
	Section 12.1     Appointment and Grant of Authority
	 	 	56	 
	Section 12.2     Non Reliance on Agent
	 	 	56	 
	Section 12.3     Responsibility of the Agent and Other Matters
	 	 	57	 
	Section 12.4     Action on Instructions
	 	 	57	 
	Section 12.5     Indemnification
	 	 	58	 
	Section 12.6     U.S. Bank National Association and Affiliates
	 	 	58	 
	Section 12.7     Notice to Holder of Notes
	 	 	58	 
	Section 12.8     Successor Agent
	 	 	58	 
	Section 12.9     Syndication Agent; Co-Documentation Agents; Lead Arrangers
	 	 	59	 

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TABLE OF CONTENTS

(Continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE XIII MISCELLANEOUS
	 	 	59	 
	 
	 	 	 	 
	Section 13.1     No Waiver and Amendment
	 	 	59	 
	Section 13.2     Amendments, Etc.
	 	 	59	 
	Section 13.3     Assignments and Participations
	 	 	60	 
	Section 13.4     Costs, Expenses and Taxes; Indemnification
	 	 	62	 
	Section 13.5     Notices
	 	 	63	 
	Section 13.6     Successors
	 	 	63	 
	Section 13.7     Severability
	 	 	63	 
	Section 13.8     Captions
	 	 	63	 
	Section 13.9     Entire Agreement
	 	 	63	 
	Section 13.10   Counterparts
	 	 	63	 
	Section 13.11   Governing Law
	 	 	64	 
	Section 13.12   Consent to Jurisdiction
	 	 	64	 
	Section 13.13   Waiver of Jury Trial
	 	 	64	 
	Section 13.14   Patriot Act
	 	 	64	 
	Section 13.15   Confidentiality
	 	 	64	 
	Section 13.16   Release of Borrowing Subsidiary, Guaranty or Pledge Agreement
	 	 	65	 

EXHIBITS

	 	 	 	 	 

	Exhibit A

	 	—
	 	Form of Borrowing Subsidiary Agreement
	Exhibit B

	 	—
	 	Form of Compliance Certificate
	Exhibit C

	 	—
	 	Form of Guaranty
	Exhibit D

	 	—
	 	Mandatory Cost
	Exhibit E

	 	—
	 	Form of Pledge Agreement
	Exhibit F

	 	—
	 	Form of General Counsel’s Opinion and Form of Special Counsel’s Opinion
	Exhibit G

	 	—
	 	Form of Assignment Agreement
	Exhibit H

	 	—
	 	Form of Intercreditor Agreement
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule 1.1

	 	—
	 	Commitments and Percentages
	Schedule 7.6

	 	—
	 	Litigation
	Schedule 7.15

	 	—
	 	Subsidiaries
	Schedule 9.6

	 	—
	 	Investments

-iv-

 

CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of May 23, 2011, is by and between GRACO INC., a Minnesota
corporation (the “Company”), the subsidiaries of the Company listed on the signature pages
hereof or which from time to time become parties hereto pursuant to Section 2.9 (each a
“Borrowing Subsidiary” and collectively the “Borrowing Subsidiaries”), the banks or
financial institutions listed on the signature pages hereof or which hereafter become parties
hereto by means of assignment and assumption as hereinafter described (individually referred to as
a “Bank” or collectively as the “Banks”), U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as Administrative Agent (in such capacity, the “Agent”),
JPMORGAN CHASE BANK, N.A., as Syndication Agent (in such capacity, the “Syndication
Agent”), THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Co-Documentation Agents (in such capacities, the “Co-Documentation Agents”), and U.S. BANK
NATIONAL ASSOCIATION and J.P. MORGAN SECURITIES LLC as Joint Lead Arrangers and Joint Bookrunners
(the “Lead Arrangers”).

ARTICLE I

DEFINITIONS, CONSTRUCTION,

ACCOUNTING TERMS AND ALTERNATIVE CURRENCIES

     Section 1.1    Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following respective meanings (and such meanings
shall be equally applicable to both the singular and plural form of the terms defined, as the
context may require):

     “Account Subsidiary” shall have the meaning set forth in Section 11.1.

     “Additional Covenant” means any affirmative or negative covenant or similar
restriction applicable to the Company or any Subsidiary (regardless of whether such provision is
labeled or otherwise characterized as a covenant) the subject matter of which either (i) is similar
to that of any covenant in Articles VIII or IX of this Agreement, or related definitions in Article
I of this Agreement, but contains one or more percentages, amounts or formulas that is more
restrictive than those set forth herein or more beneficial to the lender or creditor under any
Material Financing (and such covenant or similar restriction shall be deemed an Additional Covenant
only to the extent that it is more restrictive or more beneficial) or (ii) is different from the
subject matter of any covenants in Articles VIII or IX of this Agreement, or related definitions in
Article I of this Agreement.

     “Additional Default” means any provision contained in any agreement with respect to
any Material Financing which permits the holders of such Indebtedness to accelerate (with the
passage of time or giving of notice or both) the maturity thereof or otherwise requires the Company
or any Subsidiary to purchase the Indebtedness thereunder prior to the stated maturity thereof and
which either (i) is similar to any Default or Event of Default contained in Article X of this
Agreement, or related definitions in Article I of this Agreement, but contains one or more
percentages, amounts or formulas that is more restrictive or has a shorter grace period than those
set forth herein or is more beneficial to the lender under any Material Financing (and such
provision shall be deemed an Additional Default only to the extent that it is more restrictive, has
a shorter grace period or is more beneficial) or (ii) is different from the subject matter of any

 

 

Default or Event of Default contained in Article X of this Agreement, or related definitions
in Article I of this Agreement.

     “Advance” means the portion of the outstanding Loans bearing interest at an identical
rate for an identical Interest Period, provided that all Base Rate Advances shall be deemed a
single Advance. An Advance may be a “LIBOR Advance” or “Base Rate Advance”, and a
LIBOR Advance may be a “Fixed LIBOR Advance” or a “Floating LIBOR Advance” (each, a
“type” of Advance).

     “Adverse Event” means the occurrence of any event that could have a material adverse
effect on the business, operations, property, assets, liabilities (actual or contingent) or
condition (financial or otherwise) of the Company and the Subsidiaries as a consolidated enterprise
or on the ability of the Company or any Subsidiary obligated thereunder to perform its obligations
under the Loan Documents.

     “Agent” means U.S. Bank National Association, as Agent for the Banks hereunder and
each successor, as provided in Section 12.8, who shall act as Agent.

     “Agreement” means this Credit Agreement, as it may be amended, modified, supplemented,
restated or replaced from time to time.

     “Alternative Currency” means any currency other than Dollars consisting of Yen, Euros,
Canadian Dollars, Sterling, Swiss Francs and other freely-traded and transferable currencies,
consistently obtainable in sufficient amounts, that are approved by the Agent and the Banks from
time to time at their discretion at the request of the Company as Alternative Currencies.

     “Applicable Margin”; “Applicable Commitment Fee Rate” shall mean the percentages set
forth below corresponding to the Cash Flow Leverage Ratios shown below for the most recent fiscal
quarter end for which financial statements have been delivered:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Applicable	 	 	Applicable	 	 	Applicable	 
	 	 	 	 	Margin for Fixed	 	 	Margin for Base	 	 	Commitment	 
	 	Cash Flow Leverage Ratio:	 	 	LIBOR Advances:	 	 	Rate Advances	 	 	Fee Rate:	 
	 	Less than or equal to 1.00 to
1.00
	 	 	 	1.00	%	 	 	 	0.0	%	 	 	 	0.15	%	 
	 	Greater than 1.00 to 1.00 but
less than or equal to 1.75 to
1.00
	 	 	 	1.25	%	 	 	 	0.25	%	 	 	 	0.20	%	 
	 	Greater than 1.75 to 1.00 but
less than or equal to 2.50 to
1.00
	 	 	 	1.50	%	 	 	 	0.50	%	 	 	 	0.25	%	 
	 	Greater than 2.50 to 1.00 but
less than or equal to 3.25 to
1.00
	 	 	 	1.75	%	 	 	 	0.75	%	 	 	 	0.30	%	 
	 	Greater than 3.25 to 1.00
	 	 	 	2.00	%	 	 	 	1.00	%	 	 	 	0.40	%	 
	 

Until delivery of the Company’s quarterly financial statements for the first quarter ending after
the quarter in which the closing conditions in Section 6.1 have been satisfied, the Applicable
Margin for Fixed LIBOR Advances shall be 1.75%, the Applicable Margin for Base Rate Advances shall
be 0.75%, and the Applicable Commitment Fee Rate shall be 0.30%. Thereafter,

2

 

the Applicable Margin shall be determined on a quarterly basis, and shall be effective as of the
date five (5) days after the due date of the Company’s annual or quarterly financial statements as
required by Section 8.1(a) or (b) based on the Cash Flow Leverage Ratio as demonstrated by the
annual or quarterly financial statements of the Borrower delivered for the fiscal quarter or year
most recently ended, and as certified on behalf of the Company by the Borrower’s financial officer.
In the event that such financial statements are not delivered as required by Section 8.1(a) or
(b), the Applicable Margin shall be the highest percentages set forth above until such time as such
financial statements are delivered, after which time the Applicable Margin shall be readjusted to
the rate applicable to the Cash Flow Leverage Ratio applicable to such statements.

     “Base Rate” means the highest on any day of (a) the Prime Rate, (b) the Federal Funds
Effective Rate (each determined each Business Day and applicable from and including such Business
Day to, but not including, the next following Business Day) plus 0.50% or (c) the LIBOR Rate for
Floating LIBOR Advances plus 1.50%.

     “Base Rate Advance” means an Advance designated as such in a notice of borrowing under
Section 2.3 or a notice of continuation or conversion under Section 2.4, or that otherwise accrues
interest with reference to the Base Rate.

     “Borrowers” means the Company and each Borrowing Subsidiary.

     “Borrowing Subsidiary Agreement” means each agreement, in the form of Exhibit A
executed by each Foreign Subsidiary proposed to be a Borrowing Subsidiary and the Company.

     “Business Day” means any day (other than a Saturday, Sunday or legal holiday in the
State of Minnesota) on which national banks are permitted to be open in Minneapolis, Minnesota and
New York, New York and, with respect to the following types of Advances, the following days:

     (a)   for LIBOR Advances, a day on which dealings in Dollars or any other relevant Alternative
Currency may be carried on by the Agent and the Banks in the interbank eurocurrency market; and

     (b)   for Advances in Euros, a TARGET Day.

     “Canadian Dollar” and “C$” means the lawful currency of Canada.

     “Capitalized Lease” means any lease which is or should be capitalized on the books of
the lessee in accordance with GAAP (subject to the GAAP conventions set forth in Section 1.2).

     “Cash Flow Leverage Ratio” means, as of any date, the ratio, calculated for the period
of four consecutive fiscal quarters then ended, of consolidated Indebtedness of the Company and its
Subsidiaries as of the last day of such period to EBITDA for such period.

     “Change of Control” means:

     (a)   either (i) the acquisition by any “person” or “group” (as those terms are used in Sections
13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined in Rules 13d-

3

 

3 and 13d-4 of the Securities and Exchange Commission, except that a Person shall be deemed to
have beneficial ownership of all securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or indirectly, of 30%
or more of the voting power of the then-outstanding voting capital stock of the Borrower; or (ii) a
change in the composition of the board of directors of the Company such that continuing directors
cease to constitute more than 50% of such board of directors. As used in this definition,
“continuing directors” means, as of any date, (i) those members of the board of directors
of the Company who assumed office prior to such date, and (ii) those members of the board of
directors of the Company who assumed office after such date and whose appointment or nomination for
election by the Company’s shareholders was approved by a vote of at least 50% of the directors of
the Company in office immediately prior to such appointment or nomination; or

     (b)   a “change of control” or any similar event shall occur under, and as defined in
documents pertaining to, any Indebtedness in excess of $10,000,000 in the aggregate (other than the
Obligations) of the Company or any Material Subsidiary.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute,
together with regulations thereunder.

     “Collateral Agent” means U.S. Bank National Association, as collateral agent under the
Pledge Agreement and under the Intercreditor Agreement.

     “Commitment” means the maximum unpaid principal amount of the Loans and Letter of
Credit Obligations of all Banks which may from time to time be outstanding hereunder, being
initially $450,000,000, as the same may be increased from time to time pursuant to Section 2.10 or
reduced from time to time pursuant to Section 4.3, or, if so indicated, the maximum unpaid
principal amount of Loans and participation in Letters of Credit and Swing Line Loans of any Bank
which may from time to time be outstanding hereunder (which amounts are set forth on Schedule 1.1
hereto or in the relevant Assignment and Assumption Agreement for such Bank) and, as the context
may require, the agreement of each Bank to make Loans to the Borrowers and to issue (for the Agent)
or participate in (for the Banks) the Letters of Credit subject to the terms and conditions of this
Agreement up to its Commitment.

     “Commitment Fees” is defined in Section 3.2.

     “Compliance Certificate” means a certificate in the form of Exhibit B, duly completed
and signed by a Responsible Officer of the Company, which certificate shall include, without
limitation, supporting detail evidencing compliance with the applicable covenants addressed
therein.

     “Consolidated Assets” means the book value of the assets, net of reserves, of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP (subject
to the GAAP conventions set forth in Section 1.2) (but after giving effect, without duplication, to
the elimination of the asset component of minority interests, if any, in such Subsidiaries).

4

 

     “Contingent Obligation” means, with respect to any Person at the time of any
determination, without duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person
(the “primary obligor”) in any manner, whether directly or otherwise: (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any direct or indirect security therefor, (b)
to purchase property, securities, Ownership Interests or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain working capital,
equity capital or other financial statement condition of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or otherwise to protect the owner thereof against loss in
respect thereof, or (d) entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner against loss in respect
thereof; provided, that the term “Contingent Obligation” shall not include endorsements for
collection or deposit, in each case in the ordinary course of business, and shall not include
earn-outs in connection with Permitted Acquisitions and other acquisitions not prohibited hereby.

     “Default” means any event which, with the giving of notice to the Company or lapse of
time, or both, would constitute an Event of Default.

     “Defaulting Bank” means any Bank, as determined by the Agent, that has (a) failed to
fund any portion of its Loans or participations in Letters of Credit or Swing Line Loans within two
(2) Business Days of the date such portion is required in the determination of the Agent to be
funded by it hereunder, (b) notified the Company, the Agent, the Swing Line Bank or any Bank in
writing that it does not intend to comply with any of its funding obligations under this Agreement
or has made a public statement to the effect that it does not intend to comply with its funding
obligations (i) under this Agreement or (ii) under other agreements in which it is obligated to
extend credit unless, in the case of this clause (ii), such obligation is the subject of a good
faith dispute, (c) failed, within three (3) Business Days after request by the Agent, to confirm
that it will comply with the terms of this Agreement relating to its obligations to fund
prospective Loans and participations in then outstanding Letters of Credit and Swing Line Loans,
(d) otherwise failed to pay over to the Agent or any other Bank any other amount required to be
paid by it hereunder within one Business Day of the date when due, unless the subject of a good
faith dispute, or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar
Person charged with reorganization or liquidation of its business or custodian, appointed for it,
or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged with reorganization
or liquidation of its business or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or
appointment; provided, that a Bank shall not become a Defaulting Bank solely as the result of (x)
the acquisition or maintenance of an ownership interest in such Bank or a Person controlling such
Bank or (y) the exercise of control over a Bank or a Person controlling such Bank, in each case, by
a governmental authority or an instrumentality thereof. Any determination by the Agent that a Bank
is a Defaulting Bank will be conclusive and binding absent manifest error, and such Bank

5

 

will be deemed to be a Defaulting Bank upon notification of such determination by the Agent to
the Company, the Swing Line Bank and the Banks.

     “Dollar” and “$” mean lawful currency of the United States.

     “Dollar Equivalent” means (a) for any amount denominated in Dollars, such amount, and
(b) for any amount denominated in an Alternative Currency at any date, the equivalent in such
currency of such amount of Dollars, calculated on the basis of the arithmetic mean of the buy and
sell spot rates of exchange of the Agent in the London interbank market (or other market where the
Agent’s foreign exchange operations in respect of such Alternative Currency are then being
conducted) for such Alternative Currency at or about 11:00 a.m. (local time) two (2) Business Days
prior to the date on which such amount is to be determined, rounded up to the nearest amount of
such Alternative Currency as determined by the Agent from time to time; provided, however, that if
at the time of any such determination, for any reason, no such spot rate is being quoted by the
Agent, the Agent may use any reasonable method it deems appropriate to determine such amount,
including without limitation quotations by other financial institutions, and such determination
shall be conclusive absent manifest error.

     “Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States, one of the States of the United States or the District of Columbia.

     “EBITDA” means, for any period of determination, the consolidated net income of the
Company and its Subsidiaries, plus, to the extent subtracted in determining consolidated net income
and without duplication, (i) Interest Expense, (ii) depreciation, (iii) amortization, (iv) income
tax expense, (v) extraordinary, non-operating or non-cash charges and expenses (including but not
limited to non-cash stock compensation expense, non-cash pension expense, work force reduction or
other restructuring charges, and transaction costs, fees, and charges incurred in connection with
the acquisition of any substantial portion of the Ownership Interests or assets of, or a line of
business or division of, another Person, including any merger or consolidation with such Person),
minus extraordinary, non-operating or non-cash gains and income (including, without limitation,
extraordinary or nonrecurring gains, gains from the discontinuance of operations and gains arising
from the sale of assets other than inventory, all as determined in accordance with GAAP (subject to
the GAAP conventions set forth in Section 1.2). For purposes of calculating EBITDA, with respect
to any period of determination, (i) Permitted Acquisitions that have been made by the Company and
its Subsidiaries, including through mergers or consolidations and including any related financing
transactions, during the period of determination shall be deemed to have occurred on the first day
of the period of determination; provided that only the actual historical results of operations of
the Persons so acquired, without adjustment for pro forma expense savings or revenue increases,
shall be used for such calculation; and provided, further, that the EBITDA of the Person so
acquired attributable to discontinued operations, as determined in accordance with GAAP (subject to
the GAAP conventions set forth in Section 1.2), and operations or businesses disposed of prior to
the end of such period of determination, shall be excluded, and (ii) dispositions that have been
made by the Company and its Subsidiaries during the period of determination shall be deemed to have
occurred on the first day of the period of determination; provided that the EBITDA for such period
shall be reduced by an amount equal to the EBITDA (if positive) attributable to the

6

 

property that is the subject of such disposition for such period or increased by an amount
equal to the EBITDA (if negative) attributable thereto for such period.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute, together with regulations thereunder.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) that is a
member of a group of which the Company is a member and which is treated as a single employer under
Section 414 of the Code.

     “Euro” and “EUR” means the single currency of the participating member states
of the European Union.

     “Event of Default” means any event described in Section 10.1.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent. In the case of a day which is
not a Business Day, the Federal Funds Effective Rate for such day shall be the Federal Funds
Effective Rate for the preceding Business Day.

     “Fee Letters” has the meaning set forth in Section 3.4.

     “Finishing Group Acquisition” means the acquisition by the Company of substantially
all of the domestic and foreign assets and foreign equity interests of ITW Finishing Group from
Illinois Tool Works Inc.

     “Finishing Group Purchase Agreement” means the purchase agreement pursuant to which
the Finishing Group Acquisition is to be consummated.

     “Fixed LIBOR Advance” means an Advance designated as such in a notice of borrowing
under Section 2.3 or a notice of continuation or conversion under Section 2.4.

     “Floating LIBOR Advance” means an Advance designated as such in a notice of borrowing
under Section 2.3 or a notice of continuation or conversion under Section 2.4.

     “Foreign Subsidiary” means a Subsidiary other than a Domestic Subsidiary.

     “GAAP” means generally accepted accounting principles as in effect from time to time
in the United States.

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     “Guarantors” means each Subsidiary of the Company that executes and delivers a
Guaranty in favor of the Agent and the Banks either at the time of execution of this Agreement or
at any time hereafter pursuant to Section 8.11.

     “Guarantied Obligations” is defined in Section 11.1.

     “Guaranty” means a Guaranty of a Guarantor in favor of the Agent and the Banks, in the
form of Exhibit C hereto duly completed for each Guarantor, as the same may be amended,
supplemented or restated from time to time.

     “Hedging Obligations” means any and all obligations and exposure of the Borrower and
its Subsidiaries under (a) any and all agreements, devices or arrangements designed to protect the
Borrower or any Subsidiary from the fluctuations of interest rates or currencies, including
interest rate or foreign exchange agreements, interest rate or currency cap or collar protection
agreements, and interest rate and currency options, puts and warrants, determined on a net,
mark-to-market basis, and (b) any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.

     “Highest Lawful Rate” shall mean, on any day, the maximum non-usurious rate of
interest permitted for that day by applicable federal or state law stated as a rate per annum.

     “Indebtedness” means, with respect to any Person at the time of any determination,
without duplication: (a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations
of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of
such Person under conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred
purchase price of property or services, except trade accounts payable and accrued expenses arising
in the ordinary course of business and except earn-outs and similar obligations, (f) all
Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (g) all Capitalized Lease obligations of
such Person, (h) all Hedging Obligations of such Person, (i) all obligations of such Person, actual
or contingent, as an account party in respect of letters of credit or bankers’ acceptances, except
for letters of credit supporting purchase or sale of goods in the ordinary course of business, (j)
all Indebtedness of any partnership or joint venture as to which such Person is or may become
personally liable, (k) all obligations of such Person under any Ownership Interests issued by such
Person which cease to be considered Ownership Interests in such Person, and (1) all Contingent
Obligations of such Person. Non-recourse Indebtedness of such Person shall be deemed Indebtedness,
but only to the extent of the lower of the book value of such Indebtedness or the fair market value
of the property securing such Indebtedness.

     “Intercreditor Agreement” means the Intercreditor and Collateral Agency Agreement,
dated as of the date hereof, by and among the Collateral Agent, the Agent, on behalf of the Banks,
the Senior Noteholders, and such other Senior Creditors as may from time to time become parties
thereto, in the form of Exhibit H hereto duly completed, as the same may be amended, supplemented
or restated from time to time.

8

 

     “Interest Coverage Ratio” means, as of any date, the ratio, calculated for the period
of four consecutive fiscal quarters then ended on a consolidated basis for the Company and its
Subsidiaries in accordance with GAAP (subject to the GAAP conventions set forth in Section 1.2), of
(a) EBITDA for such period to (b) Interest Expense for such period.

     “Interest Expense” means, for any period of determination, the aggregate consolidated
amount, without duplication, of interest expense determined in accordance with GAAP (subject to the
GAAP conventions set forth in Section 1.2), excluding amortization of financing fees to the extent
included in interest expense, but specifically including (a) all but the principal component of
payments in respect of conditional sale contracts, Capitalized Leases and other title retention
agreements, (b) commissions, discounts and other fees and charges with respect to letters of credit
and bankers’ acceptance financings and (c) Hedging Obligations, in each case determined in
accordance with GAAP (subject to the GAAP conventions set forth in Section 1.2). Notwithstanding
the foregoing, for the first four fiscal quarters following the consummation of a Material
Acquisition, Interest Expense shall be adjusted, on a basis acceptable to the Agent, to give effect
to any such acquisition as if it had occurred on the first day of the measurement period.

     “Interest Period” means, for any Advance, the period commencing on the borrowing date
of such Advance or the last day of the preceding Interest Period for such Advance, as the case may
be, and ending on the numerically corresponding day one, two, three or six months, or, if approved
by all of the Banks in connection with the applicable notice, nine or twelve months thereafter, as
selected by the Borrowers pursuant to Section 2.3 or Section 2.4; provided, that:

     (a)   any Interest Period which would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day unless such next succeeding Business Day falls in another
calendar month, in which case such Interest Period shall end on the next preceding Business Day;

     (b)   any Interest Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the end of such
Interest Period; and

     (c)   no Interest Period shall extend after the date specified in clause (a) of the definition
of “Termination Date”.

     “Investment” means the acquisition, purchase, making or holding of any stock or other
security, any loan, advance, contribution to capital, extension of credit (except for trade and
customer accounts receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms), any acquisitions of real or
personal property (other than real and personal property acquired in the ordinary course of
business) and any purchase of or commitment or option to purchase stock or other debt or equity
securities of or any interest in another Person or any integral part of any business or the assets
comprising such business or part thereof. The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any adjustments for

9

 

increases or decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.

     “Investment Policies” means the Company’s Excess Cash Investment Policy, effective as
of October 1, 2010, copies of which have been furnished to the Banks, without giving effect to any
changes thereto unless such changes have been consented to in writing by the Agent, given with the
consent of the Required Banks.

     “Letters of Credit” has the meaning set forth in Section 2.7.

     “Letter of Credit Agreements” has the meaning set forth in Section 2.7.

     “Letter of Credit Defeasance Conditions” means, for each Letter of Credit, that the
Agent has received from the Company either (i) cash collateral in the full face amount of such
Letter of Credit to hold in accordance with the terms of Section 10.3, plus a Fee Reserve to be
held by the Agent for application to the items described below (with any excess being returned to
the Company upon expiry or final drawing of such Letter of Credit), or (ii) a direct pay letter of
credit (and not a standby letter of credit) issued by an issuer reasonably acceptable to the Agent,
permitting the Agent to draw the full amount of any drawing under such Letter of Credit (including
any amount that might be reinstated for drawing after drawn) and permitting drawing in the amount
of the Fee Reserve. For such purpose, the “Fee Reserve” amount shall equal the sum of (i)
routine expenses, such as drawing fees, that the Agent reasonably determines might be applicable to
such Letter of Credit, plus (ii) Letter of Credit Fees that would apply to such Letter of Credit if
it remained outstanding until its expiry date.

     “Letter of Credit Fees” has the meaning set forth in Section 2.7.

     “Letter of Credit Obligations” means the aggregate amount of all possible drawings
under all Letters of Credit plus all amounts drawn under any Letter of Credit and not reimbursed by
the Company under the applicable Letter of Credit Agreement (whether from a borrowing of Loans as
provided in Section 2.7(c)(iii) or otherwise).

     “LIBOR Advances” means the Fixed LIBOR Advances and Floating LIBOR Advances.

     “LIBOR Rate” means the offered rate for deposits in Dollars or Alternative Currencies
for delivery of such deposits on the first day of an Interest Period of a LIBOR Advance, for the
number of days comprised therein, quoted by the Agent from Reuters Screen LIBOR01 Page or any
successor thereto for Dollars and from other applicable Reuters Screens or any successor thereto
for Alternative Currencies (or other published source of British Bankers Association LIBOR rates)
as of approximately 11:00 a.m., London time, on the day that is two Business Days preceding the
first day of the Interest Period of such LIBOR Advance, or the rate for such deposits determined by
the Agent at such time based on such other published service of general application as shall be
selected by the Agent for such purpose; provided, that in lieu of determining the rate in the
foregoing manner, the Agent may determine the rate based on rates offered to the Agent for deposits
in Dollars or Alternative Currencies (as applicable) in the interbank eurodollar market at such
time for delivery on the first day of the Interest Period for the number of days comprised therein
in amounts approximately equal to the requested Advance. Notwithstanding the foregoing, the LIBOR
Rate for Floating LIBOR Advances shall be

10

 

determined each Business Day based on such quotations for an Interest Period of one month
(without regard to the two business day delivery convention generally applicable to such
quotations).

     “LIBOR Reserve Rate” means a percentage equal to the daily average during the
applicable Interest Period of the aggregate maximum reserve requirements (including all basic,
supplemental, marginal and other reserves), as specified under Regulation D of the Federal Reserve
Board, or any other applicable regulation that prescribes reserve requirements applicable to
Eurocurrency liabilities (as presently defined in Regulation D) or applicable to extensions of
credit by the Agent the rate of interest on which is determined with regard to rates applicable to
Eurocurrency liabilities. Without limiting the generality of the foregoing, the LIBOR Reserve Rate
shall reflect any reserves required to be maintained by the Agent against (i) any category of
liabilities that includes deposits by reference to which the LIBOR Rate is to be determined, or
(ii) any category of extensions of credit or other assets that includes LIBOR Advances.

     “Lien” means any security interest, mortgage, pledge, lien, hypothecation, judgment
lien or similar legal process, charge, encumbrance, title retention agreement or analogous
instrument or device (including, without limitation, the interest of the lessors under Capitalized
Leases and the interest of a vendor under any conditional sale or other title retention agreement).

     “Loan Documents” means this Agreement, the Notes, each Guaranty, each Pledge
Agreement, each Letter of Credit Agreement, each Borrowing Subsidiary Agreement, the Fee Letters,
the Intercreditor Agreement, and each other instrument, document, guaranty, security agreement,
mortgage, or other agreement executed and delivered by any Borrower or any guarantor or party
granting security interests, in each case in connection with this Agreement, the Loans or any
collateral for the Loans.

     “Loans” means the Revolving Loans and the Swing Line Loans.

     “Mandatory Costs” means the percentage rate per annum calculated by any Bank requiring
that Mandatory Costs be included in calculation of the interest rate applicable to the Alternative
Currency Advances made by such Bank from an Alternative Currency Lending Office (as defined in
Exhibit D hereto) in the United Kingdom or a Participating Member State (as defined in Exhibit D
hereto) in accordance with Exhibit D hereto.

     “Material Acquisition” means a Permitted Acquisition by the Company or a Subsidiary
where total consideration for such acquisition exceeds $25,000,000.

     “Material Financings” means (i) the Senior Notes and the Senior Note Agreements, and
(ii) any working capital facility of the Company providing for a revolving line of credit or note
offering or note issuance of the Company (including one resulting in Indebtedness held by Senior
Creditors) having an aggregate stated principal amount of at least $25,000,000. In no event shall
the credit provided pursuant to this Agreement be deemed a Material Financing.

     “Material Foreign Subsidiary” means any Foreign Subsidiary that is a Material
Subsidiary.

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     “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
10% 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 no Event of
Default has occurred and is continuing and 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 10% of Consolidated Assets as of the date of such removal, 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.

     “Notes” means the Revolving Notes and the Swing Line Note.

     “Obligations” means all obligations and liabilities of each Borrower to the Agent and
the Banks under this Agreement and all other Loan Documents, including without limitation
obligations to pay principal, interest, fees, expenses and other amounts, all Letter of Credit
Obligations, and all Hedging Obligations of each Borrower to any of the Banks or their respective
affiliates, including without limitation any such obligations that arise after the filing of a
petition by or against the Borrower under the Bankruptcy Code, regardless of whether allowed as a
claim in the resulting proceeding, even if the obligations do not accrue because of the automatic
stay under Bankruptcy Code Section 362 or otherwise.

     “Organizational Documents” means, for a Person that is (a) a corporation, its articles
of incorporation and bylaws, (b) a limited liability company, any articles of formation, membership
agreement, member control agreement or equivalent document, (c) limited or general partnership, any
partnership agreement, and (d) any other form of entity, the equivalent documents, in each case
together with all instruments, documents and agreements filed with any governmental authority to
establish such legal entity and any material instrument, document or agreement controlling the
governance of such Person entered into by such Person.

     “Other Taxes” is defined in Section 5.5.

     “Ownership Interest” means, for a Person that is (a) a corporation, its stock, (b) a
limited liability company, its membership interest and any other interest in profits, (c) limited
or general partnerships, its partnership interests (limited or general) or partnership (limited or
general) accounts, (d) any other form of entity, the equivalent Ownership Interests of such Person.

12

 

     “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56
(signed into law October 26, 2001)).

     “Payment Date” means the Termination Date, plus (a) the last day of each Interest
Period for each Fixed LIBOR Advance and, if such Interest Period is in excess of three months, the
day three months after the first day of such Interest Period; (b) the first day of each month in
respect of the immediately preceding month for each Floating LIBOR Advance, and (c) the first day
of each month in respect of the immediately preceding month for each Base Rate Advance and for any
fees including, without limitation, Commitment Fees (by way of example, June 1st for the
month of May), except that the Letter of Credit Fees and other fees payable to the Agent in respect
of Letters of Credit shall be payable as provided in Section 2.7(c)(v).

     “PBGC” means the Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.

     “Percentage” means, as to any Bank, the proportion, expressed as a percentage, that
such Bank’s Commitment bears to the total Commitments of all Banks.

     “Permitted Acquisition” means the acquisition by the Company or a Subsidiary of all or
substantially all of the Ownership Interests or assets of any other Person (including by merger) or
of all or substantially all of the assets of a division, business unit, product line or line of
business of any other Person, provided that (a) following such acquisition, the Company shall be in
compliance with Section 9.4 hereof, (b) such acquisition shall occur at a time that no Event of
Default shall have occurred and continued hereunder and no Event of Default shall result therefrom,
(c) if it is an acquisition of Ownership Interests and a new Material Subsidiary is thereby
created, such Material Subsidiary shall become a Guarantor or the Company or Subsidiary that is the
owner thereof shall have pledged the Ownership Interest thereof, if so required by Section 8.11
hereof, (d) such acquisition shall be consummated on a non-hostile basis and shall have been
approved by the board of directors (or similar governing body) of any Person acquired, and (e) the
Company shall have furnished to the Agent a certificate signed by a Responsible Officer
demonstrating in reasonable detail pro forma compliance with the financial covenants contained in
Sections 9.9, 9.10 and 9.11 for the applicable calculation period, in each case, calculated as if
such acquisition, including the consideration therefor, had been consummated on the first day of
such period.

     “Person” means any natural person, corporation, limited liability company,
partnership, joint venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.

     “Plan” means an employee benefit plan or other plan, maintained for employees of the
Company or of any ERISA Affiliate, and subject to Title IV of ERISA or Section 412 of the Code.

     “Pledge Agreement” means a Pledge Agreement by and among the Company, certain
Subsidiaries thereof from time to time parties thereto, and the Collateral Agent, in the form of

13

 

Exhibit E hereto duly completed, as the same may be amended, supplemented or restated from
time to time.

     “Prime Rate” means the rate of interest from time to time announced by the Agent as
its “prime rate.” For purposes of determining any interest rate which is based on the
Prime Rate, such interest rate shall be adjusted each time that the prime rate changes.

     “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
issuance of any such waivers in accordance with Section 412(c) of the Code.

     “Required Banks” means those Banks whose total Percentage exceeds 50%, or if no
Commitments remain in effect, whose share of principal of the Loans exceeds 50% of the aggregate
outstanding principal of all Loans.

     “Responsible Employee” means any executive officer of the Company or any employee
managing treasury functions of the Company.

     “Responsible Officer” means as to the Company, the chief executive officer, chief
operating officer, chief accounting officer, president, chief financial officer or treasurer (or
any Person designated by any such officer of the Company as a Responsible Officer for purposes
hereof and approved in writing by the Agent in its reasonable discretion), but in any event, with
respect to financial matters, the chief accounting officer, chief financial officer or treasurer
(or any Person designated by any such officer of the Company as a Responsible Officer for purposes
hereof and approved in writing by the Agent in its reasonable discretion).

     “Revaluation Date” means with respect to any Revolving Loan denominated in an
Alternative Currency: (i) each date of a borrowing of a Revolving Loan denominated in an
Alternative Currency, (ii) the last day of the Interest Period of each Advance in an Alternative
Currency, and if so requested by the Agent, if such Interest Period shall exceed 3 months, days
falling on 3 month intervals after the first day of such Interest Period, and (iii) after the
occurrence and during the continuance of an Event of Default, such additional dates as the Agent
shall determine or the Required Banks shall require.

     “Revolving Loans” has the meaning set forth in Section 2.1(a).

     “Revolving Notes” means any promissory note evidencing Revolving Loans delivered under
Section 2.5.

     “Secured Indebtedness” means Indebtedness secured by a Lien on the assets or revenues
of the Company or any Subsidiary; provided, however, that Secured Indebtedness
shall not include (i) the Obligations, (ii) Indebtedness evidenced by the Senior Notes and the
Senior Note Agreements for so long as such Indebtedness and the Senior Noteholders remain subject
to the Intercreditor Agreement, (iii) Indebtedness owing to Senior Creditors for so long as such

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Indebtedness and the holders thereof remain subject to the Intercreditor Agreement and (iv) at
any time prior to the making of initial Loans hereunder, Indebtedness arising under the Credit
Agreement dated July 12, 2007 among the Borrower, U.S. Bank National Association, as administrative
agent, and the Lenders, as defined therein.

     “Senior Creditor” means any Person that (i) from time to time extends credit to the
Company that is not subordinate or junior in right of payment or Lien priority to the Obligations,
(ii) extends credit that constitutes a Material Financing and (iii) becomes a party to and is bound
by the terms of the Intercreditor Agreement (including, without limitation, all limitations set
forth therein).

     “Senior Note Agreements” means (i) the Note Agreement, dated as of March 11, 2011,
evidencing a $300,000,000 note facility, by and among the Company and the Senior Noteholders from
time to time party thereto, and (ii) the Note Agreement to be executed, evidencing a $75,000,000
note facility, by and among the Company and the Senior Noteholders from time to time party thereto,
in each case together with the agreements, documents and instruments delivered together therewith,
and in each case as each of the same may be amended, restated, supplemented, or modified from time
to time, or as the same may be refinanced or replaced from time to time.

     “Senior Noteholders” means the holders of the Senior Notes.

     “Senior Notes” means the notes from time to time issued pursuant to a Senior Note
Agreement.

     “Stated Rate” is defined in Section 3.5.

     “Sterling” means the lawful currency of the United Kingdom.

     “Subsidiary” means any Person of which or in which the Company and its other
Subsidiaries own directly or indirectly 50% or more of: (a) the combined voting power of all
classes of stock having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation, (b) the capital interest or profit
interest of such Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other unincorporated
organization. Each Borrowing Subsidiary shall be deemed a “Subsidiary” hereunder at all
times that it is a Borrower hereunder and has not been excluded from the Material Subsidiaries by
the Company (as provided in the definition of “Material Subsidiaries”), even if at any time
it shall cease to be a Subsidiary under the foregoing sentence.

     “Swing Line Bank” means U.S. Bank National Association.

     “Swing Line Loans” means the Loans described in Section 2.1(b).

     “Swing Line Note” means any promissory note of the Company evidencing Swing Line Loans
delivered under Section 2.5.

     “Swing Line Participation Amount” is defined in Section 2.8(b).

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     “Swing Line Sublimit” means the maximum unpaid principal amount of the Swing
Line Loans which may from time to time be borrowed hereunder, being initially $50,000,000, and, as
the context may require, the agreement of the Swing Line Bank to make the Swing Line Loans to the
Company subject to the terms and conditions of this Agreement.

     “TARGET Day” means a day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system is open for the settlement of payments in
Euros.

     “Taxes” is defined in Section 5.5.

     “Termination Conditions” means that (a) the Commitments are irrevocably terminated in
full, (b) the Company and any relevant Borrowing Subsidiary has irrevocably paid in full all
Obligations and any other amount payable hereunder for which a claim has been made, (c) Letter of
Credit Defeasance Conditions shall exist in respect of each Letter of Credit outstanding hereunder,
and (d) neither the Company nor any Borrowing Subsidiary shall have any unpaid obligations or
liabilities to the Agent or the Banks hereunder except for obligations and liabilities in respect
of any indemnities or other provisions that survive termination of this Agreement and for which no
claim shall have been made by the Agent or any Bank.

     “Termination Date” means the earliest of (a) May 23, 2016, (b) the date on which the
Commitments are terminated pursuant to Section 10.2 hereof or (c) the date on which the Commitments
are reduced to zero pursuant to Section 4.3 hereof.

     “United States Person” means any citizen, national or resident of the United States,
any corporation or other entity created or organized in or under the laws of the United States or
any political subdivision hereof or any estate or trust, in each case that is not subject to
withholding of United States Federal income taxes or other taxes on payment of interest, principal
or fees hereunder.

     “U.S. Bank” means U.S. Bank National Association, in its individual capacity and not
as Agent hereunder.

     “Wholly-owned Subsidiary” means a Subsidiary of which all of the issued and
outstanding Ownership Interests (other than nominal Ownership Interests required as a matter of law
to be held by directors, officers or other Persons) are owned by the Company and/or one or more
other Wholly-owned Subsidiaries within the meaning of this definition.

     “Yen” means the lawful currency of Japan.

     Section 1.2    Accounting Terms and Calculations. Except as may be expressly provided to
the contrary herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder (including, without limitation, determination of compliance with financial
ratios and restrictions in Articles VIII and IX hereof) shall be made in accordance with GAAP. To
the extent that any change in GAAP or the application thereof from the financial statements
referred to in Section 7.5 hereof affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination shall be made as if such change in
GAAP had not occurred unless the Company and the Required Banks

16

 

agree in writing on an adjustment to such computation or determination to account for such
change in GAAP or the application thereof. In the instance of such change, the Agent, Banks and
Company shall negotiate in good faith to promptly agree to such adjustment. Any reference to
“consolidated” financial terms shall be deemed to refer to those financial terms as applied
to the Company and its Subsidiaries in accordance with GAAP. Notwithstanding any other provision
contained herein, all terms of an accounting or financial nature used herein shall be construed,
and all computations of amounts and ratios referred to herein shall be made, without giving effect
to any election under Accounting Standards Codification 825-10-25 (previously referred to as
Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or
Financial Accounting Standard having similar result or effect) to value any Indebtedness or other
liabilities of the Company or any of its Subsidiaries at “fair value”, as defined therein.

     Section 1.3    Computation of Time Periods. In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless otherwise stated the word
“from” means “from and including” and the word “to” or “until” each means “to but excluding.”

     Section 1.4    Other Definitional Terms. The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. References to Sections, Exhibits, schedules
and like references are to this Agreement unless otherwise expressly provided.

ARTICLE II

TERMS OF LENDING

     Section 2.1    The Commitments. Subject to the terms and conditions hereof and in
reliance upon the warranties of the Borrowers herein:

     (a)    each Bank agrees, severally and not jointly, to make loans (each, a “Revolving
Loan” and, collectively, the “Revolving Loans”) in Dollars and Alternative
Currencies to the applicable Borrower from time to time from the date hereof until the
Termination Date, during which period the Borrowers may repay and reborrow in accordance
with the provisions hereof, provided, that the aggregate unpaid principal amount of the
Revolving Loans of any Bank at any one time outstanding plus such Bank’s Percentage of the
Letter of Credit Obligations plus such Bank’s Percentage of the outstanding Swing Line Loans
shall not exceed its Commitment, and the total Revolving Loans, Letter of Credit Obligations
and Swing Line Loans outstanding shall not exceed the total Commitment of all of the Banks.
The Revolving Loans shall be made by the Banks on a pro rata basis, calculated for each Bank
based on its Percentage. At no time shall the Dollar Equivalent of Revolving Loans made in
Alternative Currencies exceed $200,000,000. For purposes of this Section and all
calculations herein, the principal of Revolving Loans in Alternative Currencies shall be
calculated using the Dollar Equivalent of such Revolving Loans as determined by the Agent on
each Revaluation Date; and

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     (b)    the Swing Line Bank agrees to make loans (each a “Swing Line Loan” and,
collectively, the “Swing Line Loans”) to the Company from time to time from the date hereof
until the Termination Date, during which period the Company may repay and reborrow in
accordance with the provisions hereof, provided, that the aggregate unpaid principal amount
of the Swing Line Loans at any one time outstanding shall not exceed the Swing Line
Sublimit. Swing Line Loans shall only be made in Dollars.

     Section 2.2    Advance Options. Revolving Loans (a) in Dollars shall be composed of
Fixed LIBOR Advances and Base Rate Advances, as shall be selected by the Company, and (b) in
Alternative Currencies shall be composed of Fixed LIBOR Advances, all except as otherwise provided
herein. Swing Line Loans shall be Floating LIBOR Advances or Base Rate Advances, as shall be
selected by the Company. Any combination of types of Advances may be outstanding at the same time,
except that the total number of outstanding Fixed LIBOR Advances shall not exceed 8 at any one
time. Each Fixed LIBOR Advance in Dollars shall be in a minimum amount of $1,000,000 or in an
integral multiple of $500,000 above such amount. Each Base Rate Advance of the Revolving Loans
shall be in a minimum amount of $500,000 or in an integral multiple of $100,000 above such amount.
Each Floating LIBOR Advance or Base Rate Advance of the Swing Line Loans shall be in a minimum
amount of $5,000 or an integral multiple thereof above such amount. Each Fixed LIBOR Advance in
Alternative Currencies shall be in a minimum amount and integrals designated by the Agent from time
to time for various Alternative Currencies, which minimum amounts and integrals shall be
substantially equivalent (subject to rounding) to the comparable minimum amount and integral
amounts provided for Fixed LIBOR Advance in Dollars (unless otherwise agreed between the Agent and
the Company upon addition of any Alternative Currency).

     Section 2.3    Borrowing Procedures.

     (a)    Request by Borrowers. Any request by the Borrowers for a Loan or Letter of
Credit shall be in writing, or by telephone promptly confirmed in writing or by e-mail, and
must be given so as to be received by the Agent not later than:

     (i)    2:00 p.m., Minneapolis time, on the date of any requested Swing Line Loan;

     (ii)
   11:00 a.m., Minneapolis time, on the date of any Revolving Loan requested
as a Base Rate Advance;

     (iii)    11:00 a.m., Minneapolis time, three Business Days prior to the date of
any Revolving Loan requested as a Fixed LIBOR Advance in Dollars; or

     (iv)    11:00 a.m., Minneapolis time, four Business Days prior to the date of any
requested Revolving Loan in Alternative Currencies or any Letter of Credit.

Each request for a Loan shall specify (1) the borrowing date (which shall be a Business Day), (2)
the amount of such Loan and the type or types of Advances comprising such Loan, and (3) the initial
Interest Periods for such Advances if applicable, and (4) the Alternative Currency,

18

 

if applicable. Each request for a Letter of Credit shall be accompanied by the form of the Letter of
Credit, the name of the beneficiary, and other information requested by the Agent.

     (b)    Funding of Agent. The Agent shall promptly notify each other Bank of the
receipt of the request for Revolving Loans, the matters specified therein, and of such
Bank’s Percentage of the requested Revolving Loans. On the date of the requested Revolving
Loans, each Bank shall provide its share of the requested Revolving Loans to the Agent in
Dollars or the applicable Alternative Currency in immediately available funds not later than
2:00 p.m., Minneapolis time. Unless the Agent determines that any applicable condition
specified in Article VI has not been satisfied, the Agent will make the requested Revolving
Loans available to the Borrowers at the Agent’s principal office in Minneapolis, Minnesota
in immediately available funds not later than 3:00 p.m. (Minneapolis time) on the lending
date so requested. If the Agent has made a Revolving Loan to the Borrowers on behalf of a
Bank but has not received the amount of such Revolving Loan from such Bank by the time
herein required, such Bank shall pay interest to the Agent on the amount so advanced from
the date of such Revolving Loan to the date funds are received by the Agent from such Bank
at the Federal Funds Effective Rate for Dollars or the applicable LIBOR Rate for Alternative
Currencies, such interest to be payable with such remittance from such Bank of the principal
amount of such Revolving Loan (provided, however, that the Agent shall not be required to
make any Revolving Loan on behalf of a Bank if the Agent has received prior notice from such
Bank that it will not make such Loan). If the Agent does not receive payment from such Bank
by the next Business Day after the date of any Revolving Loan, the Agent shall be entitled
to recover such Revolving Loan, with interest thereon at the rate then applicable to such
Revolving Loan, on demand, from the Borrowers, without prejudice to the Agent’s and the
Borrowers’ rights against such Bank. If such Bank pays the Agent the amount herein required
with interest as provided above before the Agent has recovered from the Borrowers, such Bank
shall be entitled to the interest payable by the Borrowers with respect to the Loan in
question accruing from the date the Agent made such Revolving Loan.

     Section 2.4    Continuation or Conversion of Loans. The Borrowers may elect to (i)
continue any outstanding Advance from one Interest Period into a subsequent Interest Period to
begin on the last day of the earlier Interest Period, or (ii) convert any outstanding Advance into
another type of Advance, on the last day of an Interest Period only for a Fixed LIBOR Advance, by
giving the Agent notice in writing, or by telephone promptly confirmed in writing or by e-mail,
given so as to be received by the Agent not later than:

     (a)    11:00 a.m., Minneapolis time, on the day of the requested continuation or
conversion, if the continuing or as-converted Advance shall be a Floating LIBOR Advance or a
Base Rate Advance;

     (b)    11:00 a.m., Minneapolis time, three Business Days prior to the date of the
requested continuation or conversion, if the continuing or as-converted Advance shall be a
Fixed LIBOR Advance in Dollars; or

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     (c)
   11:00 a.m., Minneapolis time, four Business Days prior to the date of the requested
continuation or conversion, if the continuing or as-converted Advance shall be a Fixed LIBOR
Advance in Alternative Currencies.

Each notice of continuation or conversion of an Advance shall specify (i) the effective date of the
continuation or conversion (which shall be a Business Day), (ii) the amount and the type or types
of Advances following such continuation or conversion (subject to the limitation on amount set
forth in Section 2.2), and (iii) the Interest Periods for such Advances. Absent timely notice of
continuation or conversion, following expiration of an Interest Period unless a Fixed LIBOR Advance
is paid in full, the Agent may convert such Fixed LIBOR Advance into an Advance which shall bear
interest at either (1) the Base Rate, for an Advance in Dollars, or (2) the rate established for a
new Interest Period of one month for an Advance in an Alternative Currency (and the Borrowers shall
be deemed to have selected such Interest Period for such Advance). At the option of the Agent,
until such time as such Advance is so converted by the Agent or the Borrowers or is continued as a
Fixed LIBOR Advance with a new Interest Period by notice by the Borrowers as provided above, such
Fixed LIBOR Advance shall continue to accrue interest at a rate equal to the interest rate
applicable during the expired Interest Period. Each Floating LIBOR Advance and Base Rate Advance
shall continue as a Floating LIBOR Advance or Base Rate Advance (as the case may be) until notice
of conversion shall be given as provided above. At the option of the Agent, no Revolving Loan in
Dollars shall be continued as, or converted into, a Fixed LIBOR Advance if a Default or Event of
Default shall exist.

     Section 2.5    Evidence of Loans; Request for Note. The Banks and the Agent shall enter
in their respective records the amount of each Loan and Advance, the rate of interest borne by each
Advance and the payments made on the Revolving Loans, and such records shall be deemed conclusive
evidence of the subject matter thereof, absent demonstrable error and may be introduced to prove
such amounts in lieu of a promissory note. At the request of any Bank or the Swing Line Bank, the
Company shall execute and deliver to such Bank or Swing Line Bank a promissory note to evidence the
Loans of such Bank or the Swing Line Bank to the Company. In the event that a Borrowing Subsidiary
shall be the borrower of any Revolving Loan, the Company and such Borrowing Subsidiary shall, upon
request of any Bank, execute and deliver a promissory note denominated in the Alternative Currency
of such Loan to evidence such Loans, which shall be a joint and several promissory note of the
Company and such Borrowing Subsidiary.

     Section 2.6    Funding Losses. The Company hereby agrees that upon demand by any Bank
(which demand shall be accompanied by a statement setting forth the basis for the calculations of
the amount being claimed) the Company will indemnify such Bank against any loss (other than loss of
Applicable Margin) or expense which such Bank may have sustained or incurred (including, without
limitation, any net loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Bank to fund or maintain Fixed LIBOR Advances) or which
such Bank may be deemed to have sustained or incurred, as reasonably determined by such Bank, (i)
as a consequence of any failure by the Borrower to make any payment when due of any amount due
hereunder in connection with any Fixed LIBOR Advances, (ii) due to any failure of the Borrower to
borrow or convert any Fixed LIBOR Advances on a date specified therefor in a notice thereof, other
than as a result of such Bank’s failure to fund such borrowing, or (iii) due to any payment or
prepayment of any Fixed

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LIBOR Advance on a date other than the last day of the applicable Interest Period for such
Fixed LIBOR Advance. For this purpose, all notices under Sections 2.3 and 2.4 shall be deemed to
be irrevocable.

     Section 2.7    Letters of Credit

     (a)
   Letters of Credit. Subject to the terms and conditions of this Agreement,
and on the condition that aggregate Letter of Credit Obligations shall never exceed
$100,000,000, and the sum of Letter of Credit Obligations plus Loans shall never exceed the
aggregate Commitments of the Banks, the Company may, in addition to Loans, request that the
Agent issue letters of credit for the account of the Company or a Material Subsidiary, by
making such request to the Agent (such letters of credit as any of them may be amended,
supplemented, extended or confirmed from time to time, being herein collectively called the
“Letters of Credit”). The Agent shall issue the requested Letters of Credit,
subject to (i) compliance by the Company with all conditions precedent set forth in Article
VI hereof, (ii) entry by the Company into applications, agreements and other documents
deemed appropriate by the Bank for the issuance of such Letters of Credit (the “Letter
of Credit Agreements”), (iii) reasonable satisfaction of the Agent with the form and
substance of such Letter of Credit, (iv) absence of any legal or regulatory prohibition of
issuance of any letter of credit to the proposed beneficiary, and reasonable satisfaction of
the Agent with the beneficiary of such Letter of Credit, and (v) the absence of any other
statutory or regulatory change or directive adversely affecting the issuance by the Agent of
letters of credit. Upon the date of the issuance of a Letter of Credit, the Agent shall be
deemed, without further action by any party hereto, to have sold to each Bank, and each Bank
shall be deemed without further action by any party hereto, to have purchased from the
Agent, a participation, in its Percentage, in such Letter of Credit and the related Letter
of Credit Obligations. All Letters of Credit shall expire not later than one year after the
date specified in clause (a) of the definition of “Termination Date”, provided, that
the Company shall be obligated to cause Letter of Credit Defeasance Conditions to apply to
any Letter of Credit that has not expired or been terminated (x) within three days prior to
such date specified in clause (a) of such definition, or (y) by any other date that the
Company shall terminate all Commitments hereunder.

     (b)    Each Bank’s purchase of a participating interest in a Letter of Credit pursuant to
Section 2.7(a) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment,
defense or other right which such Bank or the Company may have against the Agent, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of
a Default or an Event of Default or the failure to satisfy any of the other conditions
precedent in Article VI; (iii) any adverse change in the condition (financial or otherwise)
of the Company; (iv) any breach of this Agreement or any other Loan Document by the Company
or any Bank; (v) the expiry date of any Letter of Credit occurring after such Bank’s
Commitment has terminated or (vi) any other circumstance, happening or event whatsoever,
whether or not similar or any of the foregoing.

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     (c)    Additional Provisions. The following additional provisions shall apply to
each Letter of Credit:

     (i)    Upon receipt of any request for a Letter of Credit, the Agent shall notify
each Bank of the contents of such request and of such Bank’s Percentage of the
amount of such proposed Letter of Credit.

     (ii)    Upon receipt from the beneficiary of any Letter of Credit of any demand
for payment thereunder, Agent shall promptly notify the Company and each Bank as to
the amount to be paid as a result of such demand and the payment date. If at any
time the Agent shall have made a payment to a beneficiary of such Letter of Credit
in respect of a drawing or in respect of an acceptance created in connection with a
drawing under such Letter of Credit, each Bank will pay to Agent immediately upon
demand by the Agent at any time during the period commencing after such payment
until reimbursement thereof in full by the Company, an amount equal to such Bank’s
Percentage of such payment, together with interest on such amount for each day from
the date of demand for such payment (or, if such demand is made after 2:00 a.m.
Minneapolis time on such date, from the next succeeding Business Day) to the date of
payment by such Bank of such amount at the Federal Funds Effective Rate.

     (iii)
   The Company shall be irrevocably and unconditionally obligated forthwith
to reimburse the Agent for any amount paid by the Agent upon any drawing under any
Letter of Credit, including any Letter of Credit issued for the account of a
Material Subsidiary, without presentment, demand, protest or other formalities of
any kind, all of which are hereby waived. Such reimbursement may, subject to
satisfaction of the conditions in Article VI hereof and to the available Commitment
(after adjustment in the same to reflect the elimination of the corresponding Letter
of Credit Obligation), be made by the borrowing of Loans. The Agent will pay to
each Bank such Bank’s Percentage of all amounts received from the Company for
application in payment, in whole or in part, of a Letter of Credit Obligation, but
only to the extent such Bank has made payment to the Agent in respect of such Letter
of Credit pursuant to clause (ii) above.

     (iv)    The Company’s obligation to reimburse the Agent for any amount paid by the
Agent upon any drawing under any Letter of Credit shall be performed strictly in
accordance with the terms of this Agreement and the applicable Letter of Credit
Agreement under any and all circumstances notwithstanding any lack of validity or
enforceability of any Letter of Credit, or any draft or other document presented
under a Letter of Credit proving to be forged or fraudulent or any statement therein
being untrue or inaccurate in any respect. Neither the Agent nor any Bank shall
have any liability or responsibility by reason of or in connection with any payment
or failure to make any payment thereunder, or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit, any error in interpretation
of technical terms or any consequence arising from causes beyond the control of the
Agent; provided that the foregoing

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shall not be construed to excuse the Agent from liability to the Company to the
extent of any direct damages suffered by the Company that are caused by the Agent’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit substantially comply with the terms thereof
(unless the Agent has received approval from the Company to honor a particular
non-conforming drawing). The parties hereto expressly agree that, with respect to
documents presented which appear on their face to be in substantial compliance with
the terms of the Letter of Credit, the Agent may, in its sole discretion, either
accept and make payment upon such documents without responsibility for further
investigation or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.

     (v)    The Company will pay to Agent for the account of each Bank in accordance
with its Percentage letter of credit fees (the “Letter of Credit Fees”) with
respect to each Letter of Credit equal to an amount, calculated on the basis of face
amount of each Letter of Credit, in each case for the period from and including the
date of issuance of such Letter of Credit to and including the date of expiration or
termination thereof at a per annum rate equal to the Applicable Margin for Fixed
LIBOR Advances, provided, that if the rate of interest provided in Section 3.1(d) is
applicable to the Loans, the rate of the Letter of Credit Fees shall be increased by
2.00% per annum. The Agent will pay to each Bank, promptly after receiving any
payment in respect of Letter of Credit Fees, an amount equal to the product of such
Bank’s Percentage times the amount of such Letter of Credit Fees. The Company will
pay to the Agent for its own account other fees in respect of Letters of Credit in
accordance with the Agent’s standard fee schedule as in effect from time to time.
The Company will also pay to the Agent for its own account a fronting fee (“Fronting
Fee”) of 0.125% per annum of the amount of any Letter of Credit. The Letter of
Credit Fees and Fronting Fee shall be payable quarterly, in arrears, on the last day
of March, June, September and December of each year.

     (d)    Indemnification; Release. The Company hereby indemnifies and holds
harmless the Agent and each Bank from and against any and all claims and damages, losses,
liabilities, and costs and expenses determined on a reasonable basis which the Agent or such
Bank may incur (or which may be claimed against the Agent or such Bank) in connection with
the execution and delivery of any Letter of Credit or transfer of or payment or failure to
pay under any Letter of Credit; provided that the Company shall not be required to indemnify
any party seeking indemnification for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by the gross negligence or willful misconduct of the party
seeking indemnification or to the extent caused by Agent’s failure to exercise care as
described in the proviso to Section 2.7(c)(iv).

     (e)    In the instance of issuance of any Letter of Credit for the account of any Material
Subsidiary, the Company shall be deemed a joint applicant for such Letter of Credit, whether
or not the Company shall have signed the relevant application or other Letter of Credit
Agreement applying to such Letter of Credit, and shall be deemed to

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guaranty payment of all Letter of Credit Obligations in respect of such Letter of
Credit under Article XI.

     Section 2.8
   Refunding of Swing Line Loans.

     (a)    The Swing Line Bank, at any time, at its sole and absolute discretion may, on
behalf of the Company (which hereby irrevocably directs the Swing Line Bank to act on its
behalf), upon notice given by the Swing Line Bank no later than 11:00 a.m., Minneapolis
time, on the relevant refunding date, request each Bank to make, and each Bank hereby agrees
to make, a Revolving Loan (which initially shall be a Base Rate Advance), in an amount equal
to such Bank’s Percentage of the aggregate amount of the Swing Line Loans (the “Refunded
Swing Line Loans”) outstanding on the date of such notice, to refund such Swing Line
Loans. Each Bank shall make the amount of such Revolving Loan available to the Agent in
immediately available funds, no later than 1:00 p.m., Minneapolis time, on the date of such
notice. The proceeds of such Revolving Loans shall be distributed by the Agent to the Swing
Line Bank and immediately applied by the Swing Line Bank to repay the Refunded Swing Line
Loans.

     (b)    Upon the date any Swing Line Loan is made, the Agent shall be deemed, without
further action by any party hereto, to have sold to each Bank, and each Bank shall be deemed
without further action by any party hereto, to have purchased from the Agent, a
participation, in its Percentage, in such Swing Line Loan. Each Bank will immediately
transfer to the Agent, upon the Agent’s demand, in immediately available funds, the amount
of its participation (the “Swing Line Participation Amount”), and the proceeds of
such participation shall be distributed by the Agent to the Swing Line Bank in such amount
as will reduce the amount of the participating interest retained by the Swing Line Bank in
its Swing Line Loans.

     (c)    Whenever, at any time after the Swing Line Bank has received from any Bank such
Bank’s Swing Line Participation Amount, the Swing Line Bank receives any payment on account
of the Swing Line Loans, the Swing Line Bank will distribute to such Bank its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Bank’s participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such Bank’s pro rata
portion of such payment if such payment is not sufficient to pay the principal of and
interest on all Swing Line Loans then due); provided, however, that in the event that such
payment received by the Swing Line Bank is required to be returned, such Bank will return to
the Swing Line Bank any portion thereof previously distributed to it by the Swing Line Bank.

     (d)    Each Bank’s obligation to make the Loans referred to in Section 2.8(a) and to
purchase participating interests pursuant to Section 2.8(b) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without limitation,
(i) any setoff, counterclaim, recoupment, defense or other right which such Bank or the
Company may have against the Swing Line Bank, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions precedent specified in

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Article VI; (iii) any adverse change in the condition (financial or otherwise) of the
Company; (iv) any breach of this Agreement or any other Loan Document by the Company or any
Bank; or (v) any other circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing.

     Section 2.9    Borrowing Subsidiaries.

     (a)    The Company, with the consent of the Agent (which shall not be unreasonably
withheld), may designate any Material Foreign Subsidiary as a Borrowing Subsidiary; provided
that all Banks must legally be able to make Loans to such Material Foreign Subsidiary. Upon
not less than five (5) Business Days’ prior notice, and upon the receipt and execution by
the Agent of a duly executed Borrowing Subsidiary Agreement, such Subsidiary shall be a
Borrowing Subsidiary and a party to this Agreement.

     (b)    The obligation of each Bank to make its first Loan to any Borrowing Subsidiary is
subject to the satisfaction of the condition that the Agent shall have received the
following:

     (i)    all documents as shall reasonably demonstrate the existence of such
Borrowing Subsidiary, the corporate power and authority of such Borrowing Subsidiary
to enter into, and the validity with respect to such Borrowing Subsidiary of, this
Agreement and the other Loan Documents to which it is a party and any other matters
relevant hereto (including an opinion of counsel), all in form and substance
satisfactory to the Agent; and

     (ii)    any governmental and third party approvals necessary or advisable in
connection with the execution, delivery and performance of this Agreement by the
Borrowing Subsidiary and any documents that any Bank is required to obtain under any
governmental law, rule or regulation, including the Patriot Act.

     (c)    Each Borrowing Subsidiary hereby irrevocably appoints and authorizes the Company to
take such action and deliver and receive notices hereunder as agent on its behalf and to
exercise such powers under this Agreement as delegated to it by the terms hereof, together
with all such powers as are reasonably incidental thereof. In furtherance of and not in
limitation of the foregoing, for administrative convenience of the parties hereto, the Agent
and the Banks shall send all notices and communications to be sent to any Borrowing
Subsidiary solely to the Company and may rely solely upon the Company to receive all such
notices and other communications for and on behalf of each Borrowing Subsidiary. No Person
other than the Company (and its authorized officers and employees) may act as agent for any
Borrowing Subsidiary hereunder without the written consent of the Agent.

     (d)    Each Loan made to a Borrowing Subsidiary and interest thereon shall be the
Obligation of such Borrowing Subsidiary and the Company, guarantied by the Company pursuant
to Article XI hereof. Notwithstanding anything to the contrary in this Agreement, unless
expressly so provided in a Loan Document other than this Agreement

25

 

entered by any Borrowing Subsidiary, no Borrowing Subsidiary shall have any obligations
or liabilities in respect of any Obligations of any other Borrowing Subsidiary or the
Company. The Company, the Agent and the Banks agree that due to difficulties of
apportionment thereof, all Obligations other than principal and interest on Loans made to a
Borrowing Subsidiary shall be Obligations of the Company only, and not of any Borrowing
Subsidiary (whether or not such Obligations are related to Loans made to a Borrowing
Subsidiary).

     Section 2.10    Increase to Commitments. The Company may, from time to time, increase
the Commitments hereunder, by giving notice to the Agent, specifying the dollar amount of the
increase (which shall be in integral multiple of $5,000,000, and which shall not result in total
aggregate Commitments hereunder in excess of $600,000,000); provided, however, that an increase in
the Commitments hereunder may only be made at a time when no Default or Event of Default shall have
occurred and be continuing. The Company may increase the Commitments by either increasing a
Commitment with an existing Bank or obtaining a Commitment from a new financial institution, the
selection of which shall require the consent of the Agent, not to be unreasonably withheld. The
Company, the Agent and each Bank or other financial institution that is increasing its Commitment
or extending a new Commitment shall enter into an amendment to this Agreement setting forth the
amounts of the Commitments, as so increased or extended, and providing that any new financial
institution extending a new Commitment shall be a Bank for all purposes under this Agreement. No
such amendment shall require the approval or consent of any Bank whose Commitment is not being
increased and no Bank shall be required to increase its Commitment unless it shall so agree in
writing. Upon the execution and delivery of such amendment as provided above, this Agreement shall
be deemed to be amended accordingly and the Agent shall adjust the funded amount of the Advances of
the Banks so that each Bank (including the Banks with new or increased Commitments) shall hold
their respective Percentages (as amended by such amendment) of the Advances outstanding and the
unfunded Commitments (and each Bank shall so fund any increased amount of Advances).

     Section 2.11    Defaulting Banks. Notwithstanding any provision of this Agreement to the
contrary, if any Bank becomes a Defaulting Bank, then the following provisions shall apply for so
long as such Bank is a Defaulting Bank:

     (a)    fees shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Bank pursuant to Section 3.2;

     (b)    the Commitment and outstanding Loans of such Defaulting Bank shall not be included
in determining whether all Banks or the Required Banks have taken or may take any action
hereunder;

     (c)    if any Swing Line Loans shall be outstanding or any Letter of Credit Obligations
shall exist at the time a Bank becomes a Defaulting Bank then:

          (i)
   
all or any part of the unfunded participations in and commitments with respect to
such Swing Line Loans or Letters of Credit shall be reallocated among the non-Defaulting
Banks in accordance with their respective Percentages but only to the extent (x) the sum of
all non-Defaulting Banks’ Loans and participations in Loans and

26

 

Letters of Credit plus such Defaulting Banks’ Loans and participations in Loans and
Letters of Credit does not exceed the total of all non-Defaulting Banks’ Commitments and (y)
the conditions set forth in Article IV are satisfied at such time; provided,
that the Letter of Credit Fees payable to the Banks shall be determined taking into account
such reallocation.

          (ii)    if the reallocation described in clause (i) above cannot, or can only partially,
be effected, the Company shall within one Business Day following notice by the Agent (x)
first, prepay the outstanding Swing Line Loans that were not reallocated and (y) second,
cash collateralize such Defaulting Bank’s Percentage of the Letter of Credit Obligations in
accordance with the procedures set forth in Section 10.3;

          (iii)
   if the Company cash collateralizes any portion of such Defaulting Bank’s
Percentage of the Letter of Credit Obligations pursuant to clause (ii) above, the Company
shall not be required to pay any fees to such Defaulting Bank pursuant to Section 2.7 during
the period any portion of such Defaulting Bank’s Percentage of the Letter of Credit
Obligations is cash collateralized; and

          (iv)    if any Defaulting Bank’s Percentage of the Letter of Credit Obligations is not
cash collateralized pursuant to clause (ii) above, then, without prejudice to any rights or
remedies of the Agent or any Bank hereunder, all letter of credit fees payable under Section
2.7 with respect to such Defaulting Bank’s Percentage of the Letter of Credit Obligations
shall be payable to the Agent;

          (d)   so long as any Bank is a Defaulting Bank, the Agent shall not be required to issue or
modify any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered
by cash collateral provided by the Company in accordance with Section 2.11(c); and

          (e)   any amount payable to such Defaulting Bank hereunder (whether on account of principal,
interest, fees or otherwise and including any amount that would otherwise be payable to such
Defaulting Bank pursuant to Section 4.4) shall, in lieu of being distributed to such Defaulting
Bank, be retained by the Agent in a segregated account and, subject to any applicable requirements
of law, be applied at such time or times as may be determined by the Agent (i) first, to the
payment of any amounts owing by such Defaulting Bank to the Agent hereunder, (ii) second, to the
payment of any amounts owing by such Defaulting Bank to the Agent as issuer of Letters of Credit or
Swing Line Bank hereunder, (iii) third, to the funding of any Revolving Loan or the funding or cash
collateralization of any participating interest in any Swing Line Loan or Letter of Credit in
respect of which such Defaulting Bank has failed to fund its portion thereof as required by this
Agreement, as determined by the Agent, (iv) fourth, if so determined by the Agent and the Company,
held in such account as cash collateral for future funding obligations of the Defaulting Bank under
this Agreement, (v) fifth, to the payment of any amounts owing to the Company or the Banks as a
result of any judgment of a court of competent jurisdiction obtained by the Company or any Bank
against such Defaulting Bank as a result of such Defaulting Bank’s breach of its obligations under
this Agreement, and (vi) sixth, if so determined by the Agent, distributed to the Banks other than
the Defaulting Bank until the ratio of the outstanding credit exposure of such Banks to the
aggregate outstanding exposure of

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all the Banks equals such ratio immediately prior to the Defaulting Bank’s failure to fund any
portion of any Loans or participations in Letters of Credit or Swing Line Loans and (vii) seventh,
to such Defaulting Bank or as otherwise directed by a court of competent jurisdiction; provided,
that if such payment is a prepayment of the principal amount of any Loans or Letter of Credit
Obligations in respect of draws under Letters of Credit with respect to which the Agent has funded
its participation obligations, such payment shall be applied solely to prepay the Loans of, and
Letter of Credit Obligations owed to, all Banks that are not Defaulting Banks pro rata prior to
being applied to the prepayment of any Loans, or Letter of Credit Obligations owed to, any
Defaulting Bank.

Nothing contained in the foregoing shall be deemed to constitute a waiver by the Company of any of
its rights or remedies (whether in equity or law) against any Bank which fails to fund any of its
Loans hereunder at the time or in the amount required to be funded under the terms of this
Agreement.

     Section 2.12    Purpose of Loans. The Loans shall be used by the Company and its
Subsidiaries for working capital purposes, capital expenditures, the Finishing Group Acquisition,
other Permitted Acquisitions, prepayment of existing Indebtedness, share repurchases and other
corporate purposes of the Company and its Subsidiaries.

ARTICLE III

INTEREST AND FEES

     Section 3.1    Interest. The Loans shall bear interest as follows, all payable on the
applicable Payment Dates for the type of Advances:

     (a)    Fixed LIBOR Advances. The unpaid principal amount of each Fixed LIBOR
Advance shall bear interest prior to maturity at a rate per annum equal to the sum of (i)
the LIBOR Rate in effect for the Interest Period for such Fixed LIBOR Advance, plus (ii) the
Applicable Margin for Fixed LIBOR Advances, plus (iii) for Fixed LIBOR Advances made in
Alternative Currencies by a Bank from an Alternative Currency Lending Office in the United
Kingdom or a Participating Member State only, if so requested by a Bank in accordance with
Exhibit D hereto, the Mandatory Costs of such Bank.

     (b)    Floating LIBOR Advances. The unpaid principal amount of each Floating
LIBOR Advance shall bear interest prior to maturity at a rate per annum equal to the LIBOR
Rate in effect for each day plus the Applicable Margin for Fixed LIBOR Advances.

     (c)    Base Rate Advances. The unpaid principal amount of each Base Rate Advance
shall bear interest prior to maturity at a rate per annum equal to the Base Rate plus the
Applicable Margin for Base Rate Advances.

     (d)    Interest After Default. After notice by the Agent to the Company (which
may be given by the Agent and shall, upon direction by the Required Banks be given)
following occurrence and during continuance of an Event of Default, the Loans shall bear
interest until paid in full at a rate per annum equal to 2.00% in excess of the rate

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otherwise applicable to the Loans and the Letter of Credit Fees shall be increased by
2.00% per annum, as provided in the proviso in the first sentence of Section 2.7(c)(v).

     Section 3.2    Commitment Fee. The Company shall pay fees (the “Commitment
Fees”) to the Agent for the account of the Banks in an amount per annum determined by applying
the Applicable Commitment Fee Rate to the average daily unused amount of the Commitments of the
respective Banks for the period from the date of satisfaction of the conditions set forth in
Section 6.2 to the Termination Date, payable on the applicable Payment Dates for Commitment Fees.
Swing Line Loans shall not count as usage of the Commitments for the purpose of calculating the
Commitment Fees.

     Section 3.3    Computation. Interest on Base Rate Advances, the interest rate of which
is determined with reference to the Prime Rate, shall be computed on the basis of actual days
elapsed and a year of 365 or 366 days, as applicable. All other interest, Commitment Fees and
other periodic fees (including Letter of Credit Fees) shall be computed on the basis of actual days
elapsed and a year of 360 days.

     Section 3.4    Fees. The Company shall pay the fees to the Agent in amounts and at times
provided in the letter agreement dated as of April 29, 2011 (the “Agent’s Fee Letter”)
between the Agent and the Company. The Company shall also pay the fees agreed to in the letter
agreement dated as of April 29, 2011 between the Company and the Syndication Agent (together with
the Agent’s Fee Letter, the “Fee Letters”).

     Section 3.5    Limitation of Interest. The Borrowers, the Agent and
the Banks intend to strictly comply with all applicable laws, including applicable usury laws.
Accordingly, the provisions of this Section 3.5 shall govern and control over every other provision
of this Agreement or any other Loan Document which conflicts or is inconsistent with this Section
3.5, even if such provision declares that it controls. As used in this Section 3.5, the term
“interest” includes the aggregate of all charges, fees, benefits or other compensation which
constitute interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an expense or as
compensation for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term of the Obligations.
In no event shall a Borrower or any other Person be obligated to pay, or any Bank have any right or
privilege to reserve, receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the applicable laws (if any) of the United States or of any
applicable state, or (b) total interest in excess of the amount which such Bank could lawfully have
contracted for, reserved, received, retained or charged had the interest been calculated for the
full term of the Obligations at the Highest Lawful Rate. On each day, if any, that the interest
rate (the “Stated Rate”) called for under this Agreement or any other Loan Document exceeds
the Highest Lawful Rate, the rate at which interest shall accrue shall automatically be fixed by
operation of this sentence at the Highest Lawful Rate for that day, and shall remain fixed at the
Highest Lawful Rate for each day thereafter until the total amount of interest accrued equals the
total amount of interest which would have accrued if there were no such ceiling rate as is imposed
by this sentence. Thereafter, interest shall accrue at the Stated Rate unless and until the Stated
Rate again exceeds the Highest Lawful Rate when the provisions of the immediately

29

 

preceding sentence shall again automatically operate to limit the interest accrual rate. The
daily interest rates to be used in calculating interest at the Highest Lawful Rate shall be
determined by dividing the applicable Highest Lawful Rate per annum by the number of days in the
calendar year for which such calculation is being made. None of the terms and provisions contained
in this Agreement or in any other Loan Document which directly or indirectly relate to interest
shall ever be construed without reference to this Section 3.5, or be construed to create a contract
to pay for the use, forbearance or detention of money at an interest rate in excess of the Highest
Lawful Rate. If the term of any Obligation is shortened by reason of acceleration of maturity as a
result of any Event of Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Bank at any time, including but not limited
to, the stated maturity, is owed or receives (and/or has received) interest in excess of interest
calculated at the Highest Lawful Rate, then and in any such event all of any such excess interest
shall be canceled automatically as of the date of such acceleration, prepayment or other event
which produces the excess, and, if such excess interest has been paid to such Bank, it shall be
credited pro tanto against the then-outstanding principal balance of the Borrowers’ obligations to
such Bank, effective as of the date or dates when the event occurs which causes it to be excess
interest, until such excess is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.

ARTICLE IV

PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION

OF THE CREDIT AND SETOFF

     Section 4.1    Repayment. Principal of the Loans, together with all accrued and unpaid
interest thereon, shall be due and payable on the Termination Date.

     Section 4.2    Prepayments.

     (a)    The Borrowers may, upon at least one Business Day’s prior written or telephonic
notice received by the Agent, prepay the Loans denominated in Dollars, in whole or in part,
at any time subject to the provisions of Section 2.6, without any other premium or penalty.
Any prepayment of a Fixed LIBOR Advance must be accompanied by accrued and unpaid interest
on the amount prepaid. Each partial prepayment of a Revolving Loan that is a Base Rate
Advance shall be in an amount of $500,000 or an integral multiple of $100,000 above such
amount, or if less, the remaining principal balance of such Loan. Each partial prepayment
of a Swing Line Loan that is a Floating LIBOR Advance or Base Rate Advance shall be in an
amount of $5,000 or an integral multiple thereof above such amount, or if less, the
remaining principal balance. Each partial prepayment of a Fixed LIBOR Advance shall be in
an amount of $1,000,000 or an integral multiple of $500,000 above such amount, or, if less,
the remaining principal balance of such Advance.

     (b)
   The Borrowers may, upon at least three Business Days’ prior written or telephonic
notice received by the Agent, prepay the Revolving Loans denominated in Alternative
Currencies. Any prepayment of a Revolving Loan in an Alternative Currency shall be in the
full amount of such Revolving Loan initially borrowed or in such portion

30

 

of such amount as the Agent shall approve in its reasonable discretion, and shall be
subject to the provisions of Section 2.6, without any other premium or penalty.

     (c)    If on any Revaluation Date, the Agent shall determine that the outstanding Dollar
Equivalent of the Revolving Loans, Swing Line Loans and Letter of Credit Obligations shall
exceed the aggregate Commitments of the Banks, the Borrowers shall, upon notice of such
excess by the Agent, repay the Revolving Loans or Swing Line Loans in the amount of any such
excess. For purposes of this Section and all calculations herein, the principal of
Revolving Loans in Alternative Currencies shall be calculated using the Dollar Equivalent of
such Revolving Loans as determined by the Agent on such Revaluation Date. Such payment
shall be applied first, to any Swing Line Loans outstanding, second, to any Revolving Loans
in Dollars (first to Base Rate Advances, then Floating LIBOR Advances in a manner reasonably
calculated to minimize payments under Section 2.6), third, to any Revolving Loans in
Alternative Currencies, and fourth, to be held as cash collateral for Letter of Credit
Obligations as provided in Section 10.3.

     Section 4.3    Optional Reduction or Termination of Commitments. The Company may, at any
time, upon no less than three (3) Business Days prior written or telephonic notice received by the
Agent, reduce the Commitments of all Banks, such reduction to be in a minimum amount of $5,000,000
or an integral multiple thereof and to be applied ratably to the Commitments of the respective
Banks. Upon any reduction in the Commitments pursuant to this Section, the Company shall pay to
the Agent for the account of the Banks the amount, if any, by which the aggregate unpaid principal
amount of outstanding Loans exceeds the total Commitments of all Banks as so reduced. Amounts so
paid cannot be reborrowed. The Company may, at any time, upon not less than three (3) Business
Days prior written notice to the Agent, terminate the Commitments in their entirety. Upon
termination of the Commitments pursuant to this Section, the Company shall pay to the Agent for the
account of the Banks the full amount of all outstanding Loans and shall cause all other Termination
Conditions to exist. All payment described in this Section is subject to the provisions of Section
2.6.

     Section 4.4    Payments. Payments and prepayments of principal of, and interest on, the
Notes and all fees, expenses and other obligations under the Loan Documents shall be made without
set-off or counterclaim in immediately available funds not later than 3:00 p.m., Minneapolis time,
on the dates due at the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business Day. The Agent
shall promptly distribute in like funds to each Bank its Percentage share of each such payment of
principal, interest and Commitment Fees. Subject to the definition of the term “Interest
Period”, whenever any payment to be made hereunder or on the Notes shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of any interest or fees.

     Section 4.5    Proration of Payments. If any Bank or other holder of a Loan shall obtain
any payment or other recovery (whether voluntary, involuntary, by application of offset, pursuant
to the guaranty hereunder, or otherwise) on account of principal of, interest on, or fees with
respect to any Loan, in any case in excess of the share of payments and other recoveries of other
Banks or holders, such Bank or other holder shall purchase from the other Banks or

31

 

holders, in a manner to be specified by the Agent, such participations in the Loans held by
such other Banks or holders as shall be necessary to cause such purchasing Bank or other holder to
share the excess payment or other recovery ratably with each of such other Banks or holders;
provided, however, that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

ARTICLE V

ADDITIONAL PROVISIONS RELATING TO LOANS

     Section 5.1    Increased Costs. If, as a result of application of any law or regulation
(or in the interpretation or administration or implementation thereof) applicable to any Advance in
an Alternative Currency, or change in any law or regulation (or in the interpretation or
administration or implementation thereof) applicable to any Advance in Dollars after the date
hereof, or application (for Alternative Currency Advances) or change after the date hereof (for
Dollar Advances) of any law, rule, regulation, treaty or directive (or in the interpretation or
administration or implementation thereof), including, notwithstanding the foregoing, all requests,
rules, guidelines or directives in connection with the Dodd-Frank Wall Street Reform and Consumer
Protection Act regardless of the date enacted, adopted or issued, or compliance by the Banks with
any request or directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency (provided, that in the case
of Dollar Advances, such request or directive is made or issued after the date hereof):

     (a)    any reserve, special deposit, special assessment or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any Bank is imposed,
modified or deemed applicable, including without limitation any LIBOR Reserve Rate on
Dollars or similar reserve on Alternative Currencies;

     (b)    any increase in the amount of capital required or expected to be maintained by any
Bank or any Person controlling such Bank is imposed, modified or deemed applicable; or

     (c)    any other condition affecting this Agreement or the Commitments is imposed on any
Bank or the relevant funding markets;

and such Bank determines that, by reason thereof, the cost to such Bank of making or maintaining
the Loans or extending its Commitment is increased, or the amount of any sum receivable by such
Bank hereunder or under the Notes in respect of any Loan is reduced;

then, the Company shall pay to such Bank upon demand such additional amount or amounts as will
compensate such Bank (or the controlling Person in the instance of (c) above) for such additional
costs or reduction (provided that the Banks have not been compensated for such additional cost or
reduction in the calculation of the LIBOR Reserve Rate). Determinations by each Bank for purposes
of this Section 5.1 of the additional amounts required to compensate such Bank shall be conclusive
in the absence of manifest error. In determining such amounts, the Banks may use any reasonable
averaging, attribution and allocation methods. Each Bank

32

 

shall use best efforts to notify the
Company within 90 days after becoming aware of any application or change that would result in
payments by the Company under this Section 5.1. Failure
or delay on the part of any Bank to demand compensation pursuant to this Section 5.1 shall not
constitute a waiver of such Bank’s right to demand such compensation; provided that the
Company shall not be required to compensate a Bank pursuant to this section for any increased costs
or reductions incurred more than 90 days prior to the date that such Bank notifies the Company of
the application or change that would result in payments by the Company under this Section 5.1;
provided further that, if the change in law giving rise to such increased costs or
reductions is retroactive, then the 90-day period referred to above shall be extended to include
the period of retroactive effect thereof

     Section 5.2    Deposits Unavailable or Interest Rate Unascertainable or Inadequate;
Impracticability. If the Agent determines (which determination shall be conclusive and binding
on the parties hereto) that:

     (a)    deposits of the necessary amount for the relevant Interest Period for any LIBOR
Advance are not available in the relevant markets, or for Alternative Currencies, necessary
amounts of the relevant Alternative Currency are not readily obtainable on regular exchange
markets available to each Bank, or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate for Dollars or
other Alternative Currencies for such Interest Period;

     (b)    the LIBOR Rate will not adequately and fairly reflect the cost to the Banks of
making or funding the LIBOR Advance for a relevant Interest Period; or

     (c)    the making or funding of LIBOR Advances has become impracticable as a result of any
event occurring after the date of this Agreement which, in the opinion of the Agent,
materially and adversely affects such Advances or any Bank’s Commitment or the relevant
market;

the Agent shall promptly give notice of such determination to the Company, and (i) any notice of a
new LIBOR Advance in Dollars previously given by the Borrowers and not yet borrowed or converted
shall be deemed to be a notice to make a Base Rate Advance; (ii) any notice of a new LIBOR Advance
in an Alternative Currency shall, upon notice by the Agent, be withdrawn by the Borrowers, and
(iii) the Borrowers shall be obligated to either prepay in full any outstanding LIBOR Advances (in
Dollars or Alternative Currencies), without premium or penalty on the last day of the current
Interest Period with respect thereto or, in the instance of a LIBOR Advance in Dollars, convert any
such LIBOR Advance to a Base Rate Advance on such last day.

     Section 5.3    Changes in Law Rendering LIBOR Advances Unlawful. If at any time due to
the adoption of any law, rule, regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central bank, governmental authority, agency
or instrumentality, or comparable agency charged with the interpretation or administration thereof
in each case after the date of this Agreement, or for any other reason arising subsequent to the
date of this Agreement, it shall become unlawful or impossible for any Bank to make or fund any
LIBOR Advance in either Dollars or an Alternative Currency, the obligation of such Bank to provide
such LIBOR Advance in Dollars or the relevant Alternative

33

 

Currency shall, upon the happening of such event, forthwith be suspended for the duration of
such illegality or impossibility. If any such event shall make it unlawful or impossible for
the Bank to continue any LIBOR Advance previously made by it hereunder, such Bank shall, upon the
happening of such event, notify the Agent and the Company thereof in writing, and the Company
shall, at the time notified by such Bank, repay such Advance in full, together with accrued
interest thereon, subject to the provisions of Section 2.6, in the instance of a LIBOR Advance in
Dollars convert each such unlawful Advance to a Base Rate Advance, or in the instance of a LIBOR
Advance in an Alternative Currency change the interest rate index to an index that is not unlawful
or impossible for such Bank.

     Section 5.4    Discretion of the Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its
funding of all or any part of the Loans in any manner it elects; it being understood, however, that
for purposes of this Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each LIBOR Advance during the Interest Period for such Advance
through the purchase of deposits of Dollars or purchase of Alternative Currencies on the foreign
exchange market, each having a term corresponding to such Interest Period and bearing an interest
rate equal to the LIBOR Rate for such Interest Period (whether or not any Bank shall have granted
any participations in such Advances).

     Section 5.5    Taxes.

     (a)    No Deductions. All payments made by the Borrowers under this Agreement and
each other Loan Document shall be made free and clear of and without deduction for any
present or future taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the net income of any Bank and
all income and franchise taxes applicable to any Bank and taxes measured by or imposed on
the capital or net worth of any Bank by the jurisdiction of its location or organization
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as “Taxes”). If the Borrowers shall be
required by law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Loan Document, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.5) each Bank receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrowers shall make
such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable law.

     (b)    Stamp Taxes. In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges, or similar levies
which arise from any payment made hereunder or from the execution, delivery, or registration
of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter
referred to as “Other Taxes”).

     (c)    Indemnification for Taxes Paid by a Bank. The Borrowers shall indemnify
each Bank for the full amount of Taxes or Other Taxes (including, without

34

 

limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 5.5)
paid by any Bank and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. The Agent shall use its best efforts,
but shall not be penalized for failure, to alert the Borrowers to the assertion of any such
claim for taxes. This indemnification shall be made within 30 days from the date a Bank
makes written demand therefor.

     (d)    Certificate. Within 30 days after the date of any payment of any Taxes by
the Borrowers, the Borrowers shall furnish to each Bank, at its address referred to herein,
the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are
payable in respect of any payment by the Borrowers, the Borrowers shall, if so requested by
a Bank, provide a certificate of a Responsible Officer of the Borrowers to that effect.

     (e)    Refunds, Credits, Allowances. The amount that the Borrower shall be
required to pay to any Bank pursuant to this Section 5.5 shall be reduced by the amount of
any refund, credit or allowance which such Bank has received or reasonably anticipates
receiving in respect of Taxes as to which it has received additional amounts or has been
indemnified by the Borrower. In the case of such a refund, credit or allowance that is
anticipated to be received by a Bank after its current financial reporting period, such Bank
may require the Borrower’s to adjust payments or indemnify it as payments are due, and
return the amount of such refund, credit or allowance when received.

     (f)    Survival. Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained in this
Section 5.5 shall survive the payment in full of principal and interest hereunder and under
any instrument delivered hereunder.

     Section 5.6    Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due from any Borrower hereunder in the currency expressed
to be payable under this Agreement, the Notes or the Fee Letters (the “specified currency”)
into another currency, the parties hereto agree, to the fullest extent that they may effectively do
so, that the rate of exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other currency at the Agent’s
main office in Minneapolis, Minnesota on the Business Day preceding that on which the final,
non-appealable judgment is given. The obligations of the Borrowers in respect of any sum due to
any Bank or the Agent under this Agreement, the Notes and the Fee Letters shall, notwithstanding
any judgment in a currency other than the specified currency, be discharged only to the extent that
on the Business Day following receipt by such Bank or the Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Bank or the Agent (as the case may be) may in
accordance with normal, reasonable banking procedures purchase the specified currency with such
other currency. If the amount of the specified currency so purchased is less than the sum
originally due to such Bank or the Agent, as the case may be, in the specified currency, the
Borrowers agree, to the fullest extent that they may effectively do so, as a separate obligation
and notwithstanding any such judgment, to indemnify such Bank or the Agent, as the case may be,
against such loss.

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     Section 5.7    Mitigation.

     (a)    If any Bank requests compensation under Section 5.1 hereof, or the Borrowers are
required to pay any additional amount to or for the account of any Bank pursuant to Section
5.5 hereof, then such Bank shall use reasonable efforts to designate a different lending
office for the funding or booking of its Loans or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment
of such Bank such designation or assignment (i) would eliminate or materially reduce amounts
payable pursuant to Section 5.1 or Section 5.5, in the future, (ii) would not subject such
Bank to any unreimbursed cost or expense, and (iii) would not otherwise be materially
disadvantageous in any way to such Bank.

     (b)    The Company hereby agrees to pay all reasonable costs and expenses incurred by any
Bank in connection with any designation or assignment pursuant to this Section 5.7.

     Section 5.8    No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees
that: (i) (A) the arranging and other services regarding this Agreement provided by the Banks are
arm’s-length commercial transactions between such Borrower and its Affiliates, on the one hand, and
the Banks, on the other hand, (B) each Borrower has consulted its own legal, accounting, regulatory
and tax advisors to the extent it has deemed appropriate, and (C) each Borrower is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) each of the Banks is and has been
acting solely as a principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrowers or
any of their Affiliates, or any other Person and (B) no Bank has any obligation to the Borrowers or
any of their Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and (iii) each of the Banks
and their respective Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrowers and their Affiliates, and no Bank has any
obligation to disclose any of such interests to the Borrowers or their Affiliates. To the fullest
extent permitted by law, each Borrower hereby waives and releases any claims that it may have
against each of the Banks with respect to any breach or alleged breach of agency or fiduciary duty
in connection with any aspect of any transaction contemplated hereby.

ARTICLE VI

CONDITIONS PRECEDENT

     Section 6.1    Conditions to Effectiveness. The effectiveness of this Agreement, as well
as the obligation of the Banks to make the initial Loans hereunder and of the Agent to issue
Letters of Credit hereunder shall be subject to the satisfaction of the conditions precedent, in
addition to the applicable conditions precedent set forth in Sections 6.2 and 6.3 below, that the
Agent shall have received all of the following, in form and substance satisfactory to the Agent,

36

 

each duly executed and certified or dated as of the date of this Agreement or such other date
as is satisfactory to the Agent:

     (a)    The Notes payable to each Bank executed by a duly authorized officer (or officers)
of the Company (or Company and Borrowing Subsidiary, if applicable).

     (b)    The Pledge Agreement, together with delivery of any certificate evidencing the
stock or Ownership Interest of Foreign Subsidiaries pledged thereby and executed assignments
separate from certificate (stock powers) for such certificates.

     (c)    The Guaranties required hereunder, executed by a duly authorized officer of each
Subsidiary required to be a Guarantor hereunder.

     (d)    A certificate or certificates of the Secretary or an Assistant Secretary of each
Borrower and each Guarantor, attesting to and attaching (i) a copy of the corporate
resolution of the Company authorizing the execution, delivery and performance of the Loan
Documents, (ii) an incumbency certificate showing the names and titles, and bearing the
signatures of, the officers of such Borrower or Guarantor authorized to execute the Loan
Documents, and (iii) a copy of the Organizational Documents of such Borrower or Guarantor
with all amendments thereto.

     (e)    A Certificate of Good Standing for the Company and each Guarantor certified by the
Secretary of State or equivalent body in the applicable jurisdiction of incorporation.

     (f)    An opinion of counsel to the Company, the Guarantors and any Borrowing Subsidiary,
addressed to the Agent and the Banks, in substantially the form of Exhibit F.

     (g)    The Agent shall have received pro forma financial statements and five-year
projections giving effect to the Finishing Group Acquisition that are satisfactory to the
Agent and the Banks.

     (h)    Evidence satisfactory to the Agent that after giving effect to the Finishing Group
Acquisition the Company’s Cash Flow Leverage Ratio calculated on a pro forma basis is less
than 3.25 to 1.0.

     (i)    The Agent shall have received a copy of the Intercreditor Agreement executed and
delivered by the Senior Noteholders.

     (j)    Payment of all fees and expenses due and payable as of the effectiveness of this
Agreement under or in connection with the Fee Letters upon the effectiveness of this
Agreement.

     (k)    Amendment of the Note Agreement dated as of March 11, 2011 by and among the Company
and the Senior Noteholders party thereto to amend the definition of “Significant
Acquisition” appearing therein to mean a Permitted Acquisition (as defined therein)
involving payment by the Company or a Subsidiary (each as defined therein) of a

37

 

total purchase price equal to or exceeding $200,000,000 and to otherwise conform to the
terms of this Agreement, as applicable, in form and substance satisfactory to the Agent.

     Section 6.2    Conditions Precedent to Initial Loans. The obligation of the Banks to
make the initial Loans hereunder and of the Agent to issue Letters of Credit hereunder shall be
subject to the satisfaction of the conditions precedent, in addition to the applicable conditions
precedent set forth in Section 6.1 above and Section 6.3 below, that the Agent shall have received
all of the following, in form and substance satisfactory to the Agent, each duly executed and
certified or dated as of the date of this Agreement or such other date as is satisfactory to the
Agent:

     (a)    Evidence satisfactory to the Agent that the Company has received not less than
$375,000,000 in proceeds from the issuance of the Senior Notes under the Senior Note
Agreements with a minimum tenor of seven years, no scheduled amortization prior to the
Termination Date and affirmative, negative and financial covenants, funding conditions and
defaults or events of default no more restrictive than those under this Agreement or that
would trigger the amendment provisions of Section 8.12.

     (b)
   Evidence satisfactory to the Agent of payment in full and termination of the
Company’s existing revolving credit agreement.

     (c)    Evidence satisfactory to the Agent of the consummation of the Finishing Group
Acquisition.

     (d)    Evidence of all governmental, shareholder and third party consents (including
Hart-Scott-Rodino clearance necessary in connection with the Finishing Group Acquisition).

     (e)    The final terms and conditions of each aspect of the Finishing Group Acquisition
shall be satisfactory to the Agent and the Banks, the Finishing Group Purchase Agreement
pursuant to which the Finishing Group Acquisition is to be consummated shall be satisfactory
to the Agent and the Banks and shall provide for a maximum acquisition consideration of
$650,000,000 plus any working capital, net asset, and cash/debt adjustments provided for
under the Finishing Group Purchase Agreement plus transaction costs, and the Company will
deliver to the Agent a certificate signed by a Responsible Officer confirming that there
have been no material modifications to the Finishing Group Purchase Agreement and confirming
that the Finishing Group Acquisition will be consummated in accordance with the terms of the
Finishing Group Purchase Agreement substantially contemporaneously with the making of the
initial Loan hereunder.

     (f)    Audited financial statements for the assets and equity interests of the ITW
Finishing Group being purchased in the Finishing Group Acquisition for the fiscal year
ending December 31, 2010, which shall not be inconsistent in any material respect with the
unaudited financial statements previously delivered to the Company.

     (g)    Payment of all fees and expenses due and payable as of the initial funding under or
in connection with the Fee Letters upon the making of the initial Loan.

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     (h)    A certificate signed by a Responsible Officer that the conditions specified in
Section 6.3 have been satisfied.

     Section 6.3    Conditions Precedent to all Loans. The obligation of the Banks to make
any Loan hereunder (including the initial Loan) and the obligation of the Agent to issue Letters of
Credit hereunder shall be subject to the satisfaction of the following conditions precedent (and
any request for a Loan shall be deemed a representation by the Company that the following are
satisfied):

     (a)    Before and after giving effect to such Loan or Letter of Credit, the
representations and warranties contained in Article VII shall be true and correct in all
material respects, as though made on the date of such Loan or issuance of such Letter of
Credit, except (i) for representations and warranties which by their terms are limited to an
earlier date and (ii) for purposes of this Section 6.3, the representations and warranties
contained in Section 7.5 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 8.1 (and in the case of the last
sentence of Section 7.5, the date of the most recent audited financial statements). For the
avoidance of doubt, to the extent the information disclosed in Schedule 7.15 becomes
inaccurate or outdated, the Borrower shall deliver to the Agent an updated Schedule 7.15
reflecting the most current and accurate information with respect to the disclosures
therein, which schedule shall be deemed to be immediately effective and this Agreement shall
be immediately amended to replace the existing Schedule 7.15 with the updated Schedule 7.15.

     (b)    Before and after giving effect to such Loan or Letter of Credit, no Default or
Event of Default shall have occurred and be continuing.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

     To induce the Agent and the Banks to enter into this Agreement, to grant the Commitments and
to make Loans and issue Letters of Credit hereunder, the Borrowers represent and warrant to the
Agent and the Banks that:

     Section 7.1    Organization, Standing, Etc. The Company and each of its corporate
Subsidiaries are corporations duly incorporated and validly existing and in good standing under the
laws of the jurisdiction of their respective incorporation and have all requisite corporate power
and authority to carry on their respective businesses as now conducted, to (in the instance of the
Company) enter into the Loan Documents and to perform its obligations under the Loan Documents.
The Company and each of its Subsidiaries are duly qualified and in good standing as a foreign
corporation or other entity in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such qualification necessary, except
where the failure to be so qualified and in good standing would not be reasonably likely to result
in an Adverse Event.

     Section 7.2    Authorization and Validity. The execution, delivery and performance by
each Borrower and each Guarantor of the Loan Documents to which such Borrower or such

39

 

Guarantor is a party have been duly authorized by all necessary corporate, limited liability
company or partnership action by such Borrower or such Guarantor, and such Loan Documents
constitute the legal, valid and binding obligations of such Borrower or such Guarantor, enforceable
against such Borrower or such Guarantor in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and subject to general principles of
equity.

     Section 7.3    No Conflict; No Default. The execution, delivery and performance by each
Borrower and each Guarantor of the Loan Documents to which such Borrower or such Guarantor is a
party will not (a) violate any provision of any law, statute, rule or regulation or any order,
writ, judgment, injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to such Borrower or such Guarantor, (b) violate
or contravene any provisions of the Organizational Documents of such Borrower or such Guarantor, or
(c) result in a breach of or constitute a default under any indenture, loan or credit agreement or
any other material agreement, lease or instrument to which such Borrower or such Guarantor is a
party or by which it or any of its properties may be bound or result in the creation of any Lien on
any asset of such Borrower or such Guarantor or any Subsidiary of such Borrower or such Guarantor.
Neither the Company nor any Subsidiary is in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in
which the consequences of such default or violation would be reasonably likely to result in an
Adverse Event. No Default or Event of Default has occurred and is continuing.

     Section 7.4    Government Consent. No order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by, any governmental or
public body or authority is required on the part of any Borrower or any Guarantor to authorize, or
is required on the part of any Borrower or any Guarantor in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability of, the Loan
Documents.

     Section 7.5    Financial Statements and Condition. The Company’s audited consolidated
financial statements as at December 31, 2010, and its unaudited consolidated financial statements
as at April 1, 2011, as heretofore furnished to the Banks, have been prepared in accordance with
GAAP on a consistent basis and fairly present, in all material respects, the consolidated financial
condition of the Company and its Subsidiaries as at such dates and the consolidated results of
their operations and cash flows for the respective periods then ended (subject, in the case of such
interim financial statements, to the absence of footnotes and normal year-end adjustments). Since
December 31, 2010, no Adverse Event has occurred.

     Section 7.6    Litigation. Except as described in Schedule 7.6, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting
the Company or any Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which would be reasonably likely to
result in an Adverse Event.

40

 

     Section 7.7    Compliance. The Company and its Subsidiaries are in compliance with all
statutes and governmental rules and regulations applicable to them, except where the failure to be
in such compliance would not be reasonably likely to result in an Adverse Event.

     Section 7.8    Environmental, Health and Safety Laws. There does not exist any violation
by the Company or any Subsidiary of any applicable federal, state or local law, rule or regulation
or order of any government, governmental department, board, agency or other instrumentality
relating to environmental, pollution, health or safety matters which is reasonably likely to impose
a material liability on the Company or a Subsidiary or which would require a material expenditure
by the Company or such Subsidiary to cure. Neither the Company nor any Subsidiary has received any
notice to the effect that any part of its operations or properties is not in material compliance
with any such law, rule, regulation or order or notice that it or its property is the subject of
any governmental investigation evaluating whether any remedial action is needed to respond to any
release of any toxic or hazardous waste or substance into the environment, the consequences of
which non-compliance or remedial action would be reasonably likely to result in an Adverse Event.

     Section 7.9    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).

     Section 7.10    Regulation U. The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System).

     Section 7.11    Ownership of Property; Liens. Each of the Company and the Subsidiaries
has good and marketable title to its owned real properties and good and sufficient title to its
other owned properties, including all properties and assets referred to as owned by the Company and
its Subsidiaries in the audited balance sheet of the Company referred to in Section 7.5 (other than
property disposed of since the date of such balance sheet in the ordinary course of business or as
otherwise permitted by this Agreement). None of the properties, revenues or assets of the Company
or any of its Subsidiaries is subject to a Lien securing any Indebtedness (other than the
Obligations and other Indebtedness excluded from the definition of “Secured Indebtedness” pursuant
to the proviso in such definition) except to the extent securing Secured Indebtedness permitted by
Section 9.8.

     Section 7.12    Taxes. Each of the Company and the Subsidiaries has filed all federal,
state and local tax returns required to be filed and has paid or made provision for the payment of
all taxes due and payable pursuant to such returns and pursuant to any assessments made against it
or any of its property and all other taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or charges the amount or validity of
which is currently being contested in good faith by appropriate proceedings and with respect

41

 

to which reserves in accordance with GAAP have been provided on the books of the Company). No
tax Liens have been filed and no material claims are being asserted with respect to any such taxes,
fees or charges. The charges, accruals and reserves on the books of the Company in respect of
taxes and other governmental charges are adequate.

     Section 7.13    Trademarks, Patents. Each of the Company and the Subsidiaries possesses
or has the right to use all of the material patents, trademarks, trade names, service marks and
copyrights, and applications therefor, and all technology, know-how, processes, methods and designs
used in or necessary for the conduct of its business, without known conflict with the rights of
others.

     Section 7.14    Investment Company Act. Neither the Company nor any Subsidiary is an
“investment company” or a company “controlled” by an investment company within the meaning of the
Investment Company Act of 1940, as amended.

     Section 7.15    Subsidiaries. Schedule 7.15 sets forth as of the date of this Agreement
a list of all Subsidiaries (excluding Subsidiaries with no assets and no operations) and the number
and percentage of the shares of each class of capital stock owned beneficially or of record by the
Company or any Subsidiary therein, and the jurisdiction of formation of each such Subsidiary, and
designates which Subsidiaries are Material Subsidiaries.

     Section 7.16    Solvency.

     (a)    Immediately after the consummation of the transactions to occur on the date hereof
and immediately following the making of each Loan or other extension of credit, if any, made
on the date hereof and after giving effect to the application of the proceeds of such Loan
or extension of credit, (i) the fair value of the assets of the Company and its Subsidiaries
on a consolidated basis, on a going-concern basis, will exceed the debts and liabilities,
subordinated, contingent or otherwise, of the Company and its Subsidiaries on a consolidated
basis; (ii) the present fair saleable value of the property of the Company and its
Subsidiaries on a consolidated basis, on a going-concern basis, will be greater than the
amount that will be required to pay the probable liability of the Company and its
Subsidiaries on a consolidated basis on their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and matured;
(iii) the Company and its Subsidiaries on a consolidated basis will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (iv) the Company and its Subsidiaries on a consolidated
basis will not have unreasonably small capital with which to conduct the businesses in which
they are engaged as such businesses are now conducted and are proposed to be conducted after
the date hereof.

     (b)    The Company does not intend to, or to permit any of its Material Subsidiaries to,
and does not believe that it or any of its Material Subsidiaries will, incur debts beyond
its ability to pay such debts as they mature, taking into account the timing of and amounts
of cash to be received by it or any such Material Subsidiary and the timing of the amounts
of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such
Material Subsidiary.

42

 

     Section 7.17    Disclosure. The Company has disclosed to the Banks all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all
other matters known to it, that, individually or in the aggregate, could reasonably be expected to
result in an Adverse Event. None of the reports, financial statements, certificates or other
information furnished by or on behalf of any Borrower, any Guarantor or any Subsidiary to the Agent
or any Bank in connection with the negotiation of this Agreement or any other Loan Document (as
modified or supplemented by other information so furnished) contains any material misstatement of
fact or omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that, with respect to
projected financial information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time delivered and, if such
projected financial information was delivered prior to the date on which the conditions specified
in Section 6.1 are satisfied, such date.

ARTICLE VIII

AFFIRMATIVE COVENANTS

     From the date of this Agreement and thereafter until Termination Conditions exist, the Company
will do, and will cause each Subsidiary (except in the instance of Section 8.1) to do, all of the
following:

     Section 8.1    Financial Statements and Reports. Furnish to the Banks:

     (a)    As soon as practicable and in any event within seventy-five (75) days after the end
of each fiscal year of the Company, the annual audit report of the Company and its
Subsidiaries prepared on a consolidated basis and in conformity with GAAP, consisting of at
least statements of income, cash flow, and stockholders’ equity for such year, and a
consolidated balance sheet as at the end of such year, setting forth in each case in
comparative form corresponding figures from the previous annual audit, certified without
qualification by independent certified public accountants of recognized standing selected by
the Company and reasonably acceptable to the Agent. Delivery within the time period
specified above pursuant to paragraph (f) below of copies of the annual report on Form 10-K
of the Company for such fiscal year (including all financial statement exhibits and
financial statements incorporated by reference therein) prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this paragraph (a). The Company shall be deemed to have made
such delivery of such Form 10-K if it shall have timely made such Form 10-K available on
“EDGAR” and on its home page on the worldwide web (at the date of this Agreement located at:
http//www.graco.com) (such availability thereof being referred to as “Electronic
Delivery”).

     (b)    As soon as practicable and in any event within forty-five (45) days after the end
of each of the first three fiscal quarters of each fiscal year, a copy of the unaudited
financial statements of the Company and its Subsidiaries prepared in the same manner as the
audit report referred to in Section 8.1(a), certified on behalf of the Company by its chief
financial officer, consisting of at least a consolidated statement of income for the Company
and the Subsidiaries for such quarter and for the period from the

43

 

beginning of such fiscal year to the end of such quarter, a consolidated statement of
cash flow for the Company and its Subsidiaries for the period from the beginning of such
fiscal year to the end of such quarter, and a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter. Delivery within the time period specified
above pursuant to paragraph (f) below of copies of the quarterly report on Form 10-Q of the
Company for such quarterly period (including all financial statement exhibits and financial
statements incorporated by reference therein) prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this paragraph (a). The Company shall be deemed to have made such
delivery of such Form 10-Q if it shall have timely made Electronic Delivery thereof.

     (c)    Together with the financial statements furnished by the Company under Sections
8.1(a) and 8.1(b), a Compliance Certificate stating that as at the date of each such
financial statement there did not exist any Default or Event of Default or, if such Default
or Event of Default existed, specifying the nature and period of existence thereof and what
action the Company proposes to take with respect thereto and confirming compliance with the
covenants addressed in the Compliance Certificate.

     (d)    Immediately upon a Responsible Employee becoming aware of any Default or Event of
Default, a notice describing the nature thereof and what action the Company proposes to take
with respect thereto.

     (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.

     (f)
   Promptly upon the mailing or filing thereof, copies of all material financial
statements, reports and proxy statements mailed by the Company to the Company’s
shareholders, and copies of all registration statements, periodic reports and other
documents filed by the Company with the Securities and Exchange Commission (or any successor
thereto) or any national securities exchange.

     (g)    Immediately upon a Responsible Employee becoming aware of the occurrence thereof,
notice of the institution of any litigation, arbitration or governmental proceeding, or the
rendering of a judgment or decision in such litigation or proceeding, which is material to
the Company and its Subsidiaries as a consolidated enterprise, and the steps being taken by
the Company or Subsidiary affected by such proceeding.

     (h)    Immediately upon a Responsible Employee becoming aware of the occurrence thereof,
notice of any violation as to any environmental matter by the Company or any Subsidiary and
of the commencement of any judicial or administrative proceeding relating to health, safety
or environmental matters (i) in which an adverse determination or result would be reasonably
likely to result in the revocation of or have a material adverse effect on any operating
permits, air emission permits, water discharge

44

 

permits, hazardous waste permits or other permits held by the Company or any Subsidiary
which are material to the operations of the Company or such Subsidiary as a consolidated
enterprise, or (ii) which would be reasonably likely to impose a material liability on the
Company or such Subsidiary to any Person or which will require a material expenditure by the
Company or such Subsidiary to cure any alleged problem or violation.

     (i)    From time to time, such other information regarding the business, operation and
financial condition of the Company and the Subsidiaries as any Bank may reasonably request.

     Section 8.2    Corporate Existence. Subject to Section 9.1 in the instance of a
Subsidiary, maintain its corporate existence in good standing under the laws of its jurisdiction of
formation and its qualification to transact business as a foreign entity in each other jurisdiction
in which the character of the properties owned, leased or operated by it or the business conducted
by it makes such qualification necessary, unless failure to so qualify would not be reasonably
likely to result in an Adverse Event.

     Section 8.3
   Insurance. Maintain with financially sound and reputable insurance
companies such insurance as may be required by law and such other insurance in such amounts and
against such hazards as is customary in the case of reputable corporations engaged in the same or
similar business and similarly situated.

     Section 8.4    Payment of Taxes and Claims. File all tax returns and reports which are
required by law to be filed by it and pay before they become delinquent all taxes, assessments and
governmental charges and levies imposed upon it or its property and all claims or demands of any
kind (including, without limitation, those of suppliers, mechanics, carriers, warehouses, landlords
and other like Persons) which, if unpaid, might result in the creation of a Lien upon its property;
provided that the foregoing items need not be paid if they are being contested in good faith by
appropriate proceedings, and as long as the Company’s or such Subsidiary’s title to its property is
not materially adversely affected, its use of such property in the ordinary course of its business
is not materially interfered with and adequate reserves with respect thereto have been set aside on
the Company’s or such Subsidiary’s books in accordance with GAAP.

     Section 8.5    Inspection. Permit any Person designated by the Agent (or, so long as any
Default or Event of Default is continuing, any Bank) to visit and inspect any of its properties,
corporate books and financial records, to examine and to make copies of its books of accounts and
other financial records, and to discuss the affairs, finances and accounts of the Company and the
Subsidiaries with, and to be advised as to the same by, its officers at such reasonable times and
intervals as the Agent (or, if applicable, such Bank) may designate upon reasonable prior notice by
the Agent (or, if applicable, such Bank) to the Company. So long as no Event of Default exists,
the expenses of the Agent and the Banks for such visits, inspections and examinations shall be at
the expense of the Agent and the Banks, but any such visits, inspections, and examinations made
while any Event of Default is continuing shall be at the expense of the Company.

45

 

     Section 8.6    Maintenance of Properties. Maintain its properties used or useful in the
conduct of its business in good condition, repair and working order (ordinary wear and tear
excepted), and supplied with all necessary equipment, and make all necessary repairs, renewals,
replacements, betterments and improvements thereto, all as may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted at all times.

     Section 8.7    Books and Records. Keep adequate and proper records and books of account
in which full and correct entries will be made of its dealings, business and affairs.

     Section 8.8    Compliance. Comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject,
provided, that failure to so comply shall not be a breach of this covenant if such failure has not
resulted, and is not reasonably likely to result, in an Adverse Event and the Borrower or such
Subsidiary is acting in good faith and with reasonable dispatch to cure such noncompliance.

     Section 8.9    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.

     Section 8.10    Environmental Matters. Observe and comply with all laws, rules,
regulations and orders of any government or government agency relating to health, safety,
pollution, hazardous materials or other environmental matters to the extent non-compliance would be
reasonably likely to result in a material liability or an Adverse Event

     Section 8.11    Subsidiaries. Upon the formation, designation or acquisition of any
Material Subsidiary:

     (a)    If it is a Domestic Subsidiary, the Company will cause such Material Subsidiary to
become a Guarantor and to, concurrent with such formation or acquisition, execute and
deliver a Guaranty to the Agent for the benefit of the Banks, and provide a secretary’s
certificate and copies of all documents consistent with Section 6.1(d) for such Material
Subsidiary; and

     (b)    If it is a Foreign Subsidiary, the Company will pledge, or will cause any Domestic
Subsidiary owning such stock or Ownership Interests to pledge to the Collateral Agent for
the benefit of the Banks and the other secured parties pursuant to the Intercreditor
Agreement, pursuant to a Pledge Agreement subject to the Intercreditor Agreement, the lesser
of (i) 65% of the outstanding stock or other Ownership Interests of such Material Foreign
Subsidiary, or (ii) all of the stock or other Ownership Interests of such Material Foreign
Subsidiary owned by the Company or such Domestic Subsidiary at any time.

     Section 8.12    Most Favored Lender.

     (a)    If the Company or any Subsidiary (a) amends, restates or otherwise modifies any
Material Financing or (b) otherwise enters into, assumes or otherwise

46

 

becomes bound or obligated under any Material Financing, in each case which tightens
existing covenants or defaults or includes one or more Additional Covenants or Additional
Defaults, the terms of this Agreement shall, without any further action on the part of the
Company, any Subsidiary or the Agent or any Bank, be deemed to be amended automatically and
immediately to include each such tightened covenant, tightened default, Additional Covenant
and Additional Default contained in such agreement (subject to clause (b) below), and the
Company shall provide written notice of such event to the Agent and the Banks providing a
fully executed copy of the Material Financing containing such tightened covenant, tightened
default, Additional Covenant and Additional Default within ten (10) Business Days of
becoming bound or obligated thereby. Upon written request of the Company or the Agent, the
Company and the Agent (on behalf of the Required Banks) shall promptly execute and deliver
at the Company’s expense (including the fees and expenses of counsel for the Agent) an
amendment to this Agreement in form and substance reasonably satisfactory to the Agent
evidencing the amendment of this Agreement to include such tightened covenants, tightened
defaults, Additional Covenants and Additional Defaults, provided that the execution and
delivery of such amendment shall not be a precondition to the effectiveness of such
amendment as provided for in this Section 8.12(a), but shall merely be for the convenience
of the parties hereto.

     (b)    If after the time this Agreement is amended pursuant to Section 8.12(a) to include
in this Agreement any tightened covenant, tightened default, Additional Covenant or
Additional Default in any Material Financing and such tightened covenant, tightened default,
Additional Covenant or Additional Default ceases to be in effect under such Material
Financing or is amended by the requisite lenders under such Material Financing so as to be
less restrictive with respect to the Company and its Subsidiaries, then, upon written
request of the Company, the Agent, on behalf of the Required Banks, will release or
similarly amend, as the case may be, such tightened covenant, tightened default, Additional
Covenant or Additional Default as in effect in this Agreement, provided that (a) no Default
or Event of Default shall be in existence, and (b) if any waiver or similar fees were paid
or other concession given to any lender under such Material Financing with respect to
causing such tightened covenant, tightened default, Additional Covenant or Additional
Default to cease to be in effect or to be so amended, then the Company shall have paid or
given to the Banks the same fees or other concessions on a pro rata basis in proportion to
the relative outstanding principal amounts of the Obligations and the principal amount of
the Indebtedness outstanding under such Material Financing (plus, in the case of a revolving
credit facility, the aggregate principal amount of additional loans that the lenders are
legally committed to fund thereunder). Notwithstanding the foregoing, no release or
amendment to this Agreement pursuant to this Section 8.12(b) as the result of any tightened
covenant, tightened default, Additional Covenant or Additional Default in any Material
Financing ceasing to be in effect or being amended shall cause the covenants or Events of
Default in this Agreement to be less restrictive than the covenants or Events of Default as
contained in this Agreement as amended as provided herein other than by the amendment to
this Agreement under Section 8.12(a) originally caused by such tightened covenant, tightened
default, Additional Covenant or Additional Default.

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     (c)    If the Indebtedness evidenced by the Senior Notes and the Senior Note Agreements,
or any Indebtedness held by Senior Creditors, is secured by assets other than Ownership
Interests in Foreign Subsidiaries, then the Obligations shall be concurrently secured by
such assets, with the collateral documents evidencing the grant or perfection of the
applicable Lien being in form and substance acceptable to the Agent.

     Section 8.13    Post-Closing Covenant. Within sixty (60) days of the date on which
initial Loans are made (or such later date as the Agent shall determine in its sole discretion),
the Agent shall have received supplements or joinders with respect to the Pledge Agreement to the
extent necessary to grant the Agent a security interest in 65% of the outstanding stock or other
Ownership Interests of each first-tier Material Foreign Subsidiary, together (to the extent
available and applicable) with certificates evidencing the stock or Ownership Interest of Material
Foreign Subsidiaries pledged thereby and executed assignments separate from the certificates (stock
powers) for such certificates with respect to any Material Foreign Subsidiary the stock of which is
required to be pledged by this Agreement, including Material Foreign Subsidiaries acquired in the
Finishing Group Acquisition.

ARTICLE IX

NEGATIVE COVENANTS

     From the date of this Agreement and thereafter until Termination Conditions exist, the Company
will not, and will not permit any Subsidiary to, do any of the following:

     Section 9.1    Merger. Merge or consolidate or enter into any analogous reorganization
or transaction with any Person; provided, however, that:

     (a)    any Subsidiary may be merged with or dissolved and liquidated into the Company (if
the Company is the surviving corporation) or any Wholly-owned Subsidiary; and

     (b)    any Subsidiary may be merged with any other Person in the conduct of a Permitted
Acquisition, provided that the resulting Person is a Subsidiary, or in the conduct of a
disposition of such Subsidiary permitted under Section 9.2 of this Agreement.

     Section 9.2    Sale of Assets. Sell, transfer, lease or otherwise convey any of its
assets except for:

     (a)    sales, leases and other dispositions of assets in the ordinary course of business;

     (b)    sales and other dispositions of equipment that is obsolete or not otherwise useful
in the business of the Company or its Subsidiaries;

     (c)    sales and other dispositions of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement equipment of
equivalent value, or the proceeds of such sale are applied with reasonable promptness to the
purchase price of such replacement equipment;

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     (d)    sales or other transfers by a Subsidiary to the Company or a Wholly-owned
Subsidiary;

     (e)    sale and leaseback transactions not otherwise prohibited hereby;

     (f)    the endorsement of accounts receivable by Graco K.K. in the ordinary course of
business; and

     (g)
   sales of assets of the Company or any Subsidiary or of the Ownership Interests of
any Subsidiary during any fiscal year the aggregate book value (net of reserves) for all
such sales of which (determined, with respect to any such sale, in accordance with GAAP as
of the end of the fiscal quarter or fiscal year most recently completed prior to the date of
such sale for which financial statements have been delivered under Section 8.1(a) or (b)
hereof) does not exceed 10.00% of Consolidated Assets as of the end of the prior fiscal year
(or, if financial statements for such prior fiscal year have not yet been delivered under
Section 8.1(a) hereof, the fiscal year immediately preceding such prior fiscal year).

     Section 9.3    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)).

     Section 9.4    Change in Nature of Business. Make any material change in the nature of
the core business of the Company and its Subsidiaries, as carried on at the date hereof.

     Section 9.5    Other Agreements. Enter into any agreement, bond, note or other
instrument with or for the benefit of any Person other than the Banks which would be violated or
breached by the Company’s performance of its obligations under the Loan Documents.

     Section 9.6    Investments. Acquire for value, make, have or hold any Investments,
except:

     (a)    Investments outstanding on the date hereof and listed on Schedule 9.6;

     (b)    Travel advances to officers and employees in the ordinary course of business;

     (c)    Investments complying with the Investment Policies;

     (d)    extensions of credit in the nature of accounts receivable or notes receivable
arising from the sale of goods and services in the ordinary course of business;

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     (e)    Ownership Interests, obligations or other securities received in settlement of
claims arising in the ordinary course of business;

     (f)    Investments in Subsidiaries by the Company and other Subsidiaries not involving an
acquisition after the date hereof of the assets or Ownership Interests of a Person that is
not a Subsidiary;

     (g)    Permitted Acquisitions;

     (h)    Arrangements giving rise to Hedging Obligations, and other foreign exchange,
interest or other hedging arrangements, so long as each such arrangement is entered into in
connection with bona fide hedging operations and not for speculation; and

     (i)    any other Investments, if the aggregate costs thereof, net of any returns with
respect thereto, does not exceed $50,000,000 for all such Investments in the aggregate at
any time.

     Section 9.7    Use of Proceeds. Permit any proceeds of the Loans to be used, either
directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of “purchasing
or carrying any margin stock” in any manner that would cause any Bank not to comply with Regulation
U or at any time that Section 9.8 shall be reasonably determined by the Agent to cause any Loan to
be “indirectly” secured by margin stock as determined under Regulation U, and furnish to any Bank,
upon its request, a statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.

     Section 9.8    Secured Indebtedness. Either (a) incur, create, issue, assume or permit
to exist Secured Indebtedness at any time exceeding 5.00% of Consolidated Assets as of the end of
the most-recently completed fiscal quarter or fiscal year for which financial statements have been
delivered under Section 8.1(a) or (b), or (b) permit Secured Indebtedness to have a Lien on the
Ownership Interests of Foreign Subsidiaries that are Material Subsidiaries; provided,
however, that Indebtedness evidenced by the Senior Notes and the Senior Note Agreements,
and Indebtedness owing to Senior Creditors shall constitute Secured Indebtedness for purposes
hereof if the Indebtedness owing to the Senior Noteholders or the Senior Creditors, as applicable,
is not subject to the Intercreditor Agreement.

     Section 9.9    Cash Flow Leverage Ratio. Permit the Cash Flow Leverage Ratio, calculated
as provided in the definition thereof for each period of four consecutive fiscal quarters, to
exceed 3.25 to 1.00; provided, however, that in connection with any Permitted
Acquisition for which the purchase consideration equals or exceeds $200,000,000 (including the
Finishing Group Acquisition), the maximum Cash Flow Leverage Ratio, with prior notice to the Agent,
shall increase to 3.75 to 1.00 for the four fiscal quarter period beginning with the quarter in
which such Permitted Acquisition occurs, so long as (i) the Company is in pro forma compliance
herewith at such 3.75 to 1.00 level before and after giving effect to such Permitted Acquisition
and (ii) after any such Permitted Acquisition that results in an increase to the 3.75 to 1.00
level, the Cash Flow Leverage Ratio permitted under this Section 9.9 shall decrease to 3.25 to 1.00
for at least one fiscal quarter before becoming eligible to again increase to 3.75 to 1.00 for a
new period of four consecutive fiscal quarters (with the understanding that any Permitted

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Acquisition occurring during such fiscal quarter would be required to comply with the 3.25 to
1.00 ratio).

     Section 9.10    Interest Coverage Ratio. Permit the Interest Coverage Ratio for any
period of four consecutive fiscal quarters to be less than 3.00 to 1.00; provided,
however, that in connection with any Permitted Acquisition for which the purchase
consideration equals or exceeds $200,000,000 (including the Finishing Group Acquisition), the
minimum Interest Coverage Ratio, with prior notice to the Agent, shall decrease to 2.50 to 1.00 for
the four fiscal quarter period beginning with the quarter in which such Permitted Acquisition
occurs, so long as (i) the Company is in pro forma compliance herewith at such 2.50 to 1.00 level
before and after giving effect to such Permitted Acquisition and (ii) after any such Permitted
Acquisition that results in a decrease to the 2.50 to 1.00 level, the Interest Coverage Ratio
permitted under this Section 9.10 shall increase to 3.00 to 1.00 for at least one fiscal quarter
before becoming eligible to again decrease to 2.50 to 1.00 for a new period of four consecutive
fiscal quarters (with the understanding that any Permitted Acquisition occurring during such fiscal
quarter would be required to comply with the 3.00 to 1.00 ratio).

     Section 9.11    Material Subsidiaries. Fail to comply with the terms, conditions and
requirements of the definition of “Material Subsidiaries” in Section 1.1.

ARTICLE X

EVENTS OF DEFAULT AND REMEDIES

     Section 10.1
   Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default:

     (a)    Any Borrower or any Guarantor shall fail to make when due, whether by acceleration
or otherwise, any payment of principal of or interest on any Loan or any fee or other amount
required to be made by such Borrower or such Guarantor to the Banks pursuant to any Loan
Documents;

     (b)    Any representation or warranty made or deemed to have been made by or on behalf of
the Company or any Subsidiary in any of the Loan Documents or by or on behalf of the Company
or any Subsidiary in any certificate, statement, report or other writing furnished by or on
behalf of the Company to the Banks pursuant to the Loan Documents shall prove to have been
false or misleading in any material respect on the date as of which the facts set forth are
stated or certified or deemed to have been stated or certified;

     (c)    The Company shall fail to comply with Section 8.2 hereof or any Section of Article
IX hereof;

     (d)    Any Borrower or any Guarantor shall fail to comply with any agreement, covenant,
condition, provision or term contained in the Loan Documents and applicable to such Borrower
or such Guarantor (and such failure shall not constitute an Event of Default under any of
the other provisions of this Section 10.1) and such failure to comply shall continue for
thirty (30) calendar days after notice thereof to the Company by the Agent;

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     (e)    The Company or any Material Subsidiary shall become insolvent or shall generally
not pay its debts as they mature or shall apply for, shall consent to, or shall acquiesce in
the appointment of a custodian, trustee or receiver of the Company or such Material
Subsidiary or for a substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver shall be appointed
for the Company or a Material Subsidiary or for a substantial part of the property thereof
and shall not be discharged within 60 days;

     (f)    Any bankruptcy, reorganization, debt arrangement or other proceedings under any
bankruptcy or insolvency law shall be instituted by or against the Company or a Material
Subsidiary, and, if instituted against the Company or a Material Subsidiary, shall have been
consented to or acquiesced in by the Company or such Material Subsidiary, or shall remain
undismissed for 60 days, or an order for relief shall have been entered against the Company
or such Material Subsidiary, or the Company or any Material Subsidiary shall take any
corporate, limited liability or partnership action to approve institution of, or
acquiescence in, such a proceeding;

     (g)
   Any dissolution or liquidation proceeding not permitted by Section 9.1 shall be
instituted by or against the Company or a Material Subsidiary and, if instituted against the
Company or such Material Subsidiary, shall be consented to or acquiesced in by the Company
or such Material Subsidiary or shall remain for 60 days undismissed, or the Company or any
Material Subsidiary shall take any corporate action to approve institution of, or
acquiescence in, such a proceeding;

     (h)    A judgment or judgments for the payment of money in excess of the sum of
$25,000,000 in the aggregate shall be rendered against the Company or a Material Subsidiary
and the Company or such Material Subsidiary shall not discharge the same or provide for its
discharge in accordance with its terms, or procure a stay of execution thereof, prior to any
execution on such judgments by such judgment creditor, within 60 days from the date of entry
thereof, and within said period of 60 days, or such longer period during which execution of
such judgment shall be stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal;

     (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;

     (j)    The maturity of any Indebtedness of the Company or a Material Subsidiary (other
than Indebtedness under this Agreement) in an aggregate amount outstanding which exceeds
$25,000,000 shall be accelerated, or the Company or a Material Subsidiary shall fail to pay
any such Indebtedness in excess of such aggregate amount when due or, in the case of such
Indebtedness payable on demand, when demanded, or any event shall occur or condition shall
exist and shall continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or

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permitting (any required notice having been given and grace period having expired) the
holder of any such Indebtedness in excess of such aggregate amount or any trustee or other
Person acting on behalf of such holder to cause, such Indebtedness to become due prior to
its stated maturity or to realize upon any collateral given as security therefor;

     (k)    Except as contemplated by Section 13.16 hereof, any Loan Document shall not be, or
shall cease to be, binding on any Borrower or Guarantor (as applicable), enforceable against
such Borrower or such Guarantor in accordance with its terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and other similar
laws affecting creditors’ rights generally and subject to general principles of equity, or
any Guarantor shall disavow, cancel or terminate, or attempt to disavow, cancel or
terminate, any Guaranty; or

     (l)    Any Change of Control shall occur.

     Section 10.2    Remedies. If (a) any Event of Default described in Sections 10.1(e), (f)
or (g) shall occur, the Commitments shall automatically terminate and the outstanding unpaid
principal balance of the Notes, the accrued interest thereon and all other obligations of the
Borrowers to the Banks and the Agent under the Loan Documents shall automatically become
immediately due and payable; or (b) any other Event of Default shall occur and be continuing, then
the Agent may take any or all of the following actions (and shall take any or all of the following
actions on direction of the Required Banks): (i) declare the Commitments terminated, whereupon the
Commitments shall terminate, (ii) declare that the outstanding unpaid principal balance of the
Notes, the accrued and unpaid interest thereon and all other obligations of the Borrowers to the
Banks and the Agent under the Loan Documents to be forthwith due and payable, whereupon the Notes,
all accrued and unpaid interest thereon and all such obligations shall immediately become due and
payable, in each case without demand or notice of any kind, all of which are hereby expressly
waived, anything in this Agreement or in the Notes to the contrary notwithstanding, (iii) exercise
all rights and remedies under any other instrument, document or agreement between any Borrower and
the Agent or the Banks, and (iv) enforce all rights and remedies under any applicable law.

     Section 10.3    Letters of Credit. In addition to the foregoing remedies, if any Event
of Default described in Section 10.1(e), (f) or (g) shall have occurred, or if any other Event of
Default shall have occurred and the Agent shall have declared that the principal balance of the
Notes is due and payable, the Company shall pay to the Agent an amount equal to all Letter of
Credit Obligations. Such payment shall be in immediately available funds or in similar cash
collateral acceptable to the Agent and shall be pledged to the Agent for the ratable benefit of the
Banks. Such amount shall be held by the Agent in a cash collateral account until the outstanding
Letters of Credit are terminated without payment or are drawn and Letter of Credit Obligations with
respect thereto are paid. In the event the Company defaults in the payment of any Letter of Credit
Obligations, the proceeds of the cash collateral account shall be applied to the payment thereof.
The Company acknowledges and agrees that the Banks would not have an adequate remedy at law for
failure by the Company to pay immediately to the Agent the amount provided under this Section, and
that the Agent shall, on behalf of the Banks, have the right to require the Company to perform
specifically such undertaking whether or not any of the Letter of Credit Obligations are due and
payable. Upon the failure of the Company to make any payment

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required under this Section, the Agent, on behalf of the Banks, may proceed to use all
remedies available at law or equity to enforce the obligation of the Company to pay or reimburse
the Agent. The balance of any payment due under this Section shall bear interest payable on demand
until paid in full at a per annum rate equal to the rate of interest applicable to the Loans.

     Section 10.4    Security Agreement in Accounts and Setoff. As additional security for
the payment of all of the Obligations, each Borrower grants to the Agent, each Bank and each holder
of a Note a security interest in, a lien on, and an express contractual right to set off against,
each deposit account and all deposit account balances, cash and any other property of such Borrower
now or hereafter maintained with, or in the possession of, the Agent, such Bank or such other
holder of a Note. Upon the occurrence and during the continuance of any Event of Default, upon
written direction by the Agent to such effect, the Agent, each such Bank and each such holder of a
Note may: (a) refuse to allow withdrawals from any such deposit account; (b) apply the amount of
such deposit account balances and the other assets of such Borrower described above to the
Obligations of such Borrower; and (c) offset any other obligation of the Agent, such Bank or such
holder of a Note due to such Borrower against the Obligations of such Borrower; all whether or not
the Obligations are then due or have been accelerated and all without any advance or
contemporaneous notice or demand of any kind to the Company, such notice and demand being expressly
waived.

ARTICLE XI

GUARANTY

     For valuable consideration, receipt whereof is hereby acknowledged, and to induce each Bank to
make Revolving Loans to and on account of each Borrowing Subsidiary and to issue Letters of Credit
for the account of Material Subsidiaries:

     Section 11.1    Unconditional Guaranty. The Company unconditionally and irrevocably
guaranties to each Bank and the Agent the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of any Borrowing Subsidiary and any other Material
Subsidiary for whose account a Letter of Credit has been issued (an “Account Subsidiary”),
whether for principal, interest, fees, expenses or otherwise, whether direct or indirect, absolute
or contingent or now existing or hereafter arising (such Obligations being the “Guarantied
Obligations”). This is a Guaranty of payment and not of collection.

     Section 11.2    Guaranty Absolute. The Company guaranties that the Guarantied
Obligations will be paid strictly in accordance with the terms of this Agreement, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Bank or the Agent with respect thereto. The Obligations of the Company under
this Article XI are independent of the Guarantied Obligations, and a separate action or actions may
be brought and prosecuted against the Company to enforce this Article XI, irrespective of whether
any action is brought against any Borrowing Subsidiary or Account Subsidiary or whether any
Borrowing Subsidiary or Account Subsidiary is joined in any such action or actions. The liability
of the Company under this Guaranty shall be irrevocable, absolute and unconditional irrespective
of, and the Company hereby irrevocably waives any defense it may now or hereafter have in any way
relating to, any or all of the following:

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     (a)    any lack of validity or enforceability of this Agreement or any other agreement or
instrument relating thereto;

     (b)    any change in the time, manner or place of payment of, or in any other term of, all
or any of the Guarantied Obligations, or any other amendment or waiver of or any consent to
departure from this Agreement;

     (c)    any taking, exchange, release or non-perfection of any collateral or any taking,
release or amendment or waiver of or consent to departure from any other guaranty, for all
or any of the Guarantied Obligations;

     (d)    any change, restructuring or termination of the corporate structure or existence of
any Borrowing Subsidiary or Account Subsidiary; or

     (e)    any other circumstance (including any statute of limitations to the fullest extent
permitted by applicable law) which might otherwise constitute a defense available to, or a
discharge of, the Company, any Borrowing Subsidiary or Account Subsidiary or other
guarantor.

This guaranty shall continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guarantied Obligations is rescinded or must otherwise be returned by any
Bank or the Agent upon the insolvency, bankruptcy or reorganization of any Borrowing Subsidiary or
Account Subsidiary or otherwise, all as though such payment had not been made.

     Section 11.3    Waivers. The Company hereby expressly waives promptness, diligence,
notice of acceptance, presentment, demand for payment, protest, any requirement that any right or
power be exhausted or any action be taken against any Borrowing Subsidiary or Account Subsidiary or
against any other guarantor of all or any portion of the Guarantied Obligations, and all other
notices and demands whatsoever.

     (a)    The Company hereby waives any right to revoke this guaranty, and acknowledges that
this Guaranty is continuing in nature and applies to all Guarantied Obligations, whether
existing now or in the future and regardless of whether the Guarantied Obligations are
reduced to zero at any time or from time to time.

     (b)    The Company acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated herein and that the waivers set forth
in this Article XI are knowingly made in contemplation of such benefits.

     Section 11.4
   Subrogation. The Company will not exercise any rights that it may now or
hereafter acquire against any Borrowing Subsidiary or Account Subsidiary or any other insider
guarantor that arise from the existence, payment, performance or enforcement of the Guarantied
Obligations under this Agreement, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of the Agent or
any other Bank against a Borrowing Subsidiary or Account Subsidiary or any other insider guarantor
or any collateral, whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including the right to take or receive from a Borrowing Subsidiary or
Account Subsidiary or any other insider guarantor,

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directly or indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until all of the
Guarantied Obligations and all other amounts payable under this guaranty shall have been paid in
full in cash and the Commitments shall have terminated. If any amount shall be paid to the Company
in violation of the preceding sentence at any time prior to the later of the payment in full in
cash of the Guarantied Obligations and all other amounts payable under this guaranty and the
termination of the Commitments, such amount shall be held in trust for the benefit of the Agent and
the other Banks and shall forthwith be paid to the Agent to be credited and applied to the
Guarantied Obligations and all other amounts payable under this guaranty, whether matured or
unmatured, in accordance with the terms of this Agreement, or to be held as collateral for any
Guarantied Obligations or other amounts payable under this guaranty thereafter arising.

     Section 11.5    Survival. This guaranty is a continuing guaranty and shall (a) remain in
full force and effect until Termination Conditions exist, (b) be binding upon the Company, its
successors and assigns, (c) inure to the benefit of and be enforceable by each Bank (including each
assignee Bank pursuant to Section 13.3) and the Agent and their respective successors, transferees
and assigns and (d) shall be reinstated if at any time any payment to a Bank or the Agent hereunder
is required to be restored by such Bank or the Agent. Without limiting the generality of the
foregoing clause (c), each Bank may assign or otherwise transfer its interest in any Obligation to
any other Person in accordance with Section 13.3, and such other Person shall thereupon become
vested with all the rights in respect thereof granted to such Bank herein or otherwise.

ARTICLE XII

THE AGENTS

     Section 12.1    Appointment and Grant of Authority. Each Bank hereby appoints the Agent,
and the Agent hereby agrees to act, as Agent under this Agreement and the Intercreditor Agreement
and Collateral Agent under the Pledge Agreement and the Intercreditor Agreement. The Agent shall
have and may exercise such powers under this Agreement as are specifically delegated to the Agent
by the terms hereof and thereof, together with such other powers as are reasonably incidental
thereto. Each Bank hereby authorizes, consents to, and directs each Borrower to deal with the
Agent as the true and lawful Agent of such Bank to the extent set forth herein. Each Bank
authorizes the Agent and the Collateral Agent to enter into the Pledge Agreement and the
Intercreditor Agreement on behalf of the Banks and to take such actions thereunder as may be
required from time to time, including the release of any Collateral pursuant to a restructuring not
prohibited hereunder.

     Section 12.2    Non Reliance on Agent. Each Bank agrees that it has, independently and
without reliance on the Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and
decision to enter into this Agreement and that it will, independently and without reliance upon the
Agent, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action under this
Agreement. The Agent shall not be required to keep informed as to the performance or observance by
any Borrower of this Agreement and the Loan Documents or to inspect the properties or books of the
Borrower. Except for notices, reports and other documents

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and information expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the Company or any
Subsidiary (or any of its related companies) which may come into the Agent’s possession.

     Section 12.3    Responsibility of the Agent and Other Matters.

     (a)    The Agent shall have no duties or responsibilities in its capacity as Agent except
those expressly set forth in this Agreement and the other Loan Documents and those duties
and liabilities shall be subject to the limitations and qualifications set forth in this
Section. The duties of the Agent shall be mechanical and administrative in nature.

     (b)    Neither the Agent nor any of its directors, officers or employees shall be liable
to any Bank or holder of the Loans or Notes for any action taken or omitted (whether or not
such action taken or omitted is within or without the Agent’s responsibilities and duties
expressly set forth in this Agreement) under or in connection with this Agreement, or any
other instrument or document in connection herewith, except for gross negligence or willful
misconduct. Without limiting the foregoing, neither the Agent nor any of its directors,
officers or employees shall be responsible for, or have any duty to examine:

     (i)    the genuineness, execution, validity, effectiveness, enforceability, value
or sufficiency of this Agreement or any other Loan Document;

     (ii)    the collectibility of any amounts owed by any Borrower; any recitals or
statements or representations or warranties in connection with this Agreement or any
other Loan Document;

     (iii)    any failure of any party to this Agreement to receive any communication
sent; or

     (iv)    the assets, liabilities, financial condition, results of operations,
business or creditworthiness of the Company and its Subsidiaries.

    (c)    The Agent shall be entitled to act, and shall be fully protected in acting upon,
any communication in whatever form believed by the Agent in good faith to be genuine and
correct and to have been signed or sent or made by a proper person or persons or entity.
The Agent may consult counsel and shall be entitled to act, and shall be fully protected in
any action taken in good faith, in accordance with advice given by counsel. The Agent may
employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by the Agent with reasonable care. The Agent
shall not be bound to ascertain or inquire as to the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Notes on any Borrower’s part.

     Section 12.4    Action on Instructions. The Agent shall be entitled to act or refrain
from acting, and in all cases shall be fully protected in acting or refraining from acting under
this Agreement or the Notes or any other instrument or document in connection herewith or therewith

57

 

in accordance with instructions in writing from (i) the Required Banks except for instructions
which under the express provisions hereof must be received by the Agent from all the Banks, and
(ii) in the case of such instructions, from all the Banks.

     Section 12.5    Indemnification. To the extent the Company does not reimburse and save
the Agent harmless according to the terms hereof for and from all costs, expenses and disbursements
in connection herewith or with the other Loan Documents, such costs, expenses and disbursements to
the extent reasonable shall be borne by the Banks ratably in accordance with their Percentages and
the Banks hereby agree on such basis (a) to reimburse the Agent for all such reasonable costs,
expenses and disbursements on request and (b) to indemnify and save harmless the Agent against and
from any and all losses, obligations, penalties, actions, judgments and suits and other reasonable
costs, expenses and disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, other than as a consequence of actual gross negligence
or willful misconduct on the part of the Agent, arising out of or in connection with this Agreement
or the Notes or any instrument or document in connection herewith or therewith, or any request of
the Banks, including without limitation the reasonable costs, expenses and disbursements in
connection with defending itself against any claim or liability, or answering any subpoena, related
to the exercise or performance of any of its powers or duties under this Agreement or the other
Loan Documents or the taking of any action under or in connection with this Agreement or the Notes.

     Section 12.6
   U.S. Bank National Association and Affiliates. With respect to U.S. Bank
National Association’s Commitment and any Loans by U.S. Bank National Association under this
Agreement and any Note and any interest of U.S. Bank National Association in any Note, U.S. Bank
National Association shall have the same rights, powers and duties under this Agreement and such
Note as any other Bank and may exercise the same as though it were not the Agent. U.S. Bank
National Association and its affiliates may accept deposits from, lend money to, and generally
engage, and continue to engage, in any kind of business with each Borrower as if U.S. Bank National
Association were not the Agent.

     Section 12.7    Notice to Holder of Notes. The Agent may deem and treat the payees of
the Notes as the owners thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof has been filed with the Agent. Any request, authority or consent of any holder
of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of
such Note.

     Section 12.8    Successor Agent. The Agent may resign at any time by giving at least 30
days written notice thereof to the Banks and the Company. Upon any such resignation, the Required
Banks shall have the right to appoint a successor Agent, which shall be one of the Banks or if not
one of the Banks and no Event of Default shall have occurred and continued shall have been accepted
in writing by the Company, which acceptance shall not be unreasonably withheld. If no successor
Agent shall have been appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent’s giving notice of resignation, then the retiring Agent
may, but shall not be required to, on behalf of the Banks, appoint a successor Agent which shall be
one of the Banks or if not one of the Banks and no Event of Default shall have occurred and
continued shall have been accepted in writing by the Company, which acceptance shall not be
unreasonably withheld.

58

 

     Section 12.9    Syndication Agent; Co-Documentation Agents; Lead Arrangers. None of
the Syndication Agent, the Co-Documentation Agents and the Lead Arrangers shall have any duties,
responsibilities, liabilities or obligations under this Agreement except in its capacity as a Bank.

ARTICLE XIII

MISCELLANEOUS

     Section 13.1    No Waiver and Amendment. No failure on the part of the Banks or the
holder of the Notes to exercise and no delay in exercising any power or right hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise
of any power or right preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or agreement delivered
or to be delivered to the Banks hereunder or in connection herewith are cumulative and not
exclusive of any remedies provided by law. No notice to or demand on any Borrower not required
hereunder or under the Notes shall in any event entitle any Borrower to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the right of the Banks or the
holder of the Notes to any other or further action in any circumstances without notice or demand.

     Section 13.2    Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by any Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Company and the Agent upon direction of the
Required Banks and then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless agreed to by the Agent and all of the Banks:

     (a)    except as provided in Section 2.10, increase the amounts of or extend the terms of
the Commitments or subject the Banks to any additional obligations;

     (b)    reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder;

     (c)    postpone any date fixed for any payment of principal of, or interest on, the Notes
or any fees or other amounts payable hereunder;

     (d)    release the guaranty by the Company in Article XI hereof, or release the Guaranty
of any Guarantor except as provided in Section 13.16 hereof;

     (e)    release the pledge of Ownership Interest of any Subsidiary except as provided in
Sections 12.1 and 13.16 hereof;

     (f)    any provision requiring proceeds of repayment of the Revolving Loans or funded
participations in Letters of Credit to be transferred by the Agent to the Banks ratably, in
accordance with their respective Percentages; or

     (g)    change the definition of Required Banks or amend this Section 13.2;

59

 

provided, further that amendments, waivers or consents affecting the rights of the Agent shall also
require the consent of the Agent.

     Section 13.3    Assignments and Participations.

     (a)    Assignments. Each Bank shall have the right, subject to the further
provisions of this Sections 13.3, to sell or assign all or any part of its Commitments,
Loans, Notes, and other rights and obligations under this Agreement and related documents
(such transfer, and “Assignment”) to any commercial lender, other financial
institution or other entity (an “Assignee”). Upon such Assignment becoming
effective as provided in Section 13.3(b), the assigning Bank shall be relieved from the
portion of its Commitment, obligations to indemnify the Agent and other obligations
hereunder (other than obligations under Section 13.15) to the extent assumed and undertaken
by the Assignee, and to such extent the Assignee shall have the rights and obligations of a
“Bank” hereunder. Notwithstanding the foregoing, unless otherwise consented to by
the Company and the Agent, each partial Assignment shall be in the initial principal amount
of not less than $5,000,000 in the aggregate for all Loans and Commitments assigned, or an
integral multiple of $1,000,000 if above such amount. Each Assignment shall be documented
by an agreement between the assigning Bank and the Assignee (an “Assignment and
Assumption Agreement”) substantially in the form of Exhibit G attached hereto. Each
Assignee agrees to be bound by the terms of the Intercreditor Agreement.

     (b)    Effectiveness of Assignments. An Assignment shall become effective
hereunder when all of the following shall have occurred: (i) the Agent and the Company (or,
following occurrence and during continuance of an Event of Default, the Agent only and not
the Company) shall have been given notice of the Assignment and shall, unless the Assignee
is already a Bank under this Agreement, have given prior written consent to such Assignment,
which written consent shall not be unreasonably withheld or delayed, (ii) either the
assigning Bank or the Assignee shall have paid a processing fee of $3,500 to the Agent for
its own account, (iii) the Assignee shall have submitted the Assignment and Assumption
Agreement to the Agent with a copy for the Company, and shall have provided to the Agent
information the Agent shall have reasonably requested to make payments to the Assignee, and
(iv) the assigning Bank and the Agent shall have agreed upon a date upon which the
Assignment shall become effective. Upon the Assignment becoming effective, the Agent shall
forward all payments of interest, principal, fees and other amounts that would have been
made to the assigning Bank, in proportion to the percentage of the assigning Bank’s rights
transferred, to the Assignee.

     (c)    Participations. Each Bank shall have the right, subject to the further
provisions of this Section 13.3, to grant or sell a participation in all or any part of its
Loans, Notes and Commitments (a “Participation”) to any commercial lender, other
financial institution or other entity (a “Participant”) without the consent of the
Company, the Agent of any other party hereto. The Company agrees that if amounts
outstanding under this agreement and the Notes are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its Participation
in

60

 

amounts owing under this Agreement and any Note to the same extent as if the amount of
its Participation were owing directly to it as a Bank under this Agreement or any Note;
provided, that such right of setoff shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with such Participant, as provided in
Section 4.5 hereof. The Company also agrees that each Participant shall be entitled to the
benefits of Article V with respect to its Participation, provided, that no Participant shall
be entitled to receive any greater amount pursuant to such Sections than the transferor Bank
would have been entitled to receive in respect of the amount of the Participation
transferred by such transferor Bank to such Participant had no such transfer occurred.

     (d)    Limitation of Rights of any Assignee or Participant. Notwithstanding
anything in the foregoing to the contrary, except in the instance of an Assignment that has
become effective as provided in Section 13.3(b), (i) no Assignee or Participant shall have
any direct rights hereunder, (ii) the Company, the Agent and the Banks other than the
assigning or selling Bank shall deal solely with the assigning or selling Bank and shall not
be obligated to extend any rights or make any payment to, or seek any consent of, the
Assignee or Participant, (iii) no Assignment or Participation shall relieve the assigning or
selling Bank from its Commitment to make Loans hereunder or any of its other obligations
hereunder and such Bank shall remain solely responsible for the performance hereof, the (iv)
no Assignee or Participant, other than an affiliate of the assigning or selling Bank, shall
be entitled to require such Bank to take or omit to take any action hereunder, except that
such Bank may agree with such Assignee or Participant that such Bank will not, without such
Assignee’s or Participant’s consent, take any action which would, in the case of any
principal, interest or fee in which the Assignee or Participant has an ownership or
beneficial interest: (w) extend the final maturity of any Loans or extend the Termination
Date, (x) reduce the interest rate on the Loans or the rate of Commitment Fees, (y) forgive
any principal of, or interest on, the Loans or any fees, or (z) release all or substantially
all of the Collateral for the Loans.

     (e)    Tax Matters. No Bank shall be permitted to enter into any Assignment or
Participation with any Assignee or Participant who is not a United States Person unless such
Assignee or Participant represents and warrants to such Bank that, as at the date of such
Assignment or Participation, it is entitled to receive interest payments from the Borrowers
without withholding or deduction of any taxes and such Assignee or Participant executes and
delivers to such Bank on or before the date of execution and delivery of documentation of
such Participation or Assignment, a United States Internal Revenue Service Form W8BEN or
W8ECI, or any successor to either of such forms, as appropriate, properly completed and
claiming complete exemption from withholding and deduction of all United States federal
income taxes. Such obligation shall be continuing and any Assignee or Participant who is
not a United States Person shall deliver such forms promptly upon learning of the
obsolescence or invalidity of any forms previously delivered by such Assignee or
Participant. Borrowers shall not be required to pay additional amounts to any Assignee or
Participant pursuant to Section 5.5, and such Assignee or Participant shall reimburse such
Borrower fully for all amounts paid, directly or indirectly, by such Borrower as tax,
withholding therefor, or otherwise, including penalties and interest, together with all
costs and expenses related thereto (including reasonable attorneys fees and disbursements),
to the extent that the obligation to pay such

61

 

amounts (i) would not have arisen but for the failure of such Assignee or Participant
to comply with this Section 13.3(e), (ii) because the appropriate form was not delivered or
properly completed, or (iii) because such Assignee or Participant failed to notify the
Borrower of a change in circumstances which rendered its exemption from withholding
ineffective. Notwithstanding the foregoing, if no exemption to withholding in respect of a
Loan in an Alternative Currency shall have been available to the Bank entering into such
Assignment or Participation (and such event shall not have been caused by such Bank’s
failure to deliver appropriate forms or otherwise mitigate under Section 5.7), and such Bank
shall have been requiring adjustments or compensation under Section 5.5, such Bank’s
Assignee or Participant may require adjustment or compensation at rates not exceeding those
required by the Bank granting such Assignment or Participation.

     (f)    Information. Each Bank may furnish any information concerning each
Borrower in the possession of such Bank from time to time to Assignees and Participants and
potential Assignees and Participants, subject to agreement by such Assignees and
Participants and potential Assignees and Participants to a confidentiality restriction
substantially similar to Section 13.15.

     (g)    Federal Reserve Bank. Nothing herein stated shall limit the right of any
Bank to assign any interest herein and in any Note to a Federal Reserve Bank.

     Section 13.4    Costs, Expenses and Taxes; Indemnification.

     (a)    The Company agrees, whether or not any Advance is made hereunder, to pay on demand:
(i) 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, execution and delivery of the Loan Documents and the
preparation, negotiation and execution of any and all amendments to each thereof, and (ii)
all reasonable out-of-pocket costs and expenses of the Agent and each of the Banks incurred
after the occurrence of an Event of Default in connection with the enforcement of the Loan
Documents or protection of its rights thereunder. The Company agrees to pay, and save the
Banks harmless from all liability for, any stamp or other taxes which may be payable with
respect to the execution or delivery of the Loan Documents. The Company agrees to indemnify
and hold the Banks harmless from any loss or expense which may arise or be created by the
acceptance in good faith by the Agent of telephonic, e-mail or other instructions for making
Advances or disbursing the proceeds thereof.

     (b)    The Company agrees to defend, protect, indemnify, and hold harmless the Agent and
each and all of the Banks, each of their respective Affiliates and each of the respective
officers, directors, employees and agents of each of the foregoing (each an “Indemnified
Person” and, collectively, the “Indemnified Persons”) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims,
out-of-pocket costs and expenses determined on a reasonable basis, and disbursements of any
kind or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of outside counsel to such Indemnified Persons) in connection with this
Agreement, any other Loan Document, the capitalization of the

62

 

Company, the Commitments, the making of, management of and participation in the Loans,
the issuance of the Letters of Credit or the use or intended use of the proceeds of the
Loans or of the Letters of Credit, provided that the Company shall have no obligation under
this Section 13.4(b) to an Indemnified Person with respect to any of the foregoing to the
extent resulting from the gross negligence or willful misconduct of such Indemnified Person
or arising solely from claims between one such Indemnified Person and another such
Indemnified Person. The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Company to each Indemnified Person under the Loan
Documents or at common law or otherwise.

     (c)    The obligations of the Company under this Section 13.4 shall survive any
termination of this Agreement.

     Section 13.5
   Notices. Except when telephonic notice is expressly authorized by this
Agreement, any notice or other communication to any party in connection with this Agreement shall
be in writing and shall be sent by manual delivery, facsimile transmission, electronic mail,
overnight courier or United States mail (postage prepaid) addressed to such party at the address
specified on the signature page hereof, or at such other address as such party shall have specified
to the other party hereto in writing. All periods of notice shall be measured from the date of
delivery thereof if manually delivered, from the date of sending thereof if sent by facsimile
transmission or electronic mail, from the first Business Day after the date of sending if sent by
overnight courier, or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent under Article II hereof shall be deemed to have been given only when
received by the Agent.

     Section 13.6    Successors. This Agreement shall be binding upon each Borrower, the
Banks and the Agent and their respective successors and permitted assigns, and shall inure to the
benefit of each Borrower, the Banks and the Agent and the successors and permitted assigns of the
Banks. No Borrower shall assign its rights or duties hereunder without the written consent of the
Banks.

     Section 13.7    Severability. Any provision of the Agreement 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 13.8
   Captions. The captions or headings herein and any table of contents
hereto are for convenience only and in no way define, limit or describe the scope or intent of any
provision of this Agreement.

     Section 13.9    Entire Agreement. The Loan Documents embody the entire agreement and
understanding between each Borrower, the Banks and the Agent with respect to the subject matter
hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof.

     Section 13.10    Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either

63

 

of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of
an executed counterpart of a signature page to this Agreement 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 Agreement. Any party delivering an executed counterpart signature
page to this Agreement by facsimile or by e-mail transmission shall also deliver an original
executed counterpart of this Agreement, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability or binding effect of this Agreement.

     Section 13.11    Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS
AGREEMENT AND THE NOTES 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 13.12    Consent to Jurisdiction. AT THE OPTION OF THE BANKS, THIS AGREEMENT AND
THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR
ST. PAUL, MINNESOTA; AND EACH BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT
AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT ANY BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE BANKS AT THEIR OPTION
SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

     Section 13.13    Waiver of Jury Trial. EACH BORROWER, THE BANKS AND THE AGENT EACH
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a)
UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     Section 13.14    Patriot Act. Each Bank hereby notifies the Borrowers that pursuant to
the requirements of the Patriot Act, it is required to obtain, verify and record information that
identifies each Borrower, which information includes the name and address of the Borrowers and
other information that will allow such Bank to identify the Borrowers in accordance with the
Patriot Act.

     Section 13.15    Confidentiality. The Banks and the Agent agree to hold any information
which they may receive from the Company or any Subsidiary pursuant to this Agreement in confidence,
except for disclosure (a) to other Banks and to participants, assignees, potential participants and
potential assignees with respect to the financing, and to affiliates of such Bank, each of the
foregoing who agree to be bound by confidentiality provisions substantially similar to

64

 

this Section 13.15; (b) to legal counsel, accountants and other professional advisors to such
Bank or the Agent, provided, that the Banks and Agent shall make such Persons aware of this
confidentiality requirement, (c) to regulatory officials, (d) to any Person if, in the opinion of
counsel to the disclosing party, such disclosure is required by law, regulation or legal process;
(e) to any Person in connection with any legal proceeding against the Company or a Subsidiary to
which such Bank or the Agent is a party (and in such instance, such Bank or the Agent shall only
disclose such information as it deems reasonably necessary for purposes of such legal proceeding);
and (f) of conventional information given in response to credit inquiries to credit bureaus,
provided, however, that in the instance of disclosure under (d) or (e) unless legally prevented
such Bank or the Agent uses best efforts to give the Company prior notice of such disclosure to
allow the Company to object (without assuming any liabilities or obligations if the Company is not
able to so object). This Section 13.15 will survive termination of this Agreement and will apply
to any Bank notwithstanding its assignment of all of its rights hereunder, provided, that this
Section 13.15 shall terminate as to any Bank three years after the earlier of (x) final assignment
by such Bank of all of its rights hereunder, or (y) existence of Termination Conditions.
Information subject to such restriction shall not include (i) information already in any Bank’s
possession prior to receipt from the Company or any Subsidiary, or (ii) information which becomes
generally available to the public, other than as a result of disclosure by a Bank, or its
directors, officers, employees, advisors or agents or becomes available to a Bank on a
non-confidential basis from a source other than the Company or any Subsidiary or its advisors,
provided that such source is not known by such Bank to be bound by a confidentiality agreement
with, or other obligation of confidentiality to, the Company or any Subsidiary or another party.

     Section 13.16    Release of Borrowing Subsidiary, Guaranty or Pledge Agreement. Except
at times that an Event of Default shall have occurred and continued, upon request of the Company,
if a Subsidiary that is a Guarantor or a Subsidiary the Ownership Interests of which are pledged to
the Collateral Agent is sold in a manner permitted by this Agreement, the Agent shall (and the
Banks authorize the Agent to) release such Subsidiary from its Guaranty and direct the Collateral
Agent to release or terminate the pledge of the Ownership Interests of such Subsidiary, as
requested by the Company. In addition, if a Subsidiary that is a Borrowing Subsidiary is sold in a
manner permitted by this Agreement at a time which no Loans to such Borrowing Subsidiary, or
accrued interest thereon, remain outstanding, if so requested by the Company, the Agent shall (and
the Banks authorize the Agent to) release such Borrowing Subsidiary from this Agreement. Except at
times that an Event of Default shall have occurred and continued, if a Subsidiary is designated by
the Company as no longer being a Material Subsidiary in accordance with the definition of Material
Subsidiary, the Agent shall (and the Banks authorize the Agent to) release such Subsidiary from its
Guaranty; and, if the Ownership Interests in such Subsidiary have been pledged to the Collateral
Agent, the Agent shall (and the Banks authorize the Agent to) direct the Collateral Agent to
release or terminate the pledge of the Ownership Interests of such Subsidiary, as requested by the
Company; and, if such Subsidiary is a Borrowing Subsidiary, the Agent shall (and the Banks
authorize the Agent to) release such Borrowing Subsidiary from this Agreement provided no Loans to
such Borrowing Subsidiary, or accrued interest thereon, remain outstanding.

(signature pages follow)

65

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above.

					
	 
	 	GRACO INC.

 	 
	 	By:  	/s/ James A. Graner
 	 
	 	 	James A. Graner 	 
	 	 	Chief Financial Officer and Treasurer 	 
	 

88 11th Avenue N.E.

Minneapolis, MN 55413

Attention: Timothy A. Stoffel, Corporate Tax Director

Telephone: (612) 623-6448

Fax: (612) 378-3595

E-mail: tstoffel@graco.com

and

Attention: Karen Gallivan

Telephone: (612) 623-6604

Fax: (612) 623-6944

E-mail: kgallivan@graco.com

Signature Page to Graco Credit Agreement

 

 

					
	 	U.S. BANK NATIONAL ASSOCIATION

as Agent and a Bank

 	 
	 	By:  	/s/ Michael J. Staloch
 	 
	 	Name:    Michael J. Staloch  	 
	 	Title:      Senior Vice President  	 
	 

800 Nicollet Mall

Mail Code BC-MN-HO3P

Minneapolis, MN 55402

Attention: Michael J. Staloch

Telephone: (612) 303-3050

Fax: (612) 303-2265

E-mail: Michael.Staloch@usbank.com

Signature Page to Graco Credit Agreement

 

 

					
	JPMORGAN CHASE BANK, N.A.,

as Syndication Agent and a Bank

 	 
	By:  	 	   /s/ Suzanne Ergastolo 	 
	Name: 	     Suzanne Ergastolo  	 
	Title: 	     Vice President	 
	 

10 S. Dearborn St.

Mail Code: IL1-0364

Chicago, IL 60603

Attention: Suzanne Ergastolo

Telephone: (312) 325-3221

Fax: (312) 794-7684

E-mail: suzanne.ergastolo@jpmorgan.com

Signature Page to Graco Credit Agreement

 

 

					
	 	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

as a Bank

 	 
	 	By:  	/s/ Victor Pierzchalski
 	 
	 	Name:   Victor Pierzchalski  	 
	 	Title:     Authorized Signatory	 
	 

1251 Avenue of the Americas

New York, New York 10020-1104

	 	 	 

	Attention:

	 	US Corporate Banking
	 

	 	Scott Ackerman
	Telephone:

	 	1-952-473-7894
	Fax:

	 	1-212-782-6440 with a
	 

	 	copy to 312-696-4535
	 
	 	 
	E-mail:

	 	sackerman@us.mufg.jp

Signature Page to Graco Credit Agreement

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Bank

					
	 	 	 
	By:  	   /s/ Allison Gelfman
 	 	 
	Name: 	   Allison Gelfman  	 
	Title: 	   Managing Director	 
	 
	By:  	   /s/ Peter Kiedrowski
 	 	 
	Name: 	   Peter Kiedrowski  	 
	Title: 	   Director	 

90 South 7th Street

Minneapolis, Minnesota 55402

Attention: Allison Gelfman

Telephone: (612) 316-1402

Fax: (612) 667-4145

E-mail: allison.s.gelfman@wellsfargo.com

Signature Page to Graco Credit Agreement

 

 

FIFTH THIRD BANK,

as a Bank

					
	 	 	 
	 	By:  	                   /s/ Gary S. Losey
 	 
	 	Name:   Gary S. Losey  	 
	 	Title:    VP — Corporate Banking	 

38 Fountain Square Plaza

Cincinnati, Ohio 45202

Attention: Pam Willinger

Telephone: (513) 534-6724

Fax: (513) 534-5947

E-mail: pam.willinger@53.com

Signature Page to Graco Credit Agreement

 

 

					
	PNC BANK, National Association

as a Bank

 	 
	By:  	   /s/ Alison L. Kirker 	 
	Name:  	   Alison L. Kirker  	 
	Title: 	   Credit Officer	 

225 Fifth Avenue

4th Floor

Pittsburgh, Pennsylvania 15222

Attention: Alison Kirker

Telephone: (412) 768-5342

Fax: (412) 705-3232

E-mail: Alison.Kirker@pnc.com

Signature Page to Graco Credit Agreement

 

 

					
	 	RBS CITIZENS, N.A.,

as a Bank

 	 
	 	By:  	/s/ M. James Barry, III
 	 
	 	Name: M. James Barry, III  	 
	 	Title:   Vice President	 

71 South Wacker Drive

Chicago, IL 60606

Attention: Mark Wegener

Telephone: (312) 777-3663

Fax: (312) 777-4003

E-mail: Mark.Wegener@rbscitizens.com

Signature Page to Graco Credit Agreement

 

 

					
	 	BANK OF AMERICA, N.A.,

as a Bank

 	 
	 	By:  	/s/ Steven K. Kessler
 	 
	 	Name:  Steven K. Kessler  	 
	 	Title:    Senior Vice President	 

135 S. LaSalle St.

Chicago, IL 60603

Attention: Steven K. Kessler

Telephone: (312) 992-6323

Fax: (312) 453-3346

E-mail: steven.kessler@baml.com

Signature Page to Graco Credit Agreement

 

 

					
	 	THE NORTHERN TRUST CO.,

as a Bank

 	 
	 	By:  	/s/ Benjamin Livermore
 	 
	 	Name:  Benjamin Livermore  	 
	 	Title:    Vice President	 

50 S. LaSalle Street

M-27

Chicago, IL 60603

Attention: Benjamin Livermore

Telephone: (312) 557-7223

Fax: (312) 557-1425

E-mail: bL24@ntrs.com

Signature Page to Graco Credit Agreement

 

 

EXHIBITS

	 	 	 	 

	Exhibits
	 	 
	 
	 	 	 
	 

	A	 	Form of Borrowing Subsidiary Agreement
	 
	 	 	 
	 

	B	 	Compliance Certificate
	 
	 	 	 
	 

	C	 	Guaranty
	 
	 	 	 
	 

	D	 	Calculation of Mandatory Costs
	 
	 	 	 
	 

	E	 	Pledge Agreement
	 
	 	 	 
	 

	F	 	Form of Legal Opinion
	 
	 	 	 
	 

	G	 	Assignment and Assumption
	 
	 	 	 
	Schedules
	 	 
	 
	 	 	 
	 

	1.1	 	Commitments and Percentages
	 
	 	 	 
	 

	7.6	 	Litigation (Section 7.6)
	 
	 	 	 
	 

	7.15	 	Subsidiaries (Section 7.15)
	 
	 	 	 
	 

	9.6	 	Investments (Section 9.6)

 

 

Exhibit A

FORM OF

BORROWING SUBSIDIARY AGREEMENT

                    , 20___

U.S. Bank National Association, as Agent

Attention:

Ladies and Gentlemen:

     The undersigned, Graco Inc. (the “Company”), refers to the Credit Agreement dated as
of May 23, 2011 (as thereafter amended, the “Credit Agreement”), among the Company, any
Borrowing Subsidiary from time to time party thereto, the Banks as defined therein and U.S. Bank
National Association, as Agent. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement.

     The
Company and                      (the “Designated Borrowing Subsidiary”)
make, on and as of the date hereof (except to the extent such representations and warranties are by
their terms limited to an earlier date), the representations and warranties as to the Designated
Borrowing Subsidiary contained in Article VII of the Credit Agreement. The Designated Borrowing
Subsidiary agrees to be bound in all respects by the terms of the Credit Agreement and to perform
all of the obligations of a Borrowing Subsidiary thereunder. Each reference to a Borrowing
Subsidiary in the Credit Agreement shall be deemed to include the Designated Borrowing Subsidiary.

     All communications to the Designated Borrowing Subsidiary under the Credit Agreement should be
directed to the Company as set forth in the Section 13.5 of the Credit Agreement.

     This instrument shall be construed in accordance with and governed by the laws of the State of
Minnesota and shall be subject to the consent to jurisdiction and waiver of jury trial provisions
of the Credit Agreement. Loan proceeds should be disbursed as provided in the Credit Agreement.

     Upon the execution of this Borrowing Subsidiary Agreement by the Company and the Designated
Borrowing Subsidiary and acceptance hereof by the Agent, the Designated Borrowing Subsidiary shall
become a Borrowing Subsidiary under the Credit Agreement as though it were an original party
thereto and shall be entitled to borrow under the Credit Agreement upon the satisfaction of the
conditions precedent set forth in Article VI of the Credit Agreement.

Exh. A-1

 

Very Truly Yours,

GRACO INC.

					
	 	 	 
	 	By:  	 	 
	 
	 	Title: 	 	 
	 	 	 	 

[DESIGNATED BORROWING SUBSIDIARY]

					
	 	 	 
	 	By:  	 	 
	 
	 	Title: 	 	 
	 	 	 	 

Accepted as of the date first above written:

U.S. BANK NATIONAL ASSOCIATION, as Agent

					
	 	 	 
	 	By:  	 	 
	 
	 	Title: 	 	 
	 	 	 	 

Exh. A-2

 

EXHIBIT B

[FORM OF COMPLIANCE CERTIFICATE]

To:

[address to each Bank]

U.S. Bank National Association, as Agent

800 Nicollet Mall

Mail Code BC-MN-H03P

Minneapolis, MN 55402

Attention:

     The undersigned hereby certifies, on behalf of Graco Inc. (the “Company”) that:

     (1)   I am the duly elected chief financial officer of the Company;

     (2)   I have reviewed the terms of the Credit Agreement dated as of May 23, 2011 (as thereafter
amended, the “Credit Agreement”), among the Company, any Borrowing Subsidiary from time to
time party thereto, the Banks as defined therein and U.S. Bank National Association, as Agent and I
have made, or have caused to be made under my supervision, a detailed review of the transactions
and conditions of the Company during the accounting period covered by the Attachment hereto;

     (3)   The examination described in paragraph (2) did not disclose, and I have no knowledge,
whether arising out of such examinations or otherwise, of the existence of any condition or event
which constitutes a Default or an Event of Default (as such terms are defined in the Credit
Agreement) during or at the end of the accounting period covered by the Attachment hereto or as of
the date of this Certificate, except as described below (or on a separate attachment to this
Certificate). The exceptions listing, in detail, the nature of the condition or event, the period
during which it has existed and the action which the Company has taken, is taking or proposes to
take, with respect to each such condition or event are as follows:

     (4)   No subsidiary has become a Material Subsidiary and no Material Subsidiary has been
acquired or formed since the date of the most recent Certificate delivered pursuant to Section
8.1(c), except as described below (or on a separate attachment to this Certificate):

     The foregoing certification, together with the computations in the Attachment hereto and the
financial statements delivered with this Certificate in support hereof, are made and delivered this
_____ day of                     , _______ pursuant to Section 8.1(c) of
the Credit Agreement.

Exh. B-1

 

GRACO INC.

					
	 	 	 
	 	By:  	 	 
	 	Title: 	 	 
	 	 	 	 
	 

Exh. B-2

 

ATTACHMENT TO COMPLIANCE CERTIFICATE

AS OF                     ,            WHICH PERTAINS

TO THE PERIOD FROM                     ,           

TO                     ,                     

	 	 	 	 	 	 	 	 

	 	Secured Indebtedness (Maximum amount: 5.00% of Consolidated
Assets as of the time specified in Section 9.8) (Section 9.8)
	 	 	$	 	 	 
	 	Cash Flow Leverage Ratio (Maximum [3.25 to 1.00][3.75 to
1.00]1) (Section 9.9)
	 	 	 	 	 	 
	 	Interest Coverage Ratio (Minimum [2.50 to 1.00][3.0 to
1.00]2) (Section 9.10)
	 	 	 	to 1.0   	 	 
	 	Consolidated Assets as of                     (determine
date in accordance with Section 9.8):
	 	 	$	 	 	 
	 	Applicable Margin for Fixed LIBOR Advances:
	 	 	 	%	 	 
	 	Applicable Margin for Base Rate Advances:
	 	 	 	%	 	 
	 	Applicable Commitment Fee Rate (determine as provided in the
definition thereof.):
	 	 	 	%	 	 
	 	Book value (net of reserves) of total assets of Subsidiaries that
are not Material Subsidiaries (determined as provided in the
definition of “Material Subsidiaries” in the Credit Agreement):
	 	 	$	 	 	 
	 

 

			
	1	 	Per Section 9.9, covenant levels may vary
based on permitted acquisitions. Appropriate level and permitted acquisition
reference to be included.
	 
	2	 	Per Section 9.10, covenant levels may vary
based on permitted acquisitions. Appropriate level and permitted
acquisition reference to be included.

Exh. B-3

 

EXHIBIT C

FORM OF GUARANTY

(Joint and Several)

     FOR VALUE RECEIVED and in consideration of entry by the Banks (as defined in the Credit
Agreement) and U.S. BANK NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, together
with it successors and assigns, called the “Agent”) into that certain Credit Agreement,
dated as of May 23, 2011 (as thereafter amended, modified, extended, renewed, restated or replaced
from time to time called the “Credit Agreement”) among the Banks, the Agent, the Borrowing
Subsidiaries (as defined in the Credit Agreement) and GRACO INC., a Minnesota corporation
(hereinafter called the “Debtor”), the undersigned (the “Guarantors”) JOINTLY AND
SEVERALLY hereby unconditionally guarantee the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all Obligations, as defined in and
determined under, the Credit Agreement, including without limitation all future advances, all
obligations to reimburse the Agent for drawings under all Letters of Credit, and all of such
Obligations that arise after the filing of a petition by or against the Debtor under the Bankruptcy
Code, even if the obligations do not accrue or are not allowed or allowable under the Bankruptcy
Code or otherwise (all such obligations being hereinafter collectively called the
“Liabilities”), and the Guarantors further jointly and severally agree to pay all expenses
(including attorneys’ fees and legal expenses) paid or incurred by the Banks or Agent in
endeavoring to collect the Liabilities, or any part thereof, and in enforcing this guaranty.

     As additional security for the payment of all of the Liabilities and all obligations of the
Guarantors hereunder (collectively, the “Guaranty Obligations”), each Guarantor grants to
the Agent for the benefit of itself and the Banks a security interest in, a lien on, and an express
contractual right to set off against, each deposit account and all deposit account balances, cash
and any other property of such Guarantor now or hereafter maintained with, or in the possession of,
the Agent. Upon the occurrence of any default hereunder (as described in the immediately preceding
paragraph), the Agent may: (a) refuse to allow withdrawals from any such deposit account; (b)
apply the amount of such deposit account balances and the other assets of the Guarantors described
above to the Guaranty Obligations; and (c) offset any other obligation of the Agent against the
Guaranty Obligations; all whether or not the Guaranty Obligations are then due or have been
accelerated and all without any advance or contemporaneous notice or demand of any kind to the
Guarantor, such notice and demand being expressly waived.

     This guaranty shall in all respects be a continuing, absolute and unconditional guaranty, and
shall (subject to release by the Agent, as provided in Section 13.16 of the Credit Agreement)
remain in full force and effect (notwithstanding, without limitation, the dissolution of any
Guarantor or that at any time or from time to time all Liabilities may have been paid in full)
until Termination Conditions (as defined in and determined under the Credit Agreement) exist.

     The Guarantors further agrees that, if at any time all or any part of any payment theretofore
applied by the Agent or the Banks to any of the Liabilities is or must be rescinded or returned by
the Agent or the Banks for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Debtor), such Liabilities shall, for the purposes of this
guaranty, to the extent that such payment is or must be rescinded or returned, be deemed

Exh. C-1

 

to have continued in existence, notwithstanding such application by the Agent or the Banks,
and this guaranty shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or the Banks had not been made.

     The Agent and the Banks may, from time to time, at their sole discretion and without notice to
any Guarantor, take any or all of the following actions: (a) be granted a security interest in any
property to secure any of the Liabilities or the Guaranty Obligations, (b) retain or obtain the
primary or secondary obligation of any obligor or obligors, in addition to the Guarantors, with
respect to any of the Liabilities, (c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of any nature of any other obligor with respect to any of the
Liabilities, (d) release its security interest in, or surrender, release or permit any substitution
or exchange for, all or any part of any property securing any of the Liabilities or any obligation
hereunder, or extend or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature of any other
obligor with respect to any such property, and (e) resort to any Guarantor for payment of any of
the Liabilities, whether or not the Agent and the Banks (i) shall have resorted to any property
securing any of the Liabilities or (ii) shall have proceeded against any other obligor primarily or
secondarily obligated with respect to any of the Liabilities including without limitation any other
Guarantor (all of the actions referred to in preceding clauses (i) and (ii) being hereby expressly
waived by each Guarantor).

     Any amounts received by the Agent and the Banks from whatsoever source on account of the
Liabilities may be applied by it toward the payment of such of the Liabilities, and in such order
of application, as the Agent may from time to time elect.

     Until Termination Conditions exist, no payment made by or for the account of the Guarantors
pursuant to this guaranty shall entitle the Guarantors by subrogation or otherwise to any payment
by the Debtor or from or out of any property of the Debtor and the Guarantors shall not exercise
any right or remedy against the Debtor or any property of the Debtor by reason of any performance
by the Guarantors of this guaranty.

     The Guarantors hereby expressly waive: (a) notice of the acceptance by the Agent or the Banks
of this guaranty, (b) notice of the existence or creation or non-payment of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other notices
whatsoever, and (d) all diligence in collection or protection of or realization upon the
Liabilities or any part thereof, any obligation hereunder, or any security for, or guaranty of, any
of the foregoing.

     Notwithstanding any other provision hereof, the obligation of each Guarantor on this guaranty
is limited to the amount which can be guaranteed by such Guarantor under applicable federal and
state laws relating to the insolvency of debtors without this guaranty being held to be avoidable
or unenforceable. Each Guarantor acknowledges and agrees that Obligations may be created and
continued in any amount, without affecting or impairing the liability of such Guarantor hereunder,
and Agent and the Banks may pay (or allow for the payment of) Obligations out of any sums received
by or available to the Agent or the Banks on account of Obligations from the Debtor, the Borrowing
Subsidiaries, any other Guarantor or any other

Exh. C-2

 

Person (except the Guarantor), from the properties of the Debtor, the Borrowing Subsidiaries,
any other Guarantor or such other Persons, out of collateral security or from any other source and
such payment (or allowance) shall not reduce, affect or impair the liability of such Guarantor
hereunder. The liability of each Guarantor shall be a continuing liability and shall not be
affected by (nor shall anything herein contained be deemed a limitation upon) the amount of credit
which may be extended to the Debtor or the Borrowing Subsidiaries, the number of transactions with
the Debtor or the Borrowing Subsidiaries, repayments by the Debtor, the Borrowing Subsidiaries or
any other Guarantor, or the allocation by the Agent of repayments by the Debtor or the Borrowing
Subsidiaries, it being the understanding of such Guarantor that, subject to the provisions of
Section 13.16 of the Credit Agreement, such Guarantor’s liability shall continue hereunder until
Termination Conditions (as defined in and determined under the Credit Agreement) exist. To the
extent that any payment to, or realization by, the Agent or the Banks on the Guarantied Obligations
exceeds the limitations of this paragraph as to any Guarantor and is subject to avoidance and
recovery in any such proceeding, the amount subject to avoidance shall in all events be limited to
the amount by which such actual payment or realization exceeds such limitation, and this guaranty
as limited shall in all events remain in full force and effect and be fully enforceable against
each Guarantor. This paragraph is intended solely to preserve the rights of the Agent hereunder
against each Guarantor and neither any Guarantor, the Debtor, any Borrowing Subsidiary, any other
Guarantor of the Obligations nor any Person shall have any right, claim or defense under this
paragraph that would not otherwise be available under applicable insolvency laws. “Person”
shall have the meaning set forth in the Credit Agreement.

     Each Bank may from time to time without notice to the Guarantors, assign or transfer, in
accordance with the terms of the Credit Agreement, its Percentage (as defined in the Credit
Agreement) of any or all of the Liabilities or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer thereof in accordance with the
terms of the Credit Agreement, such Liabilities shall be and remain Liabilities for the purposes of
this guaranty, and each and every immediate and successive permitted assignee or transferee of any
of the Liabilities or of any interest therein shall, to the extent of the interest of such assignee
or transferee in the Liabilities, be entitled to the benefits of this guaranty to the same extent
as if such assignee or transferee were such Bank.

     Unless the Agent shall otherwise consent in writing, the Agent shall have the sole right to
enforce this Guaranty, as Agent as provided in the Credit Agreement, for the benefit of the Agent
and the Banks (including any transferee, as provided in the prior paragraph).

     Each Guarantor hereby warrants to the Agent and the Banks that such Guarantor now has, and
will continue to have independent means of obtaining information concerning the affairs, financial
condition and business of the Debtor. Neither the Agent nor the Bank shall have any duty or
responsibility to provide the Guarantors with any credit or other information concerning the
affairs, financial condition or business of the Debtor which may come into the Agent’s or the
Bank’s possession.

     No delay on the part of the Agent or any Bank in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Agent or any Bank of any
right or remedy shall preclude other or further exercise thereof or the exercise of any other right

Exh. C-3

 

or remedy; nor shall any modification or waiver of any of the provisions of this guaranty be
binding upon the Agent or any Bank except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent and (except in the case of a release required by Section 13.16 of
the Credit Agreement) the Required Banks (as defined in the Credit Agreement). No action of the
Agent or the Banks permitted hereunder shall in any way affect or impair the rights of the Agent or
the Banks and the obligations of the Guarantors under this guaranty. For the purposes of this
guaranty, Liabilities shall include all obligations of the Debtor to the Agent or the Banks
specified as Liabilities, notwithstanding any right or power of the Debtor or anyone else to assert
any claim or defense as to the invalidity or unenforceability of any such obligation, and no such
claim or defense shall affect or impair the obligations of the Guarantors hereunder, and shall
specifically include, without limitation, any and all interest, fees or commissions included in the
Liabilities and accruing or payable after the commencement of any bankruptcy or insolvency
proceedings, notwithstanding any provision or rule of law which might restrict the rights of the
Bank to collect such obligations from the Debtor. The obligations of the Guarantors under this
guaranty shall be absolute and unconditional irrespective of any circumstance whatsoever which
might constitute a legal or equitable discharge or defense of any Guarantor. The Guarantors hereby
acknowledge that there are no conditions to the effectiveness of this guaranty.

     This guaranty shall be binding upon each Guarantor, and upon the successors and assigns of
each Guarantor.

     Wherever possible, each provision of this guaranty shall be interpreted in such a manner as to
be effective and valid under applicable law, but if any provision of this guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining
provisions of this guaranty.

     THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY 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.

     THE AGENT AND THE BANKS (BY ACCEPTING THIS GUARANTY) AND THE GUARANTORS HEREBY EXPRESSLY WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     AT THE OPTION OF THE AGENT, THIS GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE GUARANTORS CONSENT TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT
CONVENIENT. IN THE EVENT ANY GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE

Exh. C-4

 

UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
BY THIS GUARANTY, THE AGENT, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE
OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

(signature page follows)

Exh. C-5

 

     SIGNED AND DELIVERED as of __________, 2011.

	 	 	 	 	 
	 	GRACO OHIO INC.

 	 
	 	By:  	 	 
	 	James A. Graner 	 
	 	Chief Financial Officer and Treasurer 	 
	 

	 	 	 	 	 
	 	GRACO MINNESOTA INC.

 	 
	 	By:  	 	 
	 	James A. Graner 	 
	 	Chief Financial Officer and Treasurer 	 
	 

	 	 	 	 	 
	 	GRACO HOLDINGS INC.

 	 
	 	By:  	 	 
	 	James A. Graner 	 
	 	Chief Financial Officer and Treasurer 	 
	 

Signature page to Guaranty

 

EXHIBIT D

MANDATORY COST

	1.	 	The Mandatory Cost (to the extent applicable) is an addition to the interest rate to
compensate Banks for the cost of compliance with:

	 	(a)	 	the requirements of the Bank of England and/or the Financial Services Authority
(or, in either case, any other authority which replaces all or any of its functions);
or
	 
	 	(b)	 	the requirements of the European Central Bank.

	2.	 	On the first day of each Interest Period (or as soon as practicable thereafter), each Bank
requesting an adjustment to the rate of interest borne by an Advance in an Alternative
Currency (a “Requesting Bank”) shall calculate, as a percentage rate, a rate (the
“Additional Cost Rate”) for such Requesting Bank, in accordance with the paragraphs
set out below, and notify the Agent and the Company of such rate. Each Requesting Bank will,
at the request of the Company or the Agent, deliver to the Company or the Agent as the case
may be, a statement setting forth, in reasonable detail, the calculation of any Mandatory
Cost.
	 
	3.	 	The Additional Cost Rate for any Bank lending from an Alternative Currency Lending Office in
a Participating Member State (other than the United Kingdom) will be the percentage notified
by that Bank to the Agent and the Company. This percentage will be certified by such Bank in
its notice to the Agent and the Company as the cost (expressed as a percentage of such Bank’s
participation in all Loans made from such Alternative Currency Lending Office) of complying
with the minimum reserve requirements of the European Central Bank in respect of Loans made
from that Alternative Currency Lending Office.
	 
	4.	 	The Additional Cost Rate for any Bank lending from an Alternative Currency Lending Office in
the United Kingdom will be calculated by the Requesting Bank as follows:

	 	(a)	 	in relation to any Loan in Sterling:

AB+C (B-D)+E x 0.01 per cent. per annum

100 — (A+C)

	 	(b)	 	in relation to any Loan in any currency other than Sterling:

E x 0.01 percent. per annum

300

	 	  Where:	 	

	 
	 	A	 	is the percentage of Eligible Liabilities (assuming these to be in excess of
any stated minimum) which that Bank is from time to time required to maintain as an

Exh. D-1

 

	 	 	 	interest free cash ratio deposit with the Bank of England to comply with cash ratio
requirements.
	 
	 	B 	 	is the percentage rate of interest (excluding the Applicable Margin, the
Mandatory Cost and, in the case of interest charged at the rate specified in Section
3.1(e) (the “Default Rate”), without counting any increase in interest rate
effected by the charging of the Default Rate) payable for the relevant Interest Period
of such Loan.
	 
	 	C 	 	is the percentage (if any) of Eligible Liabilities which that Bank is required
from time to time to maintain as interest bearing Special Deposits with the Bank of
England.
	 
	 	D 	 	is the percentage rate per annum payable by the Bank of England to the
Requesting Bank on interest bearing Special Deposits.
	 
	 	E 	 	is designed to compensate Banks for amounts payable under the Fees Regulations
and is calculated by the Requesting Bank and expressed in pounds per £1,000,000.

	5.	 	For the purposes of this Exhibit:

	 	(a)	 	“Alternative Currency Lending Office” for any Bank shall mean the
office of such Bank designated in an administrative questionnaire delivered to the
Agent or such other office or offices as such Bank shall from time to time notify the
Company and the Agent.
	 
	 	(b)	 	“Eligible Liabilities” and “Special Deposits” have the meanings
given to them from time to time under or pursuant to the Bank of England Act 1998 or
(as may be appropriate) by the Bank of England;
	 
	 	(c)	 	“Fees Regulations” means the FSA1Supervision Manual or such other law
or regulation as may be in force from time to time in respect of the payment of fees
for the acceptance of deposits;
	 
	 	(d)	 	“Fee Tariffs” means the fee tariffs specified in the Fees Regulations
under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated
fee required pursuant to the Fees Regulations but taking into account any applicable
discount rate); and
	 
	 	(e)	 	“Participating Member State” means each such state described as such in
the economic and monetary union as contemplated in the Treaty on European Union, as
thereafter amended, and subsequent treaties.
	 
	 	(f)	 	“Tariff Base” has the meaning given to it in, and will be calculated in
accordance with, the Fees Regulations.

Exh. D-2

 

	6.	 	In application of the above formulae, A, B, C and D will be included in the formulae as
percentages (i.e. 5 percent. will be included in the formula as 5 and not as 0.05). A
negative result obtained by subtracting D from B shall be taken as zero. The resulting
figures shall be rounded to four decimal places.
	 
	7.	 	The percentages or rates of charge of each Bank for the purpose of A, C and E above shall be
determined by the Requesting Bank based on the assumption that such Requesting Bank’s
obligations in relation to cash ratio deposits, Special Deposits and the Fees Regulations are
the same as those of a typical bank from its jurisdiction of incorporation with an Alternative
Currency Lending Office in the same jurisdiction as such Bank’s Alternative Currency Lending
Office.
	 
	8.	 	The Agent shall distribute the additional amounts received as a result of the Mandatory Cost
to the Requesting Banks on the basis of the Additional Cost Rate for each Requesting Bank
based on the information provided by each Bank pursuant to paragraph 2 above.
	 
	9.	 	Any determination by the Requesting Bank pursuant to this Exhibit in relation to a formula,
the Mandatory Cost, an Additional Cost Rate or any amount payable to a such Requesting Bank
shall, in the absence of manifest error, be conclusive and binding on all parties hereto.
	 
	10.	 	The Agent may from time to time, after consultation with the Company and the Banks, determine
and notify to all parties any amendments which are required to be made to this Exhibit in
order to comply with any change in law, regulation or any requirements from time to time
imposed by the Bank of England, the Financial Services Authority or the European Central Bank
(or, in any case, any other authority which replaces all or any of its functions) and any such
determination shall, in the absence of manifest error, be conclusive and binding on all
parties hereto.

Exh. D-3

 

Exhibit E

FORM OF PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT (this “Agreement”), dated as of May 23, 2011, is made and given
by GRACO INC., a corporation organized under the laws of the State of Minnesota (the
“Pledgor”) to U.S. BANK NATIONAL ASSOCIATION as Collateral Agent (in such capacity, and
together with any successors in such capacity, the “Secured Party”) for the banks (the
“Banks”) from time to time party to the Credit Agreement defined below and the noteholders
(the “Noteholders” and collectively with the Banks, the “Creditors”) from time to
time holding notes issued under the Note Purchase Agreements defined below.

RECITALS

     A.   Graco Inc., a Minnesota corporation (the “Borrower”), the Borrowing Subsidiaries
from time to time party thereto, the Banks (as named therein from time to time) and U.S. Bank
National Association, as Agent, have entered into a Credit Agreement dated as of May 23, 2011 (as
the same may be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) pursuant to which the Banks have agreed to extend to the Borrower
certain credit accommodations, including loan and letter of credit facilities.

     B.   The Borrower and the Noteholders named in the Purchaser Schedule attached thereto have
entered into a Note Agreement dated as of March 11, 2011 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “March 11, 2011 Note Purchase
Agreement”).

     C.   It is contemplated that the Borrower will enter into a Note Agreement with one or more
affiliates of The Prudential Insurance Company of America as Noteholders named in the Purchaser
Schedule attached thereto (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Additional Note Purchase Agreement”, together with the March 2011
Note Agreement, the “Note Purchase Agreements”, and together with the Credit Agreement and
the agreements, documents and instruments delivered in connection with any or all of the foregoing
(as each may be amended, restated, supplemented or otherwise modified from time to time), the
“Senior Indebtedness Documents”).

     D.   The Agent, the Secured Party and the Noteholders have entered into an Intercreditor and
Collateral Agency Agreement dated as of May 6, 2011 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Intercreditor Agreement”),
pursuant to which the Secured Party has been appointed Collateral Agent.

 

 

     E.   The Pledgor is the owner of the stock or other ownership or membership interests (the
“Pledged Interests”) described in Schedule I hereto issued by the issuers named thereon.
The Pledgor may own stock or other ownership or membership interests in such issuers in excess of
the percentage set forth on Schedule I, but the term “Pledged Interests” shall be limited
to the percentage of stock or other ownership or membership interest listed on Schedule I, and all
assets described in Sections 2(b) and (c) hereof consistent therewith.

     F.   It is a term and condition of the Senior Indebtedness Documents that Pledgor enter into
this Agreement and grant the security interests and pledges provided herein.

     G.   The Pledgor finds it advantageous, desirable and in the best interests of the Pledgor to
comply with the requirement that this Agreement be executed and delivered to the Secured Party.

     H.   The relative rights and priorities of the Creditors in respect of the Collateral (as
defined below) are governed by the Intercreditor Agreement.

     NOW, THEREFORE, in consideration of the premises and in order to induce the Creditors to
continue to extend credit accommodations to the Borrower, the Pledgor hereby agrees with the
Secured Party for the benefit of the Secured Party (on behalf of the Creditors) as follows:

     Section 1.   Defined Terms. As used in this Agreement, the following terms shall have
the meanings indicated:

     “Collateral” shall have the meaning given to such term in Section 2.

     “Event of Default” shall have the meaning given to such term in the Intercreditor
Agreement.

Exh. E-2

 

     “Lien” shall mean any security interest, mortgage, pledge, lien, charge, encumbrance,
title retention agreement or analogous instrument or device (including the interest of the lessors
under capitalized leases), in, of or on any assets or properties of the Person referred to.

     “Permitted Lien” shall have the meaning given to such term in Section 4(a).

     “Pledged Interests” shall have the meaning given to such term in the Recitals.

     “Secured Obligations” shall mean all of the “Obligations” under and as defined in the
Credit Agreement and all of the obligations owing to the Noteholders under the Note Purchase
Agreements, including, without limitation, all of the “Obligations” under and as defined in the
Intercreditor Agreement.

     “Security Interest” shall have the meaning given to such term in Section 2.

     (a)   Terms Defined in Uniform Commercial Code. All other terms used in this Agreement
that are not specifically defined herein or the definitions of which are not incorporated herein by
reference shall have the meaning assigned to such terms in Article 9 of the Uniform Commercial Code
as adopted in the State of Minnesota.

     (b)   Singular/Plural, Etc. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular, the plural and “or” has the
inclusive meaning represented by the phrase “and/or.” The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,”
“herein,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and
not to any particular provision of this Agreement. References to Sections are references to
Sections in this Agreement unless otherwise provided.

     Section 2.   Pledge. As security for the payment and performance of all of the Secured
Obligations, the Pledgor hereby pledges to the Secured Party for the benefit of the Secured Party
and the Creditors and grants to the Secured Party for the benefit of the Secured Party and the
Creditors a security interest (the “Security Interest”) in the following, including any
securities account containing a securities entitlement with respect to the following (the
“Collateral”):

Exh. E-3

 

     (a)   The Pledged Interests and the certificates representing the Pledged Interests, and all
dividends, cash, instruments and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Interests.

     (b)   All additional shares of stock or ownership or membership interests of any issuer of the
Pledged Interests from time to time acquired by the Pledgor in any manner in exchange for, as a
dividend on, as a result of stock splits or combinations or otherwise in connection with the
initial Pledged Interests, and the certificates representing such additional shares of stock or
ownership or membership interests, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in exchange for any or
all of such shares of stock or ownership or membership interests.

     (c)   All proceeds of any and all of the foregoing (including proceeds that constitute property
of types described above).

     Section 3.   Delivery of Collateral. All certificates and instruments representing or
evidencing the Pledged Interests shall be delivered to the Secured Party contemporaneously with the
execution of this Agreement. All certificates and instruments representing or evidencing
Collateral received by the Pledgor after the execution of this Agreement shall be delivered to the
Secured Party promptly upon the Pledgor’s receipt thereof. All such certificates and instruments
shall be held by or on behalf of the Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the Secured Party. With
respect to all Pledged Interests consisting of uncertificated securities, book-entry securities or
securities entitlements, the Pledgor shall either (a) execute and deliver, and cause any necessary
issuers or securities intermediaries to execute and deliver, control agreements in form and
substance reasonably satisfactory to the Secured Party covering such Pledged Interests, or (b)
cause such Pledged Interests to be transferred into the name of the Secured Party. The Secured
Party shall have the right at any time, when an Event of Default has occurred and is continuing, to
cause any or all of the Collateral to be transferred of record into the name of the Secured Party
or its nominee for the benefit of the Creditors (but subject to the rights of the Pledgor under
Section 6) and to exchange certificates representing or evidencing Collateral for certificates of
smaller or larger denominations. If the Collateral is in the possession of a bailee, the Pledgor
will join with the Secured Party in notifying the bailee of the interest of the Secured Party and
in obtaining from the bailee an acknowledgment that it hold the Collateral for the benefit of the
Secured Party.

Exh. E-4

 

     Section 4.   Certain Warranties and Covenants. The Pledgor makes the following
warranties and covenants:

     (a)   The Pledgor has title to the Pledged Interests and will have title to each other item of
Collateral hereafter acquired, free of all Liens except the Security Interest and liens permitted
by the Senior Indebtedness Documents or that arise by operation of law (“Permitted Liens”).
As of the date of this Agreement, the Pledgor is unaware of the existence of any such liens
arising by operation of law.

     (b)   The Pledgor has full corporate power and authority to execute this Agreement, to perform
the Pledgor’s obligations hereunder and to subject the Collateral to the Security Interest created
hereby.

     (c)   No financing statement covering all or any part of the Collateral is on file in any public
office (except for any financing statements filed by the Secured Party or as permitted by the
Intercreditor Agreement).

     (d)   The Pledged Interests have been duly authorized and validly issued by the issuer thereof
and are fully paid and non-assessable. The certificates representing the Pledged Interests are
genuine.

     (e)   The Pledged Interests constitute the percentage of the issued and outstanding member
interests of the respective issuers thereof indicated on Schedule I (if any such percentage is so
indicated).

     Section 5.   Further Assurances. The Pledgor agrees that at any time and from time to
time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action that may be necessary or that the Secured
Party may reasonably request, in order to perfect and protect the Security Interest or to enable
the Secured Party to exercise and enforce its rights and remedies hereunder with respect to any
Collateral (but any failure to request or assure that the Pledgor execute and deliver such
instruments or documents or to take such action shall not affect or impair the validity,
sufficiency or enforceability of this Agreement and the Security Interest, regardless of whether
any such

Exh. E-5

 

item was or was not executed and delivered or action taken in a similar context or on a prior
occasion).

     Section 6.   Voting Rights; Dividends; Etc.

     (a)   Subject to paragraph (d) of this Section 6, the Pledgor shall be entitled to exercise or
refrain from exercising any and all voting and other consensual rights pertaining to the Pledged
Interests or any other stock or member interests that becomes part of the Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the other Senior
Indebtedness Documents.

     (b)   Subject to paragraph (e) of this Section 6 and Section 3 hereof, the Pledgor shall be
entitled to receive, retain, and use in any manner not prohibited by the Senior Indebtedness
Documents any and all interest and dividends paid in respect of the Collateral.

     (c)   The Secured Party shall execute and deliver (or cause to be executed and delivered) to the
Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and other rights that it is entitled to
exercise pursuant to Section 6(a) hereof and to receive the dividends and interest that it is
authorized to receive and retain pursuant to Section 6(b) hereof.

     (d)   Upon the occurrence and during the continuance of any Event of Default, the Secured Party
shall have the right in its sole discretion, and the Pledgor shall execute and deliver all such
proxies and other instruments as may be necessary or appropriate to give effect to such right, to
terminate all rights of the Pledgor to exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to Section 6(a) hereof,
and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the
sole right to exercise or refrain from exercising such voting and other consensual rights;
provided, however, that the Secured Party shall not be deemed to possess or have control over any
voting rights with respect to any Collateral unless and until the Secured Party has given written
notice to the Pledgor that any further exercise of such voting rights by the Pledgor is prohibited
and that the Secured Party and/or its assigns will henceforth exercise such voting rights; and
provided, further, that neither the registration of any item of Collateral in the Secured Party’s
name nor the exercise of any voting rights with respect thereto shall be deemed to constitute a
retention by the Secured Party of any such Collateral in satisfaction of the Secured Obligations or
any part thereof.

Exh. E-6

 

     (e)   Upon the occurrence and during the continuance of any Event of Default following written
notice from the Secured Party to the Pledgor of revocation of the Pledgor’s rights under Section
6(b) hereof (provided that no such notice shall be required in the case of an Event of Default
under Section 10.1(e) or (f) of the Credit Agreement or Section 7A(viii), (ix) or (x) of the Note
Purchase Agreements):

     (i)   all rights of the Pledgor to receive the dividends and interest that it would
otherwise be authorized to receive and retain pursuant to Section 6(b) hereof shall cease,
and all such rights shall thereupon become vested in the Secured Party who shall thereupon
have the sole right to receive and hold such dividends as Collateral, and

     (ii)   all payments of interest and dividends that are received by the Pledgor contrary
to the provisions of paragraph (i) of this Section 6(e) shall be received in trust for the
benefit of the Secured Party, shall be segregated from other funds of the Pledgor and shall
be forthwith paid over to the Secured Party as Collateral in the same form as so received
(with any necessary endorsement).

     Section 7.   Transfers and Other Liens; Additional Member Interests.

     (a)   Except as may be permitted by the Senior Indebtedness Documents, the Pledgor agrees that
it will not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, any of the Collateral, or (ii) create or permit to exist any Lien, upon
or with respect to any of the Collateral other than Permitted Liens to the extent that the holder
thereof shall not be seeking enforcement thereof in any way.

     (b)   The Pledgor agrees that it will (i) cause each issuer of the Pledged Interests not to
issue any additional stock or member interests that would cause the percentage of all such stock or
membership interest represented by the Pledged Interests to be less than such percentage as of the
date of this Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or member interests or other securities
of each issuer of the Pledged Interests issued to or received by the Pledgor, provided, that at no
time shall the Pledged Interests be required to exceed, on a percentage basis, 65% of all
outstanding stock or membership interest of any issuer.

     Section 8.   Secured Party Appointed Attorney-in-Fact. As additional security for the
Secured Obligations, the Pledgor hereby irrevocably appoints the Secured Party the Pledgor’s

Exh. E-7

 

attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name
of such Pledgor or otherwise, from time to time in the Secured Party’s good-faith discretion, to
take any action and to execute any instrument that the Secured Party may reasonably believe
necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the
Pledgor under Section 6 hereof), in a manner consistent with the terms hereof, including, without
limitation, to receive, indorse and collect all instruments made payable to the Pledgor
representing any dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.

     Section 9.   Secured Party May Perform. The Pledgor hereby authorizes the Secured Party
to file financing statements with respect to the Collateral. The Pledgor irrevocably waives any
right to notice of any such filing. If the Pledgor fails to perform any agreement contained
herein, the Secured Party may itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Secured Party incurred in connection therewith shall be payable by the
Pledgor under Section 13 hereof.

     Section 10.   The Secured Party’s Duties. The powers conferred on the Secured Party
hereunder are solely to protect its and the Creditors’ interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Secured Party shall be deemed to have
exercised reasonable care in the safekeeping of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to the safekeeping which the Secured Party accords its
own property of like kind. Except for the safekeeping of any Collateral in its possession and the
accounting for monies and for other properties actually received by it hereunder, neither the
Secured Party nor any Creditor shall have any duty, as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not the Secured Party or any Creditor has or is deemed to
have knowledge of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral. The Secured Party will take
action in the nature of exchanges, conversions, redemption, tenders and the like requested in
writing by the Pledgor with respect to any of the Collateral in the Secured Party’s possession if
the Secured Party in its reasonable judgment determines that such action will not impair the
Security Interest or the value of the Collateral, but a failure of the Secured Party to comply with
any such request shall not of itself be deemed a failure to exercise reasonable care.

     Section 11.   Remedies upon Default. If any Event of Default shall have occurred and be
continuing:

     (a)   The Secured Party may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights and remedies of

Exh. E-8

 

a secured party on default under Article 9   of the Uniform Commercial Code as adopted in the
State of Minnesota (the “Code”) in effect at that time, and may, without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker’s board or at any of the Secured Party’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Secured
Party may reasonably believe are commercially reasonable. The Secured Party agrees to give at
least ten days’ prior notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made, and the Pledgor agrees that such notice shall
constitute reasonable notification. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Secured Party may adjourn any
public or private sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it was so adjourned.
The Pledgor hereby waives all requirements of law, if any, relating to the marshalling of assets
which would be applicable in connection with the enforcement by the Secured Party of its remedies
hereunder, absent this waiver. The Secured Party may disclaim warranties of title and possession
and the like.

     (b)   The Secured Party may notify any Person obligated on any of the Collateral that the same
has been assigned or transferred to the Secured Party and that the same should be performed as
requested by, or paid directly to, the Secured Party, as the case may be. The Pledgor shall join
in giving such notice, if the Secured Party so requests. The Secured Party may, in the Secured
Party’s name or in the Pledgor’s name, demand, sue for, collect or receive any money or property at
any time payable or receivable on account of, or securing, any such Collateral or grant any
extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or
change the obligation of any such Person.

     (c)   Any cash held by the Secured Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Secured Party, be held by the Secured Party as
collateral for, or then or at any time thereafter be applied in whole or in part by the Secured
Party against, all or any part of the Secured Obligations (including any expenses of the Secured
Party payable pursuant to Section 13 hereof).

     Section 12.   Waiver of Certain Claims. The Pledgor acknowledges that because of
present or future circumstances, a question may arise under the Securities Act of 1933, as from
time to time amended (the “Securities Act”), with respect to any disposition of the
Collateral permitted hereunder. The Pledgor understands that compliance with the Securities Act
may very strictly limit the course of conduct of the Secured Party if the Secured Party were to
attempt to dispose of all or any portion of the Collateral and may also limit the extent to which
or the manner in which any subsequent transferee of the Collateral or any portion thereof may
dispose of the same. There may be other legal restrictions or limitations affecting the Secured
Party in

Exh. E-9

 

any attempt to dispose of all or any portion of the Collateral under the applicable Blue Sky
or other securities laws or similar laws analogous in purpose or effect. The Secured Party may be
compelled to resort to one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Collateral for their own account for
investment only and not to engage in a distribution or resale thereof. The Pledgor agrees that the
Secured Party shall not incur any liability, and any liability of the Pledgor for any deficiency
shall not be impaired, as a result of the sale of the Collateral or any portion thereof at any such
private sale in a manner that the Secured Party reasonably believes is commercially reasonable
(within the meaning of Section 9-627 of the Uniform Commercial Code as adopted in the State of
Minnesota). The Pledgor hereby waives any claims against the Secured Party arising by reason of
the fact that the price at which the Collateral may have been sold at such sale was less than the
price that might have been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Secured Party shall accept the first offer received and does not
offer any portion of the Collateral to more than one possible purchaser. The Pledgor further
agrees that the Secured Party has no obligation to delay sale of any Collateral for the period of
time necessary to permit the issuer of such Collateral to qualify or register such Collateral for
public sale under the Securities Act, applicable Blue Sky laws and other applicable state and
federal securities laws, even if said issuer would agree to do so. Without limiting the generality
of the foregoing, the provisions of this Section would apply if, for example, the Secured Party
were to place all or any portion of the Collateral for private placement by an investment banking
firm, or if such investment banking firm purchased all or any portion of the Collateral for its own
account, or if the Secured Party placed all or any portion of the Collateral privately with a
purchaser or purchasers.

     Section 13.   Costs and Expenses; Indemnity. The Pledgor will pay or reimburse the
Secured Party on demand for all reasonable out-of-pocket expenses (including in each case all
filing and recording fees and taxes and all reasonable fees and expenses of counsel and of any
experts and agents) incurred by the Secured Party in connection with the creation, perfection,
protection, satisfaction, foreclosure or enforcement of the Security Interest and the preparation,
administration, continuance, amendment or enforcement of this Agreement, and all such costs and
expenses shall be part of the Secured Obligations secured by the Security Interest. The Pledgor
shall indemnify and hold the Secured Party and each Creditor harmless from and against any and all
claims, losses and liabilities (including reasonable attorneys’ fees) growing out of or resulting
from this Agreement (including enforcement of this Agreement) or the Secured Party’s actions
pursuant hereto, except claims, losses or liabilities resulting from the Secured Party’s gross
negligence or willful misconduct as determined by a final judgment of a court of competent
jurisdiction. Any liability of the Pledgor to indemnify and hold the Secured Party and each
Creditor harmless pursuant to the preceding sentence shall be part of the Secured Obligations
secured by the Security Interest. The obligations of the Pledgor under this Section shall survive
any termination of this Agreement.

     Section 14.   Waivers and Amendments; Remedies. This Agreement can be waived, modified,
amended, terminated or discharged, and the Security Interest can be released, only

Exh. E-10

 

explicitly in a writing signed by the Secured Party and the Pledgor. A waiver so signed shall
be effective only in the specific instance and for the specific purpose given. Mere delay or
failure to act shall not preclude the exercise or enforcement of any rights and remedies available
to the Secured Party. All rights and remedies of the Secured Party shall be cumulative and may be
exercised singly in any order or sequence, or concurrently, at the Secured Party’s option, and the
exercise or enforcement of any such right or remedy shall neither be a condition to nor bar the
exercise or enforcement of any other.

     Section 15.   Notices. Any notice or other communication to any party in connection
with this Agreement shall be sent as provided in the Intercreditor Agreement.

     Section 16.   Pledgor Acknowledgments. The Pledgor hereby acknowledges that (a) the
Pledgor has been advised by counsel in the negotiation, execution and delivery of this Agreement,
(b) the Secured Party has no fiduciary relationship to the Pledgor, the relationship being solely
that of debtor and creditor, and (c) no joint venture exists between the Pledgor and the Secured
Party.

     Section 17.   Continuing Security Interest; Assignments under Credit Agreement. This
Agreement shall create a continuing security interest in the Collateral and shall (a) subject to
release by the Secured Party as provided in Section 13.16 of the Credit Agreement and Section 11V
of the Note Purchase Agreements, remain in full force and effect until Termination Conditions (as
defined in and determined under the Credit Agreement) and conditions for termination under the Note
Purchase Agreements exist, (b) be binding upon the Pledgor, its successors and assigns, and (c)
inure, together with the rights and remedies of the Secured Party hereunder, to the benefit of, and
be enforceable by, the Secured Party and its successors and permitted transferees and assigns.
Without limiting the generality of the foregoing clause (c), the Secured Party may assign or
otherwise transfer all or any portion of its rights and obligations under the Senior Indebtedness
Documents to any other Person to the extent and in the manner provided in the Senior Indebtedness
Documents, and may similarly transfer all or any portion of its rights under this Agreement to such
Persons.

     Section 18.   Termination of Security Interest. At such time as Termination Conditions
(as defined in and determined under the Credit Agreement) and conditions for termination under the
Note Purchase Agreements exist, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Pledgor. Upon any such termination, the Secured Party will
return to the Pledgor such of the Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination. Any reversion or return of the Collateral
upon termination of this Agreement and any instruments of transfer or termination shall be at the
expense of the Pledgor and shall be without warranty by, or recourse on, the

Exh. E-11

 

Secured Party. As used in this Section, “Pledgor” includes any assigns of Pledgor,
any Person holding a subordinate security interest in any part of the Collateral or whoever else
may be lawfully entitled to any part of the Collateral.

     Section 19.   Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA; PROVIDED,
HOWEVER, THAT NO EFFECT SHALL BE GIVEN TO CONFLICT OF LAWS PRINCIPLES OF THE STATE OF MINNESOTA,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF MINNESOTA. Whenever possible, each provision of this
Agreement and any other statement, instrument or transaction contemplated hereby or relating hereto
shall be interpreted in such manner as to be effective and valid under such applicable law, but, if
any provision of this Agreement or any other statement, instrument or transaction contemplated
hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement or any
other statement, instrument or transaction contemplated hereby or relating hereto.

     Section 20.   Consent to Jurisdiction. AT THE OPTION OF THE SECURED PARTY, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR
ST. PAUL, MINNESOTA; AND THE PLEDGOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE PLEDGOR
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

     Section 21.   Waiver of Jury Trial. EACH OF THE PLEDGOR AND THE SECURED PARTY, BY ITS
ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Exh. E-12

 

     Section 22.   Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement 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 Agreement. Any party delivering an executed counterpart signature page to this
Agreement by facsimile or by e-mail transmission shall also deliver an original executed
counterpart of this Agreement, but the failure to deliver an original executed counterpart shall
not affect the validity, enforceability or binding effect of this Agreement.

     Section 23   General. All representations and warranties contained in this Agreement
or in any other agreement between the Pledgor and the Secured Party shall survive the execution,
delivery and performance of this Agreement and the creation and payment of the Secured Obligations.
The Pledgor waives notice of the acceptance of this Agreement by the Secured Party. Captions in
this Agreement are for reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Agreement.

     Section 24.   Collateral Agent. U.S. Bank National Association, in its capacity as
Secured Party, has been appointed collateral agent for the Creditors hereunder pursuant to the
Intercreditor Agreement. It is expressly understood and agreed by the parties to this Agreement
that any authority conferred upon the Secured Party hereunder is subject to the terms of the
delegation of authority made by the Creditors to the Secured Party pursuant to the Intercreditor
Agreement, and that the Secured Party has agreed to act (and any successor Secured Party shall act)
as such hereunder only on the express conditions contained in such Section 2. Any successor
Secured Party appointed pursuant to the Intercreditor Agreement shall be entitled to all the
rights, interests and benefits of the Secured Party hereunder. For the avoidance of doubt, each
Pledgor hereby acknowledges and agrees that it is not a third-party beneficiary of, nor has any
rights under, the Intercreditor Agreement. If the Secured Party or any Creditor shall violate the
terms of the Intercreditor Agreement, each Pledgor agrees, by its execution and delivery hereof,
that it shall not use such violation as a defense to any enforcement by any such party against such
Pledgor nor assert such violation as a counterclaim or basis for setoff or recoupment against any
such party. No such violation shall limit or impair the rights of the Secured Party or any
Creditor hereunder.

(signature page follows)

Exh. E-13

 

     IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first above written.

PLEDGOR:

	 	 	 	 	 
	 	GRACO INC.

 	 
	 	By:  	 	 
	 	 	James A. Graner 	 
	 	 	Chief Financial Officer and Treasurer 	 
	 

Address for Pledgor:

88 11th Avenue N.E.

Minneapolis, MN 55413

Attention: Timothy Stoffel, Corporate Tax Director

Telephone: (612) 623-___

Fax: (612) __-____

and

Attention: Karen Gallivan

Telephone: (612) 623-6604

Fax: (612) 623-6944

Accepted:

U.S. BANK NATIONAL ASSOCIATION,

Secured Party

	 	 	 	 	 
	 	 	 
	 
	 	By:  	 	 
	 	Title:  	 	 
	 	 	 	 
	 

Address for Secured Party:

800 Nicollet Mall

Mail Code BC-MN-H03P

Minneapolis, MN 55402

Fax Number: (612) 303-2265

Signature page to Pledge Agreement

 

 

SCHEDULE I

TO

PLEDGE AGREEMENT

GRACO INC.

PLEDGED INTERESTS

	 	 	 

	  Issuer:
	 
	Graco K.K.

	 
	 	 
	  Jurisdiction of Organization:
	 	Japan
	 
	 	 
	  Type of Interest:
	 	Common Stock

	 
	 	 
	  Percentage Ownership:
	 	65.00%
	 
	 	 
	  Certificate No(s).:
	 	2B-001 through 2B-009; 3A-001 through
	 
	 	3A-008; 4A-001 through 4A-0034
	 
	 	 
	  Number of Units/Shares:
	 	429,000
	 
	 	 
	  Issuer:
	 	Graco Korea Inc.
	 
	 	 
	  Jurisdiction of Organization:
	 	Korea
	 
	 	 
	  Type of Interest:
	 	Common Stock
	 
	 	 
	  Percentage Ownership:
	 	65.00%
	 
	 	 
	  Certificate No(s).:
	 	10,000-1 through 10,000-8; 1000-01; 100-1
	 
	 	through 100-5
	 
	 	 
	  Number of Units/Shares:
	 	81,500
	 
	 	 
	  Issuer:
	 	Graco N.V.
	 
	 	 
	  Jurisdiction of Organization:
	 	Belgium
	 
	 	 
	  Type of Interest:
	 	Uncertificated Common Stock
	 
	 	 
	  Percentage Ownership:
	 	65.00%
	 
	 	 
	  Certificate No(s).:
	 	N/A
	 
	 	 
	Number of Units/Shares:

	 	655,301

 

 

EXHIBIT F

Form of General Counsel’s Opinion

May 23, 2011

     To: The Agent and Banks party on the date hereof to the Credit Agreement described below

Ladies and Gentlemen:

     I am General Counsel of Graco Inc., a Minnesota corporation (the “Company” and,
together with each of its Domestic Subsidiaries who are Guarantors, collectively the “Loan
Parties” and individually, a “Loan Party”). I am delivering to you this opinion letter
upon which you may rely in connection with the Credit Agreement, dated as of the date hereof, among
the Company, the Borrowing Subsidiaries, as defined therein, the Banks, as defined therein, and
U.S. Bank National Association, as Agent (the “Credit Agreement”), the other Loan Documents
described therein which are being entered into by any of the Loan Parties concurrently therewith
(together with the Credit Agreement, the “Loan Documents”), and the transactions
contemplated thereby. Unless otherwise defined herein, capitalized terms used herein shall have
the respective meanings assigned to such terms in the Credit Agreement.

     I, as General Counsel for the Company, have made or caused to be made such factual inquiries,
and have examined or caused to be examined such questions of law, as I have considered necessary or
appropriate for purposes of this opinion letter. In connection with such examination, I have
reviewed originals or facsimile or electronic copies of the following documents, each, to the
extent applicable, dated as of the date hereof:

     (i)   the Credit Agreement;

     (ii)   the Notes;

     (iii)   the Guaranty;

     (iv)   the Pledge Agreement;

     (v)   the Intercreditor Agreement; and

     (vi)   the Fee Letters.

The documents referred to in clauses (i)   through (vi) above are hereinafter collectively called the
“Loan Documents” and individually called a “Loan Document”.

     Based upon and subject to the foregoing and the assumptions, qualifications and exceptions set
forth below, I advise you that, in my opinion:

     (1) Each of the Company, Graco Minnesota Inc. and Graco Holdings Inc. (together with Graco
Minnesota Inc., the “Minnesota Guarantors”) is a corporation validly existing and in

Exh. F-1

 

good standing under the laws of the State of Minnesota. Each of the other Loan Parties is a
corporation validly existing and in good standing under the laws of its jurisdiction of
incorporation.

     (2)   Each of the Company and each of the Minnesota Guarantors has full corporate power and
authority to own and operate its properties and assets, carry on its business as presently
conducted, and enter into and perform its obligations under the Loan Documents to which it is a
party.

     (3)   The execution and delivery by each of the Company and each of the Minnesota Guarantors of
each of the Loan Documents to which it is a party, the performance by each of the Company and each
of the Minnesota Guarantors of its obligations thereunder, and, in the case of the Company, the
borrowing by it under the Credit Agreement, have been duly authorized by all necessary corporate
action on the part of such Loan Party, and the Loan Documents to which either the Company or a
Minnesota Guarantor is a party have been duly executed and delivered on behalf of such Loan Party.

     (4)   There is no provision in any Loan Party’s Organizational Documents, or in any material
indenture, mortgage, contract or agreement to which any Loan Party is a party or by which it or its
properties may be bound and of which I have Actual Knowledge, or in any writ, order or decision of
any court or governmental instrumentality binding on any Loan Party and of which I have Actual
Knowledge, which would be contravened by the execution and delivery by such Loan Party of the Loan
Documents to which it is a party, nor do any of the foregoing prohibit such Loan Party’s
performance of any obligation of such Loan Party contained therein. There is no provision in any
statute, rule or regulation of the United States of America or the State of Minnesota applicable to
any Loan Party which would be contravened by the execution and delivery by such Loan Party of the
Loan Documents to which it is a party, nor do any of the foregoing prohibit such Loan Party’s
performance of any obligation of such Loan Party contained therein.

     (5)   To my Actual Knowledge, except as described in Schedule 7.6 to the Credit Agreement, there
are no actions, suits or proceedings pending or threatened against any Loan Party before any court
or arbitrator or by or before any administrative agency which are reasonably likely to constitute
an Adverse Event.

     (6)   The Company is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System).

ASSUMPTIONS, QUALIFICATIONS AND EXCEPTIONS

     In rendering the foregoing opinions, I wish to advise you of the following additional
assumptions, qualifications and exceptions to which such opinions are subject:

	 	A.	   	I have relied solely on certificates of public officials as to the opinions set
forth in paragraph (1) above regarding valid existence and good standing, and such
opinions are given as of the respective dates of such certificates. As to certain
relevant facts, I have relied on representations made by the Loan Parties in the

Exh. F-2

 

	 	 	 	Loan Documents, the assumptions set forth below, and certificates of officers of the
Loan Parties reasonably believed by me to be appropriate sources of information, as
to the accuracy of factual matters, in each case without independent verification
thereof or other investigation; provided, however, that I have no Actual Knowledge
concerning the factual matters upon which reliance is placed which would render such
reliance unreasonable. For purposes hereof, the term “Actual Knowledge”
means the conscious awareness by me at the time this opinion letter is delivered of
facts or other information without any other investigation.
	 
	 	B.	 	This opinion letter is limited to the laws of the State of Minnesota and the
federal laws of the United States of America.
	 
	 	C.	 	I have relied, without investigation, upon the following assumptions: (i)
natural persons who are involved on behalf of any Loan Party have sufficient legal
capacity to enter into and perform the transaction or to carry out their role in it;
(ii) each document submitted to me for review is accurate and complete, each such
document that is an original is authentic, each such document that is a copy conforms
to an authentic original, and all signatures on each such document are genuine; (iii)
there are no agreements or understandings among the parties, written or oral, and there
is no usage of trade or course of prior dealing among the parties that would, in either
case, define, supplement or qualify the terms of any of the Loan Documents; (iv) all
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies, constituting the law of any relevant jurisdiction are generally
available (i.e., in terms of access and distribution following publication or other
release) to lawyers practicing in such jurisdiction, and are in a format that makes
legal research reasonably feasible; (v) the constitutionality or validity of a relevant
statute, rule, regulation or agency action is not at issue unless a reported decision
in the relevant jurisdiction has specifically addressed but not resolved, or has
established, its unconstitutionality or invalidity; (vi) documents reviewed by me
(including the Loan Documents) would be enforced as written and would be interpreted in
accordance with the laws of the State of Minnesota; (vii) each Loan Party will obtain
all permits and governmental approvals required in the future, and will make all
filings and take all actions similarly required, relevant to subsequent consummation of
the transactions contemplated by the Loan Documents or performance of the Loan
Documents; (viii) no Loan Party will in the future take any discretionary action
(including a decision not to act) permitted under the Loan Documents that would result
in a violation of law or constitute a breach or default under any other agreement or
court order; and (ix) all parties to the transaction will act in accordance with, and
will refrain from taking any action that is forbidden by, the terms and conditions of
the Loan Documents.
	 
	 	D.	 	The opinions expressed above are limited to the specific issues addressed and
to laws existing on the date hereof. By rendering my opinions, I do not undertake to
advise you with respect to any other matter or of any change in such laws or in the
interpretation thereof which may occur after the date hereof.

Exh. F-3

 

	 	E.	 	I express no opinions as to the effect of any document or instrument that is
not itself a Loan Document, notwithstanding any provision in a Loan Document requiring
that any Loan Party perform or cause any other Person to perform its obligations under,
or stating that any action will be taken as provided in or in accordance with, or
otherwise incorporating by reference, such document or instrument.
	 
	 	F.	 	In rendering the opinions expressed herein, I have only considered the
applicability of statutes, rules and regulations that a lawyer in the State of
Minnesota exercising customary professional diligence would reasonably recognize as
being directly applicable to the Loan Parties, the transaction or both.
	 
	 	G.	 	The opinions expressed above do not address any of the following legal issues:
(i) securities laws and regulations, the rules and regulations of securities exchanges,
and laws and regulations relating to commodity (and other) futures and indices and
other similar instruments; (ii) except as provided in paragraph (6) above, Federal
Reserve Board margin regulations; (iii) pension and employee benefit laws and
regulations (e.g., ERISA); (iv) antitrust and unfair competition laws and regulations;
(v) laws and regulations concerning filing and notice requirements(e.g., the
Hart-Scott-Rodino Antitrust Improvements Act, as amended), other than requirements
applicable to charter-related documents such as certificates of merger; (vi) laws,
regulations, directives and executive orders restricting transactions with, or freezing
or otherwise controlling assets of, designated foreign persons or governing investments
by foreign persons in the United States (e.g., the Trading with the Enemy Act, as
amended, regulations of the Office of Foreign Asset Control of the United States
Treasury Department, and the Foreign Investment and National Security Act of 2007);
(vii) compliance with fiduciary duty and conflict of interest requirements; (viii) the
statutes and ordinances, administrative decisions and the rules and regulations of
counties, towns, municipalities and special political subdivisions (whether created or
enabled through legislative action at the federal, state or regional level) and
judicial decisions to the extent that they deal with the foregoing; (ix) fraudulent
transfer and fraudulent conveyance laws; (x) environmental laws and regulations; (xi)
land use and subdivision laws and regulations; (xii) tax laws and regulations; (xiii)
intellectual property laws and regulations; (xiv) racketeering laws and regulations
(e.g., RICO); (xv) health and safety laws and regulations (e.g., OSHA); (xvi) labor
laws and regulations; (xvii) laws, regulations and policies concerning national and
local emergency (e.g., the International Emergency Economic Powers Act, as amended),
possible judicial deference to acts of sovereign states, and criminal and civil
forfeiture laws; and (xviii) other statutes of general application to the extent they
provide for criminal prosecution (e.g., mail fraud and wire fraud statutes).

     This opinion letter may not be used or relied upon without my prior written consent (i) by any
Person who is not an addressee, except for Persons that become Banks or the Agent under the Credit
Agreement after the date hereof pursuant to the Credit Agreement (which Persons may rely on this
opinion letter to the same extent as the addressees hereof as if this opinion letter were

Exh. F-4

 

addressed and had been delivered to them on the date of this opinion letter, on the condition
and understanding that I assume no responsibility or obligation to consider the applicability or
correctness of this opinion letter to any Person other than the addressees), or (ii) for any
purpose whatsoever other than the transactions contemplated by the Loan Documents.

Very truly yours,

Karen P. Gallivan

Vice President, General Counsel and Secretary

Exh. F-5

 

EXHIBIT F

Form of Special Counsel’s Opinion

May 23, 2011

To: The Agent and Banks party on the date

hereof to the Credit Agreement described below

Ladies and Gentlemen:

     We have acted as special counsel for Graco Inc., a Minnesota corporation (the
“Company” and together, with its Domestic Subsidiaries who are Guarantors, collectively,
the “Loan Parties” and individually, a “Loan Party”), and we are delivering to you
this opinion letter upon which you may rely, in connection with the Credit Agreement, dated as of
the date hereof, among the Company, the Borrowing Subsidiaries, as defined therein, the Banks, as
defined therein, and U.S. Bank National Association, as Agent (the “Credit Agreement”), the
other Loan Documents described therein which are being entered into by any of the Loan Parties
concurrently therewith (together with the Credit Agreement, the “Loan Documents”), and the
transactions contemplated thereby. Unless otherwise defined herein, capitalized terms used herein
shall have the respective meanings assigned to such terms in the Credit Agreement.

     In so acting, we, as special counsel for the Company, have made such factual inquiries, and
have examined such questions of law, as we have considered necessary or appropriate for the
purposes of this opinion letter. In connection with such examination, we have reviewed originals
or facsimile or electronic copies of the following documents, each, to the extent applicable, dated
as of the date hereof:

     (i)   the Credit Agreement;

     (ii)   the Notes;

     (iii)   the Guaranty;

     (iv)   the Pledge Agreement;

     (v)   the Intercreditor Agreement; and

     (vi)   the Fee Letters.

The documents referred to in clauses (i) through (vi) above are hereinafter collectively called the
“Loan Documents” and individually called a “Loan Document”.

     Based upon and subject to the foregoing and the assumptions, qualifications and exceptions set
forth below, advise you that, in our opinion:

Exh. F-1

 

     (1)   Each of the Loan Documents to which any of the Loan Parties is a party constitutes a valid
and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with
its terms.

     (2)   Neither the execution and delivery by any Loan Party of the Loan Documents to which it is
a party, nor the performance by such Loan Party of any obligation of such Loan Party contained
therein, nor, in the case of the Company, the borrowing by it under the Credit Agreement, requires
such Loan Party to obtain the consent or approval of the government of the United States of America
or the State of Minnesota or any department, commission or agency thereof or make any filings under
any statute, rule or regulation of the United States of America or the State of Minnesota
applicable to such Loan Party except for consents which have been obtained or filings which have
been made.

     (3)   The Company is not an “investment company” or, to our Actual Knowledge, a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.

ASSUMPTIONS, QUALIFICATIONS AND EXCEPTIONS

     In rendering the foregoing opinions, we wish to advise you of the following additional
assumptions, qualifications and exceptions to which such opinions are subject:

	 	A.	 	As to certain relevant facts, we have relied on representations made by the
Loan Parties in the Loan Documents, the assumptions set forth below, and certificates
of officers of the Loan Parties reasonably believed by us to be appropriate sources of
information, as to the accuracy of factual matters, in each case without independent
verification thereof or other investigation; provided, however, that our Primary
Lawyers have no Actual Knowledge concerning the factual matters upon which reliance is
placed which would render such reliance unreasonable. For purposes hereof, the term
“Primary Lawyers” means lawyers in this firm who have given substantive legal
attention to representation of the Company in connection with this matter, and the term
“Actual Knowledge” means the conscious awareness by such Primary Lawyers at the
time this opinion letter is delivered of facts or other information without any other
investigation.
	 
	 	B.	 	This opinion letter is limited to the laws of the State of Minnesota and the
federal laws of the United States of America. We express no opinion as to whether, or
the extent to which, the laws of any particular jurisdiction apply to the subject
matter hereof, including without limitation the enforceability of the governing law
provisions contained in the Loan Documents. Without limiting the generality of the
foregoing, we do not opine with respect to any foreign law which may govern the
collateral subject to the Pledge Agreement, or as to the applicability of any such law.
	 
	 	C.	 	We have relied, without investigation, upon the following assumptions: (i)
natural persons who are involved on behalf of any Loan Party have sufficient legal
capacity to enter into and perform the transaction or to carry out their role in

Exh. F-2

 

	 	 	 	it; (ii) the Company holds the requisite title and rights to the collateral subject
to the Pledge Agreement, each party to a Loan Document (other than the Loan Parties)
has satisfied those legal requirements that are applicable to it to the extent
necessary to make such Loan Document enforceable against it; each party to a Loan
Document (other than the Loan Parties) has complied with all legal requirements
pertaining to its status (such as legal investment laws, foreign qualification
statutes and business activity reporting requirements, including without limitation,
to the extent applicable, the provisions of Minnesota Statute Section 290.371) as
such status relates to its rights to enforce such Loan Document against the Loan
Parties; (v) each document submitted to us for review is accurate and complete, each
such document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; (vi) there has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence; (vii) the conduct of the parties to the Loan
Documents has complied with any requirement of good faith, fair dealing and
conscionability; (viii) the Agent, the Banks and any representative acting for any
of them in connection with the Loan Documents have acted in good faith and without
notice of any defense against the enforcement of any rights created by, or adverse
claim to any property or security interest transferred or created as a part of, any
of the Loan Documents; (ix) there are no agreements or understandings among the
parties, written or oral, and there is no usage of trade or course of prior dealing
among the parties that would, in either case, define, supplement or qualify the
terms of any of the Loan Documents; (x) all statutes, judicial and administrative
decisions, and rules and regulations of governmental agencies, constituting the law
of any relevant jurisdiction are generally available (i.e., in terms of access and
distribution following publication or other release) to lawyers practicing in such
jurisdiction, and are in a format that makes legal research reasonably feasible;
(xi) the constitutionality or validity of a relevant statute, rule, regulation or
agency action is not at issue unless a reported decision in the relevant
jurisdiction has specifically addressed but not resolved, or has established, its
unconstitutionality or invalidity; (xii) documents reviewed by us (other than the
Loan Documents) would be enforced as written and would be interpreted in accordance
with the laws of the State of Minnesota; (xiii) each Loan Party will obtain all
permits and governmental approvals required in the future, and will make all filings
and take all actions similarly required, relevant to subsequent consummation of the
transactions contemplated by the Loan Documents or performance of the Loan
Documents; (xiv) no Loan Party will in the future take any discretionary action
(including a decision not to act) permitted under the Loan Documents that would
result in a violation of law or constitute a breach or default under any other
agreement or court order; and (xv) all parties to the transaction will act in
accordance with, and will refrain from taking any action that is forbidden by, the
terms and conditions of the Loan Documents.
	 
	 	D.	 	In rendering the opinions set forth herein, we have also assumed, without
investigation, that (i) the Loan Parties are duly organized, validly existing and in
good standing under the laws of their respective jurisdictions of organization; (ii)

Exh. F-3

 

	 	 	 	each of the Loan Parties has the power and authority to execute, deliver and perform
the Loan Documents to which such Loan Party is a party and to consummate the
transactions contemplated by such Loan Documents; (iii) the Loan Documents to which
any of the Loan Parties is a party have been duly authorized, executed and delivered
by such Loan Party; and (iv) except to the extent expressly opined to under
paragraph (2) above, the execution, delivery and performance by each of the Loan
Parties of the Loan Documents to which such Loan Party is a party and the
consummation by each of the Loan Parties of the transactions contemplated by the
Loan Documents to which such Loan Party is a party did not and will not (A) violate
or conflict with or require any consent under any statute, rule or regulation or any
judgment, order, writ, injunction or decree of any court or governmental authority,
or (B) violate or result in a breach of or constitute a default or require any
consent under any Organizational Documents of such Loan Party or any other
agreement, contract, instrument or obligation to which such Loan Party is a party or
by which such Loan Party or any of its assets is bound. We note that you have, to
the extent you deemed advisable, received opinions with respect to certain of the
foregoing matters from Karen P. Gallivan, Vice President, General Counsel and
Secretary of the Company.
	 
	 	E.	 	The opinions expressed above are limited to the specific issues addressed and
to laws and facts existing on the date hereof. By rendering our opinions, we do not
undertake to advise you with respect to any other matter or of any change in such laws
or in the interpretation thereof, or of any changes in facts, which may occur after the
date hereof.
	 
	 	F.	 	The opinion expressed in paragraph (3) above (i) is limited by the effect of
bankruptcy, reorganization, insolvency, moratorium, fraudulent transfer, fraudulent
conveyance, receivership and other similar laws now or hereafter in effect relating to
or affecting creditors’ rights generally, and by general principles of equity, and (ii)
is subject to the qualification that certain provisions of the Pledge Agreement may be
unenforceable in whole or in part, but the inclusion of such provisions does not affect
the validity as against the Company of the Pledge Agreement as a whole and the Pledge
Agreement contains provisions generally considered adequate for the practical
realization in respect of the Company of the principal benefits provided thereby,
subject to the other assumptions, qualifications and exceptions contained in this
opinion letter. Without limiting the generality of the foregoing, we have assumed that
each of the Agent and the Banks will exercise its rights and remedies under the Loan
Documents in good faith and under circumstances and in a manner which are commercially
reasonable.
	 
	 	G.	 	Without limiting any other qualifications set forth herein, the opinion
expressed in paragraph (1) above is subject to the effect of generally applicable laws
(including without limitation common law) that (i) provide for the enforcement of oral
waivers or modifications where a material change of position in reliance thereon has
occurred or provide that a course of performance may operate as a waiver; (ii) limit
the enforcement of provisions of a contract that purport to require waiver

Exh. F-4

 

	 	 	 	of the obligations of good faith, fair dealing, diligence and reasonableness; (iii)
limit the availability of a remedy under certain circumstances where another remedy
has been elected; (iv) limit the enforceability of provisions releasing, exculpating
or exempting a party from, or requiring indemnification of or contribution to a
party for, liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or unlawful
conduct; may, where less than all of a contract may be unenforceable, limit the
enforceability of the balance of the contract to circumstances in which the
unenforceable portion is not an essential part of the agreed exchange; (vi) govern
and afford judicial discretion regarding the determination of damages and
entitlement to attorneys’ fees and other costs; (vii) may permit a party who has
materially failed to render or offer performance required by a contract to cure that
failure unless either permitting a cure would unreasonably hinder the aggrieved
party from making substitute arrangements for performance or it is important under
the circumstances to the aggrieved party that performance occur by the date stated
in the contract; (viii) may require mitigation of damages; (ix) limit the right of a
creditor to use force or cause a breach of the peace in enforcing rights; (x) relate
to the sale or disposition of collateral subject to the Pledge Agreement or the
requirements of a commercially reasonable sale; (xi) provide a time limitation after
which a remedy may not be enforced (i.e., statutes of limitation), or (xii) may
limit the enforceability of provisions restricting competition, the solicitation of
customers or employees, the use or disclosure of information or other activities in
restraint of trade.
	 
	 	H.	 	We express no opinion as to the enforceability or effect in the Loan Documents
of (i) any provision that provides for the payment of premiums upon mandatory
prepayment or acceleration, or of liquidated damages (whether or not denominated as
such); (ii) any “usury savings” provision; (iii) any provision that authorizes
one party to act as attorney-in-fact for another party; (iv) any agreement to submit to
the jurisdiction of any particular court or other governmental authority (either as to
personal jurisdiction or subject matter jurisdiction), any provision restricting access
to courts (including without limitation agreements to arbitrate disputes), any waivers
of the right to jury trial, any waivers of service of process requirements which would
otherwise be applicable, any provision relating to evidentiary standards, any agreement
that a judgment rendered by a court in one jurisdiction may be enforced in another
jurisdiction or any provision otherwise affecting the jurisdiction or venue of courts;
(v) any waiver of, or agreement or consent that has the effect of waiving, legal or
equitable defenses, rights to damages, rights to counterclaim or set off, the
application of statutes of limitations, rights to notice, or the benefits of any other
constitutional, statutory or regulatory rights (unless and to the extent the
constitution, statute or regulation explicitly allows waiver); any provision that
provides that any Person purchasing a participation from a Bank may exercise set-off or
similar rights with respect to such participation, or that any Person other than a
Bank, including any affiliate of a Bank, may exercise set-off or similar rights with
respect to the Obligations due to such Bank, or that the Agent or any Bank may exercise
set-off or similar rights other than in accordance with

Exh. F-5

 

	 	 	 	applicable law; or (vii) any provision that purports to impose increased interest
rates or late payment charges upon overdraft, delinquency in payment or default, or
to provide for the compounding of interest or the payment of interest on interest.
	 
	 	I.	 	We express no opinions as to the enforceability or effect of any document or
instrument that is not itself a Loan Document, notwithstanding any provision in a Loan
Document requiring that the Loan Parties perform or cause any other Person to perform
its obligations under, or stating that any action will be taken as provided in or in
accordance with, or otherwise incorporating by reference, such document or instrument.
	 
	 	J.	 	With respect to our opinion in paragraph (1) above, we hereby advise you that
(i) in the absence of an effective waiver or consent, a guarantor may be discharged
from its guaranty to the extent the guaranteed obligations are modified or other action
or inaction by a creditor increases the scope of the guarantor’s risk or otherwise
detrimentally affects the guarantor’s interests (such as by impairing the value of
collateral securing the guaranteed obligations, negligently administering the
guaranteed obligations, or releasing the borrower or a co-guarantor of the guaranteed
obligations); and (ii) a guarantor may have the right to revoke a guaranty with respect
to obligations incurred after the revocation, notwithstanding the absence of an express
right of revocation in the guaranty.
	 
	 	K.	 	In rendering the opinions expressed herein, we have only considered the
applicability of statutes, rules and regulations that a lawyer in the relevant
jurisdiction exercising customary professional diligence would reasonably recognize as
being directly applicable to the Loan Parties, the transaction or both.
	 
	 	L.	 	The opinions expressed above do not address any of the following legal issues:
(i) securities laws and regulations, the rules and regulations of securities exchanges,
and laws and regulations relating to commodity (and other) futures and indices and
other similar instruments; (ii) Federal Reserve Board margin regulations; (iii) pension
and employee benefit laws and regulations (e.g., ERISA); (iv) antitrust and unfair
competition laws and regulations; (v) laws and regulations concerning filing and notice
requirements (e.g. ̧ the Hart-Scott-Rodino Antitrust Improvements Act, as amended) other
than requirements applicable to charter-related documents such as certificates of
merger; (vi) laws, regulations, directives and executive orders restricting
transactions with, or freezing or otherwise controlling assets of, designated foreign
persons or governing investments by foreign persons in the United States (e.g., the
Trading with the Enemy Act, as amended, regulations of the Office of Foreign Asset
Control of the United States Treasury Department, and the Foreign Investment and
National Security Act of 2007); (vii) compliance with fiduciary duty and conflict of
interest requirements; (viii) the statutes and ordinances, administrative decisions and
the rules and regulations of counties, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the federal,
state or regional level) and judicial decisions to the extent that they deal with the

Exh. F-6

 

	 	 	 	foregoing; (ix) fraudulent transfer and fraudulent conveyance laws; (x)
environmental laws and regulations; (xi) land use and subdivision laws and
regulations; (xii) tax laws and regulations; (xiii) intellectual property laws and
regulations; (xiv) racketeering laws and regulations (e.g., RICO); (xv) health and
safety laws and regulations (e.g., OSHA); (xvi) labor laws and regulations; (xvii)
laws, regulations and policies concerning national and local emergency (e.g., the
International Emergency Economic Powers Act, as amended), possible judicial
deference to acts of sovereign states, and criminal and civil forfeiture laws; and
(xviii) other statutes of general application to the extent they provide for
criminal prosecution (e.g., mail fraud and wire fraud statutes).
	 
	 	M.	 	We express no opinion as to the attachment, perfection or relative priority of
any security interest created by the Pledge Agreement.

     This opinion letter may not be used or relied upon without our prior written consent (i) by
any Person who is not an addressee, except for Persons that become Banks or the Agent under the
Credit Agreement after the date hereof pursuant to the Credit Agreement (which Persons may rely on
this opinion letter to the same extent as the addressees hereof as if this opinion letter were
addressed and had been delivered to them on the date of this opinion letter, on the condition and
understanding that we assume no responsibility or obligation to consider the applicability or
correctness of this opinion letter to any Person other than the addressees), or (ii) for any
purpose whatsoever other than the transactions contemplated by the Loan Documents.

Very truly yours,

FAEGRE & BENSON LLP

Exh. F-7

 

Exhibit G

Form of Assignment Agreement

     ASSIGNMENT AGREEMENT, dated as of
          , 20_, among [      ] (the
“Transferor Bank”), [    ] (the “Purchasing Bank”), Graco Inc., a Delaware
corporation (the “Company”) and U.S. Bank National Association, as Agent for the Banks
under the Credit Agreement described below (in such capacity, the “Agent”).

WITNESSETH

     WHEREAS, this Assignment Agreement is being executed and delivered in accordance with Section
13.3 of the Credit Agreement, dated as of May 23, 2011, among the Company, the Borrowing
Subsidiaries from time to time party thereto, the Transferor Bank and the other Banks party thereto
and the Agent (as from time to time amended, supplemented or otherwise modified in accordance with
the terms thereof, the “Credit Agreement” terms defined therein being used herein as
therein defined);

     WHEREAS, the Purchasing Bank wishes to become a Bank party to the Credit Agreement; and

     WHEREAS, the Transferor Bank is selling and assigning to the Purchasing Bank rights,
obligations and commitments under the Credit Agreement;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1.   Upon the execution and delivery of this Assignment Agreement by the Purchasing Bank, the
Transferor Bank, the Agent and the Company, the Purchasing Bank shall be a Bank party to the Credit
Agreement for all purposes thereof.

     2.   Effective on [    ] (the “Effective Date”), the Transferor Bank hereby sells and
assigns to the Purchasing Bank      % (the “Assigned Percentage”) of its Commitment
and of the principal balance of its Loans outstanding under the Credit Agreement. Together with
the Assigned Percentage, the Transferor Bank hereby assigns to the Purchasing Bank the Transferor
Bank’s interest as a Bank in the Loan Documents (the Assigned Percentage and such interest in the
Loan Documents being hereinafter referred to as the “Assigned Interest”). The Purchasing
Bank hereby assumes the Assigned Interest and the Transferor Bank’s related obligations under the
Loan Documents, including without limitation the Transferor Bank’s participation in Letters of
Credit and all obligations of the Transferor Bank to fund, refund or purchase participations in
Revolving Loans and Swing Line Loans to the extent provided in the Credit Agreement.

     3.   On the Effective Date, the Purchasing Bank shall pay to the Transferor Bank a purchase
price (the “Purchase Price”) equal to the outstanding principal amount of the Loans
included in the Assigned Interest as of the day preceding the Effective Date. The Transferor Bank
acknowledges receipt from the Purchasing Bank of an amount equal to the Purchase Price.

     4.   All interest and Commitment Fees and Letter of Credit Fees accrued on the Assigned Interest
for the billing period in which the Effective Date falls shall be paid to the

Exh. G-1

 

Agent as provided in the Credit Agreement, and distributed by the Agent (a) with respect to
amounts accrued before the Effective Date, to the Transferor Bank and (b) with respect to amounts
accrued on or after the Effective Date, to the Purchasing Bank. The Transferor Bank has made
arrangements with the Purchasing Bank with respect to the portion, if any, to be paid by the
Transferor Bank to the Purchasing Bank of other fees heretofore received by the Transferor Bank
pursuant to the Credit Agreement.

     5.   Subject to the provisions of paragraph 4 above, from and after the Effective Date,
principal, interest, fees and other amounts that would otherwise be payable to or for the account
of the Transferor Bank pursuant to the Credit Agreement and the other Loan Documents in respect of
the Assigned Interest shall, instead, be payable to or for the account of the Purchasing Bank
pursuant to the Credit Agreement. Each time the Banks are asked, from and after the Effective
Date, to make Loans or otherwise extend credit under the Loan Documents, the Agent shall advise the
Purchasing Bank, as provided in the Credit Agreement, of the request, and the Purchasing Bank shall
be solely responsible for making a Loan or otherwise extending credit in accordance with its
Assigned Interest.

     6.   Concurrently with the execution and delivery hereof, (i) as and to the extent provided in
the Credit Agreement, the Agent shall prepare and distribute to the Company and the Banks a revised
schedule of the Commitments, Loans and Percentages of each Bank, after giving effect to the
assignment of the Assigned Interest, and (iii) the Transferor Bank shall pay to the Agent a
processing and recordation fee of $3,500.

     7.   The Transferor Bank (a) represents and warrants to the Purchasing Bank that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (b) represents and warrants to the Purchasing Bank that the copies
of the Loan Documents and the related agreements, certificates, opinion and letters previously
delivered to the Purchasing Bank are true and correct copies of the Loan Documents and related
agreements, certificates, opinion and letters executed by and/or delivered in connection with the
closing of the credit facility contemplated by the Credit Agreement; (c) makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any of the Loan Documents or any
other instrument or document furnished pursuant thereto; and (d) makes no representation or
warranty and assumes no responsibility with respect to the financial condition of the Company, or
the performance or observance by the Company or any other Person of any of their respective
obligations under the Loan Documents or any other instrument or document furnished pursuant
thereto.

     8.   The Purchasing Bank (a) confirms to the Transferor Bank and the Agent that it has received
a copy of the Loan Documents together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Agreement; (b)
acknowledges that it has, independently and without reliance upon the Transferor Bank, the Agent or
any Bank and instead in reliance upon its own review of such documents and information as the
Purchasing Bank deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and agrees that it will, independently and without reliance upon the Transferor Bank, the
Agent or any Bank, and based on such documents and information

Exh. G-2

 

as the Purchasing Bank shall deem appropriate at the time, continue to make its own credit
decision in taking or not taking action under the Loan Documents; (c) agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by the Purchasing Bank as a Bank under the Credit Agreement, including,
without limitation, the provisions of Section 13.15 of the Credit Agreement relating to
confidentiality of information; and (d) represents and warrants to the Company and the Agent that
it is either (i) a corporation organized under the laws of the United States or any State thereof
or (ii) is entitled to complete exemption from United States withholding tax imposed on or with
respect to any payments, including fees, to be made pursuant to the Credit Agreement (x) under an
applicable provision of a tax convention to which the United States is a party or (y) because it is
acting through a branch, agency or office in the United States and any payment to be received by it
under the Credit Agreement is effectively connected with a trade or business in the United States,
and it has complied with the provisions of Section 13.3(e) of the Credit Agreement. The Purchasing
Bank agrees that it shall be subject to the terms of the Intercreditor Agreement.

     9.   The Transferor Bank and the Purchasing Bank each individually represents and warrants that
(a) it is validly existing and in good standing and has all requisite power to enter into this
Agreement and to carry out the provisions hereof and has duly authorized the execution and delivery
of this Agreement; (b) the execution and delivery of this Agreement and the performance of the
obligations hereunder do not violate any provision of law, any order, rule or regulation of any
court or governmental agency or its charter, articles of incorporation or bylaws or constitute a
default under any agreement or other instrument to which it is a party or by which it is bound; and
(c) it has duly executed and delivered this Agreement, and this Agreement constitutes a legal,
valid and binding obligation enforceable against it in accordance with its terms.

     10.   Each of the parties to this Assignment Agreement agrees that at any time and from time to
time upon the written request of any other party, it will execute and deliver such further
documents and do such further acts and things as such other party may reasonably request in order
to effect the purposes of this Assignment Agreement.

     11.   The address for notices to the Purchasing Bank as well as administrative information with
respect to the Purchasing Bank is as set out below:

     THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF MINNESOTA.

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by
their respective duly authorized officers as of the date first set forth above.

Exh. G-3

 

[     ],

Transferor Bank

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

[     ],

Purchasing Bank

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

U.S. BANK NATIONAL ASSOCIATION

as Agent

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

CONSENTED AND ACKNOWLEDGED

GRACO INC.

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 

Information on Purchasing Bank:

Address:

[     ],

Attention: [     ]

Fax: [     ]

Exh. G-4

 

Exhibit H

Form of Intercreditor Agreement

Attached.

Exh. H-1

 

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

          This Intercreditor and Collateral Agency Agreement (this “Agreement”), dated as of May 23,
2011, is entered into by and among U.S. Bank National Association, as the administrative agent
under the below-defined Bank Credit Agreement (the “Bank Agent”), U.S. Bank National Association,
as the collateral agent appointed pursuant to the terms and conditions hereof (the “Collateral
Agent”), 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 (each, together with its
successors and permitted assigns, and any other holder of any Senior Notes, a “Noteholder”, and
collectively the “Noteholders”).

WITNESSETH:

          WHEREAS, Graco Inc. (the “Company”), the institutions from time to time party thereto as
lenders (the “Banks”), and the Bank Agent are parties to a Credit Agreement dated as of May 23,
2011 (as the same may be amended, restated, supplemented or otherwise modified from time to time,
the “Bank Credit Agreement”);

          WHEREAS, the Company and the Noteholders named in the Purchaser Schedule attached thereto are
party to that certain Note Agreement, dated as of March 11, 2011 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “March 11, 2011 Note Purchase
Agreement”), pursuant to which the Company has issued or expects to issue its 4.00% Series A Senior
Notes due March 11, 2018 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Series A Notes”), 5.01% Series B Senior Notes due March 11, 2023 (as the
same may be amended, restated, supplemented or otherwise modified from time to time, the “Series B
Notes”), 4.88% Series C Senior Notes due January 26, 2023 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Series C Notes”) and 5.35% Series D
Senior Notes due July 26, 2026 (as the case may be amended, restated, supplemented or otherwise
modified form time to time, the “Series D Notes”); and

          WHEREAS, it is contemplated that the Company will enter into a Note Agreement (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the “Additional Note
Purchase Agreement”; and, together with the March 2011 Note Agreement, the “Note Purchase
Agreements”) with one or more affiliates of The Prudential Insurance Company of America under which
the Company will issue one or more additional series of its senior notes (each as amended,
restated, supplemented or otherwise modified from time to time, the “Additional Senior Notes” and,
together with the Series A Notes, the Series B Notes, the Series C Notes and the Series D Notes,
collectively, the “Senior Notes”) in the aggregate principal amount of $75,000,000 (the Senior
Notes, together with the Bank Credit Agreement, the Note Purchase Agreements and the agreements,
documents and instruments delivered in connection with any or all of the foregoing (as each may be
amended, restated, supplemented or otherwise modified from time to time), the “Senior Indebtedness
Documents”);

Exh. H-2

 

          WHEREAS, the Banks and the Noteholders (together with the Bank Agent, the “Creditors”) have
provided the Company with various loans, extensions of credit and financial accommodations under
the Senior Indebtedness Documents (collectively, the “Senior Indebtedness”);

          WHEREAS, in order to make and continue making and extending such loans, extensions of credit
and financial accommodations, the Creditors have required that the Company and certain of its
subsidiaries (collectively, the “Grantors”) guaranty and/or secure the Obligations (as hereafter
defined);

          WHEREAS, the Creditors wish to appoint the Collateral Agent to hold all security interests and
liens granted by the Grantors in respect of the Obligations; and

          WHEREAS, the Creditors wish to agree upon certain matters in respect of the Senior
Indebtedness, including, without limitation, payment priorities and the application of Collateral
(as defined below) proceeds;

          NOW, THEREFORE, for the above reasons, in consideration of the mutual covenants herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

          1. Definitions.

          For the purposes of this Agreement, the following terms shall have the meanings specified with
respect thereto below. Any plural term that is used herein in the singular shall be taken to mean
each entity or item of the defined class and any singular term that is used herein in the plural
shall be taken to mean all of the entities or items of the defined class, collectively.

          “Affiliate” of any Person shall mean any other Person which directly or indirectly controls,
is controlled by or is under common control with such first Person. A Person shall be deemed to
control a corporation or other entity if such Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such corporation or other
entity, whether through the ownership of voting securities, by contract or otherwise.

          “Collateral” shall mean all property and assets, and interests in property and assets, upon or
in which the Grantors have granted a lien or security interest to the Collateral Agent to secure
all or any part of the Obligations.

          “Collateral Agent Expenses” shall mean, without limitation, all costs and expenses incurred by
the Collateral Agent in connection with the performance of its duties under this Agreement,
including the realization upon or protection of the Collateral or enforcing or defending any lien
upon or security interest in the Collateral or any other action taken in accordance with the
provisions of this Agreement, expenses incurred for legal counsel (including reasonable allocated
costs of staff counsel) in connection with the foregoing, and any other costs, expenses or
liabilities incurred by the Collateral Agent for which the Collateral Agent is entitled to be
reimbursed or indemnified by any Grantor pursuant to this Agreement or any Collateral Document or
by the Creditors pursuant to this Agreement.

Exh. H-3

 

          “Collateral Documents” shall mean all agreements, documents and instruments (including,
without limitation, all pledge agreements, security agreements, mortgages, collateral assignments,
financing statements, and other perfection documents) entered into, delivered or authorized from
time to time by any Grantor in favor of the Collateral Agent in respect of the Obligations or
otherwise entered into, delivered or authorized from time to time by a Grantor to secure all or any
part of the Obligations, as each may be amended, restated, supplemented or otherwise modified from
time to time.

          “Enforcement” shall mean:

          (a)   for the Bank Agent or any Bank to make demand for payment of or accelerate the time for
payment prior to the scheduled payment date of any loan, extension of credit or other financial
accommodation under the Bank Credit Agreement or any agreement, document or instrument delivered in
connection therewith or to call for funding of cash collateral for any Letter of Credit prior to
being presented with a draft drawn thereunder (or in the event the draft is a time draft, prior to
its due date), in each case on account of an “Event of Default” under and as defined in the Bank
Credit Agreement;

          (b)   for any Noteholder to make demand for payment of or accelerate the time for payment prior
to the scheduled payment date of any loan, extension of credit or other financial accommodation
under either Note Purchase Agreement, the Senior Notes, or the agreements, documents and
instruments delivered in connection therewith;

          (c)   for the Bank Agent or any Bank to terminate its commitment to extend loans or other
financial accommodations, including issuances of Letters of Credit, to the Company or any other
Grantor prior to the final scheduled payment date for all Obligations thereunder or prior to the
scheduled termination date for such commitment (as such scheduled termination date is in effect on
the date hereof or, if later, such date to which any such scheduled termination date may hereafter
be extended) , in each case on account of an “Event of Default” under and as defined in the Bank
Credit Agreement;

          (d)   for the Bank Agent or any Bank to commence judicial enforcement of any rights or remedies
under or with respect to the Obligations, the Bank Credit Agreement or any agreement, document or
instrument delivered in connection therewith, or to set off against any balances held by the Bank
Agent or such Bank for the account of any Grantor or any other property at any time held or owing
by the Bank Agent or such Bank to or for the credit or account of any Grantor;

          (e)   for any Noteholder to commence judicial enforcement of any rights or remedies under or
with respect to the Obligations, either Note Purchase Agreement, the Senior Notes, or any
agreement, document or instrument delivered in connection therewith, or, if applicable, to set off
against or appropriate any balances held by such Noteholder for the account of any Grantor or any
other property at any time held or owing by such Noteholder to or for the credit or account of any
Grantor;

          (f)   for the Collateral Agent to commence the judicial enforcement of any rights or remedies
under any Collateral Document (other than an action solely for the purpose of

Exh. H-4

 

establishing or defending the lien or security interest intended to be created by any
Collateral Document upon or in any Collateral as against or from claims of third parties on or in
such Collateral), to setoff against any balances held by it for the account of any Grantor or any
other property at any time held or owing by it to or for the credit or for the account of any
Grantor or to otherwise take any action to realize upon the Collateral (provided, however, that
“Enforcement” shall not include the Bank Agent’s charging of the Borrower’s deposit account for
non-accelerated amounts due in the ordinary course pursuant to the Credit Agreement); or

          (g)   the commencement by, against or with respect to any Grantor of any proceeding under any
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law or for the appointment of a receiver for any Grantor or its assets.

          “Event of Default” shall mean (i) an “Event of Default” under and as defined in the Bank
Credit Agreement, (ii) an “Event of Default” under and as defined in either Note Purchase Agreement
or the Senior Notes, or (iii) any event, occurrence or action (or any failure to take any of the
foregoing) that permits or automatically results in the acceleration of the repayment of any amount
of Obligations under a Senior Indebtedness Document.

          “Insolvent Entity” shall mean any entity that has (i) become or is insolvent or has a parent
company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken
any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it,
or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.

          “L/C Interests” shall mean, with respect to any Bank, such Bank’s direct or participation
interests in all unpaid reimbursement obligations with respect to Letters of Credit, and such
Bank’s direct obligations or risk participations with respect to undrawn amounts of all outstanding
Letters of Credit; provided, that the undrawn amounts of outstanding Letters of Credit
shall be considered to have been reduced to the extent of any amount on deposit with the Collateral
Agent at any time as provided in Section 5(b) hereof.

          “Letters of Credit” shall mean all letters of credit issued under the Bank Credit Agreement.

          “Obligation Share” shall mean, with respect to any Creditor at any time, a fraction (expressed
as a percentage), the numerator of which is the amount of Obligations owing to such Creditor at
such time, and the denominator of which is the aggregate amount of all Obligations owing to all of
the Creditors at such time.

          “Obligations” shall mean each and every monetary obligation owed by a Grantor to the Creditors
and the Collateral Agent under the Senior Indebtedness Documents, including, without limitation,
(1) the outstanding principal amount of, accrued and unpaid interest on, and any unpaid
Yield-Maintenance Amount or other breakage or prepayment indemnification due

Exh. H-5

 

with respect to Senior Indebtedness, (2) any unpaid reimbursement obligations with respect to
any Letters of Credit, (3) any undrawn amounts of any outstanding Letters of Credit, and (4) any
other unpaid amounts including amounts in respect of hedging obligations, foreign exchange
obligations and treasury and cash management obligations permitted under the Senior Indebtedness
Documents, and fees, expenses, indemnifications, and reimbursements due from the Grantors under any
of the Senior Indebtedness Documents; provided that the undrawn amounts of any outstanding
Letters of Credit shall be considered to have been reduced to the extent of any amount on deposit
with the Collateral Agent at any time as provided in Section 5(b) hereof. The term “Obligations”
shall include all of the foregoing indebtedness, liabilities and obligations whether or not allowed
as a claim in any bankruptcy, insolvency, receivership or similar proceeding.

          “Person” shall mean any individual, corporation, partnership, limited liability company, trust
or other entity.

          “Principal Exposure” shall mean, with respect to any Creditor at any time, (i) if such
Creditor is a Bank, the aggregate amount of such Bank’s commitments to extend revolving credit
(including letters of credit) under the Bank Credit Agreement plus, to the extent any term loans
have been extended, the principal amount of such term loans, or, if the Banks shall then have
terminated their commitments to extend credit under the Bank Credit Agreement, the sum of (x) the
outstanding principal amount of all of such Bank’s loans under the Bank Credit Agreement and (y)
the outstanding face amount and/or principal amount of such Bank’s L/C Interests at such time, and
(ii) if such Creditor is a Noteholder, the outstanding principal amount of such Creditor’s Senior
Notes at such time.

          “Pro Rata Share” shall mean, with respect to any Creditor at any time, a fraction, expressed
as a percentage, the numerator of which is the amount of such Creditor’s Principal Exposure at such
time, and the denominator of which is the aggregate amount of Principal Exposure of all of the
Creditors of the same class (i.e. Banks or Noteholders, as applicable) at such time.

          “Pro Rata Expenses Share” shall mean, with respect to any Creditor at any time, a fraction,
expressed as a percentage, the numerator of which is the amount of such Creditor’s Principal
Exposure at such time, and the denominator of which is the aggregate amount of Principal Exposure
of all Creditors at such time.

          “Qualified Creditor” shall mean any Creditor which is not an Affiliate of any Grantor.

          “Required Creditors” shall mean, at any time, (i) Banks whose Pro Rata Shares represent
greater than 50% of the aggregate Principal Exposure of all of the Banks and (ii) Noteholders whose
Pro Rata Shares represent greater than 50% of the aggregate Principal Exposure of all of the
Noteholders; provided, however, that only Pro Rata Shares of Senior Indebtedness
held by Qualified Creditors shall be included in this determination; provided,
further, that if at any time Obligations owing to Banks or Noteholders, as the case may be,
are less than both (A) $1,000,000, and (B) 10% of the aggregate Obligations (the Banks or the
Noteholders, as the case may be, a “Deminimis Group"), then the Required Creditors shall be

Exh. H-6

 

determined without regard to clause (i) if the Deminimis Group is the Banks, and clause (ii)
if the Deminimis Group is the Noteholders.

          “Specified Provisions” shall mean any of the terms relating to (i) amounts or timing of
payment of interest or fees, (ii) terms relating to required payments or prepayments of any
Obligations, (iii) financial and negative covenants set forth in the Senior Indebtedness Documents
(including paragraph 6 of either Note Purchase Agreement and Article IX of the Bank Credit
Agreement), (iv) covenants relating to the operations of the Company or its subsidiaries, (v)
events of default, and (vi) definitions as used in any of the foregoing.

          “Yield-Maintenance Amount” shall mean the “Yield-Maintenance Amount” as defined in either Note
Purchase Agreement.

          2.   Appointment of Collateral Agent.

          (a)   Appointment of Collateral Agent. Subject in all respects to the terms and
provisions of this Agreement, the Bank Agent, for itself and on behalf of the Banks, and the
Noteholders hereby appoint U.S. Bank National Association to act as collateral agent for the
benefit of the Creditors (the “Collateral Agent”) with respect to the liens upon and the security
interests in the Collateral and the rights and remedies granted under and pursuant to the
Collateral Documents, and U.S. Bank National Association hereby accepts such appointment and agrees
to act as such collateral agent. The agency created by this Section 2 shall in no way impair or
affect any of the rights and powers of, or impart any duties or obligations upon, U.S. Bank
National Association in its individual capacity as a lender or creditor under any Senior
Indebtedness Document. To the extent legally necessary to enable the Collateral Agent to enforce
or otherwise foreclose and realize upon any of the liens or security interests in the Collateral in
any legal proceeding which the Collateral Agent either commences or joins as a party in accordance
with the terms of this Agreement, each of the Creditors agrees to join as a party in such
proceeding and take such action therein concurrently to enforce and obtain a judgment for the
payment of the Obligations held by it.

          (b)    Duties of Collateral Agent. Subject to the Collateral Agent having been directed
to take such action in accordance with the terms of this Agreement, each Creditor hereby
irrevocably authorizes the Collateral Agent to take such action on its behalf under the provisions
of the Collateral Documents and any other instruments, documents and agreements referred to in the
Collateral Documents and to exercise such powers under the Collateral Documents as are specifically
delegated to the Collateral Agent by the terms of the Collateral Documents and such other powers as
are reasonably incidental thereto. Subject to the provisions of Section 11 of this Agreement, the
Collateral Agent is hereby irrevocably authorized to take all actions on behalf of the Creditors to
enforce the rights and remedies of the Collateral Agent and the Creditors provided for in the
Collateral Documents or by applicable law with respect to the liens upon and security interests in
the Collateral granted to secure the Obligations provided, however, that,
notwithstanding any provision to the contrary in any Collateral Documents, (i) the Collateral Agent
shall act solely at and in accordance with the written direction of the Required Creditors, (ii)
the Collateral Agent shall not, without the written consent of all of the Qualified Creditors,
release or terminate by affirmative action or consent any lien upon or security interest in any
Collateral granted under any Collateral Documents (except (x) upon (1) dispositions of

Exh. H-7

 

Collateral by a Grantor and (2) removal of the Material Subsidiary (as defined in the Bank
Credit Agreement) designation of a Subsidiary (as defined in the Bank Credit Agreement), in each
case as permitted in accordance with the terms of all of the Senior Indebtedness Documents and
prior to the occurrence of an Event of Default, (y) upon disposition of such Collateral after an
Event of Default pursuant to direction given under clause (i) of this Section 2(b) and (x) to the
extent authorized under the provisions of the last sentence of Section 12.1 of the Bank Credit
Agreement, paragraph 11V of the March 11, 2011 Purchase Note Agreement and the comparable provision
of the Additional Note Purchase Agreement), and (iii) the Collateral Agent shall not accept any
Obligations in whole or partial consideration for the disposition of any Collateral without the
written consent of all of the Qualified Creditors. The Collateral Agent agrees to make such
demands and give such notices under the Collateral Documents as may be requested by, and to take
such action to enforce the Collateral Documents and to foreclose upon, collect and dispose of the
Collateral or of the Collateral Documents as may be directed by, the Required Creditors;
provided, however, that the Collateral Agent shall not be required to take any
action that is contrary to law or the terms of the Collateral Documents or this Agreement. Once a
direction to take any action has been given by the Required Creditors to the Collateral Agent, and
subject to any other directions which may be given from time to time by the Required Creditors,
decisions regarding the manner in which any such action is to be implemented and conducted (with
the exception of any decision to settle, compromise or dismiss any legal proceeding, with or
without prejudice) shall be made by the Collateral Agent, with the assistance and upon the advice
of its counsel. Notwithstanding the provisions of the preceding sentence, any decision to settle,
compromise or dismiss any legal proceeding, with or without prejudice, which implements, approves
or results in or has the effect of causing any release, change or occurrence, where such release,
change or occurrence otherwise would require unanimous approval of all of the Qualified Creditors
pursuant to the terms of this Agreement, also shall require the unanimous approval of all of the
Qualified Creditors.

          (c)   Requesting Instructions. The Collateral Agent may at any time request directions
from the Creditors as to any course of action or other matter relating to the performance of its
duties under this Agreement and the Collateral Documents, and the Creditors shall respond to such
request in a reasonably prompt manner.

          (d)   Emergency Actions. If the Collateral Agent has asked the Required Creditors for
instructions following the receipt of any notice of an Event of Default and if the Required
Creditors have not responded to such request within 30 days, the Collateral Agent shall be
authorized to take such actions with regard to such Event of Default which the Collateral Agent, in
good faith, believes to be reasonably required to protect the Collateral from damage or
destruction; provided, however, that once instructions have been received from the
Required Creditors, the actions of the Collateral Agent shall be governed thereby and the
Collateral Agent shall not take any further action which would be contrary to such instructions.

          (e)   Collateral Document Amendments. An amendment, supplement, modification,
restatement or waiver of any provision of any Collateral Document, any consent to any departure by
any Grantor from any such provision, or the execution or acceptance by the Collateral Agent of any
Collateral Document not in effect on the date of this Agreement shall be effective if, and only if,
consented to in writing by the Required Creditors (with the understanding that the Collateral
Documents that are identified in Exhibit A hereto are hereby

Exh. H-8

 

approved by the Required Creditors); provided, however, that, (i) no such
amendment, supplement, modification, restatement, waiver, consent or such Collateral Document not
in effect on the date of this Agreement which imposes any additional responsibilities upon the
Collateral Agent shall be effective without the written consent of the Collateral Agent, and (ii)
no such amendment, supplement, modification, waiver or consent shall release any Collateral from
the lien or security interest created by any Collateral Document not subject to the exception in
Section 2(b)(ii) of this Agreement or narrow the scope of the property or assets in which a lien or
security interest is granted pursuant to any Collateral Document or change the description of the
obligations secured thereby without the written consent of all Qualified Creditors.

          (f)   Administrative Actions. The Collateral Agent shall have the right to take such
actions under this Agreement and under the Collateral Documents, not inconsistent with the
instructions of the Required Creditors or the terms of the Collateral Documents and this Agreement,
as the Collateral Agent deems necessary or appropriate to perfect or continue the perfection of the
liens on the Collateral for the benefit of the Creditors.

          (g)   Collateral Agent Acting Through Others. The Collateral Agent may perform any of
its duties under this Agreement and the Collateral Documents by or through attorneys (which
attorneys may be the same attorneys who represent any Creditor), agents or other persons reasonably
deemed appropriate by the Collateral Agent. In addition, the Collateral Agent may act in good
faith reliance upon the opinion or advice of attorneys selected by the Collateral Agent. In all
cases the Collateral Agent may pay reasonable fees and expenses of all such attorneys, agents or
other persons as may be employed in connection with the performance of its duties under this
Agreement and the Collateral Documents.

          (h)   Resignation of Collateral Agent.

          (i)   The Collateral Agent (A) may resign at any time upon notice to the Creditors, and
(B) may be removed at any time upon the written request of the Required Creditors sent to
the Collateral Agent and the other Creditors. For the purposes of any determination of
Required Creditors under this Section 2(h)(i), the Pro Rata Share of any Insolvent Entity
shall be disregarded.

          (ii)   If the Collateral Agent shall resign or be removed, the Required Creditors shall
have the right to select a replacement Collateral Agent by notice to the Collateral Agent
and the other Creditors.

          (iii)   Upon any replacement of the Collateral Agent, the Collateral Agent shall assign
all of the liens upon and security interests in all Collateral under the Collateral
Documents, and all right, title and interest of the Collateral Agent under all the
Collateral Documents, to the replacement Collateral Agent, without recourse to the
Collateral Agent or any Creditor and at the expense of the Company.

          (iv)   No resignation or removal of the Collateral Agent shall become effective until a
replacement Collateral Agent shall have been selected as provided in this Agreement and
shall have assumed in writing the obligations of the Collateral Agent under this Agreement
and under the Collateral Documents. In the event that a

Exh. H-9

 

replacement Collateral Agent shall not have been selected as provided in this Agreement
or shall not have assumed such obligations within 90 days after the resignation or removal
of the Collateral Agent, then the Collateral Agent may apply to a court of competent
jurisdiction for the appointment of a replacement Collateral Agent.

          (v)   Any replacement Collateral Agent shall be a bank, trust company, or insurance
company having capital, surplus and undivided profits of at least $250,000,000.

          (i)   Indemnification of Collateral Agent. Each Grantor, by its consent to this
Agreement, hereby agrees to indemnify and hold the Collateral Agent, its officers, directors,
employees and agents (including, but not limited to, any attorneys acting at the direction or on
behalf of the Collateral Agent) harmless against any and all costs, claims, damages, penalties,
liabilities, losses and expenses (including, but not limited to, court costs and reasonable
attorneys’ fees) which may be incurred by or asserted against the Collateral Agent or any such
officers, directors, employees and agents by reason of its status as agent under this Agreement or
which pertain, whether directly or indirectly, to this Agreement, the Collateral Documents, or to
any action or failure to act of the Collateral Agent as agent hereunder, except to the extent any
such action or failure to act by the Collateral Agent constitutes gross negligence, willful
misconduct or a breach of this Agreement. The obligations of the Grantor under this Section 2(i)
shall survive the payment in full of the Obligations and the termination of this Agreement.

          (j)   Liability of Collateral Agent. In the absence of gross negligence, willful
misconduct or a breach of this Agreement, the Collateral Agent will not be liable to any Creditor
for any action or failure to act or any error of judgment, negligence, mistake or oversight on its
part or on the part of any of its officers, directors, employees or agents. To the extent not paid
by any Grantor, each Creditor hereby severally, and not jointly, agrees to indemnify and hold the
Collateral Agent and each of its officers, directors, employees and agents (collectively,
“Indemnitees”) harmless from and against any and all liabilities, costs, claims, damages,
penalties, losses and actions of any kind or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel for any Indemnitee) incurred by or asserted against
any Indemnitee arising out of or in relation to this Agreement or the Collateral Documents or its
status as agent under this Agreement or any action taken or omitted to be taken by any Indemnitee
pursuant to and in accordance with any of the Collateral Documents and this Agreement, except to
the extent arising from the gross negligence, willful misconduct or breach of this Agreement, with
each Creditor being liable only for its Pro Rata Expenses Share of any such indemnification
liability. The obligations of the Creditors under this Section 2(j) shall survive the payment in
full of the Obligations and the termination of this Agreement.

          (k)   No Reliance on Collateral Agent. Neither the Collateral Agent nor any of its
officers, directors, employees or agents (including, but not limited to, any attorneys acting at
the direction or on behalf of the Collateral Agent) shall be deemed to have made any
representations or warranties, express or implied, with respect to, nor shall the Collateral Agent
or any such officer, director, employee or agent be liable to any Creditor or responsible for (i)
any warranties or recitals made by any Grantor in the Collateral Documents or any other agreement,
certificate, instrument or document executed by any Grantor in connection with the Collateral
Documents, (ii) the due or proper execution or authorization of this Agreement or any

Exh. H-10

 

Collateral Documents by any party other than the Collateral Agent, or the effectiveness,
enforceability, validity, genuineness or collectability as against any Grantor of any Collateral
Document or any other agreement, certificate, instrument or document executed by any Grantor in
connection with any Collateral Document, (iii) the present or future solvency or financial worth of
any Grantor, or (iv) the value, condition, existence or ownership of any of the Collateral or the
perfection of any lien upon or security interest in the Collateral (whether now or hereafter held
or granted) or the sufficiency of any action, filing, notice or other procedure taken or to be
taken to perfect, attach or vest any lien or security interest in the Collateral. Except as may be
required by Section 2(b) of this Agreement, the Collateral Agent shall not be required, either
initially or on a continuing basis, to (A) make any inquiry, investigation, evaluation or appraisal
respecting, or enforce performance by any Grantor of, any of the covenants, agreements or
obligations of any Grantor under any Collateral Document, or (B) undertake any other actions (other
than actions expressly required to be taken by it under this Agreement). Nothing in any of the
Collateral Documents, expressed or implied, is intended to or shall be so construed as to impose
upon the Collateral Agent any obligations, duties or responsibilities except as set forth in this
Agreement and in the Collateral Documents. The Collateral Agent shall be protected in acting upon
any notice, request, consent, certificate, order, affidavit, letter, telegram, telecopy or other
paper or document given to it by any person reasonably and in good faith believed by it to be
genuine and correct and to have been signed or sent by such person. The Collateral Agent shall
have no duty to inquire as to the performance or observance of any of the terms, covenants or
conditions of any of the Senior Indebtedness Documents. Except upon the direction of the Required
Creditors pursuant to Section 2(b) of this Agreement, the Collateral Agent shall not be required to
inspect the properties or books and records of any Grantor for any purpose, including to determine
compliance by any Grantor with its covenants respecting the perfection of security interests.

          3.    Lien Priorities. The parties to this Agreement expressly agree that the security
interests and liens granted to the Collateral Agent shall secure the Obligations on a pari passu
basis for the benefit of the Creditors and that, notwithstanding the relative priority or the time
of grant, creation, attachment or perfection under applicable law of any security interests and
liens, if any, of the Creditors upon or in any of the Collateral to secure any Obligations, whether
such security interests and liens are now existing or hereafter acquired or arising and whether
such security interests and liens are in or upon now existing or hereafter arising Collateral, such
security interests and liens shall be first and prior security interests and liens (subject to
security interests and liens permitted by the Senior Indebtedness Documents) in favor of the
Collateral Agent to secure all of the Obligations on a pari passu basis for the benefit of the
Creditors.

          4.    Certain Notices. Each of the Collateral Agent and each Creditor agrees to use its
best efforts to give to the others (a) copies of any notice of the occurrence or existence of an
Event of Default sent to any Grantor, simultaneously with the sending of such notice to such
Grantor, (b) notice of the occurrence or existence of an Event of Default of which such party has
knowledge, promptly after obtaining knowledge thereof, (c) notice of the refusal of any Bank to
make any loan or extension of credit pursuant to the terms of any Senior Indebtedness Document,
promptly after such refusal, and (d) notice of an Enforcement by such party (excluding an
Enforcement approved by the Required Creditors as required by this Agreement), prior to commencing
such Enforcement, but the failure to give any of the foregoing notices shall

Exh. H-11

 

not affect the validity of such notice of an Event of Default given to a Grantor or create a
cause of action against or cause a forfeiture of any rights of the party failing to give such
notice or create any claim or right on behalf of any third party. The Collateral Agent agrees to
deliver to each Creditor a copy of each notice or other communication received by it under any
Collateral Document as soon as practicable after receipt of such notice or communication and a copy
of any Collateral Document executed after the date of this Agreement as soon as practicable after
the execution thereof.

          5.   Distribution of Proceeds of Collateral and Payments and Collections After
Enforcement.

          (a)   On and after the occurrence of an Event of Default (unless such Event of Default has been
waived pursuant to the terms of the Bank Credit Agreement with the consent of the holders of a
majority of the outstanding principal amount of the Senior Notes (in the case of an Event of
Default under the Bank Credit Agreement) or waived pursuant to the terms of the applicable Note
Purchase Agreement with the consent of the Required Lenders as defined in the Bank Credit Agreement
(in the case of an Event of Default under a Note Purchase Agreement)), all proceeds of Collateral
held or received by the Collateral Agent or any Creditor and any other collections or payments
received, directly or indirectly, by the Collateral Agent or any Creditor on or with respect to any
Obligations (including, without limitation, any amount of any balances held by the Collateral Agent
or any Creditor for the account of any Grantor or any other property held or owing by it to or for
the credit or for the account of any Grantor setoff or appropriated by it, any payment under any
guaranty constituting a Senior Indebtedness Document, any payment in an insolvency or
reorganization proceeding and the proceeds from any sale of any Obligations or any interest therein
to any Grantor or any Affiliate of any Grantor, but excluding, except as otherwise provided in
paragraph (b) of this Section 5, amounts on deposit in the Special Cash Collateral Account provided
for in paragraph (b) of this Section 5) shall be delivered to the Collateral Agent and distributed
as follows:

          (i)   First, to the Collateral Agent in the amount of any unpaid Collateral Agent
Expenses;

          (ii)   Next, to the extent proceeds remain, to the Creditors in the amount of any
unreimbursed amounts paid by the Creditors to any Indemnitee pursuant to Section 2(j) of
this Agreement, pro rata in proportion to the respective unreimbursed amounts thereof paid
by each Creditor; and

          (iii)   Next, to the extent proceeds remain, to each Creditor an amount equal to its
Obligation Share of such proceeds in respect of Obligations owing to it under the Senior
Indebtedness Documents.

          Notwithstanding the foregoing, with respect to any collections or payments received by any
Creditor on or after the occurrence of an Event of Default but prior to the date of the occurrence
of an Enforcement, (1) such collections and payments shall be subject to the distribution
provisions of clauses (i) through (iii), above, only to the extent that the principal amount of the
Obligations owed to such Creditor on the date of such Enforcement is less than the principal amount
of the Obligations owed to such Creditor on the date of such Event of Default,

Exh. H-12

 

and (2) the amount of any such collections and payments subject to the distribution provisions
of clause (i) through (iii) above, in accordance with clause (1) shall not be so distributed until
the date of the occurrence of such Enforcement. For the purposes of the preceding sentence, any
collection or payment received by the Bank Agent on behalf of the Banks shall be considered to have
been received by the Banks, and applied to pay the Obligations owed to the Banks, to which such
payment or collection relates whether or not distributed by the Bank Agent to the Banks.

          After the Obligations have been finally paid in full in cash, the balance of proceeds of the
Collateral, if any, shall be paid to any Grantor or as otherwise required by law.

          (b)   Any payment pursuant to clause (a)(iii) above with respect to undrawn amounts of
outstanding Letters of Credit shall be paid to the Collateral Agent for deposit in an account (the
“Special Cash Collateral Account”) to be held as collateral for the Obligations and disposed of as
provided herein. On each date after the occurrence of an Enforcement on which a payment is made to
a beneficiary pursuant to a draw on a Letter of Credit, the Collateral Agent shall distribute from
the Special Cash Collateral Account for application to the payment of the reimbursement obligation
due to the Banks with respect to such draw an amount equal to the product of (1) the amount then on
deposit in the Special Cash Collateral Account, and (2) a fraction, the numerator of which is the
amount of such draw and the denominator of which is the aggregate undrawn amount of all outstanding
Letters of Credit immediately prior to such draw. On each date after the occurrence of an
Enforcement on which a reduction in the undrawn amount of any outstanding Letter of Credit occurs
other than on account of a payment made to a beneficiary pursuant to a draw on a Letter of Credit,
then the Collateral Agent shall distribute from the Special Cash Collateral Account an amount equal
to the product of (1) the amount then on deposit in the Special Cash Collateral Account and (2) a
fraction the numerator of which is the amount of such reduction and the denominator of which is the
aggregate undrawn amount of all outstanding Letters of Credit immediately prior to such reduction,
which amount shall be distributed as provided in clauses (a)(i) through (iii) above. At such time
as the undrawn amount of outstanding Letters of Credit is reduced to zero, any amount remaining in
the Special Cash Collateral Account, after the distribution therefrom as provided above, shall be
distributed as provided in clauses (a)(i) through (iii) above.

          (c)   Any re-allocations of any payments or distributions initially made or received on any
Obligations due to payments and transfers among the Creditors and the Collateral Agent under this
Section 5 shall be deemed to reduce the Obligations of any Creditor receiving any such payment or
other transfer under this Section 5 and shall be deemed to restore and reinstate the Obligations of
any Creditor making any such payment or other transfer under this Section 5, in each case by the
amount of such payment and other transfer; provided that if for any reason such restoration
and reinstatement shall not be binding against the Company or any other Grantor, then the Creditors
and the Collateral Agent agree to take such actions as shall have the effect of placing them in the
same relative positions as they would have been if such restoration and reinstatement had been
binding against the Company and the other Grantors.

Exh. H-13

 

          6.    Certain Credit Extensions and Amendments to Agreements by the Creditors; Actions
Related to Collateral; Other Liens, Security Interests and Guaranties.

          (a)   The Bank Agent, on its behalf and on behalf of the Banks, agrees that, without the prior
written consent of Noteholders holding a majority of the outstanding principal amount of the Senior
Notes, it will not (i) amend, modify, supplement or restate, or waive (A) any Specified Provision
if the effect of such amendment, modification, supplement, restatement, or waiver causes any
Specified Provision to become more restrictive with respect to the Company or any subsidiary
thereof or (B) any other provision of the Bank Credit Agreement or any agreement, document or
instrument delivered in connection therewith, if any Grantor makes any payment or gives any other
financial accommodation (other than reimbursement of out-of-pocket expenses and customary amendment
fees) in connection therewith, (ii) except for any guarantees securing all of the Obligations
constituting Senior Indebtedness Documents, retain or obtain the primary or secondary obligations
of any other obligor or obligors with respect to all or any part of the Obligations evidenced by
the Bank Credit Agreement and the agreements, documents and instruments delivered in connection
therewith or (iii) from and after the institution of any bankruptcy or insolvency proceeding
involving any Grantor, as respects the Collateral enter into any agreement with any Grantor with
respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate
protection.

          (b)   Each Noteholder agrees that, without the prior written consent of Banks holding a majority
of the outstanding principal amount of Obligations under and undrawn commitments to extend credit
under the Bank Credit Agreement, it will not (i) amend, modify, supplement, restate, or waive (A)
any Specified Provision if the effect of such amendment, modification, supplement, restatement or
waiver causes any Specified Provision to become more restrictive with respect to the Company or any
subsidiary of the Company or (B) any other provision of a Note Purchase Agreement or Senior Notes
if any Grantor makes any payment or gives any other financial accommodation (other than
reimbursement of out-of-pocket expenses and customary amendment fees) in connection therewith, (ii)
except for any guarantees securing all of the Obligations constituting Senior Indebtedness
Documents, retain or obtain the primary or secondary obligations of any other obligor or obligors
with respect to all or any part of the Obligations evidenced by a Note Purchase Agreement and the
Senior Notes or (iii) from and after the institution of any bankruptcy or insolvency proceeding
involving any Grantor, as respects the Collateral enter into any agreement with any Grantor with
respect to post-petition usage of cash collateral, post-petition financing arrangements or adequate
protection.

          (c)   Each Creditor agrees that it will have recourse to the Collateral only through the
Collateral Agent, that it shall have no independent recourse to the Collateral and that it shall
refrain from exercising any rights or remedies under the Collateral Documents which have or may
have arisen or which may arise as a result of an Event of Default or an acceleration of the
maturities of the Obligations, except that, upon the direction of the Required Creditors, any
Creditor may set off any amount of any balances held by it for the account of any Grantor or any
other property held or owing by it to or for the credit or for the account of any Grantor, provided
that the amount set off is delivered to the Collateral Agent for application pursuant to Section 5
of this Agreement. Without such direction, no Creditor shall set off any such amount. For the
purposes of determining whether such direction to setoff has been given, any Creditor which has not
voted in favor of or against such setoff within three business days of receiving

Exh. H-14

 

notice from another Creditor of its intent to setoff will be deemed to have voted in favor of
such setoff. For the purposes of perfection any setoff rights which may be available under
applicable law, any balances held by the Collateral Agent or any Creditor for the account of any
Grantor or any other property held or owing by the Collateral Agent or any Creditor to or for the
credit or account of any Grantor shall be deemed to be held as agent for all Creditors.

          (d)   No Creditor shall take or receive a security interest in or a lien upon any of the
property or assets of any Grantor as security for the payment of any Obligations other than liens
and security interests granted to the Collateral Agent in the Collateral pursuant to the Collateral
Documents. The existence of a common law lien on deposit accounts shall not be prohibited by the
provisions of this paragraph (d) provided that any realization on such lien and the application of
the proceeds thereof shall be subject to the provisions of this Agreement.

          (e)   Nothing contained in this Agreement shall (i) prevent any Creditor from imposing a default
rate of interest in accordance with any Senior Indebtedness Document or prevent a Creditor from
raising any defenses in any action in which it has been made a party defendant or has been joined
as a third party, except that the Collateral Agent may direct and control any defense directly
relating to the Collateral or any one or more of the Collateral Documents as directed by the
Required Creditors, which shall be governed by the provisions of this Agreement, or (ii) affect or
impair the right any Creditor may have under the terms and conditions governing the Obligations to
accelerate and demand repayment of such Obligations. Subject only to the express limitations set
forth in this Agreement, each Creditor retains the right to freely exercise its rights and remedies
as a general creditor of the Grantors in accordance with applicable law and agreements with the
Grantors, including without limitation the right to file a lawsuit and obtain a judgment therein
against the Grantors and to enforce such judgment against any assets of the Grantors other than the
Collateral.

          (e)   Subject to the provisions set forth in this Agreement, each Creditor and its affiliates
may (without having to account therefor to any Creditor) own, sell, acquire and hold equity and
debt securities of the Grantors and lend money to and generally engage in any kind of business with
the Grantors (as if, in the case of U.S. Bank National Association, it was not acting as Collateral
Agent), and, subject to the provisions of this Agreement, the Creditors and their affiliates may
accept dividends, interest, principal payments, fees and other consideration from the Grantors for
services in connection with this Agreement or otherwise without having to account for the same to
the other Creditors, provided that any such amounts which constitute Obligations are provided for
in the applicable Senior Indebtedness Documents.

          7.   Accounting; Adjustments.

          (a)   The Collateral Agent and each Creditor agrees to render an accounting to any of the others
of the amounts of the outstanding Obligations, receipts of payments from the Grantors or from the
Collateral and of other items relevant to the provisions of this Agreement upon the reasonable
request from one of the others as soon as reasonably practicable after such request, giving effect
to the application of payments and collections as hereinbefore provided in this Agreement.

Exh. H-15

 

          (b)   Each party hereto agrees that to the extent any payment of any Obligations made to it
hereunder is in excess of the amount due to be paid to it hereunder, or in the event any payment of
any Obligations made to any party hereto is subsequently invalidated, declared fraudulent or
preferential, set aside or required to be paid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause (“Avoided Payments”), then it
shall pay to the other parties hereto (or in the case of Avoided Payments the other parties shall
pay to it) such amounts so that, after giving effect to the payments hereunder by all parties, the
amounts received by all parties are not in excess of the amounts to be paid to them hereunder as
though any payment so invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid had not been made.

          8.   Notices. Except as otherwise expressly provided herein, any notice required or
desired to be served, given or delivered hereunder shall be in writing, and shall be deemed to have
been validly served, given or delivered three (3) business days after deposit in the United States
mails, with proper postage prepaid, one business day after delivery to a courier for next day
delivery, upon delivery by courier or upon transmission by telecopy or similar electronic medium
(provided that a copy of any such notice sent by such transmission is also sent by one of the other
means provided hereunder within one day after the date sent by such transmission) to the addresses
set forth below the signatures hereto, with a copy to any person or persons set forth below such
signature shown as to receive a copy, or to such other address as any party designates to the
others in the manner herein prescribed. Any party giving notice to any other party hereunder shall
also give copies of such notice to all other parties. Any notice delivered to the Bank Agent shall
be deemed to be delivered to all of the Banks.

          9.   Contesting Liens or Security Interests; No Partitioning or Marshaling of Collateral;
Contesting Obligations.

          (a)   No Creditor shall contest the validity, perfection, priority or enforceability of or seek
to avoid, have declared fraudulent or have put aside any lien or security interest granted to the
Collateral Agent and each party hereby agrees to cooperate in the defense of any action contesting
the validity, perfection, priority or enforceability of such liens or security interests. Each
party shall also use its best efforts to notify the other parties of any change in the location of
any of the Collateral or the business operations of any Grantor or of any change in law which would
make it necessary or advisable to file additional financing statements in another location as
against any Grantor with respect to the liens and security interests intended to be created by the
Collateral Documents, but the failure to do so shall not create a cause of action against the party
failing to give such notice or create any claim or right on behalf of any other party to this
Agreement and any third party.

          (b)   Notwithstanding anything to the contrary in this Agreement or in any Collateral Document,
no Creditor shall have the right to have any of the Collateral, or any security interest or other
property being held as security for all or any part of the Obligations by the Collateral Agent,
partitioned, or to file a complaint or institute any proceeding at law or in equity to have any of
the Collateral or any such security interest or other property partitioned, each Creditor hereby
waives any such right. The Collateral Agent and each Creditor hereby waive any and all rights to
have the Collateral, or any part thereof, marshaled upon any foreclosure of any of the liens or
security interests securing the Obligations.

Exh. H-16

 

          (c)   Neither the Collateral Agent nor any Creditor shall contest the validity or enforceability
of or seek to avoid, have declared fraudulent or have set aside any Obligations (including, without
limitation, any guaranty thereof). In the event any Obligations are invalidated, avoided, declared
fraudulent or set aside for the benefit of any Grantor, the Collateral Agent and the Creditors
agree that such Obligations shall nevertheless be considered to be outstanding for all purposes of
this Agreement.

          10.   No Additional Rights for Grantors Hereunder. Each Grantor, by its consent hereto,
acknowledges that it shall have no rights under this Agreement. If the Collateral Agent or any
Creditor shall violate the terms of this Agreement, each Grantor agrees, by its consent hereto,
that it shall not use such violation as a defense to any enforcement by any such party against such
Grantor nor assert such violation as a counterclaim or basis for setoff or recoupment against any
such party.

          11.   Bankruptcy Proceedings. Nothing contained herein shall limit or restrict the
independent right of any Creditor to initiate an action or actions in any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar proceeding in its individual capacity and to appear or be heard on any
matter before the bankruptcy or other applicable court in any such proceeding, including, without
limitation, with respect to any question concerning the post-petition usage of Collateral and
post-petition financing arrangements, provided such initiating Creditor provides all other
Creditors prior notice of the initiation of any such action. The Collateral Agent is not entitled
to initiate such actions on behalf of any Creditor or to appear and be heard on any matter before
the bankruptcy or other applicable court in any such proceeding as the representative of any
Creditor. The Collateral Agent is not authorized in any such proceeding to enter into any
agreement for, or give any authorization or consent with respect to, the post-petition usage of
Collateral, unless such agreement, authorization or consent has been approved in writing by the
Required Creditors. This Agreement shall survive the commencement of any such bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar proceeding.

          12.   Independent Credit Investigation. Neither the Collateral Agent nor any Creditor,
nor any of its respective directors, officers, agents or employees, shall be responsible to any of
the others for the solvency or financial condition of any Grantor or the ability of any Grantor to
repay any of the Obligations, or for the value, sufficiency, existence or ownership of any of the
Collateral, the perfection or vesting of any lien or security interest, or the statements of any
Grantor, oral or written, or for the validity, sufficiency or enforceability of any of the
Obligations, any Senior Indebtedness Document, any Collateral Documents, any document or agreement
executed or delivered in connection with or pursuant to any of the foregoing, or the liens or
security interests granted by the Grantors in connection therewith. Each of the Collateral Agent
and each Creditor has entered into its respective financial agreements with the Grantors based upon
its own independent investigation, and makes no warranty or representation to the other, nor does
it rely upon any representation by any of the others, with respect to the matters identified or
referred to in this Section.

          13.   Supervision of Obligations. Except to the extent otherwise expressly provided
herein, each Creditor shall be entitled to manage, supervise, amend and modify

Exh. H-17

 

(including, without limitation, an amendment to increase the amount of such Obligations or
waive an Event of Default) the obligations of the Grantors to it in accordance with applicable law
and such Creditor’s practices in effect from time to time without regard to the existence of any
other Creditor.

          14.   Turnover of Collateral. If any Creditor acquires custody, control or possession
of any Collateral or any proceeds thereof other than pursuant to the terms of this Agreement, such
Creditor shall promptly cause such Collateral or the proceeds of such Collateral to be delivered to
or put in the custody, possession or control of the Collateral Agent for disposition and
distribution in accordance with the provisions of Section 5 of this Agreement. Until such time as
such Creditor shall have complied with the provisions of the immediately preceding sentence, such
Creditor shall be deemed to hold such Collateral and the proceeds thereof in trust for the parties
entitled thereto under this Agreement.

          15.   Options to Purchase.

          (a)   After the occurrence of a Purchase Option Trigger Event (as defined below), each Bank
shall have the option to purchase all (but not less than all) of the outstanding Obligations owed
to the Noteholders at a purchase price equal to 100% of the amount of such Obligations on the date
of purchase (including all interest thereon to the date of purchase), plus an amount equal to the
Yield-Maintenance Amount which would be payable under the applicable Note Purchase Agreement if the
Senior Notes were prepaid pursuant to the optional prepayment provisions of the applicable Note
Purchase Agreement on such date of purchase.

          (b)   After the occurrence of a Purchase Option Trigger Event, each Noteholder shall have the
option to purchase all (but not less than all) of the outstanding Obligations owed to the Banks at
a purchase price equal to 100% of the amount thereof on the date of purchase (including all
interest thereon to the date of purchase).

          (c)   Any Creditor desiring to exercise its option to purchase under this Section 15 may do so
by giving notice to the Creditors whose Obligations are to be purchased. The closing of the
purchase and sale shall take place on the fifth business day after such notice is given. At the
closing, the buyer will pay the sellers the purchase price of the Obligations being purchased
except that, with respect to the purchase of exposures in respect of outstanding but undrawn
Letters of Credit, the purchase shall be a risk participation therein payable at the same time as
the related Letters of Credit are drawn. Payment of such purchase price shall be made in the same
manner as specified in the applicable Senior Indebtedness Documents. Any notice of exercise of any
such option to purchase shall be irrevocable. In the event more than one notice of exercise of an
option to purchase under this Section 15 is given, only the notice first given shall be effective
and the other notices given shall be ineffective.

          (d)   For the purposes of this Section 15, a “Purchase Option Trigger Event” shall occur when
(i) an Event of Default has occurred and is continuing, (ii) any Creditor has notified the
Collateral Agent and each other Creditor of its desire to direct the Collateral Agent to take
action hereunder, and (iii) within 60 days after the notice specified in clause (ii), the Required
Creditors shall not have authorized the Collateral Agent to take such action and the

Exh. H-18

 

Creditor giving such notice shall not have withdrawn such notice by notice given to the
Collateral Agent and the other Creditors.

          16.   Amendment. This Agreement and the provisions hereof may be amended, modified or
waived only by a writing signed by the Collateral Agent, the Bank Agent, on its behalf and on
behalf of the Banks, and each of the Noteholders.

          17.   Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of each of the parties hereto, including
subsequent holders of the Obligations and persons subsequently becoming parties to the Senior
Indebtedness Documents as Creditors; provided that (a) neither the Collateral Agent nor any
Creditor shall assign or transfer any interest in any Obligations or permit such person to become
such a party to the applicable Senior Indebtedness Documents unless such transfer or assignment is
made subject to this Agreement and such transferee, assignee or person assumes the obligations of
the transferor or assignor or the obligations of a Creditor, as the case may be, hereunder from and
after the time of such transfer or assignment or the time such person becomes a party to the
applicable Senior Indebtedness Documents, as the case may be, and (b) the appointment of any
replacement Collateral Agent shall be subject to the provisions of Section 2 of this Agreement.

          18.   Limitation Relative to Other Agreements. Nothing contained in this Agreement is
intended to impair (a) as between the Noteholders and the Grantors, the rights of the Noteholders
and the obligations of the Grantors under the Note Purchase Agreements and the Senior Notes, or (b)
as between the Bank Agent, the Banks and the Grantors, the rights of the Bank Agent and the Banks
and the obligations of the Grantors under the Bank Credit Agreement and the agreements, documents
and instruments delivered in connection therewith.

          19.   Counterparts. This Agreement may be executed in several counterparts and by each
party on a separate counterpart, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute but one and the same instrument. In proving
this Agreement, it shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom enforcement is sought. Any facsimile copy of a signature hereto
shall have the same effect as the original thereof.

          20.   Governing Law. THIS AGREEMENT SHALL BE GOVERNED AS TO VALIDITY, INTERPRETATIONS,
ENFORCEABILITY AND EFFECT BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF ILLINOIS.

          21.   Confirmations and Agreements.

          (i)   The Bank Agent confirms that the Banks have approved this Agreement as of the date hereof.

          (ii)   Each party subject hereto agrees that it will not, and will use commercially reasonable
efforts to cause its agents, employees, officers, directors, shareholders, partners, and its
representatives associated with or acting on its behalf (collectively, the “Representatives”), and
its sub-contractors, if any, not to, directly or indirectly through a third-party intermediary, in

Exh. H-19

 

connection with this Agreement and the transactions resulting herefrom, offer, pay, promise to
pay, or authorize the giving of money or anything of value to any Government Official (as defined
below) for the purpose of inducing such Government Official to use his or her influence or position
with the government or instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in order to assist in obtaining or retaining business for, directing
business to, or securing an improper advantage for such party.

          (b)   Each party subject hereto will, and will use commercially reasonable efforts to cause its
Representatives and sub-contractors, if any, to maintain books and records that accurately reflect
any payment of money or thing of value to a Government Official, directly or indirectly, in
connection with any matter relating to this Agreement.

          (c)   The term “Government Official” includes any employee, agent or representative of a non-US
government, and any non-US political party, party official or candidate. Government Official may
also include royalty, non-US legislators, representatives of non-US state-owned enterprises,
employees of public international organizations (including but not limited to the United Nations,
International Monetary Fund, World Bank and other international agencies and organizations), and
employees and officers of foreign embassies or trade organizations having offices in the US,
regardless of rank or position, and any individuals acting on behalf of a Government Official.

          (d)   On any date on which the Obligations or any other amounts need to be determined, the
Collateral Agent shall use the rate of exchange specified in Section 5.6 of the Bank Credit
Agreement to determine the U.S. Dollar equivalent of any foreign currency (if any) in which such
Obligations or other amounts are denominated, and such U.S. Dollar equivalent shall be used for
purposes of determining that portion of the Obligations or such other amounts denominated in the
applicable foreign currencies on such date.

The remainder of this page is intentionally blank.

Exh. H-20

 

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

as Bank Agent and Collateral Agent

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 	

Notice information:

800 Nicollet Mall

Mail Code BC-MN-HO3P

Minneapolis, MN 55402

Attention: Michael J. Staloch

Telephone: (612) 303-3050

Fax: (612) 303-2265

E-mail: Michael.Staloch@usbank.com

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA, as a Noteholder
 	 
	 
	 	By:  	
 	 
	 	 	Vice President 	 
	 	 	 	 
	 	Notice information:

The Prudential Insurance Company of America

c/o Prudential Capital Group

Two Prudential Plaza, Suite 5600

180 N. Stetson Avenue

Chicago, IL 60601

Attention: Managing Director
 	 

Exh. H-21

 

	 	 	 	 	 

	 	 	 	 	 
	 	GIBRALTAR LIFE INSURANCE CO., LTD.,

as a Noteholder

THE PRUDENTIAL LIFE INSURANCE

COMPANY, LTD., as a Noteholder

By:    Prudential Investment Management

          (Japan), Inc., as Investment Manager

By:   Prudential Investment Management, Inc.,

          as Sub-Adviser

 	 
	 	By:  	 	 
	 	 	Vice President 	 
	 	 	 	 
	 	Notice information:

Pruco Life Insurance Company

c/o Prudential Capital Group

Two Prudential Plaza, Suite 5600

180 N. Stetson Avenue

Chicago, IL 60601

Attention: Managing Director
 	 

Exh. H-22

 

	 	 	 	 	 

	 	 	 	 	 
	 	FORETHOUGHT LIFE INSURANCE 

COMPANY, as a Noteholder 

RGA REINSURANCE COMPANY,

as a Noteholder

MTL INSURANCE COMPANY,

as a Noteholder

ZURICH AMERICAN INSURANCE

COMPANY, as a Noteholder

By:     Prudential Private Placement Investors, L.P.

          (as Investment Advisor)

By:     Prudential Private Placement Investors, Inc.

          (as its General Partner)

 	 
	 	By:  	
 	 
	 	 	Vice President 	 
	 
	 	Notice information:

Prudential Retirement Insurance and Annuity Company

c/o Prudential Capital Group

Two Prudential Plaza, Suite 5600

180 N. Stetson Avenue

Chicago, IL 60601

Attention: Managing Director

 	 

Exh. H-23

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

EXHIBIT A

LIST OF COLLATERAL DOCUMENTS

Pledge Agreement, dated as of May 23, 2011, made by Graco Inc.

Exh. H-24

 

ACKNOWLEDGMENT OF AND CONSENT AND AGREEMENT

TO INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

          Each of the undersigned, a Grantor described in the Intercreditor and Collateral Agency
Agreement set forth above, acknowledges and, to the extent required, consents to the terms and
conditions of the Intercreditor and Collateral Agency Agreement. Each of the undersigned Grantors
does hereby further acknowledge and agree to its agreements under Sections 2(i), 5(c) and 10 of the
Intercreditor and Collateral Agency Agreement and acknowledges and agrees that it is not a
third-party beneficiary of, nor has any rights under, the Intercreditor and Collateral Agency
Agreement. Each of the undersigned confirms that the signatories to this Acknowledgment of and
Consent and Agreement to Intercreditor and Collateral Agency Agreement constitute all of the
Grantors in existence as of the date hereof.

          This Acknowledgment of and Consent and Agreement to Intercreditor and Collateral Agency
Agreement and any amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which, when so executed and delivered, shall be an original, but all
of which together shall constitute but one of the same instrument. In proving this Acknowledgment
of and Consent and Agreement to Intercreditor and Collateral Agency Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the party against whom
enforcement is sought.

The remainder of this page is intentionally blank.

Exh. H-25

 

          IN WITNESS WHEREOF, each party below has caused this Acknowledgment of and Consent and
Agreement to Intercreditor and Collateral Agency Agreement to be executed by its duly authorized
officer as of May 23, 2011.

	 	 	 	 	 
	 	GRACO INC.

GRACO HOLDINGS INC.

GRACO MINNESOTA INC.

GRACO OHIO INC.

 	 
	 	By:  	 	 
	 	Name:  	James A. Graner 	 
	 	Title:  	CFO & Treasurer 	 

Exh. H-26

 

Schedule 1.1

Commitments and Percentages

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Bank:	 	 	Commitment:	 	 	Percentage:	 
	 	U.S. BANK NATIONAL ASSOCIATION
	 	 	$	85,000,000	 	 	 	 	18.888888888889	%	 
	 	JPMORGAN CHASE BANK, N.A.
	 	 	$	85,000,000	 	 	 	 	18.888888888889	%	 
	 	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
	 	 	$	55,000,000	 	 	 	 	12.222222222222	%	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	 	$	55,000,000	 	 	 	 	12.222222222222	%	 
	 	FIFTH THIRD BANK
	 	 	$	40,000,000	 	 	 	 	8.888888888889	%	 
	 	PNC BANK N.A.
	 	 	$	40,000,000	 	 	 	 	8.888888888889	%	 
	 	RBS CITIZENS, N.A.
	 	 	$	40,000,000	 	 	 	 	8.888888888889	%	 
	 	BANK OF AMERICA, N.A.
	 	 	$	25,000,000	 	 	 	 	5.555555555556	%	 
	 	THE NORTHERN TRUST CO.
	 	 	$	25,000,000	 	 	 	 	5.555555555556	%	 
	 	TOTAL COMMITMENTS
	 	 	$	450,000,000	 	 	 	 	100	%	 
	 

Schedule 1.1-1

 

 

Schedule 7.6

Litigation (Section 7.6)

None.

Sched. 7.6-1

 

 

Schedule 7.15

Subsidiaries (Section 7.15)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Subsidiary	 	 	Jurisdiction	 	 	Number of Shares	 	 	Percentage Owned	 	 	Material Subsidiary?	 
	 	Graco Australia Pty Ltd.

	 	 	Australia
	 	 	100 
	 	 	100% by the Company	 	 	 	 
	 	Graco California Inc.

	 	 	Minnesota
	 	 	100 
	 	 	100% by the Company	 	 	 	 
	 	Graco Canada Inc.

	 	 	Canada
	 	 	10,000 
	 	 	100% by the Company	 	 	 	 
	 	Graco do Brasil Lmtda

	 	 	Brazil
	 	 	132,536* 
	 	 	100% by the Company*	 	 	 	 
	 	Graco Fluid Equipment (Shanghai) Co.,
Ltd.

	 	 	People’s Republic of China
	 	 	N/A**
	 	 	100% by the Company	 	 	 	 
	 	Graco Fluid Equipment (Suzhou) Co., Ltd.

	 	 	People’s Republic of China
	 	 	N/A**
	 	 	100% by Graco Minnesota Inc.	 	 	 	 
	 	Graco GmbH

	 	 	Germany
	 	 	N/A**
	 	 	100% by the Company	 	 	 	 
	 	Graco Hong Kong Ltd.

	 	 	People’s Republic of
China (Special Adm
Region)
	 	 	2,000 
	 	 	100% by the Company	 	 	 	 
	 	Graco Indiana Inc.

	 	 	Delaware
	 	 	1,000 
	 	 	100% by the Company	 	 	 	 
	 	Graco K.K.

	 	 	Japan
	 	 	660,000 
	 	 	100% by the Company
	 	 	Yes	 
	 	Graco Korea Inc.

	 	 	Korea
	 	 	125,500 
	 	 	100% by the Company
	 	 	Yes	 
	 	Graco Limited

	 	 	United Kingdom
	 	 	100,000 
	 	 	100% by the Company	 	 	 	 
	 	Graco Minnesota Inc.

	 	 	Minnesota
	 	 	1,000 
	 	 	100% by the Company
	 	 	Yes	 
	 	Graco N.V.

	 	 	Belgium
	 	 	1,008,157* 
	 	 	100% by the Company*
	 	 	Yes	 
	 	Graco Ohio Inc.

	 	 	Ohio
	 	 	95 Class A 9,405 Class B
	 	 	100% by the Company
	 	 	Yes	 
	 	Graco S.A.S.

	 	 	France
	 	 	24,499 
	 	 	100% by the Company	 	 	 	 
	 	Graco Trading (Suzhou) Co., Ltd.

	 	 	People’s Republic of China
	 	 	N/A** 
	 	 	100% by Graco Minnesota Inc.	 	 	 	 
	 	Gusmer Corporation

	 	 	Delaware
	 	 	1,000 
	 	 	100% by the Company	 	 	 	 
	 	Gusmer Canada Ltd.

	 	 	Canada
	 	 	100 Common 1,000 Class A
	 	 	100% by Gusmer Corporation	 	 	 	 
	 	Gusmer Sudamerica S.A.

	 	 	Argentina
	 	 	12,000*** 
	 	 	100% by the Company***	 	 	 	 
	 	Graco Holdings Inc.

	 	 	Minnesota
	 	 	100 
	 	 	100% by the Company
	 	 	Yes	 
	 

 

			
	*	 	Includes shares held by executive officers of the Company or the relevant
Subsidiary to satisfy the requirements of local law.
	 
	**	 	No shares are issued.
	 
	***	 	Shares held by two executive officers of the Company to satisfy the requirements of local law.

Sched. 7.15.-1

 

Schedule 9.6

Investments (Section 9.6)

Investment in Corporate Owned Life Insurance (COLI) through establishment of a Rabbi (Grantor)
Trust (“Trust”) with Wilmington Trust on June 27, 2007.

The Trust is intended to provide informal funding for the Company’s deferred compensation and
executive excess benefit retirement plans. The funding schedule anticipates the payment of a
premium of $1,498,626 each year for a five year period beginning in 2007.

Sched. 9.6-1exv4w57

Exhibit 4.57

CU(01) — Finance — 2010 — 65 — 1463

The 2011-2012 Network Lease Agreement for the 21 Southern Provinces

Signed between

Unicom
New Horizon Telecommunications Company Limited

And

China United Network Communications Corporation Limited

October 29, 2010

 

 

 

Table of Contents

	 	 	 	 	 
	Article 1 Definition
	 	 	4	 
	Article 2 Principles and Major Contents of the Lease
	 	 	5	 
	Article 3 Lease Term
	 	 	5	 
	Article 4 Delay of Lease
	 	 	6	 
	Article 5 Lease Fee and Payment
	 	 	7	 
	Article 6 Ownership and Risk Sharing
	 	 	7	 
	Article 7 Liabilities of the Parties to the Agreement
	 	 	8	 
	Article 8 Statement, representation and guarantee
	 	 	9	 
	Article 9 Purchase Option
	 	 	10	 
	Article 10 Liability for Breach
	 	 	11	 
	Article 11 Force Majeure
	 	 	11	 
	Article 12 Confidentiality
	 	 	12	 
	Article 13 Termination
	 	 	12	 
	Article 14 Expenses
	 	 	13	 
	Article 15 Waiver, Rights and Remedies
	 	 	13	 
	Article 16 Severability
	 	 	14	 
	Article 17 Notices
	 	 	14	 
	Article 18 Governing Law and Arbitration
	 	 	14	 
	Article 19 Effectiveness and Amendment
	 	 	15	 
	Article 20 Supplementary Provisions
	 	 	16	 

 

2

 

	 	 	This Agreement is signed between the following two Parties on October 29, 2010 in Beijing
of the People’s Republic of China:

The
Leasing Party: Unicom New Horizon Telecommunications Company Limited (“Unicom New Horizon”)

Address: Room 610 of Office Build 3, No.18, Jianguomennei Street, Dongcheng
District, Beijing

The Renting Party: China United Network Communications Corporation Limited (“CUCL”)

Address: No. 21 Financial Street,

Xicheng District, Beijing

Whereas:

(1) CUCL is a foreign investment company established under the laws of the PRC, which is 100% owned
by China Unicom (Hong Kong) Limited (“Unicom Red Chip Company”). The major business of CUCL in
China include: fixed-line local telephone service ( including local wireless loop service), public
telegraph and telex services, domestic telecom facility services, fixed-line domestic long distance
call service, fixed-line international long distance call service, IP telephone service (limited to
Phone-to-Phone service), 900/1800MHz GSM 2G digital cellular mobile telecommunications service,
WCDMA 3G digital cellular mobile telecommunications service, satellite international private line
service, Internet data transmission service, international data telecommunications service, 26GHz
radio access services; and mobile communications services in 31 provinces (autonomous regions and
municipalities) such as Beijing, Tianjin, Shanghai, Liaoning, Hebei, Shandong, Jiangsu, Zhejiang,
Fujian, Guangdong, Hubei, Anhui, Sichuan, Guizhou, Xinjiang, Chongqing, Shaanxi, Guangxi, Henan,
Heilongjiang, Jilin, Jiangxi, Shanxi, Inner Mongolia, Hunan, Hainan, Yunnan, Ningxia, Gansu,
Qinghai and Tibet;

(2) Unicom New Horizon is a limited company established and validly existing under the law of PRC,
whose shares are 100% held by China United Network Communications Group Company Limited (“Unicom
Group”). Unicom New Horizon owns the fixed networks assets of the 21 southern provinces and cities
(regions);

 

3

 

Based on equality and mutual benefits, the Parties have reached the following agreement through
friendly consultations:

Article 1 Definition

	1.1	 	In this Agreement, unless the context (including “whereas” provisions and the annex of this
Agreement) otherwise requires, the following expressions have the meanings defined below:

	 	 	 
	Unicom New Horizon (the Leasing Party)

	 	Refers to Unicom New Horizon Telecommunications Company Limited
	CUCL (the Renting Party)

	 	Refers to China United Network
Communications Corporation Limited
	The target area/ 21 southern provinces
and cities (regions)

	 	Shanghai Municipality, Jiangsu
Province, Zhejiang Province, Anhui
Province, Fujian Province, Jiangxi
Province, Hubei Province, Hunan
Province, Guangdong Province,
Guangxi Zhuang Autonomous Region,
Hainan Province, Chongqing
Municipality, Sichuan Province,
Guizhou Province, Yunnan Province,
Tibet Autonomous Region, Shaanxi
Province, Gansu Province, Qinghai
Province, Ningxia Hui Autonomous
Region and Xinjiang Uygur
Autonomous Region
	Fixed communications network

	 	For the purpose of this Agreement,
it refers to various domestic and
international fixed telecom
networks, facilities and their
affiliated equipment that are
owned or succeeded by the leasing
Party.
	Fixed network services

	 	It refers to the operation of
various domestic and international
fixed telecom network, facilities;
provision of voice, data, image,
and multimedia communications and
information services based on
fixed telecom network
	The fixed network assets in 21
provinces and cities (regions)

	 	It refers to the communications
equipment and facilities related
to the operation of the fixed
communications network in the 21
southern provinces and cities
(regions)
	Lease term

	 	It refers to the period agreed
under 3.1 of this Agreement
	Purchase options

	 	It refers to the communications
network purchasing option owned by
the rent Party under Article 9 of
this Agreement

	1.2	 	Any article or clause mentioned in this Agreement, unless otherwise explicitly specified,
shall be an article or clause under this Agreement.

	1.3	 	Any party mentioned in this Agreement or other agreements or documents shall include the
successor or permitted transferee.

	1.4	 	Any law or any provision of the law mentioned in this Agreement shall include the
modification and reenactment of the law and provision, the alternative provisions or all
rules and legal documentations published according to the above-mentioned laws and
provisions.

 

4

 

	1.5	 	The titles of the articles and annex of this Agreement are only for the convenience of
reading, which would not have any legal effect when explaining the contract.

Article 2 Principles and Major Contents of the Lease

	2.1	 	The Leasing Party agrees to lease the fixed network assets of 21 southern provinces
and cities (regions) according to the terms and conditions set forth in this Agreement.

	2.2	 	The Parties confirm that the lease takes effect as of Jan 1, 2011 (including the day).

	2.3	 	The Parties hereby agree that unless otherwise arranged, the Renting Party shall be the
sole user of the fixed network assets of 21 southern provinces and cities (regions), upon
which the Renting Party could operate its fixed-line services in the target areas pursuant
to applicable laws and regulations of PRC.

	2.4	 	As the consideration for the Leasing Party’s fulfillment of its obligations under this
Agreement, the Renting Party shall pay the rent fee agreed under Article 5 of this
Agreement.

	2.5	 	All the business operation revenue generated by the fixed network services in the target
areas, including but not limited to voice traffic fee, monthly rent fee, interconnection
settlement income and other revenue generated by or related to network operation shall be
collected by and belong to the Renting Party.

	 
	2.6	 	The costs for operation, management and maintenance of the fixed communications network shall
be borne by the Renting Party.

Article 3 Lease Term

	3.1	 	The expiration period of this Agreement and the lease term herein are two (2) years,
starting from Jan 1, 2011 and ending on Dec 31, 2012.

	3.2	 	Subject to the compliance of the laws and relevant state regulations, when the term of
this Agreement or its extension expires, the Renting Party is entitled to, with at least
two month prior notice to the Leasing Party, extend the renting of the fixed network assets
of 21 southern provinces and cities (regions) according to the terms and conditions(except
the rate of renting) set forth in this Agreement.

 

5

 

Article 4 Delay of Lease

	4.1	 	If due to any incident or situation, the Leasing Party fails to provide any of the
relevant telecom network facilities within the fixed network assets of 21 southern
provinces and cities (regions), which may influence the Renting Party’s provision of
fixed network services to its customers, the Leasing Party shall, as soon as possible
(under any circumstances, within 5 working days after the Leasing Party being aware of
the incident or situation), notify the Renting Party in writing. Such notification shall
list the following:

	 	4.1.1	 	The nature of the incident or situation and if it is caused by the reasons
listed in provision 4.4;

	 
	 	4.1.2	 	If the Leasing Party believes that certain measures need to be taken for
correcting the matter or enabling the network to operate as soon as possible, the
Leasing Party must specify the measures; and

	 	4.1.3	 	The impacts that such incident or situation might have on the Renting
Party’s provision of fixed network service, including the number of possible
affected fixed network users.

	4.2	 	Once the Renting Party receives any notification based on Clause 4.1, it shall
discuss possible corrective action with the Leasing Party in good faith.

	4.3	 	In addition to the situation mentioned in Clause 4.4 of this Agreement, if the Leasing
Party fails to provide any of the fixed networks assets in the 21 southern provinces and
cities (regions) and thus affects the Renting Party’s provision of fixed networks services,
the Leasing Party shall give a discount on the lease fee (hereinafter called “Delay
Discount”). It is calculated as follows:

	 	 	 
	Delay Discount =

	 	the number of Renting Party’s fixed network users affected by
the delay × time of delay (number of days)× the ARPU of fixed network
users(including basic communications and value-added services)/ number of days of
corresponding months

	 	 	In the above formula, “the number of Renting Party’s fixed network users affected by the
delay” shall be confirmed in accordance with the Renting Party’s report and the actual
proof provided; “the ARPU of fixed network users (including basic communications and
value-added services)” shall be the average monthly ARPU of the fixed network users in
affected areas during the period of three months before the delay, an figure which is
confirmed by the Renting Party.

	 
	 	 	The Delay Discount shall be deducted from the lease fee (to be paid by the Renting Party to
the Leasing Party) of the next term.

	4.4	 	If any incident or situation notified by the Leasing Party to the Renting Party based
on Clause 4.1 falls in the following category or caused by the following items:

	 	4.4.1	 	Force Majeure;

	 
	 	4.4.2	 	The Renting Party materially fails to fulfill its substantial obligations
under this Agreement, or prevents the Leasing Party from carrying out its duties
under this Agreement; or

 

6

 

	 	4.4.3	 	The need to abide by any applicable laws, any compulsory requirements set
by the governmental authorities or other applicable compulsory stipulations;

unless such incident (only limited to the incidents stipulated in Clause 4.4.3) is caused by
the Leasing Party’s violation of this Agreement, the Leasing Party is not responsible for
giving any delay discount, liquidated damages or other compensations due to the inability
(caused by such incidents) to lease the telecom network facilities to the Renting Party
according to the terms and conditions of this Agreement; however, the Leasing Party shall
resume the provision of related telecom network facilities which are interrupted due to such
incidents at the earliest date possible.

Article 5 Lease Fee and Payment

	5.1	 	The lease fee during the lease term is:

	 	5.1.1	 	The lease fee for 2011 is 2.4 billion Yuan;

	 
	 	5.1.2	 	The lease fee for 2012 is 2.6 billion Yuan. Unless otherwise specified in
writing between the two Parties, all payable lease fees shall be paid in RMB.

	5.2	 	The lease fee shall be paid by quarter based on the standards listed in Clause 5.1 and
transferred to the Leasing Party within 30 days after each quarter.

	5.3	 	If, according to Clause 3.2 of this Agreement, both Parties agree to extend the lease
term, the related lease fee shall be separately discussed between the two Parties.

Article 6 Ownership and Risk Sharing

	6.1	 	Both Parties agree, the fixed communications network leased under this Agreement shall
be owned by the Leasing Party. The Renting Party could, after the lease taking effect,
build or expand related fixed communications network according to its business development
needs, and ownership of those newly built and expanded network facilities and equipment
(paid by the Renting Party itself) belong solely to the Renting Party. Pursuant to the
applicable laws and regulations, the Parties shall underwrite their own network equipment
and facilities respectively and enjoy the benefits of such insurances.

	6.2	 	During the lease term, the Leasing Party shall be responsible for the risk of loss,
theft, damage or destruction of the assets of fixed communication network, while the
Renting Party is responsible for the loss of damage caused by the operation of fixed
communication network within its target areas.

 

7

 

Article 7 Liabilities of the Parties to the Agreement

	7.1	 	Liabilities of the Leasing Party

Without limiting the liabilities of the Leasing Party under other provisions of this
Agreement, the Leasing Party shall hold the following liabilities to the Renting Party:

	 	7.1.1	 	Obtaining and maintaining all the necessary government
approval/authorization, license and other documents required for network operation,
maintenance and upgrade;

	 
	 	7.1.2	 	Ensuring the fixed assets of the 21 southern provinces and cities (regions)
could be delivered to the Renting Party for use during the lease term;

	 	7.1.3	 	Trying its best to make sure the network quality indicators’ compliance with
the agreed standards set by the two Parties;

	 	7.1.4	 	If the Renting Party requires the Leasing Party to upgrade its network
software or hardware, the Leasing Party shall try its best to meet the requirements
as soon as possible;

	 
	 	7.1.5	 	Unless agreed in writing by the Renting Party, any part of the fixed
communications network of the target areas shall not be rent or sold to any third
party, or any third party shall not be allowed to use or operate the network for
telecom service provision in any form;

	 
	 	7.1.6	 	Without the prior written consent of the Renting Party, the Leasing Party
shall not, in any form, use or operate the fixed communications network of the target
areas to provide telecom service to any third party, or compete with the listed Group
in any other form;

	 
	 	7.1.7	 	If any part of the fixed communications network in the target areas
breaks down, the Leasing Party shall provide all the necessary cooperation to the
Renting Party, including contacting the network equipment providers and coordinating
among the parties.

	7.2	 	Liabilities of the Renting Party

Without limiting liabilities of the Renting Party under other provisions of this Agreement,
the Renting Party shall hold the following liabilities to the Leasing Party:

	 	7.2.1	 	Providing the information and materials about the network status, usage
and operation as reasonably required by the Leasing Party from time to time;

 

8

 

	 	7.2.2	 	Allowing the representative of the Leasing Party to examine the network during
normal working time after a reasonable notification has been sent;

	 
	 	7.2.3	 	Being responsible for the maintenance and security of the network, and in
charge of the maintenance of all the databases related to the network;

	 
	 	7.2.4	 	Allowing the Leasing Party to use the premise of the Renting Party for the
purpose of fulfilling the Leasing Party’s duties under this Agreement;

	 
	 	7.2.5	 	(i) Taking all the necessary or favorable steps to protect all parts of
network, trying to keep the network in a good state (excluding normal wear and tear),
and (ii) maintaining the network according to the best practice commonly recognized
by other fixed network service operators in China.

Article 8 Statement, Representation and Guarantee

	8.1	 	Statement, representation and guarantee of the Renting Party to the Leasing Party:

	 	8.1.1	 	The Renting Party is a legal entity formally registered and validly
existing pursuant to the Chinese laws, and is operating with limited liability. It
is entitled to own and use its capital to continue its ongoing services;

	 	8.1.2	 	The Renting Party is capable of executing this Agreement, fulfilling the
obligations under this Agreement and carrying out the transactions contemplated in
this Agreement. In addition, it has taken all the necessary actions to approve the
execution, fulfillment and delivery of this Agreement and carry out the transactions
contemplated in this Agreement.

	 	8.1.3	 	This Agreement becomes an integral part of the Renting Party’s legal, valid and
binding liabilities;

	 	8.1.4	 	The Renting Party’s execution and fulfillment of this Agreement and the
performance of the transaction contemplated herein, is not and will not (i) be in
contradiction with the incorporation documents of the Renting Party; or (ii) be in
contraction with any document which has binding effects on the Renting Party or any
of its assets or lead to violation of such documents, nor will it lead to any
guarantee on any of its assets;

	 	8.1.5	 	The Renting Party abides by the civil and commercial laws relating to its
liabilities under this Agreement; neither the Renting Party nor any of its assets is
entitled to exemption of any sort, and the Renting Party’s executing and fulfilling of
this Agreement is a private commercial act; and

	 	8.1.6	 	There is no pending or possible law suit, arbitration or administrative
procedure, the failing of which will lead to major unfavorable impact on the Renting
Party’s financial status or services, or on its capability to fulfill the
liabilities under this Agreement.

 

9

 

	8.2	 	Statement, representation and guarantee of the Leasing Party to the Renting Party:

	 	8.2.1	 	The Leasing Party is a legal entity formally registered according to the
Chinese law, and is operating with limited liability. It is entitled to own and use
its capital to continue the services it is providing;

	 	8.2.2	 	The Leasing Party is capable of executing this agreement, fulfilling the
obligations under this Agreement and carrying out the transactions contenplated in
this agreement. In addition, it has taken all the necessary actions to approve the
execution, fulfillment and delivery of this Agreement and carry out the transactions
contenplated in this Agreement.

	 
	 	8.2.3	 	This agreement becomes an integral part of the Leasing Party’s legal, valid and
binding liabilities;

	 	8.2.4	 	The Leasing Party’s execution and fulfillment of this Agreement and the
performance of the transaction contemplated herein, is not and will not (i) be in
contradiction with the incorporation documents of the Leasing Party; or (ii) be in
contraction with any document which has binding effects on the Leasing Party or its
assets or lead to violation of such documents, nor will it lead to any guarantee on
any of its assets;

	 	8.2.5	 	All approvals, consents, registration and notification with regard to the
Leasing Party’s execution, fulfillment, legal effect and performance of this Agreement
under the PRC laws and those necessary for the transaction contemplated herein, the
obtaining or completion of which are the liability of the Leasing Party (depend on
which is applicable), shall be already obtained or completed and must be in full
validity;

	 	8.2.6	 	The Renting Party’s usage of the network under this Agreement will not
cause the Renting Party to violate any law, rule, order, license, waiver, consent,
registration, approval or other authorization; and

	 	8.2.7	 	The Leasing Party abides by the civil and commercial laws relating to its
liabilities under this Agreement; neither the Leasing Party nor any of its asset is
entitled to exemption of any sort, and the Leasing Party’s execution and fulfillment
of this Agreement constitutes a private commercial act.

Article 9 Purchase Option

	9.1	 	The Leasing Party hereby grants the purchase option for the fixed-line communication
network of the target areas to the Renting Party. The Renting Party may exercise the
purchase option during the lease term upon the delivery of a written notice to the Leasing
Party.

	9.2	 	The Leasing Party and the Renting Party shall in good faith conduct a negotiation on and
sign a transfer agreement in relation to the fixed-line communication network of the target
areas once it becomes practical. The purchasing price of the fixed-line communication
network of the target areas shall be determined by a
consultation between the Leasing Party and the Renting Party by taking into consideration of
the evaluation results concluded under the applicable laws and regulations of China in
combination with the fair value of such network.

 

10

 

	9.3	 	The Renting Party shall exercise the purchase option in compliance with all applicable
laws, regulations and regulatory rules (including the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited).

Article 10 Liability for Breach

	10.1	 	Any untrue, inaccurate, incomplete statement and/or guarantee, any false statement,
omission or misrepresentation, any violence of the commitment under this Agreement or any
provisions thereof by either party shall be deemed as breach of this Agreement. Unless
otherwise specified, the defaulting Party shall make complete and full compensations to the
non-defaulting Party for the actual damages caused.

Article 11 Force Majeure

Force Majeure events shall mean any event that occurs after this Agreement takes effect and
adversely affects the performance by a Party of its obligations under this Agreement in whole or
in part, but only if and to the extent that such events are unforeseeable and the occurrence and
effect could not be prevented or overcome. Should either the Leasing Party or the Renting Party
(“affected Party”) be prevented, impeded or delayed from performing any of its obligations under
this Agreement due to the Force Majeure event, then:

	11.1	 	The affected Party may, subject to a notice of the Force Majeure event(s) delivered to the
other Party in accordance with Clause 11.2 of this Agreement, suspend the performance of its
obligations under this Agreement which is prevented, impeded or delayed by any Force Majeure
event during the period for which such event lasts.

	11.2	 	The affected Party shall immediately give the other Party a written notice of the Force
Majeure event(s) after its occurrence, providing reasonable details on such Force Majeure
event(s), including the occurrence, time as well as the effects of such event(s) on the
affected Party’s ability to perform its obligations under this Agreement.

	11.3	 	The affected Party shall use all reasonable efforts to mitigate the effects of the Force
Majeure event(s) on its ability to perform the obligations under this Agreement.

	11.4	 	The affected Party shall notify the other Party in writing of the termination or
elimination of the Force Majeure event(s) and the duration of such event(s) after the cease
of such event(s) without any delay. Both Parties shall recommence
performance of their obligations under this Agreement.

 

11

 

Article 12 Confidentiality

	12.1	 	The Parties shall, and shall ensure that their directors, senior officers, employees and
agents, hold in confidence this Agreement, all terms and provisions thereof, and all
documents and information in relation to this Agreement supplied by or on behalf of the
other Party and shall not disclose this Agreement, any terms and provisions thereof or any
above-mentioned documents and information to the third party without the prior written
consent from the other Party. However, either Party shall be entitled to the following
disclosure subjecting to a prior notice to the other Party:

	 	12.1.1	 	any disclosure by either Party for the purpose of protecting its rights and
benefits in any lawsuit or legal actions arising out of this Agreement or in respect
thereof; or

	 	12.1.2	 	any disclosure required by an order of a court of the competent jurisdiction (to be
performed either in accordance with any disclosing procedures or in a pattern
otherwise specified) or by any laws or any rules and regulations of any stock
exchange or securities regulators; or

	 	12.1.3	 	any disclosure made by either Party to its auditor, legal counselor or other
professional consultants; or

	 	12.1.4	 	any disclosure by either Party to any banks or other financing institutions, or
potential financing institutions; or

	 	12.1.5	 	any disclosure required by any applicable law or made by either Party for the
performance of its obligations under this Agreement.

	12.2	 	Nothing set forth in Clause 12.1 shall preclude the disclosure of materials, documents or
other information relating to this Agreement by the Renting Party to China United Network
Communications Limited (“Unicom A Share Company”) and its subsidiaries.

Article 13 Termination

	13.1	 	The Renting Party may terminate this Agreement at any time by giving written notice at
least ninety (90) day prior to the desired termination date.

 

12

 

	13.2	 	In case of any continuing or material breach of any provisions of this Agreement
by either the Leasing Party or the Renting Party (except the deliberate breach of this
Agreement by either Party for the purpose of termination), should the defaulting Party
fail to make any remedies for the breach within ninety (90) days after the receipt of a
written notice containing information on details of breach and demanding remedies while
such breach is remediable, the non-breaching Party shall be entitled to terminate this
Agreement at any time, but to the extent that such termination will not affect any other
rights hereunder of the Parties or the remedies.

	13.3	 	If the defaulting Party only violates the provisions on time of performance rather than
any other subject (in addition, the time of performance is not an essential element), such
breach shall be deemed remediable.

	13.4	 	The right to terminate this Agreement stipulated in this Article shall not infringe on any
other right or remedy of either Party result from or arise out of the relevant breach (if
any) or any other breach.

	13.5	 	On termination of this Agreement due to any reason, the Parties shall have no further
obligations hereunder except for rights or obligations otherwise specified or already
properly accrued prior to such termination.

	13.6	 	Notwithstanding Clause 13.1, this Agreement may be terminated at any time subject to the
mutual consent in writing.

	13.7	 	Upon the termination of this Agreement, the Renting Party shall return to the Leasing
Party in good faith the fixed-line communication network and properly deal with the
subsequent matters including customer service.

Article 14 Expenses

	14.1	 	Save as otherwise provided herein, each Party shall bear its own expenses and expenditures
(including legal fees and expenses) in connection with the negotiation, preparation and
performance of this Agreement.

	14.2	 	All stamp duties and other taxes payable in respect of this Agreement and any previous
transactions hereto shall be borne by the Parties in equal share.

Article 15 Waiver, Rights and Remedies

Unless otherwise expressly provided herein, the waiver, failure or delay by either Party to
exercise any right, power or remedy under this Agreement or any other transaction document shall
not thereby act as a waiver of such right, power or remedy, nor shall the waiver, failure or
delay affect the Party’s subsequent performance of such right, power or remedy, or any other
right, power or remedy. Any single or partial exercise of any right, power or remedy shall not
preclude any further exercise of such right, power or
remedy. No waiver shall be effective unless made in writing and duly signed by an authorized
representative of the waiving Party.

 

13

 

Article 16 Severability

All provisions under this Agreement and any other transaction documents shall be deemed
severable. In the event that any provision contained herein shall be held to be invalid or
unenforceable by reason of any law in any jurisdiction, such invalidity or unenforceability shall
attach to such provision; and the Parties shall make all reasonable efforts to replace such
provision with one that is valid and enforceable and which achieves, to the extent possible, the
purpose of the original provision.

Article 17 Notices

	17.1	 	All notices made under the provisions of this Agreement shall be in writing and duly
signed by the sender of such notice (or an authorized representative), and shall be given by
hand-delivery, postage prepaid recorded mail, express mail or registered mail, or facsimile
transmission to the Parties with a specified recipient at the address or facsimile number
set forth hereunder. Such notice shall be deemed officially delivered

	 	(1)	 	at the time personally delivered, when delivered by hand;

	 
	 	(2)	 	upon transmission thereof, if by facsimile transmission; and

	 
	 	(3)	 	at the time actually delivered, if sent by postage prepaid recorded mail,
express mail or registered mail.

Should any notice given by hand-delivery or facsimile transmission be delivered at
non-working hour of the recipient, such notice shall be deemed received by such recipient at
the working hour of the next working day thereafter.

All the time specified in this Article shall refer to the local time at which the receiving
Party is located.

Article 18 Governing Law and Arbitration

	18.1	 	This Agreement shall be governed by and construed in accordance with the laws of China.

	18.2	 	The Parties shall put in good effort to resolve any dispute, conflict or claim (“Dispute”)
arising under, out of, in connection with or relating to the interpretation or performance
of this Agreement through amicable consultation. If such Dispute has not been resolved
within sixty (60) days after the receipt by a
Party of a request requiring consultations between the Parties to resolve the Dispute,
such Dispute shall be submitted for arbitration.

 

14

 

	18.3	 	Any Dispute shall be resolved by means of arbitration in accordance with the effective
arbitration rule of China International Economic and Trade Arbitration Commission (“CIETAC”)
when such Dispute is submitted. The Dispute shall be decided by three arbitrators, one
appointed by each Party and the third appointed by the two chosen. In case the two
arbitrators chosen by the Parties fail to determine the third arbitrator, CIETAC shall make
the appointment of the third arbitrator.

	18.4	 	The arbitration proceedings shall be conducted by CIETAC in Beijing and in the Chinese
language, unless otherwise agreed by the Parties to the arbitration.

	18.5	 	The award rendered by arbitration conducted pursuant to the foregoing proceedings shall be
final and binding upon both Parties, and may be enforced in accordance with the terms and
conditions thereof.

	18.6	 	The arbitration fees shall be borne by the losing party. The Parties agree that, if one
Party shall enforce the award rendered by any legal proceedings, the Party subject to such
legal proceedings shall bear all reasonable fees, expenses and attorney fees.

	18.7	 	During dispute settlement, the Parties shall continue to perform this Agreement except for
the provisions in dispute.

Article 19 Effectiveness and Amendment

	19.1	 	This Agreement shall not become effective unless reviewed and approved by the board of
directors of the Unicom A Share Company and Unicom Red Chip Company, and duly signed by the
legal representatives or their authorized representatives of the Parties with the official
seals or special seals for contractual use stamped. Upon signature of this Agreement, any
amendment to this Agreement (or any other transaction documents) shall be binding only if
made in writing and duly signed by the legal representatives or their authorized
representatives of the Parties with the official seals or special seals for contractual use
stamped.

	19.2	 	Except as expressly agreed, no amendment shall be construed as a general waiver of any
provisions under this Agreement, nor shall it affect any rights, obligations or liabilities
under or pursuant to this Agreement which have already accrued up to the date of amendment,
and such rights and obligations shall remain in full force and effect, except and only to
the extent that they are so modified or varied.

	19.3	 	No right or privilege under this Agreement shall be assigned by either Party or its
successors except with the prior written consent of the other Party.

 

15

 

Article 20 Supplementary Provisions

	20.1	 	(For the Parties entering into this Agreement) In case of any conflict between any
provisions of this Agreement and any other agreements, the former shall prevail, unless (a)
such other agreement expressly states its priority over this Agreement in such conflict; and
(b) such other agreement is entered into by Parties to this Agreement, or such other
agreement prevails over this Agreement in such conflict as otherwise agreed in writing.

	20.2	 	This Agreement together with its attached annexures shall constitute all legal documents
in connection with the leasing matter hereof and supersede all prior oral discussions and
written agreements on this subject matter, except otherwise agreed by the Parties.

	20.3	 	This Agreement shall be signed in ten (10) originals, each Party holding two (2) and
others for the use of information disclosure, and review by and/or registration at the
government authorities (if required), each of which shall be equally authentic.

(The next page is the signature page of this Agreement with no main text on it.)

 

16

 

(This page is the signature page for the 2011-2012 Network Lease Agreement for the 21
Southern Provinces and there is no main text on it.)

Unicom
New Horizon Telecommunications Company Limited (Seal)

Signature of the legal representative or authorized representative

	 	 	 
	/s/ Zhao Yujun
 

	 	 

China United Network Communications Corporation Limited (Seal)

Signature of the legal representative or authorized representative

	 	 	 
	/s/ Tong Jilu
 

	 	 

 

17

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