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RESTATED ARTICLES OF INCORPORATION
OF
GRACO INC.
(Approved by the Board of Directors of Graco Inc. on
June 14, 2007)
ARTICLE
I
 1. |
The
name of this corporation shall be Graco Inc. |
ARTICLE 2
| 2. |
Corporation
Service Company, is this Corporation's registered
agent in the State of Minnesota, and Suite 418,
380 Jackson Street, St. Paul, Minnesota 55101,
the business office address of Corporation Service
Company, is the registered office of this Corporation. |
ARTICLE
3
| 3. |
Any action required or permitted to
be taken at a meeting of the Board of Directors of
this corporation not needing approval by the shareholders
under Minnesota Statutes, Chapter 302A, may be taken
by written action signed by the number of directors
that would be required to take such action at a meeting
of the Board of Directors at which all directors
are present. |
ARTICLE 4
| 4.1 |
(a) |
The total number of shares which this
corporation shall be authorized to issue is One Hundred
Million Twenty-two Thousand Five Hundred Forty-nine
(100,022,549) shares of which Ninety-seven Million (97,000,000)
shares of the par value of $1.00 per share shall be
Common Shares, Three Million (3,000,000) shares of the
par value of $1.00 per share shall be Preferred Shares
and Twenty-two Thousand Five Hundred Forty-nine (22,549)
shares of the par value of $100.00 per share shall be
Cumulative Preferred Shares. |
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(b) |
Preferred Shares may
be issued from time to time in one or more series
as the Board of Directors may determine, as hereinafter
provided. The Board of Directors is hereby authorized
by resolution or resolutions, to provide from time
to time for series of Preferred Shares out of the
unissued Preferred Shares not then allocated to
any series of Preferred Shares. Before any shares
of any such series are issued, the Board of Directors
shall fix and determine, and is hereby expressly
empowered to fix and determine, by resolution or
resolutions, the designations and the relative
rights and preferences thereof, of the shares of
such series. Preferred Shares will be senior to
the Cumulative Preferred Shares in terms of dividend
and liquidation rights unless the Board of Directors
specifically provides otherwise in the resolution
or resolutions establishing a series of Preferred
Shares.
The Board of Directors is expressly
authorized to vary the provisions relating to the
foregoing matters among the various series of Preferred
Shares.
Preferred Shares of any series that
shall be issued and thereafter acquired by the
corporation through purchase, redemption (whether
through the operation of a sinking fund or otherwise),
conversion, exchange or otherwise, shall, upon
appropriate filing and recording to the extent
required by law, have the status of authorized
and unissued Preferred Shares and may be reissued
as part of such series or as part of any other
series of Preferred Shares. Unless otherwise provided
in the resolution or resolutions of the Board of
Directors providing for the issue thereof, the
number of authorized shares of any series of Preferred
Shares may be increased or decreased (but not below
the number of shares thereof then outstanding)
by resolution or resolutions of the Board of Directors
and appropriate filing and recording to the extent
required by law. In case the number of shares of
any such series of Preferred Shares shall be decreased,
the shares representing such decrease shall, unless
otherwise provided in the resolution or resolutions
of the Board of Directors providing for the issuance
thereof, resume the status of authorized but unissued
Preferred Shares, undesignated as to series. |
| 4.2 |
The
designations, relative rights, voting powers, preferences
and restrictions granted to or imposed upon the Common
Shares and Cumulative Preferred Shares, which shall
be subject to the rights granted to any series of
Preferred Shares in the resolutions authorizing the
series, are as follows: |
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(a) |
Voting. Except as expressly set forth in sub-division (f)
below and except as otherwise
provided in the resolutions authorizing any series
of Preferred Shares or by law, the holders of Common
Shares shall have the sole voting rights of shareholders
of the corporation and shall be entitled to one vote
for each share held. The shareholders of the corporation
shall have no right to cumulate votes for the election
of directors. |
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(b) |
No Pre-emptive Rights. Except as provided
in the resolutions authorizing any series of Preferred
Shares, no holders of any share of stock of any class
of this corporation shall have any pre-emptive right
to subscribe to any issue of shares of any class
of this corporation now or hereafter authorized or
any security hereafter issued by this corporation
convertible into shares of this corporation. |
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(c) |
Dividends. The holders of Cumulative
Preferred Shares shall be entitled to receive out
of any assets legally available therefor, when
and as declared by the Board of Directors, fixed
cumulative dividends at the rate of five percent
(5%) per annum upon the par value thereof, and
no more, payable semiannually on January 1 and
July 1 of each year. Such dividends shall be cumulative
from January 1, 1969.
In no event shall any dividend be
paid or declared (other than dividends payable
in Common Shares of any class), nor shall any distribution
be made on the Common Shares of any class of the
corporation, nor shall any Common Shares of any
class be purchased, redeemed or otherwise acquired
by the corporation for value unless all dividends
on the Cumulative Preferred Shares for all past
semiannual dividend periods and for the then current
semiannual dividend period shall have been paid,
or declared and a sum sufficient for the payment
thereof set apart for payment.
Subject to the provisions of this
Article 4 and not otherwise, dividends may be declared
by the Board of Directors and paid from time to
time, out of any funds legally available therefor,
upon the Common Shares, and the holders of Cumulative
Preferred Shares shall not be entitled to participate
in any such dividends. |
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(d) |
Redemption. The Cumulative
Preferred Shares of the corporation may be redeemed
as a whole at any time or in part from time to time
at the option of the corporation by resolution of
the Board of Directors at the redemption price of
$105 per share together with an amount equal to all
accrued and unpaid cumulative dividends thereon from
the date on which dividends thereon became cumulative
to the redemption date. If less than all of the outstanding
Cumulative Preferred Shares are to be redeemed, the
shares to be redeemed shall be selected by the Board
of Directors or by a person appointed for such purpose
by the Board of Directors.
Notice of every redemption of Cumulative Preferred
Shares shall be mailed addressed to the holders of
record of the shares to be redeemed at their respective
addresses as they appear on the stock books of the
corporation not less than thirty (30) and not more
than sixty (60) days prior to the date fixed for redemption.
If notice of redemption shall have been duly given
as aforesaid and if on or before the redemption date
specified in the notice, all funds necessary for the
redemption shall have been deposited in trust with
a bank or trust company in good standing and doing
business at any place within the United States, and
designated in the notice of redemption, for the pro
rata benefit of the shares so called for redemption,
so as to be and continue to be available therefor,
then, from and after the date of such deposit, notwithstanding
that any certificate for Cumulative Preferred Shares
so called for redemption shall not have been surrendered
for cancellation, the shares represented thereby shall
no longer be deemed outstanding, and the dividends
thereon shall cease to accumulate from and after the
date fixed for redemption, and all rights with respect
to the Cumulative Preferred Shares so called for redemption
shall forthwith, on the date of such deposit, cease
and terminate except only the right of the holders
thereof to receive the redemption price of the shares
so redeemed, including accrued cumulative dividends
to the redemption date, but without interest. Any
funds deposited by the corporation pursuant to this
paragraph and unclaimed at the end of six (6) years
after the date fixed for redemption shall be repaid
to the corporation upon its request expressed in a
resolution of its Board of Directors, after which
repayment the holders of the shares so called for
redemption shall look only to the corporation for
the payment thereof.
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(e) |
Dissolution, Liquidation, etc.
In the event of any dissolution, liquidation or winding
up of the affairs of the corporation, before any distribution
or payment shall be made to the holders of Common Shares,
the holders of the Cumulative Preferred Shares shall
be entitled to be paid in full the par value thereof
if such liquidation, dissolution or winding up shall
be involuntary, and the sum of $105 per share if such
liquidation, dissolution or winding up shall be voluntary,
together, in either event, with a sum, in the case of
each share, equal to the cumulative accrued and unpaid
dividends thereon to the date fixed for such distribution
or payment. If such distribution or payment shall have
been made to the holders of the Cumulative Preferred
Shares or moneys made available for such payment in
full, the remaining assets and funds of the corporation
shall be distributed ratably to the holders of the Common
Shares. If there shall be insufficient assets to make
full payment to the holders of Cumulative Preferred
Shares as above provided, the assets of the corporation
shall be distributed among the holders of Cumulative
Preferred Shares ratably. Except as herein otherwise
expressly provided, the Cumulative Preferred Shares
shall not be entitled to participate in any of the profits,
surplus or assets of the corporation. The consolidation
or merger of the corporation into or with any other
corporation or corporations pursuant to the statutes
of the State of Minnesota shall not be deemed a liquidation,
dissolution or winding up of the affairs of the corporation
within the meaning of any of the provisions of this
paragraph. |
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(f) |
Special Voting Rights. The holders
of Cumulative Preferred Shares shall not be entitled
as such to vote at any meeting of the shareholders of
the corporation except as required by law or as hereinafter
otherwise provided. |
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(i) |
If an amendment to the Articles of Incorporation
of the corporation would adversely affect the rights
of the holders of Cumulative Preferred Shares, then
in addition to the vote thereon by the holders of the
Common Shares, the holders of Cumulative Preferred Shares
shall be entitled to vote separately as a class thereon,
and such amendment shall be adopted only if it receives
the affirmative vote of the holders of a majority of
the Cumulative Preferred Shares. |
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(ii) |
After an amount equivalent to three (3)
full semi-annual dividend installments of the Cumulative
Preferred Shares shall be in default, the holders of
Cumulative Preferred Shares at the time outstanding,
voting separately as a class shall, at any annual meeting
of the shareholders or any special meeting of the shareholders
called as herein provided occurring during such period,
elect two (2) members of the Board of Directors, and
the holders of the Common Shares, voting separately
as a class, shall elect the remaining directors of the
corporation. |
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(iii) |
After an amount equivalent to six (6)
full semi-annual dividend installments of the Cumulative
Preferred Shares shall be in default, the holders of
Cumulative Preferred Shares, voting separately as a
class, shall, at any annual meeting of the shareholders
or any special meeting of the shareholders called as
herein provided occurring during such period, elect
the smallest number of directors necessary to constitute
a majority of the full Board of Directors, and the holders
of the Common Shares, voting separately as a class,
shall elect the remaining directors of the corporation. |
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At any annual meeting
or special meeting of shareholders for the election
of directors occurring after all cumulative dividends
then in default on the Cumulative Preferred Shares
then outstanding, including the dividend for the then
current semi-annual period, shall have been paid,
or declared and set apart for payment, the Cumulative
Preferred Shares shall thereupon be divested of any
rights with respect to the election of directors as
above provided, but always subject to the same provisions
for the revesting of such voting power in the Cumulative
Preferred Shares in the case of a future like default
or defaults in dividends on Preferred Shares.
Voting power for the election of directors
vested in the holders of the Cumulative Preferred
Shares as above provided may be exercised at any annual
meeting of shareholders or at a special meeting of
shareholders held for such purpose, which special
meeting of shareholders shall be called by the proper
officers of the corporation at any time when such
voting power shall be vested within twenty (20) days
after written request therefor signed by the holder
or holders of not less than ten percent (10%) of the
Cumulative Preferred Shares then outstanding, the
date of such special meeting to be not more than twenty
(20) days from the date of giving notice thereof,
and such notice shall be given to all holders of Cumulative
Preferred Shares and Common Shares not less than ten
(10) days prior to said meeting. In each such case
such notice shall direct attention to the voting rights
of the holders of Cumulative Preferred Shares. At
any such meeting the presence in person or by proxy
of the holders of a majority of the Cumulative Preferred
Shares outstanding shall be required to constitute
a quorum for the election of directors whom the holders
of Cumulative Preferred Shares are entitled to elect
and, likewise, the presence in person or by proxy
of the holders of a majority of the Common Shares
outstanding shall be required to constitute a quorum
for the election of directors whom the holder of Common
Shares are entitled to elect; provided that either
the Cumulative Preferred shareholders or the Common
shareholders who are present in person or by proxy
at such a meeting shall have power to adjourn such
meeting for the election of directors to be elected
by them from time to time, without notice other than
announcement at the meeting and, provided further,
that the adjournment of the meeting for lack of a
quorum of the Common shareholders shall not prevent
the election at that meeting of the directors whom
the Cumulative Preferred shareholders are entitled
to elect if there is a quorum of the Cumulative preferred
shareholders.
If at any time the holders of Cumulative
Preferred Shares shall become entitled to elect two
(2) directors or a majority of the Board of Directors
as aforesaid, the terms of all incumbent directors
shall expire whenever such two (2) directors or such
majority have been duly elected and qualified.
Whenever the Cumulative Preferred Shares
shall be divested of voting power with respect to
the election of directors the terms of all then incumbent
directors shall expire upon the election of a new
board by the holders of Common Shares at the next
annual or special meeting for the election of directors.
If a vacancy or vacancies in the Board
of Directors shall exist with respect to a director
or directors elected by the Cumulative Preferred shareholders,
the remaining director or directors elected by the
Cumulative Preferred shareholders may, by the vote
of such remaining director if there be but one, or
by the vote of a majority of such remaining directors
if there be more than one, elect a successor or successors
to hold office for the unexpired term. Likewise, a
vacancy or vacancies existing with respect to directors
elected by the Common shareholders may be filled by
the remaining director or directors elected by the
Common shareholders.
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ARTICLE 5
| 5.1 |
Whether or not a vote of shareholders
is otherwise required, the affirmative vote of the holders
of not less than two-thirds of the outstanding shares
of "Voting Stock" (as hereafter defined) of
the corporation shall be required for the approval or
authorization of any "Business Combination"
(as hereafter defined) with any Related Person (as hereafter
defined) involving the corporation or the approval or
authorization by the corporation in its capacity as
a shareholder of any Business Combination involving
a "Subsidiary" (as hereafter defined) which
requires the approval or authorization of the shareholders
of the Subsidiary; provided, however, that the two-thirds
voting requirement shall not be applicable if: |
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(a) |
The "Continuing
Directors" (as hereafter defined) by a majority
vote have expressly approved the Business Combination;
or |
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(b) |
The Business Combination is a merger,
consolidation, exchange of shares or sale of all or
substantially all of the assets of the corporation and
the cash or fair market value (determined as of the
effective date of such Business Combination or, in the
case of a sale of assets as of the date of the distribution
of the proceeds of the sale to the shareholders of the
corporation) of the property, securities or other consideration
to be received per share by holders of common stock
of the corporation other than the Related Person is
not less than the highest per share price (with appropriate
adjustments for recapitalizations, stock splits, stock
dividends and like distributions), paid by the Related
Person in acquiring any of its holdings of the corporation's
common stock during the two-year period prior to the
effective date of the Business Combination or the distribution
of the proceeds of a sale of assets. |
| 5.2 |
For the purposes of this Article 5: |
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(a) |
The
term "Business Combination" shall mean |
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(i) |
any merger or consolidation of the
corporation or a Subsidiary with or into a Related Person, |
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(ii) |
any exchange of shares of the corporation
or a Subsidiary for shares of a Related Person which,
in the absence of this Article, would have required
the affirmative vote of at least a majority of the
voting power of the outstanding shares of the corporation
entitled to vote or the affirmative vote of the corporation,
in its capacity as a shareholder of the Subsidiary, |
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(iii) |
any sale, lease, exchange, transfer
or other disposition (in one transaction or a series
of transactions), including, without limitation,
a mortgage or any other security device, of all or
any "Substantial Part" (as hereinafter
defined) of the assets either of the corporation
(including, without limitation, any voting securities
of a Subsidiary) or of a Subsidiary, to or with a
Related Person, |
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(iv) |
any sale, lease, exchange, transfer
or other disposition (in one transaction or a series
of transactions) of all or any Substantial Part of
the assets of a Related Person to or with the corporation
or a Subsidiary, |
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(v) |
the issuance of any securities to
a Related Person (except pursuant to stock dividends,
stock splits or similar transactions which would
not have the effect of increasing the proportionate
voting power of a Related Person) of the corporation,
or of a Subsidiary (except pursuant to a pro rata
distribution to all holders of common stock of the
corporation), |
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(vi) |
any recapitalization or reclassification
that would have the effect of increasing the voting
power of a Related Person, and |
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(vii) |
any agreement, contract or other arrangement
providing for any of the transactions described in
this definition of Business Combination. |
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(b) |
The
term "Related Person" shall mean and include
any individual, corporation, partnership or other
person or entity which, together with its "Affiliates" and "Associates" (as
defined on February 24, 1984 by Rule 12b-2 under
the Securities Exchange Act of 1934), "Beneficially
Owns" (as defined on February 24, 1984 by Rule
13d-3 under the Securities Exchange Act of 1934)
in the aggregate 15 percent or more of the outstanding
Voting Stock of the corporation, and any Affiliate
or Associate (other than the corporation or a wholly-owned
subsidiary of the corporation) of any such individual,
corporation, partnership or other person or entity. |
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(c) |
The term "Substantial Part" shall
mean more than 30 percent of the fair market value
of the total assets of the corporation in question,
as of the end of its most recent fiscal year ending
prior to the time the determination is being made. |
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(d) |
Without limitation, any shares of
common stock of the corporation that any Related
Person has the right to acquire pursuant to any agreement,
or upon exercise of conversion rights, warrants or
options, or otherwise, shall be deemed beneficially
owned by the Related Person. |
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(e) |
The term "Subsidiary" shall
mean any corporation, a majority of the equity securities
of any class of which are owned by the corporation,
by another Subsidiary, or in the aggregate by the
corporation and one or more of its Subsidiaries. |
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(f) |
The term "Voting Stock" shall
mean all outstanding shares of capital stock of the
corporation entitled to vote generally in the election
of directors and each reference to a proportion of
shares of Voting Stock shall refer to such proportion
of the votes entitled to be cast by such shares. |
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(g) |
The term "Continuing Director"
shall mean (i) a director who was a member of the Board
of Directors of the corporation either on February 24,
1984 or immediately prior to the time that any Related
Person involved in the Business Combination in question
became a Related Person and (ii) any person becoming
a director whose election, or nomination for election
by the corporation's shareholders, was approved by a
vote of a majority of the Continuing Directors; provided,
however, that in no event shall a Related Person involved
in the Business Combination in question be deemed to
be a Continuing Director. |
| 5.3 |
For the purposes of this Article 5 the
Continuing Directors by a majority vote shall have the
power to make a good faith determination, on the basis
of information known to them, of: (i) the number of
shares of Voting Stock of the corporation that any person
or entity Beneficially Owns, (ii) whether a person or
entity is an Affiliate or Associate of another, (iii)
whether the assets subject to any Business Combination
constitute a Substantial Part, (iv) whether any business
transaction is one in which a Related Person has an
interest, (v) whether the cash or fair market value
of the property, securities or other consideration to
be received per share by holders of capital stock of
the corporation other than the Related Person in a Business
Combination is an amount at least equal to the highest
per share price paid by the Related Person and (vi)
such other matters with respect to which a determination
is required under this Article 5. |
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| 5.4 |
The provisions set forth in this Article
5 may not be repealed or amended in any respect, unless
such action is approved by the affirmative vote of the
holders of not less than two-thirds of the outstanding
shares of Voting Stock of the corporation. |
ARTICLE 6
| 6.1 |
The number of directors shall initially
be ten and, thereafter, shall be fixed from time to
time by the Board of Directors or by the affirmative
vote of the holders of two-thirds of the voting power
of the outstanding capital stock of the corporation,
voting together as a single class. The directors shall
be divided into three classes, as nearly equal in number
as reasonably possible, with the term of office of the
first class to expire at the 1988 annual meeting of
shareholders, the term of office of the second class
to expire at the 1989 annual meeting of shareholders
and the term of office of the third class to expire
at the 1990 annual meeting of shareholders. At each
annual meeting of shareholders following such initial
classification and election, directors elected to succeed
those directors whose terms expire shall be elected
for a term of office to expire at the third succeeding
annual meeting of shareholders after their election. |
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| 6.2 |
Subject to the rights of the holders
of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in
the authorized number of directors or any vacancies
in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or
other cause may be filled by a majority vote of the
directors then in office though less than a quorum,
and directors so chosen shall hold office for a term
expiring at the next annual meeting of shareholders.
No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any
incumbent director. |
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| 6.3 |
Any directors, or the entire Board of
Directors, may be removed from office at any time, but
only for cause and only by the affirmative vote of the
holders of the proportion or number of the voting power
of the shares of the classes or series the director
represents sufficient to elect them. |
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| 6.4 |
The provisions of this Article 6 may
not be repealed or amended in any respect, unless such
action is approved by the affirmative vote of the holders
of not less than two-thirds of the outstanding shares
of the capital stock of the corporation entitled to
vote generally in the election of directors, voting
together as a single class. |
ARTICLE
7
| 7. |
No director of the corporation shall
be personally liable to the corporation or its shareholders
for monetary damages for breach of fiduciary duty by
such director as a director; provided, however, that
this Article 7 shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty
of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 302A.559 of the Minnesota Business
Corporation Act or Section 80A.23 of the Minnesota Securities
Law, or (iv) for any transaction from which the director
derived an improper personal benefit. No amendment to
or repeal of this Article 7 shall apply to or have any
effect on the liability or alleged liability of any
director of the corporation for or with respect to any
acts or omissions of such director occurring prior to
such amendment or repeal. |
ARTICLE 8
| 8. |
The Board of Directors of the corporation
(the "Board"), when evaluating any offer of
another party, (a) to make a tender or exchange offer
for any Voting Stock (as defined in Article 5) of the
corporation or (b) to effect a Business Combination
(as defined in Article 5), shall, in connection with
the exercise of its judgment in determining what is
in the best interests of the corporation as a whole,
be authorized to give due consideration to such factors
as the Board determines to be relevant, including, without
limitation: |
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(i) |
the interests of the corporation's
shareholders; |
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(ii) |
the social, legal and economic effects
upon employees, suppliers, customers and others having
similar relationships with the corporation, and the
communities in which the corporation conducts its
business; |
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(iii) |
whether the proposed transaction might
violate federal or state laws; and |
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(iv) |
not only the consideration being offered
in the proposed transaction, in relation to the then
current market price for the outstanding capital stock
of the corporation, but also the market price for the
capital stock of the corporation over a period of years,
the estimated price that might be achieved in a negotiated
sale of the corporation as a whole or in part of through
orderly liquidation, the premiums over market price
for the securities of other corporations in similar
transactions, current political, economic or other factors
bearing on securities prices and the corporation's financial
condition and future prospects. |
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In connection with any such evaluation,
the Board is authorized to conduct such investigations
and to engage in such legal proceedings as the Board
may determine. |
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