Graco Inc.; Illinois Tool Works Inc.; and Itw Finishing LLC

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IN THE MATTER OF GRACO INC.;

ILLINOIS TOOL WORKS INC.;

AND ITW FINISHING LLC CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLATIONS OF SECTION 5 AND OF THE FEDERAL TRADE COMMISSION ACT AND SECTION 7 OF THE CLAYTON ACT Docket No. 9350; File No. 111 0169 Complaint, December 15, 2011 – Decision, October 6, 2014 This consent order addresses the $650 million acquisition by Graco, Inc. of certain assets of Illinois Tool Works Inc. and ITW Finishing LLC (“ITW”). The complaint alleges that Graco’s acquisition of ITW would substantially reduce competition in various markets for industrial liquid finishing equipment in North America. The consent order requires Graco to divest ITW’s liquid finishing business assets, including the Binks, Devilbiss, Ransburg, and BGK brands.

Participants For the Commission: Anna Chehtova, Amanda Hamilton, Marc Schneider, Brian Telpner, and Cathlin Tully. For the Respondents: John Graubert, Covington & Burling LLP, Joseph Humke, Lindquist & Vennum, Richard Parker, O’Melveny & Myers LLP, and Richard A. Duncan, Faegre Baker Daniels LLP; Logan Breed and J. Robert Robertson, Hogan Lovells US LLP.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by the Act, the Federal Trade Commission, having reason to believe that Respondents Graco Inc. (“Graco”), Illinois Tool Works Inc., and ITW Finishing LLC (“ITW”) having entered into an agreement pursuant to which Graco will acquire the assets of ITW, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and which if consummated may substantially lessen competition in violation GRACO INC. 569 Complaint of Section 7 of the Clayton Act, 15 U.S.C. § 18 and Section 5 of the FTC Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint pursuant to Section 5(b) of the FTC Act, 15 U.S.C. § 45(b), and Section 11(b) of the Clayton Act, 15 U.S.C. § 21(b), stating its charges as follows: I.

NATURE OF THE CASE 1. Graco’s proposed acquisition of ITW, its largest and most significant competitor, threatens to harm competition for certain industrial liquid finishing equipment in North America and lead to higher prices for North American distributors and end users already struggling in today’s economic environment. Finishing is the application by end-user customers of coatings, such as paint or varnish, to all kinds of metal, plastic, or wood products that they manufacture. Describing the deal, Graco’s president told his Board of Directors that the ITW finishing companies were 2. Graco and ITW are the two dominant manufacturers of liquid finishing equipment for industrial use in North America. The acquisition would combine Graco’s with its leading competitor and eliminate the close competition ITW now poses to Graco’s liquid finishing business. As described in the 2010 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines (“Merger Guidelines”), the loss of this close direct competition is likely in and of itself to lead to anticompetitive effects. After the acquisition, Graco will no longer need to effectively discount on sales to distributors to compete with ITW and will have less incentive to develop new and better products. Because competition for sales to distributors will be lessened, end use industrial manufacturers may pay higher prices for industrial liquid finishing equipment.

3. Post-acquisition, Graco will control well over of the sales of all liquid finishing equipment for industrial use in North America. According to the parties’ internal documents, Graco VOLUME 158 Complaint and ITW are the dominant suppliers of certain industrial liquid finishing equipment in North America. Exel is a distant third. 4. Under the relevant case law and the Merger Guidelines, the extraordinarily high post-acquisition concentration levels render the acquisition presumptively unlawful in relevant markets within the product categories of pumps, spray guns, and proportioners for industrial use, in which Graco and ITW compete for the sale of industrial liquid finishing equipment to distributors (value-added resellers) for resale.

5. Evidence from the parties, distributors (value-added resellers), and other industry participants confirms this strong presumption of illegality. Because Exel and other niche manufacturers lack Graco’s and ITW’s installed base, brand acceptance, and access to quality North American distribution which can furnish some users with service and replacement parts, no existing competitors can or would constrain Graco postacquisition from imposing price increases on industrial liquid finishing equipment. As one industrial end user commented to ITW, 6. Effective expansion or entry into the manufacture and sale in each industrial liquid finishing equipment market in North America is unlikely in response to an anticompetitive price increase, due to significant barriers to entry. In a recent presentation prepared for its Board of Directors, Graco identified Repositioning or expansion by existing smaller competitors is unlikely without access to capable local distributors to sell and service finishing equipment for industrial end users. Indeed, Graco believes Respondents have advanced no credible, cognizable efficiencies to justify the acquisition, especially given the GRACO INC. 571 Complaint extremely high post-acquisition concentration and the loss of close competition between Graco and ITW. Indeed, Graco’s stated plan is to operate the two liquid finishing equipment businesses as separate standalone operations, only now under the common control of a single firm.

II.

RESPONDENTS 7. Graco Inc. is a for-profit corporation, existing and doing business under and by virtue of the laws of the state of Minnesota, with its office and principal place of business located at 88 11th Avenue Northeast, Minneapolis, Minnesota 55413. Graco manufactures and sells liquid finishing equipment throughout North America and the world.

8. Illinois Tool Works Inc. is a for-profit corporation, existing and doing business under and by virtue of the laws of the state of Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. Illinois Tool Works wholly owns ITW Finishing LLC. 9. ITW Finishing LLC is a for-profit limited liability company, existing and doing business under and by virtue of the laws of the state of Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. ITW manufactures and sells liquid finishing equipment throughout North America and the world. III.

JURISDICTION 10. Respondents, and each of their relevant operating subsidiaries and parent entities are, and at all relevant times have been, engaged in activities in or affecting “commerce” as defined in Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C. § 12.

11. The acquisition constitutes an acquisition subject to Section 7 of the Clayton Act, 15 U.S.C. § 18. VOLUME 158 Complaint IV.

THE ACQUISITION 12. Pursuant to an Asset Purchase Agreement dated April 14, 2011, Graco proposes to acquire certain assets and equity interests from Illinois Tool Works and ITW for $650 million. The transaction would create an entity with annual sales exceeding $1 billion. Respondents Graco and ITW have combined North American liquid finishing equipment sales exceeding V.

INDUSTRY STRUCTURE AND ANTICOMPETITIVE EFFECTS 13. Industrial manufacturers, the end users of the products at issue, use liquid finishing equipment to apply paint and other coatings to all kinds of finished goods, including automobiles, office furniture, and home appliances. Almost every surface requires a finish, whether for aesthetic value, surface protection, or other features. These characteristics are often the very things that make a customer choose one product over another. Applying a consistent finish is a critical part of the manufacturing process, because any disruption in the finishing process could impede the entire manufacturing process. Manufacturers require reliable, proven finishing equipment and local service, whenever a problem arises, day or night.

14. Graco and ITW manufacture and sell liquid finishing equipment for use in industrial settings. This equipment includes pumps, applicators (spray guns), plural component equipment (proportioners), and related equipment used in industrial paint systems. The equipment is durable, with a significant follow-on parts and service business associated with each system or component sale. Pumps, spray guns, proportioners, and the spare parts associated with these components account for the vast majority of the North American industrial liquid finishing equipment sales of both firms. Respondents sell these products throughout North America.

GRACO INC. 573 Complaint 15. Liquid finishing equipment manufacturers, including Graco and ITW, predominantly sell their products to independent, highly-specialized distributors, who purchase the vast majority of liquid finishing equipment for resale. Distributors provide a total liquid finishing solution—a value-added bundle of goods and services to meet each end user’s needs, which can include system design, engineering, installation, product training, equipment customization, maintenance, and repair. The initial sale of equipment typically results in additional business for the distributor in selling spare and replacement parts and accessories. Aftermarket sales often comprise the majority of a distributor’s business. The aftermarket business most typically involves Graco and ITW parts because they have the largest installed bases of equipment.

16. Access to quality distributors appears to be the most costeffective way to channel the local pull-through demand for the industrial liquid finishing equipment that is the subject of this complaint. As previously stated, all industrial liquid finishing equipment manufacturers sell predominantly through distributors. Graco itself sells all of its industrial liquid finishing equipment to distributors. ITW sells the vast majority of its industrial liquid finishing equipment to distributors.

17. Graco and ITW compete directly with each other on price and product innovation. Graco and ITW compete on price by (among other things) offering reduced prices to their distributors (and, through them to industrial end users) in the form of volume discounts, payment of commissions to distributors for “switching” an end user, and other promotions on the sale of their equipment. Graco and ITW also compete on innovation, often developing new products to match close offerings of the other firm. 18. Graco and ITW are the largest suppliers of pumps, spray guns, and proportioners, and are close or the closest competitors in each category of products that are the subject of this complaint. When Graco and ITW win a competitive sale, they displace each other’s products more often than anyone else’s. To grow share in a mature industry, a manufacturer must displace competitive product.

VOLUME 158 Complaint 19. Post-acquisition, distributors and industrial manufacturers will have no recourse to curb the loss of this competition. 20. Other firms will not grow or expand to replace the loss of this competition, especially for installed base sales. Without a network of well-financed, capable distributors who can quickly furnish service and replacement parts to end users, firms cannot expect to penetrate these markets significantly. Fringe competitors lack the installed base to attract significant local distribution. Moreover, without a large installed base, new entrants will be unable to find adequate distribution. After the acquisition, most of the top North American distributors would not switch from Graco to carry or promote fringe competitors or new entrants. Distributors depend heavily on Graco and ITW for their business, fear retaliation from Graco if they carry other brands, and believe that their end users would be disinclined to embrace unfamiliar brands lacking long-term marketplace reliability and manufacturer credibility. The acquisition will exacerbate the already substantial barriers to entry presented by the limited pool of quality distributors with a substantial percentage of installed base sales opportunities, generally unavailable to less-established brands of industrial liquid finishing equipment.

21. Graco’s large installed base in end user plants makes it extremely difficult for competitors to expand their market presence. Only ITW has managed to retain significant and growing market presence, often at Graco’s expense. GRACO INC. 575 Complaint 22.

Post-acquisition, Graco’s distributors will not risk their Graco volume discounts, promotional programs, and their Graco component and aftermarket sales by promoting other manufacturers’ products. Graco will be able to realize even greater percentage price increases over cost increases than they do today. 23. Graco and ITW have the largest installed base of equipment sold to end users and the largest share of distributor sales and distributor loyalty. Graco and ITW have an advantage over other industrial liquid finishing equipment manufacturers when to attract and maintain distributors to push end user sales.

24. The transaction would eliminate both price and non-price competition between Graco and ITW for distributors and end users and enhance the merged entity’s market power. VI.

RELEVANT PRODUCT MARKETS 25. From this evidence of anticompetitive effects, it can be inferred that certain of the products discussed below satisfy the hypothetical monopolist test used to identify relevant markets. Respondents’ documents track their sales by the following categories of equipment.

26. The relevant product markets that would be affected by the transaction are no broader than the manufacture and sale of: a. liquid finishing pumps for industrial use, b. liquid finishing applicators (spray guns) for industrial use, c. liquid finishing plural component equipment (proportioners) for industrial use, VOLUME 158 Complaint d. circulation pumps for paint systems used in automotive assembly plants, and e. industrial liquid finishing equipment for resale. A.

Liquid Finishing Pumps for Industrial Use 27. Industrial liquid finishing pumps are specialized equipment used to transfer, distribute, or circulate paints and finishing liquids at a regulated pressure, flow rate, and temperature. A liquid finishing system requires one or more pumps, depending on the scale of the finishing operation. Liquid finishing pumps encompass a variety of technologies (e.g., piston, centrifugal, double diaphragm, and rotary lobe), powered by different means (i.e., electric, hydraulic, and pneumatic), and operating at different pressures and flow rates. Brand reputation, a loyal installed base of end users, and the importance of quality distribution that can quickly service and/or replace those pumps are the key competitive dynamics for all industrial liquid finishing pumps.

B.

Liquid Finishing Spray Guns for Industrial Use 28. Industrial liquid finishing spray guns are specialized equipment used to apply paint and other liquid coatings to a surface. Spray guns encompass a range of designs, such as airless guns, air-assisted airless guns, and manual electrostatic guns, and several relevant product markets may exist within the overall spray gun market. Although end users’ demands are varied and specific, and a gun appropriate for one use will not always substitute for a spray gun used in a different process, brand reputation, a loyal installed base of end users, and the importance of quality distribution that can quickly service and/or replace those applicators are the key common competitive dynamics for all industrial liquid finishing spray guns. GRACO INC. 577 Complaint C.

Liquid Finishing Proportioners for Industrial Use 29. Plural-component equipment (proportioners) mix paint with catalysts and other liquids in ratios before application to a product. Proportioners can handle multiple colors and catalysts and offer some flexibility in configuration. Some proportioners can make rapid, multiple color changes, with real-time information and touch screen displays. Brand reputation, a loyal installed base of end users, and the importance of quality distribution that can quickly service and/or replace those proportioners are the key competitive dynamics for all industrial liquid finishing proportioners.

D.

Circulation Pumps for Paint Systems in Automotive Assembly Plants 30. Paint circulation pumps used in automotive paint circulation systems are specialized equipment designed to circulate automotive paint and other liquid finishes to various points along an assembly line. Auto manufacturers are highly sensitive to finish quality and production costs. Automakers and automotive suppliers consider electric piston circulation pumps superior to other pump technologies in reliability and efficiency. Automakers generally preapprove liquid finishing equipment manufacturers’ pumps for use in automotive assembly plants; this approval can take two years or longer. E.

Industrial Liquid Finishing Equipment for Resale 31. Manufacturers of liquid finishing equipment for industrial use rely predominantly on independent distributors to purchase equipment for resale with a variety of value-added services and equipment that end users demand. End users require immediate turnaround on service, sales, engineering, and support. Manufacturers best supply these services, especially to their installed base, throughout North America using local distribution. VOLUME 158 Complaint Industrial liquid finishing equipment manufacturers compete to provide the broadest set of products at the lowest delivered price, with prompt equipment delivery and service to resellers. VII.

GEOGRAPHIC MARKET 32. A relevant geographic market in which to analyze the effects of the proposed acquisition is North America because of the high entry hurdles and entry barriers presented by the parties’ large installed bases and the end use customers’ need for immediate service and/or repair or replacement of liquid finishing equipment. Distributors are largely bound to source liquid finishing equipment in North America in order to be able to provide the service and support their end users require. Only industrial liquid finishing equipment manufacturers with a large installed base and sales staff in North America can profitably support this network of distribution. The importance of the installed base and local distribution means that overseas manufacturers with limited sales in North America lack the economic incentive or ability to expand their North American sales.

VIII.

PRESUMPTIVE ILLEGALITY OF THE ACQUISITION 33. Because no countervailing benefits exist, the acquisition will eliminate both price and non-price competition between Graco and ITW and increase the merged entity’s market power, making it illegal.

34. The acquisition’s effect on concentration renders it presumptively illegal. Graco and ITW are the two most significant competitors providing pumps, spray guns, and proportioners for industrial use in North America. Other manufacturers are fringe competitors with small North American sales and lack the ability to reposition or expand in a manner sufficient to ameliorate the anticompetitive effects of the transaction.

GRACO INC. 579 Complaint 35. Graco and ITW are the only providers currently supplying circulation pumps for use in automotive paint circulation systems, making this acquisition a de facto merger to monopoly for new sales in this market.

36. Graco and ITW are the only providers effectively able to compete for the most capable distributors because of their broad liquid finishing equipment lines, large installed bases, and strong reputations for quality with end users. Other competitors with small North American sales, for the reasons previously stated, lack the economic incentive or ability to reposition or expand in a manner sufficient to ameliorate the reduced price competition resulting from the transaction.

37. Each relevant product market is already highly concentrated, and the proposed acquisition would further increase concentration to presumptively anticompetitive levels under the relevant case law and the Merger Guidelines. IX.

ENTRY AND REPOSITIONING BARRIERS AND LACK OF EFFICIENCIES 38. Substantial and effective entry, repositioning, or fringe firm growth sufficient to deter or counteract the anticompetitive effects of the proposed acquisition is unlikely. This is because of the high entry hurdles and barriers that need to be overcome, which include, but are not limited to, the substantial time and expense to develop and market a sufficiently extensive product line to satisfy diverse end users’ needs, establish marketplace credibility, build an installed base of end users, and develop an adequate distribution network.

39. The most significant entry hurdles and barriers are reputation, installed base, and, connected to this, finding adequate distribution that can supply prompt service and/or repair or replace the equipment of the installed base. These factors present significant obstacles to expansion or repositioning by existing fringe competitors, as well as de novo entry. 40.

The difficult entry hurdles and barriers to entry VOLUME 158 Complaint have enabled Graco to raise prices annually and to realize increased profits. ITW is the most significant constraint on Graco’s ability to raise prices even further, a constraint that will be eliminated by this transaction.

41. Extraordinary efficiencies specific to the transaction are necessary to justify the acquisition in light of high concentration and high potential to harm competition. Graco has no significant plans to integrate the ITW business or products with Graco. Any manufacturing synergies are unlikely for at least five years. X.

VIOLATIONS COUNT I – ILLEGAL AGREEMENT 42. The allegations of Paragraphs 1 through 41 are incorporated by reference as though fully set forth. 43. The acquisition agreement constitutes an unfair method of competition in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45.

COUNT II – ILLEGAL ACQUISITION 44. The allegations of Paragraphs 1 through 41 are incorporated by reference as though fully set forth. 45. The acquisition, if consummated, may substantially lessen competition in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15.U.S.C. § 18, and is an unfair method of competition in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45.

NOTICE Notice is hereby given to the Respondents that the fifteenth day of May 2012, at 10:00 a.m. is hereby fixed as the time, and Federal Trade Commission offices, 600 Pennsylvania Avenue, N.W., Room 532, Washington, D.C. 20580, as the place when and where an evidentiary hearing will be had before an Administrative GRACO INC. 581 Complaint Law Judge of the Federal Trade Commission, on the charges set forth in this complaint, at which time and place you will have the right under the Federal Trade Commission Act and the Clayton Act to appear and show cause why an order should not be entered requiring you to cease and desist from the violations of law charged in the complaint.

You are notified that the opportunity is afforded you to file with the Commission an answer to this complaint on or before the fourteenth (14th) day after service of it upon you. An answer in which the allegations of the complaint are contested shall contain a concise statement of the facts constituting each ground of defense; and specific admission, denial, or explanation of each fact alleged in the complaint or, if you are without knowledge thereof, a statement to that effect. Allegations of the complaint not thus answered shall be deemed to have been admitted. If you elect not to contest the allegations of fact set forth in the complaint, the answer shall consist of a statement that you admit all of the material facts to be true. Such an answer shall constitute a waiver of hearings as to the facts alleged in the complaint and, together with the complaint, will provide a record basis on which the Commission shall issue a final decision containing appropriate findings and conclusions and a final order disposing of the proceeding. In such answer, you may, however, reserve the right to submit proposed findings and conclusions under Rule 3.46 of the Commission’s Rules of Practice for Adjudicative Proceedings. Failure to file an answer within the time above provided shall be deemed to constitute a waiver of your right to appear and to contest the allegations of the complaint and shall authorize the Commission, without further notice to you, to find the facts to be as alleged in the complaint and to enter a final decision containing appropriate findings and conclusions, and a final order disposing of the proceeding.

The Administrative Law Judge shall hold a prehearing scheduling conference not later than ten (10) days after the answer is filed by the Respondents. Unless otherwise directed by the Administrative Law Judge, the scheduling conference and further proceedings will take place at the Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Room 532, Washington, D.C. VOLUME 158 Complaint 20580. Rule 3.21(a) requires a meeting of the parties’ counsel as early as practicable before the pre-hearing scheduling conference (but in any event no later than five (5) days after the answer is filed by the Respondents). Rule 3.31(b) obligates counsel for each party, within five (5) days of receiving the Respondents’ answer, to make certain initial disclosures without awaiting a discovery request.

NOTICE OF CONTEMPLATED RELIEF Should the Commission conclude from the record developed in any adjudicative proceedings in this matter that the Acquisition challenged in this proceeding violates Section 7 of the Clayton Act, as amended, the Commission may order such relief against Respondents as is supported by the record and is necessary and appropriate, including, but not limited to: 1. If the Acquisition is consummated, divestiture or reconstitution of all associated and necessary assets, in a manner that restores two or more distinct and separate, viable and independent businesses in the relevant markets, with the ability to offer such products and services as Graco and ITW were offering and planning to offer prior to the acquisition.

2. A prohibition against any transaction between Graco and ITW that combines their businesses in the relevant markets, except as may be approved by the Commission. 3. A requirement that, for a period of time, Graco and ITW provide prior notice to the Commission of acquisitions, mergers, consolidations, or any other combinations of their businesses in the relevant markets with any other company operating in the relevant markets.

4. A requirement to file periodic compliance reports with the Commission.

5. Any other relief appropriate to correct or remedy the anticompetitive effects of the transaction or to ensure the creation of one or more viable, competitive independent entities to compete in the relevant markets. GRACO INC. 583 Order to Hold Separate IN WITNESS WHEREOF, the Federal Trade Commission has caused this complaint to be signed by its Secretary and its official seal to be hereto affixed, at Washington, D.C., this fifteenth day of December 2011.

By the Commission.

ORDER TO HOLD SEPARATE AND MAINTAIN ASSETS The Federal Trade Commission (“Commission”), having heretofore issued its administrative Complaint charging Respondents Graco Inc. (“Graco”), Illinois Tool Works Inc., and ITW Finishing LLC (“ITW”), hereinafter referred to as Respondents, with violations of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and Respondents having been served with a copy of the Complaint, together with a notice of contemplated relief, and the Respondents having answered the Complaint denying said charges; and Respondents, their attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Orders (“Consent Agreement”), containing an admission by Respondents of all the jurisdictional facts set forth in the aforesaid Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and The Secretary of the Commission having thereafter withdrawn the matter from adjudication in accordance with § 3.25(c) of its Rules; and The Commission having thereafter considered the matter and the executed Consent Agreement, now in further conformity with VOLUME 158 Order to Hold Separate the procedure described in § 3.25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and issues this Order to Hold Separate and Maintain Assets (“Hold Separate”): 1. Respondent Graco Inc. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Minnesota, with its office and principal place of business located at 88-11th Avenue Northeast, Minneapolis, Minnesota 55413. 2. Respondent Illinois Tool Works Inc. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. 3. Respondent ITW Finishing LLC is a limited liability company organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. ITW Finishing LLC is indirectly wholly-owned by Illinois Tool Works Inc. 4. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondents, and the proceeding is in the public interest.

ORDER I.

IT IS ORDERED that, as used in this Hold Separate, the following definitions, and all other definitions used in the Consent Agreement and the proposed Decision and Order (and when made final, the Decision and Order), shall apply: A. “Acquisition” means the proposed acquisition described in the Asset Purchase Agreement by and among Graco Inc., Graco Holdings Inc., Graco Minnesota Inc., Illinois Tool Works Inc., and ITW GRACO INC. 585 Order to Hold Separate Finishing LLC, dated April 14, 2011 (the “Asset Purchase Agreement”).

B. “Acquisition Date” means the date the Acquisition is consummated.

C. “Commission-approved Acquirer” means any Person that receives the prior approval of the Commission to acquire the Liquid Finishing Business Assets pursuant to the Decision and Order.

D. “Confidential Business Information” means competitively sensitive, proprietary and all other business information of any kind, except for any information that Respondents demonstrate (i) was or becomes generally available to the public other than as a result of a disclosure by Respondents, or (ii) was available, or becomes available, to Respondents on a non-confidential basis, but only if, to the knowledge of Respondents, the source of such information is not in breach of a contractual, legal, fiduciary, or other obligation to maintain the confidentiality of the information.

E. “Decision and Order” means (i) the proposed Decision and Order contained in the Consent Agreement in this matter until the issuance and service of a final Decision and Order by the Commission; and (ii) the final Decision and Order issued by the Commission following the issuance and service of a final Decision and Order by the Commission.

F. “Divestiture Date” means the date on which Respondent Graco (or the Divestiture Trustee) and a Commission-approved Acquirer consummate a transaction to divest, license, assign, grant, transfer, deliver and otherwise convey the Liquid Finishing Business Assets completely and as required by Paragraph II. (or Paragraph V.) of Decision and Order. G. “Gema Powder Finishing Business” means the worldwide business of developing, assembling, VOLUME 158 Order to Hold Separate manufacturing, distributing, selling, or servicing powder finishing systems and products conducted prior to the Acquisition by Respondent ITW, including all business activities relating to the development, manufacture, and sale of products under the brand name Gema. “Gema Powder Finishing Business” does not include the Liquid Finishing Business. H. “Hold Separate” means this Order to Hold Separate and Maintain Assets.

I. “Hold Separate Business” means the (i) Liquid Finishing Business Assets and (ii) Liquid Finishing Business.

J. “Hold Separate Business Employees” means the Liquid Finishing Business Employees, the Hold Separate Gema Employees, and the Hold Separate Gema Shared Employees.

K. “Hold Separate Gema Employees” means employees located in the United Kingdom, Germany, France, Italy, Australia, Japan, and Mexico in facilities shared with the Liquid Finishing Business or Liquid Finishing Business Assets whose job responsibilities relate exclusively to Gema powder finishing products. L. “Hold Separate Gema Shared Employees” means employees located in the United Kingdom, Germany, France, Italy, Australia, Japan, and Mexico in facilities shared with the Liquid Finishing Business or Liquid Finishing Business Assets whose job responsibilities relate to both the liquid finishing and powder finishing businesses.

M. “Hold Separate Period” means the time period during which the Hold Separate is in effect, which shall begin on the date this Hold Separate becomes a final and effective order, which shall occur on or prior to the Acquisition Date, and terminate pursuant to Paragraph V. of this Hold Separate.

GRACO INC. 587 Order to Hold Separate N. “Hold Separate Manager(s)” means the Person(s) appointed pursuant to Paragraph II.C.2. of this Hold Separate.

O. “Hold Separate Trustee” means the Person appointed pursuant to Paragraph II.C.l. of this Hold Separate. P. “Liquid Finishing Business” means the worldwide business of developing, assembling, manufacturing, distributing, selling, or servicing liquid finishing systems and products conducted prior to the Acquisition by Respondent ITW, including all business activities relating to the development, manufacture, and sale of products under the brand names Binks, Devilbiss, Ransburg, and BGK. “Liquid Finishing Business” does not include the Gema Powder Finishing Business.

Q. “Liquid Finishing Business Assets” means all rights, title, and interest in and to all property and assets, tangible and intangible, of every kind and description, wherever located, and any improvements or additions thereto, relating to the Liquid Finishing Business. R. “Liquid Finishing Business Employees” means any full-time, part-time, or contract employee(s) of the Liquid Finishing Business, including the Hold Separate Gema Shared Employees, immediately prior to the Acquisition.

S. “Orders” means the Decision and Order and this Hold Separate.

T. “Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other business entity. U. “Prospective Acquirer” means a Person that Graco (or a Divestiture Trustee appointed under the Decision and Order) intends to submit as a Commission-approved Acquirer to the Commission for its prior approval pursuant to the Decision and Order.

VOLUME 158 Order to Hold Separate II.

IT IS FURTHER ORDERED that:

A. During the Hold Separate Period, Respondent Graco shall:

1. Hold the Hold Separate Business separate, apart, and independent as required by this Hold Separate and shall vest the Hold Separate Business with all rights, powers, and authority necessary to conduct its business.

2. Not exercise direction or control over, or influence directly or indirectly, the Hold Separate Business or any of its operations, the Hold Separate Trustee, or the Hold Separate Managers, except to the extent that Respondent Graco must exercise direction and control over the Hold Separate Business as is necessary to assure compliance with this Hold Separate, the Consent Agreement, the Decision and Order, and all applicable laws. Nothing herein shall limit taking such action as may be required to ensure compliance with financial reporting requirements, with all applicable laws, regulations, and other legal requirements, or with policies and standards concerning health, safety, and environmental aspects of the Hold Separate Business or with the integrity of the Hold Separate Business financial controls.

3. Take such actions as are necessary to maintain and assure the continued viability, marketability, and competitiveness of the Hold Separate Business, and to prevent the destruction, removal, wasting, deterioration, or impairment of any of the assets, except for ordinary wear and tear, and shall not sell, transfer, encumber, or otherwise impair the Hold Separate Business (except as required by the Decision and Order).

GRACO INC. 589 Order to Hold Separate B. From the time Respondents execute the Consent Agreement until the Acquisition Date, Respondent ITW shall take such actions as are necessary to maintain and assure the continued maintenance of the full economic viability, marketability, and competitiveness of the Hold Separate Business, and prevent the destruction, removal, wasting, deterioration, or impairment of any of the assets, except for ordinary wear and tear.

C. Respondent Graco shall hold the Hold Separate Business separate, apart, and independent of Respondent Graco on the following terms and conditions:

1. At any time after the Respondents sign the Consent Agreement, the Commission may appoint a Hold Separate Trustee to monitor the operations of the Hold Separate Business and to ensure that the Respondents comply with their obligations as required by this Hold Separate and the Decision and Order. The Hold Separate Trustee shall serve as Hold Separate Trustee pursuant to the agreement executed by the Hold Separate Trustee and Respondent Graco (“Hold Separate Trustee Agreement”).

a. The Commission shall select the Hold Separate Trustee, subject to the consent of Respondent Graco, which consent shall not be unreasonably withheld. If Respondent Graco has not opposed, in writing, including the reasons for opposing, the selection of the proposed Hold Separate Trustee within ten (l0) days after notice by the staff of the Commission to Respondent Graco of the identity of the proposed Hold Separate Trustee, Respondent Graco shall be deemed to have consented to the selection of the proposed Hold Separate Trustee.

VOLUME 158 Order to Hold Separate b. The Hold Separate Trustee shall have the responsibility for monitoring the organization of the Hold Separate Business; supervising the management of the Hold Separate Business by the Hold Separate Managers; maintaining the independence of the Hold Separate Business; and monitoring Respondents’ compliance with their respective obligations pursuant to the Orders, including, without limitation, maintaining the viability, marketability, and competitiveness of the Hold Separate Business pending divestiture.

c. No later than one (1) day after the appointment of the Hold Separate Trustee, Respondent Graco shall enter into an agreement (“Hold Separate Trustee Agreement”) that, subject to the prior approval of the Commission, transfers to and confers upon the Hold Separate Trustee all rights, powers, and authority necessary to permit the Hold Separate Trustee to perform his or her duties and responsibilities pursuant to this Hold Separate, in a manner consistent with the purposes of the Orders and in consultation with Commission staff, and shall require that the Hold Separate Trustee shall act in a fiduciary capacity for the benefit of the Commission.

d. Subject to all applicable laws and regulations, the Hold Separate Trustee shall have full and complete access to all personnel, books, records, documents, and facilities of the Hold Separate Business, and to any other relevant information as the Hold Separate Trustee may reasonably request including, but not limited to, all documents and records kept by Respondents in the ordinary course of business that relate to the Hold Separate Business. Respondents shall develop such financial or other information as the Hold Separate Trustee GRACO INC. 591 Order to Hold Separate may reasonably request and shall cooperate with the Hold Separate Trustee.

e. Respondents shall take no action to interfere with or impede the Hold Separate Trustee’s ability to monitor Respondents’ compliance with this Hold Separate, the Consent Agreement, or the Decision and Order, or otherwise to perform his or her duties and responsibilities consistent with the terms of this Hold Separate.

f. The Hold Separate Trustee shall have the authority to employ, at the cost and expense of Respondent Graco, such consultants, accountants, attorneys, and other representatives and assistants as are reasonably necessary to carry out the Hold Separate Trustee’s duties and responsibilities. g. The Commission may require the Hold Separate Trustee and each of the Hold Separate Trustee’s consultants, accountants, attorneys, and other representatives and assistants to sign an appropriate confidentiality agreement relating to materials and information received from the Commission in connection with performance of the Hold Separate Trustee’s duties.

h. Respondents may require the Hold Separate Trustee and each of the Hold Separate Trustee’s consultants, accountants, attorneys, and other representatives and assistants to sign an appropriate confidentiality agreement; provided, however, such agreement shall not restrict the Hold Separate Trustee from providing any information to the Commission. i. Thirty (30) days after the Acquisition Date, and every thirty (30) days thereafter until the Hold Separate terminates, the Hold Separate Trustee VOLUME 158 Order to Hold Separate shall report in writing to the Commission concerning the efforts to accomplish the purposes of this Hold Separate and Respondents’ compliance with their obligations under the Hold Separate and the Decision and Order. Included within that report shall be the Hold Separate Trustee’s assessment of the extent to which the businesses comprising the Hold Separate Business are meeting (or exceeding) their projected goals as are reflected in operating plans, budgets, projections, or any other regularly prepared financial statements. j. If the Hold Separate Trustee ceases to act or fails to act diligently and consistent with the purposes of this Hold Separate, the Commission may appoint a substitute Hold Separate Trustee consistent with the terms of this Hold Separate, subject to the consent of Respondent Graco, which consent shall not be unreasonably withheld. If Respondent Graco has not opposed, in writing, including the reasons for opposing, the selection of the substitute Hold Separate Trustee within ten (l0) days after notice by the staff of the Commission to Respondent Graco of the identity of any substitute Hold Separate Trustee, Respondent Graco shall be deemed to have consented to the selection of the proposed substitute Hold Separate Trustee. Respondent Graco and the substitute Hold Separate Trustee shall execute a Hold Separate Trustee Agreement, subject to the approval of the Commission, consistent with this paragraph. k. The Hold Separate Trustee shall serve until the day after the Divestiture Date; provided, however, that the Commission may extend or modify this period as may be necessary or appropriate to accomplish the purposes of the Orders.

GRACO INC. 593 Order to Hold Separate 2. No later than five (5) days after the Acquisition Date, Respondent Graco shall appoint one or more Hold Separate Managers (collectively the “Hold Separate Managers”), subject to the approval of the Hold Separate Trustee in consultation with Commission staff, to manage and maintain the Hold Separate Business in the regular and ordinary course of business and in accordance with past practice.

a. The Hold Separate Managers shall be responsible for the operation of the Hold Separate Business and shall report directly and exclusively to the Hold Separate Trustee, and shall manage the Hold Separate Business independently of the management of Respondent Graco. The Hold Separate Managers shall not be involved, in any way, in the operations of the other businesses of Respondent Graco during the term of this Hold Separate.

b. No later than three (3) days after appointment of the Hold Separate Manager(s), Respondent Graco shall enter into a management agreement with each such manager that, subject to the prior approval of the Hold Separate Trustee, in consultation with the Commission staff, transfers all rights, powers, and authority necessary to permit each such Hold Separate Manager to perform his or her duties and responsibilities pursuant to this Hold Separate, in a manner consistent with the purposes of the Orders.

c. Respondents shall provide the Hold Separate Managers with reasonable financial incentives to undertake this position. Such incentives shall include employee benefits, including regularly scheduled raises, bonuses, vesting of retirement benefits (as permitted by law) on the same basis as provided for under the Asset VOLUME 158 Order to Hold Separate Purchase Agreement for other employees hired by Respondent Graco, and additional incentives as may be necessary to assure the continuation and prevent any diminution of the Hold Separate Business’s viability, marketability, and competitiveness until the end of the Hold Separate Period, and as may otherwise be necessary to achieve the purposes of this Hold Separate.

d. The Hold Separate Managers shall make no material changes in the ongoing operations of the Hold Separate Business except with the approval of the Hold Separate Trustee, in consultation with the Commission staff. e. The Hold Separate Managers shall have the authority, with the approval of the Hold Separate Trustee, to remove Hold Separate Business Employees and replace them with others of similar experience or skills. If any Person ceases to act or fails to act diligently and consistent with the purposes of this Hold Separate, the Hold Separate Managers, in consultation with the Hold Separate Trustee, may request Respondent Graco to, and Respondent Graco shall, appoint a substitute Person, which Person the respective manager shall have the right to approve.

f. In addition to Hold Separate Business Employees, the Hold Separate Managers may, with the approval of the Hold Separate Trustee and at the cost and expense of Respondent Graco, employ such consultants, accountants, attorneys, and other representatives and assistants as are reasonably necessary to assist the respective manager in managing the Hold Separate Business and in carrying out the manager’s duties and responsibilities. Nothing contained herein shall preclude a Hold Separate Manager from contacting or communicating GRACO INC. 595 Order to Hold Separate directly with the staff of the Commission, either at the request of the staff of the Commission or in the discretion of the manager.

g. The Hold Separate Trustee shall be permitted, in consultation with the Commission staff, to remove any Hold Separate Manager for cause. Within three (3) days after such removal, Respondent Graco shall appoint a replacement manager, subject to the approval of the Hold Separate Trustee in consultation with Commission staff, on the same terms and conditions as provided in this paragraph. 3. The Hold Separate Trustee and the Hold Separate Managers shall serve, without bond or other security, at the cost and expense of Respondent Graco, on reasonable and customary terms commensurate with the person’s experience and responsibilities.

4. Respondent Graco shall indemnify the Hold Separate Trustee and Hold Separate Managers and hold each harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the Hold Separate Trustee’s or the Hold Separate Managers’ duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from gross negligence or willful misconduct by the Hold Separate Trustee or the Hold Separate Managers.

5. The Hold Separate Business shall be staffed with sufficient employees (including any full-time, parttime, or contract employee of the Hold Separate Business) to maintain the viability and competitiveness of the Hold Separate Business. To VOLUME 158 Order to Hold Separate the extent that such employees leave or have left the Hold Separate Business prior to the Divestiture Date, the Hold Separate Managers, with the approval of the Hold Separate Trustee, may replace departing or departed employees with persons who have similar experience and expertise or determine not to replace such departing or departed employees.

6. In connection with support services or products not included within the Hold Separate Business, Respondent Graco shall continue to provide, or offer to provide, the same support services to the Hold Separate Business as customarily have been or were being provided to such businesses by ITW prior to the Acquisition Date. For any services or products that Respondents may provide to the Hold Separate Business, Respondents may charge no more than the same price they charge others for the same services or products (or a commercially reasonable rate if ITW had not previously charged for such services). Respondents’ personnel providing such services or products must retain and maintain all Confidential Business Information of or pertaining to the Hold Separate Business on a confidential basis, and, except as is permitted by this Hold Separate, such persons shall be prohibited from disclosing, providing, discussing, exchanging, circulating, or otherwise furnishing any such information to or with any person whose employment involves any of Respondents’ businesses, other than the Hold Separate Business. Such personnel shall also execute confidentiality agreements prohibiting the disclosure of any Confidential Business Information of the Hold Separate Business.

a. Respondent Graco shall offer to the Hold Separate Business, directly or through Respondent ITW, any services and products that Respondent ITW provided, in the ordinary course of business directly or through third GRACO INC. 597 Order to Hold Separate party contracts to the business constituting the Hold Separate Business at any time since December 31, 2011, or such services that Respondent ITW is obligated to provide under Schedule 1.2 of the Asset Purchase Agreement. Respondent ITW shall treat the Hold Separate Business as a Graco Subsidiary, as that term is defined in the Asset Purchase Agreement. Subject to the foregoing, the services and products that Respondent Graco shall offer the Hold Separate Business shall include, but shall not be limited to, the following:

i. human resources and administrative services, including but not limited to payroll processing, labor relations support, retirement administration, and procurement and administration of employee benefits, including health benefits;

ii. federal and state regulatory compliance and policy development services;

iii. environmental health and safety services, which are used to develop corporate policies and insure compliance with federal and state regulations and corporate policies; iv. financial accounting services;

v. preparation of tax returns;

vi. audit services;

vii. information technology support services; viii.processing of accounts payable and accounts receivable;

ix. technical support;

x. procurement of supplies;

VOLUME 158 Order to Hold Separate xi. maintenance and repair of facilities; xii. procurement of goods and services utilized in the ordinary course of business by the Hold Separate Business;

xiii.legal services; and xiv.cash management services in the ordinary course of business, including cash sweeps, consistent with the cash management services provided by Respondent ITW prior to the Acquisition Date.

b. The Hold Separate Business shall have, at the option of the Hold Separate Managers with the approval of the Hold Separate Trustee, the ability to acquire services and products from third parties (including Respondent ITW) unaffiliated with Respondent Graco.

7. Respondent Graco shall provide the Hold Separate Business with sufficient financial and other resources:

a. as are appropriate in the judgment of the Hold Separate Trustee to operate the Hold Separate Business as it is currently operated (including efforts to generate new business) consistent with the practices of the Hold Separate Business in place prior to the Acquisition; b. to perform all maintenance to, and replacements of, the assets of the Hold Separate Business in the ordinary course of business and in accordance with past practice and current plans;

c. to carry on during the Hold Separate Period such capital projects, physical plant improvements, and business plans as are already underway for which all necessary GRACO INC. 599 Order to Hold Separate regulatory and legal approvals have been obtained, including but not limited to existing or planned renovation or expansion projects; and d. to maintain the viability, competitiveness, and marketability of the Hold Separate Business. Such financial resources to be provided to the Hold Separate Business shall include, but shall not be limited to, (i) general funds, (ii) capital, (iii) working capital, and (iv) reimbursement for any operating losses, capital losses, or other losses; provided, however, that, consistent with the purposes of the Decision and Order and in consultation with the Hold Separate Trustee: (i) the Hold Separate Managers may reduce in scale or pace any capital or research and development project, or substitute any capital or research and development project for another of the same cost; and (ii) to the extent that the Hold Separate Business generates financial funds in excess of financial resource needs, Respondent Graco shall have availability to such excess funds consistent with practices in place for the Hold Separate Business prior to the Acquisition.

8. Respondent Graco shall cause the following individuals that have access to Confidential Business Information of or pertaining to the Hold Separate Business to submit to the Hold Separate Trustee, or Commission staff as appropriate, a signed statement that the individual will maintain the confidentiality required by the terms and conditions of this Hold Separate: (i) the Hold Separate Trustee, (ii) the Hold Separate Managers, (iii) each of Respondent Graco’s employees not subject to the Hold Separate, (iv) the Hold Separate Gema Employees, (v) the Hold Separate Gema Shared Employees, and (vi) such additional Persons that the Hold Separate Trustee, in consultation with Commission staff, may identify. VOLUME 158 Order to Hold Separate These individuals must retain and maintain all Confidential Business Information of, or pertaining to, the Hold Separate Business on a confidential basis and, except as is permitted by this Hold Separate, such Persons shall be prohibited from disclosing, providing, discussing; exchanging, circulating, or otherwise furnishing any such information to or with any other Person whose employment involves any of Respondents’ businesses or activities other than the Hold Separate Business.

9. Except for the Hold Separate Managers, Hold Separate Business Employees, and support services employees involved in providing services to the Hold Separate Business pursuant to this Hold Separate, and except to the extent provided in this Hold Separate, Respondent Graco shall not permit any other of its employees, officers, or directors to be involved in the operations of the Hold Separate Business.

10. Respondents’ employees (other than the Liquid Finishing Business Employees, the Hold Separate Gema Shared Employees, and Graco employees involved in providing support services to the Hold Separate Business pursuant to Paragraph II.C.6.) shall not receive, or have access to, or use or continue to use any Confidential Business Information of the Hold Separate Business except: a. as required by law; and b. to the extent that necessary information is exchanged:

i. in the course of consummating the Acquisition in compliance with the terms of the Asset Purchase Agreement;

ii. as necessary to effect the divestiture of the Hold Separate Business, including in GRACO INC. 601 Order to Hold Separate connection with the marketing of the divested assets pursuant to the Consent Agreement, in negotiating agreements to divest assets pursuant to the Consent Agreement and engaging in related due diligence;

iii. in complying with this Hold Separate or the Consent Agreement;

iv. in overseeing compliance with policies and standards concerning the safety, health, and environmental aspects of the operations of the Hold Separate Business and the integrity of the financial controls of the Hold Separate Business;

v. in defending legal claims, investigations, or enforcement actions threatened or brought against or related to the Hold Separate Business;

vi. to lenders and auditors; or vii. in obtaining legal advice.

Nor shall the Hold Separate Managers or any Hold Separate Business Employees receive or have access to, or use or continue to use, any Confidential Business Information about Respondents and relating to Respondents’ businesses, except such information as is necessary to maintain and operate the Hold Separate Business.

In addition to the foregoing, Respondent Graco may receive aggregate financial and operational information relating to the Hold Separate Business to the extent necessary to allow Respondent Graco to comply with the requirements and obligations of the laws of the United States and other countries, to prepare consolidated financial reports, tax VOLUME 158 Order to Hold Separate returns, reports required by securities laws, payroll and benefits information, and personnel reports, and to comply with this Hold Separate. Any such information that is obtained pursuant to this subparagraph shall be used only for the purposes set forth in this subparagraph.

11. Subject to all other provisions in this Hold Separate, the:

a. Hold Separate Gema Employees (i) may receive or have access to, use or continue to use, or disclose any Confidential Business Information pertaining to the Gema Powder Finishing Business; (ii) shall not seek, receive, have access to, or disclose any Confidential Business Information pertaining to the Liquid Finishing Business; and (iii) shall provide the signed confidentiality statement required by Paragraph II.C.8. of this Hold Separate. b. Hold Separate Gema Shared Employees (i) may receive or have access to, use or continue to use, or disclose any Confidential Business Information pertaining to the Gema Powder Finishing Business and to the Liquid Finishing Business; (ii) shall not disclose, provide, discuss, exchange, circulate, or otherwise furnish any such information pertaining to the Liquid Finishing Business to or with any other Person whose employment involves any of Respondent Graco’s competing liquid finishing businesses; and (iii) shall provide the signed confidentiality statement required by Paragraph II.C.8. of this Hold Separate.

12. Respondent Graco and the Hold Separate Business shall jointly implement, and at all times during the Hold Separate Period maintain in operation, a system, as approved by the Hold Separate Trustee, of access and data controls to prevent unauthorized access to or dissemination of Confidential Business GRACO INC. 603 Order to Hold Separate Information of the Hold Separate Business, including, but not limited to, the opportunity by the Hold Separate Trustee, on terms and conditions agreed to with Respondents, to audit Respondents’ networks and systems to verify compliance with this Hold Separate.

13. No later than five (5) days after the Acquisition Date, Respondent Graco shall establish written procedures, subject to the approval of the Hold Separate Trustee, covering the management, maintenance, and independence of the Hold Separate Business consistent with the provisions of this Hold Separate.

14. No later than five (5) days after the date this Hold Separate becomes final, Respondent Graco shall circulate to persons who are employed in Respondent Graco’s businesses that compete with the Hold Separate Business, and shall circulate on the Acquisition Date to employees of the Hold Separate Business, a notice of this Hold Separate, in a form approved by the Hold Separate Trustee in consultation with Commission staff.

D. Until the Divestiture Date, Respondent Graco shall provide each Hold Separate Employee with reasonable financial incentives to continue in his or her position consistent with past practices and/or as may be necessary to preserve the marketability, viability, and competitiveness of the Liquid Finishing Business and the Liquid Finishing Business Assets pending divestiture. Such incentives shall include employee benefits, including regularly scheduled raises, bonuses, vesting of retirement benefits (as permitted by law) on the same basis as provided for under the Asset Purchase Agreement for other employees hired by Respondent Graco, and additional incentives as may be necessary to assure the continuation and prevent any diminution of the viability, marketability, and competitiveness of the Liquid Finishing Business Assets until the Divestiture Date, and as may otherwise VOLUME 158 Order to Hold Separate be necessary to achieve the purposes of this Hold Separate.

E. From the date the Respondents execute the Consent Agreement until this Hold Separate terminates, Respondent Graco shall not, directly or indirectly, solicit, induce, or attempt to solicit or induce any Hold Separate Employee for a position of employment with Respondent Graco. A Prospective Acquirer or the Commission-approved Acquirer shall have the option of offering employment to any Hold Separate Employee. Respondent Graco shall not interfere with the employment by a Prospective Acquirer or the Commission-approved Acquirer of such employee; shall not offer any incentive to such employee to decline employment with a Prospective Acquirer or the Commission-Acquirer or to accept other employment with the Respondent Graco; and shall remove any impediments that may deter such employee from accepting employment with a Prospective Acquirer or the Commission-approved Acquirer including, but not limited to, any non-compete or confidentiality provisions of employment or other contracts that would affect the ability of such employee to be employed by a Prospective Acquirer or the Commission-approved Acquirer.

F. Respondent Graco shall not, directly or indirectly, solicit, induce, or attempt to solicit or induce any Hold Separate Employee who has accepted an offer of employment with a Prospective Acquirer or the Commission-approved Acquirer to terminate his or her employment relationship with such Person; provided, however, Respondent Graco may:

1. advertise for employees in newspapers, trade publications, or other media, or engage recruiters to conduct general employee search activities, so long as these actions are not targeted specifically at any Hold Separate Business Employees; and GRACO INC. 605 Order to Hold Separate 2. hire Hold Separate Business Employees who apply for employment with Respondent Graco, so long as such individuals were not solicited by the Respondent Graco in violation of this paragraph; provided further, that this sub-Paragraph shall not prohibit Respondent Graco from making offers of employment to or employing any Hold Separate Business Employees if a Prospective Acquirer or the Commission-approved Acquirer has notified Respondent Graco in writing that a Prospective Acquirer or the Commission-approved Acquirer does not intend to make an offer of employment to that employee, or where such an offer has been made and the employee has declined the offer, or where the individual’s employment has been terminated by a Prospective Acquirer or the Commission-approved Acquirer.

G. The purpose of this Hold Separate is to: (1) preserve the assets and businesses within the Hold Separate Business as viable, competitive, and ongoing businesses independent of Respondent Graco until the divestiture required by the Decision and Order is achieved; (2) assure that no Confidential Business Information is exchanged between the Respondents and the Hold Separate Business, except in accordance with the provisions of this Hold Separate; (3) prevent interim harm to competition pending the relevant divestitures and other relief; and (4) maintain the full economic viability, marketability, and competitiveness of the Hold Separate Business, and prevent the destruction, removal, wasting, deterioration, or impairment of any of the assets or businesses within the Hold Separate Business except for ordinary wear and tear.

III.

IT IS FURTHER ORDERED that Respondent Graco shall notify the Commission at least thirty (30) days prior to: A. Any proposed dissolution of Respondent Graco; VOLUME 158 Order to Hold Separate B. Any proposed acquisition, merger, or consolidation of Respondent Graco; or C. Any other change in Respondent Graco, including, but not limited to, assignment and the creation or dissolution of subsidiaries, if such change might affect compliance obligations arising out of this Order. IV.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Hold Separate, and subject to any legally recognized privilege, and upon written request and upon five (5) days’ notice to the relevant Respondent, relating to compliance with this Hold Separate, Respondents shall permit any duly authorized representative of the Commission: A. Access, during business office hours of the relevant Respondent(s) and in the presence of counsel, to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and all other records and documents in the possession or under the control of the relevant Respondent(s) related to compliance with the Consent Agreement and/or the Orders, which copying services shall be provided by such Respondent(s) at the request of the authorized representative(s) of the Commission and at the expense of such Respondent(s); and B. Without restraint or interference from such Respondent(s), to interview officers, directors, or employees of such Respondent(s), who may have counsel present.

V.

IT IS FURTHER ORDERED that this Hold Separate shall terminate at the earlier of:

A. Three (3) business days after the Commission withdraws its acceptance of the Consent Agreement GRACO INC. 607 Statement of the Commission pursuant to the provisions of Commission Rule 3.25(f), 16 C.F.R. § 3.25(f); or B. The day after the Divestiture Date of the Hold Separate Assets required to be divested pursuant to the Decision and Order.

By the Commission.

Statement of the Federal Trade Commission On December 15, 2011, the Commission issued an administrative complaint challenging Graco Inc.’s (“Graco”) proposed acquisition of the industrial finishing equipment businesses of ITW Finishing LLC and Illinois Tool Works Inc. (collectively “ITW”). The Commission also authorized its staff to file a separate complaint seeking a temporary restraining order and preliminary injunction in federal district court. That federal court proceeding is pending in the United States District Court for the District of Minnesota.

The matter has now been withdrawn from administrative adjudication, and the Commission has voted unanimously to issue an Order to Hold Separate and Maintain Assets (“Hold Separate”) to Respondents Graco and ITW, pending consideration of a proposed Agreement Containing Consent Orders (“Consent Agreement”) that has been entered into by and among the Respondents and Complaint Counsel supporting the administrative complaint. This will allow Graco to complete the challenged acquisition, subject to and in compliance with the requirements of the Hold Separate issued today. The Hold Separate applies to all ITW liquid finishing businesses and assets worldwide that Graco is acquiring in the acquisition (collectively, the “Liquid Finishing Business Assets”), including business activities related to the development, VOLUME 158 Decision and Order manufacture, and sale of products under the Binks, Devilbiss, Ransburg, and BGK brand names.

The purpose of the Hold Separate is to allow the Commission staff sufficient time fully to review and consider the appropriate scope of divestiture and other relief needed to remedy the anticompetitive effects of Graco’s acquisition of the Liquid Finishing Business Assets as alleged in the administrative complaint. During the hold separate period, Graco and ITW have committed to cooperate fully and in good faith with staff’s review. The Commission is not voting to accept or reject the proposed Consent Agreement for public comment at this time. After staff completes its review and submits to the Commission any additional recommendations regarding the proposed Consent Agreement, the Commission may take such action as it deems appropriate, including accepting the Consent Agreement, either as proposed or with modifications, for public comment. The Commission is able to accept the Hold Separate under conditions that will allow the parties to complete their planned acquisition because both sides appear to be moving closer to a solution that will benefit consumers.

DECISION AND ORDER [Redacted Public Version] The Federal Trade Commission (“Commission”), having heretofore issued its administrative Complaint charging Respondents Graco Inc. (“Graco”), Illinois Tool Works Inc., and ITW Finishing LLC (“ITW”), hereinafter referred to as the Respondents, with violations of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and the Respondents having been served with a copy of the Complaint, together with a notice of contemplated relief, and the Respondents having answered the Complaint denying said charges; and GRACO INC. 609 Decision and Order The Respondents, their attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Orders (“Consent Agreement”), containing an admission by the Respondents of all the jurisdictional facts set forth in the aforesaid Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by the Respondents that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and The Secretary of the Commission having thereafter withdrawn the matter from adjudication in accordance with § 3.25(c) of its Rules; and The Commission having thereafter considered the matter and the executed Consent Agreement, and thereupon issued its Order to Hold Separate and Maintain Assets, and having accepted the executed Consent Agreement and placed such agreement on the public record for a period of thirty (30) days, and having duly considered the comments filed by interested persons pursuant to Commission Rule 2.34, 16 C.F.R. § 2.34, and having modified the Decision and Order in certain respects, now in further conformity with the procedure prescribed in § 3.25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and issues the following Decision and Order (“Order”): 1. Respondent Graco Inc. is a corporation organized, existing, and doing business under, and by virtue of, the laws of the State of Minnesota, with its office and principal place of business located at 88-11th Avenue Northeast, Minneapolis, Minnesota 55413. 2. Respondent Illinois Tool Works Inc. is a corporation organized, existing, and doing business under, and by virtue of, the laws of the State of Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. 3. Respondent ITW Finishing LLC is a limited liability company organized, existing, and doing business under and by virtue of the laws of the State of VOLUME 158 Decision and Order Delaware, with its office and principal place of business located at 3600 West Lake Avenue, Glenview, Illinois 60026. ITW Finishing LLC is indirectly wholly owned by Illinois Tool Works Inc. 4. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondents, and the proceeding is in the public interest.

ORDER I.

IT IS HEREBY ORDERED that, as used in this Order, the following definitions shall apply:

A. “Graco” means Graco Inc., its directors, officers, employees, agents, representatives, successors, and assigns; and its subsidiaries, divisions, groups and affiliates in each case controlled by Graco, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. After the Acquisition Date, Graco includes the Liquid Finishing Business Assets. After the Divestiture Date, Graco excludes the Liquid Finishing Business Assets and any subsidiaries that are divested in connection with the divestiture of the Liquid Finishing Business Assets.

B. “ITW” means Illinois Tool Works Inc., its directors, officers, employees, agents, representatives, successors, and assigns; and its subsidiaries, divisions, groups and affiliates in each case controlled by ITW (including, but not limited to, Respondent ITW Finishing LLC), and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. “Commission” means the Federal Trade Commission. GRACO INC. 611 Decision and Order D. “3M” means 3M Company, a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its headquarters address located at 3M Center, St. Paul, Minnesota 55144-1000. The term “3M” includes 3M Innovative Properties Company.

E. “3M Agreements” means the 3M Settlement Agreement and the 3M Supply and License Agreement. The 3M Agreements are attached as Appendix 1, Confidential Exhibit 1, to this Order. F. “3M Settlement Agreement” means the Settlement Agreement, dated October 23, 2008, by and among 3M Company, 3M Innovative Properties Company, Illinois Tool Works Inc. and ITW Finishing LLC. G. “3M Supply and License Agreement” means the Supply and License Agreement, dated October 23, 2008, by and among 3M Company, 3M Innovative Properties Company, Illinois Tool Works Inc. and ITW Finishing LLC.

H. “3M-ITW Settlement-Related Agreements” means all agreements and releases by and between Graco and ITW related to the settlement between 3M and ITW of the lawsuit filed by 3M against ITW on March 8, 2013, in the United States District Court for the District of Minnesota, 3M Company and 3M Innovative Properties Company v. Illinois Tool Works, Inc. and ITW Finishing L.L.C., Case No. 0:13-CV- 00553 (“3M-ITW Settlement”), pursuant to which Respondents have agreed, among other things, to transfer and convey the 3M Agreements and the DeKups IP and Tooling to, and for use in connection with, the Liquid Finishing Business. The 3M-ITW Settlement-Related Agreements are attached as Appendix 1, Confidential Exhibit 2, to this Order. I. “Acquisition” means the acquisition described in the Asset Purchase Agreement, by and among Graco Inc., Graco Holdings Inc., Graco Minnesota Inc., Illinois VOLUME 158 Decision and Order Tool Works Inc., and ITW Finishing LLC, dated April 14, 2011 (the “Asset Purchase Agreement”), including the First Amendment to the agreement, dated April 2, 2012.

J. “Acquisition Date” means April 2, 2012, the date the Acquisition was consummated.

K. “Business Records” means all originals and all copies of any operating, financial or other information, documents, data, computer files (including files stored on a computer’s hard drive or other storage media), electronic files, books, records, ledgers, papers, instruments, and other materials, whether located, stored or maintained in traditional paper format or by means of electronic, optical, or magnetic media or devices, photographic or video images, or any other format or media, including, without limitation: distributor files and records; customer files and records, customer lists, customer product specifications, customer purchasing histories, customer service and support materials, customer approvals and other information; credit records and information; correspondence; referral sources; supplier and vendor files and lists; advertising, promotional and marketing materials, including website content; sales materials; research and development data, files, and reports; technical information; data bases; studies; drawings, specifications and creative materials; production records and reports; service and warranty records; equipment logs; operating guides and manuals; employee and personnel records; educational materials; tax returns; financial and accounting records; and other documents, information, and files of any kind.

L. “Commission-approved Acquirer” means any Person that receives the prior approval of the Commission to acquire the Liquid Finishing Business Assets pursuant to Paragraph II. (or Paragraph V.) of this Order. GRACO INC. 613 Decision and Order M. “Confidential Business Information” means competitively sensitive, proprietary and all other business information of any kind, except for any information that Respondents demonstrate (i) was or becomes generally available to the public other than as a result of a disclosure by Respondents, or (ii) was available, or becomes available, to Respondents on a non-confidential basis, but only if, to the knowledge of Respondents, the source of such information is not in breach of a contractual, legal, fiduciary, or other obligation to maintain the confidentiality of the information.

N. “DeKups Products” means all “Supplied Products” within the meaning of the 3M Supply and License Agreement as identified and described on Exhibit A to the 3M Supply and License Agreement, which is attached as part of Appendix 1, Confidential Exhibit 1, to this Order.

O. “DeKups IP and Tooling” means the DeKups Intellectual Property identified and described on Appendix 1, Exhibit 3, to this Order, and all tooling, molds, dies, and other equipment relating to the DeKups Products to which ITW has or had any rights or interests (including reversionary) pursuant to the 3M Agreements or otherwise. The DeKups IP and Tooling are included in the Liquid Finishing Business Intellectual Property and are required to be divested to the Commission-approved Acquirer pursuant to this Order.

P. “Devilbiss Powder Finishing Intellectual Property” means all Intellectual Property that is necessary for making, having made, using, offering for sale, selling, importing or exporting Devilbiss Powder Finishing Products, which are specifically identified and described on Appendix 2, Exhibit 1, to this Order. The Devilbiss Powder Finishing Intellectual Property is included in the LFB Powder Finishing Intellectual Property and is required to be divested to the VOLUME 158 Decision and Order Commission-approved Acquirer pursuant to this Order.

Q. “Devilbiss Powder Finishing Products” means the powder finishing products and systems manufactured, sold or serviced under the Devilbiss® trademarks or brand names prior to the Acquisition by Respondent ITW, and are specifically identified and described on Appendix 2, Exhibit 1, to this Order.

R. “Direct Cost” means an amount not to exceed the cost of labor (inclusive of benefits), material, travel, and other expenditures to the extent such costs are directly incurred to provide the relevant assistance, support, or service. In the case of Respondent’s hourly employees who provide labor, the cost of labor shall not exceed the hourly wage rate, together with the prorated cost of benefits, for any such employees. In the case of Respondent’s salaried employees who provide labor, the cost of labor shall not exceed the prorated base salary, together with the prorated cost of benefits, for any such employees.

S. “Divested Ransburg Powder Finishing Intellectual Property” means the Ransburg Powder Finishing Intellectual Property including, but not limited to (but specifically excluding the Retained Ransburg Powder Finishing Intellectual Property), the Intellectual Property identified and described on Appendix 3, Exhibit 2, to this Order. The Divested Ransburg Powder Finishing Intellectual Property is included in the LFB Powder Finishing Intellectual Property and is required to be divested by Graco to the Commissionapproved Acquirer pursuant to this Order. T. “Divestiture Agreement(s)” means any agreement(s) that receive the prior approval of the Commission between Respondent Graco (or between a Divestiture Trustee appointed pursuant to Paragraph V. of this Order) and a Commission-approved Acquirer to purchase the Liquid Finishing Business Assets (including any related agreements, including but not GRACO INC. 615 Decision and Order limited to, a Graco License, an LFB License-Back, and any Transitional Services agreement), and all amendments, exhibits, attachments, agreements, and schedules thereto that have been approved by the Commission.

U. “Divestiture Date” means the date on which Respondent Graco (or the Divestiture Trustee) and a Commission-approved Acquirer consummate a transaction to divest, license, assign, grant, transfer, deliver, and otherwise convey the Liquid Finishing Business Assets completely and as required by Paragraph II. (or Paragraph V.) of this Order. V. “Gema Powder Finishing Business” means the worldwide business of developing, assembling, manufacturing, distributing, selling, or servicing Gema Powder Finishing Products conducted prior to the Acquisition by Respondent ITW, and as it has been operated by Respondent Graco since the Acquisition, including all business activities relating thereto, but only if and to the extent that such operations and activities are consistent with Graco’s obligations pursuant to this Order and the Hold Separate. For the avoidance of doubt, the Gema Powder Finishing Business does not include the Liquid Finishing Business or the LFB Powder Finishing Business. For the further avoidance of doubt, the Gema Powder Finishing Business was acquired by Respondent Graco in the Acquisition and is not required to be divested pursuant to this Order.

W. “Gema Powder Finishing Products” means the powder finishing products and systems manufactured, sold, or serviced prior to the Acquisition by Respondent ITW, including, but not limited to, powder finishing products and systems manufactured, sold, or serviced under the Gema® trademark or brand name and any improvements or additions thereto specifically directed to developing, assembling, manufacturing, distributing, selling, or servicing powder finishing systems and products; provided, however, that the VOLUME 158 Decision and Order Gema Powder Finishing Products do not include the Liquid Finishing Products or the LFB Powder Finishing Products.

X. “Graco License” means: (i) a worldwide, fully paid-up, royalty-free, perpetual, irrevocable, transferrable license by Respondent Graco to the Commissionapproved Acquirer under the Graco Retained Intellectual Property, and (ii) such tangible embodiments of the licensed rights (including but not limited to physical and electronic copies) as may be necessary to enable the Commission-approved Acquirer to utilize the licensed rights. The purpose of the Graco License is to assure the continued and unimpeded research, development, manufacture, use, import, export, distribution, offer to sell, and sale of the Liquid Finishing Products and the LFB Powder Finishing Products. The Graco License for the Category 1 - Graco Retained Intellectual Property shall be sub-licensable, and on an exclusive basis (except as to Respondent Graco and except as to Graco’s right to have products made on its behalf by another under the Graco Retained Intellectual Property), and shall convey the right to the Commission-approved Acquirer to enforce all rights in the Category 1 - Graco Retained Intellectual Property. The Graco License for the Category 2- Graco Retained Intellectual Property shall include the Commission-approved Acquirer’s right to have products made on its behalf by another, and shall be on such further terms and conditions as receive the prior approval of the Commission. The Commission-approved Acquirer shall not have the right to assign or transfer the Graco License without Graco’s prior written consent, which consent shall not be unreasonably withheld, except (i) if such assignment or transfer occurs in connection with a merger or the sale or other disposition of all or substantially all of the assets or stock of the Liquid Finishing Business and/or the LFB Powder Finishing Business, and (ii) the assignee agrees in writing to be bound by all of the Commission-approved Acquirer’s obligations under the Graco License.

GRACO INC. 617 Decision and Order Y. “Graco Retained Intellectual Property” means (i) Category 1: the Retained Ransburg Powder Finishing Intellectual Property, which is specifically identified and described on Appendix 3, Exhibit 3 to this Order, and (ii) Category 2: Intellectual Property included as an asset of the Gema Powder Finishing Business for which a license to the Commission-approved Acquirer is necessary to assure the continued and unimpeded operations of the Liquid Finishing Business and the LFB Powder Finishing Business after the Divestiture Date. The Graco Retained Intellectual Property that must be licensed to the Commission-approved Acquirer pursuant to a Graco License is specifically identified and described on Appendix 4 to this Order. Respondent Graco shall maintain the Category 1 - Graco Retained Intellectual Property in force, which includes paying maintenance fees for issued patents, diligently prosecuting any pending patent applications, and maintaining the confidentiality of trade secrets; provided, however, that Respondent Graco may be relieved of the duty to maintain any portion of the Category 1 - Graco Retained Intellectual Property in force by transferring the ownership of such portion of the Graco Retained Intellectual Property to the Commission-approved Acquirer.

Z. “Hold Separate” means the Order to Hold Separate and Maintain Assets issued by the Commission in this matter.

AA. “Hold Separate Business” means the (i) Liquid Finishing Business Assets, (ii) Liquid Finishing Business, and (iii) LFB Powder Finishing Business. BB. “Intellectual Property” means all intellectual property and all associated rights thereto, including all of the following in any jurisdiction throughout the world: (i) all brand names, commercial names, trade names, “doing business as” (d/b/a) names, registered and unregistered trademarks, trade dress, logos, slogans, service marks, internet domain names, internet website content (together with all translations, adaptions, VOLUME 158 Decision and Order derivations, and combinations thereof), including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (ii) all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisionals, revisions, extensions, and reexaminations thereof, and all inventions and discoveries (whether patentable or unpatentable and whether or not reduced to practice), and all improvements thereto, and all rights to obtain and file for patents and registrations thereof; (iii) all copyrightable works, all registered and unregistered copyrights in both published works and unpublished works, and all applications, registrations, and renewals in connection therewith; (iv) all mask works and all applications, registrations, and renewals in connection therewith; (v) all know-how, trade secrets, and confidential or proprietary information (including ideas, research and development, formulas, compositions, manufacturing and production processes and techniques, tooling, molds, dies, equipment, engineering, technical data and information, blue prints, designs, drawings, specifications, protocols, quality control information, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, and all other data, technology, and plans); (vi) all computer software (including source code, executable code, data, databases, and related documentation); (vii) all advertising and promotional materials; (viii) all other proprietary rights; (ix) all copies and tangible embodiments thereof (in whatever form or medium); and (x) all rights to sue and recover damages or obtain injunctive relief for infringement, dilution, misappropriation, violation, or breach of any of the foregoing.

CC. “LFB License-Back” means: (i) a fully paid-up, royalty-free, perpetual, irrevocable, transferable license by the Commission-approved Acquirer to Respondent Graco under the Licensed-Back Powder Finishing Intellectual Property, and (ii) such tangible GRACO INC. 619 Decision and Order embodiments of the licensed rights (including but not limited to physical and electronic copies) as may be necessary to enable Respondent Graco to utilize the licensed rights. The LFB License-Back shall be on such further terms and conditions as receive the prior approval of the Commission; provided, however, that the LFB License-Back shall be limited to the following field/application: powder finishing.

DD. “LFB Powder Finishing Business” means the worldwide business of developing, assembling, manufacturing, distributing, selling, or servicing the LFB Powder Finishing Products conducted prior to the Acquisition by Respondent ITW, and as it has been and is required to be maintained since the Acquisition pursuant to the requirements of the Hold Separate, including all business activities relating thereto. EE. “LFB Powder Finishing Intellectual Property” means all Devilbiss Powder Finishing Intellectual Property and all Divested Ransburg Powder Finishing Intellectual Property owned or licensed (as licensor or licensee) by Respondent Graco (after the Acquisition) in which Graco has a proprietary interest, and all associated rights thereto, that were acquired by Graco in the Acquisition or that have been assigned, transferred, conveyed to, acquired, or owned by Graco after the Acquisition, and that are required to be divested by Graco to the Commission-approved Acquirer pursuant to this Order.

FF. “LFB Powder Finishing Products” means the Devilbiss Powder Finishing Products and the Ransburg Powder Finishing Products, which are identified and described on Appendix 2, Exhibits 1 and 2, respectively, to this Order.

GG. “Licensed-Back Powder Finishing Intellectual Property” means the Divested Ransburg Powder Finishing Intellectual Property, which is specifically identified and described on Appendix 5 to this Order, and which Graco is permitted to license back from the VOLUME 158 Decision and Order Commission-approved Acquirer consistent with the divestiture requirements of Paragraph II.A of this Order pursuant to an LFB License-Back. HH. “Liquid Finishing Business” means the worldwide business of developing, assembling, manufacturing, distributing, selling, or servicing Liquid Finishing Products conducted prior to the Acquisition by Respondent ITW, and as it has been and is required to be maintained since the Acquisition pursuant to the requirements of the Hold Separate, including all business activities relating thereto.

II. “Liquid Finishing Business Assets” means all of Graco’s rights, title, and interest in and to all property and assets, tangible and intangible, of every kind and description, wherever located, and any improvements or additions thereto, relating to the Liquid Finishing Business or to the LFB Powder Finishing Business that were acquired by Graco in the Acquisition (except as otherwise provided in this Order) or that have been assigned, transferred, conveyed to, or acquired or owned by Graco after the Acquisition pursuant to the 3M-ITW Settlement-Related Agreements or otherwise, and as they have been and are required to be maintained pursuant to the requirements of the Hold Separate, including but not limited to: 1. All real property interests (including fee simple interests and real property leasehold interests), including all easements, appurtenances, licenses, and permits, together with all buildings and other structures, facilities, and improvements located thereon, owned, leased, or otherwise held; 2. All Tangible Personal Property, including any Tangible Personal Property removed from any location of the Liquid Finishing Business or of the LFB Powder Finishing Business since the date of the announcement of the Acquisition, and not replaced, if such property was used in connection with the operation of the Liquid Finishing Business GRACO INC. 621 Decision and Order or of the LFB Powder Finishing Business prior to the Acquisition;

3. All inventories, wherever located, including all finished product, work in process, raw materials, spare parts, and all other materials and supplies to be used or consumed in the production of finished products;

4. All (a) trade accounts receivable and other rights to payment from customers of Respondents and the full benefit of all security for such accounts or rights to payment, (b) all other accounts or notes receivable by Respondents and the full benefit of all security for such accounts or notes, and (c) any claim, remedy, or other right related to any of the foregoing;

5. All agreements and contracts (including, but not limited to, the 3M Agreements and other agreements and contracts with customers, distributors, suppliers, vendors, sales representatives, agents, licensees, and licensors), purchase orders, sales orders, leases, mortgages, notes, bonds, and other binding commitments, whether written or oral, and all rights thereunder and related thereto;

6. All consents, licenses, certificates, registrations, or permits issued, granted, given, or otherwise made available by or under the authority of any governmental body or pursuant to any legal requirement, and all pending applications therefor or renewals thereof;

7. All intangible rights and property, including all Liquid Finishing Business Intellectual Property and all LFB Powder Finishing Business Intellectual Property, and all going-concern value, goodwill, telephone, telecopy, and e-mail addresses and listings;

VOLUME 158 Decision and Order 8. All Business Records; provided, however, that where documents or other materials included in the Business Records to be divested contain information: (a) that relates both to the Liquid Finishing Business Assets to be divested and to Respondent Graco’s retained assets or other products or businesses and cannot be segregated in a manner that preserves the usefulness of the information as it relates to the Liquid Finishing Business Assets to be divested; or (b) for which the relevant party has a legal obligation to retain the original copies, the relevant party shall be required to provide only copies or relevant excerpts of the documents and materials containing this information. In instances where such copies are provided to the Commission-approved Acquirer, the relevant party shall provide the Commissionapproved Acquirer access to original documents under circumstances where copies of the documents are insufficient for evidentiary or regulatory purposes;

9. All insurance benefits, including rights and proceeds;

10. All rights under warranties and guarantees, express or implied; and 11. All rights relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof.

Provided, however, that the Liquid Finishing Business Assets need not include any part of such assets that the Commission-approved Acquirer determines it does not need, or that the Commission otherwise determines need not be divested, if the Commission approves the divestiture without such assets, and Provided further that the Liquid Finishing Business Assets shall not include the following (and Respondent Graco is not required to divest any of the following to GRACO INC. 623 Decision and Order the Commission-approved Acquirer pursuant to this Order):

a. The Graco Retained Intellectual Property (except insofar as the Liquid Finishing Business Assets shall include a Graco License to the Graco Retained Intellectual Property as provided in Paragraph II.D. of this Order); b. Properties, tangible and intangible, used in or relating to the businesses engaged in by Respondent Graco (other than the Liquid Finishing Business and the LFB Powder Finishing Business), including but not limited to the worldwide business of developing, assembling, manufacturing, distributing, selling, or servicing liquid finishing systems and products in which Respondent Graco was engaged prior to the Acquisition and in which Respondent Graco has continued to be engaged since the Acquisition; and c. Assets and properties, tangible and intangible, relating to the Gema Powder Finishing Products and/or the Gema Powder Finishing Business, except for any Intellectual Property specifically identified on Appendix 6 or Appendix 3, Exhibit 2, to this Order.

JJ. “Liquid Finishing Business Employees” means any full-time, part-time, or contract employees of the Liquid Finishing Business or the LFB Powder Finishing Business who were employed at any time immediately prior to the Acquisition through the Divestiture Date.

KK. “Liquid Finishing Business Intellectual Property” means all Intellectual Property owned or licensed (as licensor or licensee) by Respondent Graco (after the Acquisition) in which Graco has a proprietary interest, and all associated rights thereto, that were acquired by Graco in the Acquisition or that have been assigned, VOLUME 158 Decision and Order transferred, conveyed to, acquired, or owned by Graco after the Acquisition, or by Respondents pursuant to the 3M-ITW Settlement-Related Agreements or otherwise (including, but not limited to, the DeKups IP and Tooling), and that relate to the Liquid Finishing Products and/or the Liquid Finishing Business, all of which is required to be divested by Graco to the Commission-approved Acquirer pursuant to this Order. The Liquid Finishing Business Intellectual Property includes, but is not limited to, the Intellectual Property identified and described on Appendix 1, Exhibit 3, and Appendix 6.

LL. “Liquid Finishing Products” means the liquid finishing products and systems manufactured, sold, or serviced prior to the Acquisition by Respondent ITW, including, but not limited to, liquid finishing products and systems manufactured, sold, or serviced under the Binks®, Devilbiss®, Ransburg®, and BGK Finishing Systems trademarks or brand names, and any improvements or additions thereto specifically directed to developing, assembling, manufacturing, distributing, selling, or servicing liquid finishing systems and products.

MM. “Person” means any individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture, other entity, or a governmental body.

NN. “Prospective Acquirer” means a Person that Respondent Graco (or a Divestiture Trustee) intends to submit as a Commission-approved Acquirer to the Commission for its prior approval pursuant to Paragraph II. (or Paragraph V.) of this Order. OO. “Ransburg Powder Finishing Intellectual Property” means all Intellectual Property that is necessary for making, having made, using, offering for sale, selling, importing, or exporting Ransburg Powder Finishing Products, including, but not limited to, the Intellectual GRACO INC. 625 Decision and Order Property specifically identified and described on Appendix 3, Exhibit 1, to this Order.

PP. “Ransburg Powder Finishing Products” means the powder finishing products and systems manufactured, sold, or serviced under the Ransburg® trademarks or brand names prior to the Acquisition by Respondent ITW, which are specifically identified and described on Appendix 2, Exhibit 2, to this Order. QQ. “Respondents” means Graco and ITW, individually and collectively.

RR. “Retained Ransburg Powder Finishing Intellectual Property” means the Ransburg Powder Finishing Intellectual Property specifically identified and described on Appendix 3, Exhibit 3, to this Order. The Retained Ransburg Powder Finishing Intellectual Property is not required to be divested by Graco to the Commission-approved Acquirer pursuant to Paragraph II.A. of this Order; provided, however, that Graco is required to enter into a Graco License conveying rights in the Graco Retained Intellectual Property, including, but not limited to, the Retained Ransburg Powder Finishing Intellectual Property, to the Commissionapproved Acquirer in accordance with the requirements of Paragraph II.D. of this Order. SS. “Tangible Personal Property” means all machinery, equipment, tools, furniture, office equipment, computer hardware, supplies, materials, vehicles, rolling stock, and other items of tangible personal property (other than inventories) of every kind owned or leased (including, but not limited to, all tangible personal property included in the DeKups IP and Tooling), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

VOLUME 158 Decision and Order TT. “Transitional Services” means any transitional assistance, support, or services necessary to enable the Commission-approved Acquirer to continue the development, manufacturing, distribution, sales, and services related to operation of the Liquid Finishing Business Assets, including, but not limited to, the provision of administrative services, consultation and advice, technical assistance, and training. II.

IT IS FURTHER ORDERED that:

A. Respondent Graco shall divest the Liquid Finishing Business Assets, absolutely and in good faith, at no minimum price, as an on-going business, no later than 180 days after the date this Order becomes final, to a Commission-approved Acquirer, and only in a manner (and pursuant to a Divestiture Agreement with the Commission-approved Acquirer) that receives the prior approval of the Commission; provided, however, that nothing in this Order shall prevent Respondent Graco from entering into an LFB License-Back, subject to the prior approval of the Commission, with the Commission-approved Acquirer.

B. No later than the Divestiture Date, Respondent Graco shall secure all consents, assignments, waivers, licenses, certificates, registrations, permits, and other authorizations from all Persons that are necessary for the divestiture and operation of the Liquid Finishing Business Assets to the Commission-approved Acquirer; provided, however, that Respondent Graco may satisfy this requirement by certifying that the Commission-approved Acquirer has executed appropriate agreements directly with each of the relevant Persons.

C. In the event Respondent Graco is unable to obtain any consent(s), assignment(s), waiver(s), license(s), certificate(s), registration(s), permit(s), or other authorizations necessary for the divestiture and/or GRACO INC. 627 Decision and Order operation of the Liquid Finishing Business Assets from any Person, Respondent Graco shall:

1. Provide such assistance as the Commissionapproved Acquirer may reasonably request in its efforts to obtain a comparable license, certificate, registration, permit, or other authorization; and/or 2. With the acceptance of the Commission-approved Acquirer and the prior approval of the Commission, substitute equivalent assets or arrangements.

D. No later than the Divestiture Date, Respondent Graco shall grant a Graco License under the Graco Retained Intellectual Property to the Commission-approved Acquirer in connection with the Liquid Finishing Business Assets as divested pursuant to this Order, and only in a manner (and pursuant to a Divestiture Agreement with the Commission-approved Acquirer) that receives the prior approval of the Commission. Respondent Graco is not required to make any representations or warranties with respect to the ownership, existence, or maintenance of the Category 2 – Graco Retained Intellectual Property in the Divestiture Agreement.

E. Respondent Graco:

1. shall not join, file, prosecute, or maintain any suit, in law or equity, or take any administrative action, either directly or indirectly through a third party (including assignees, transferees, or licensees), against the Commission-approved Acquirer or any of its customers or affiliates (including integrators, distributors, licensees, manufacturers, and suppliers), assigns or successors in interest, under or with regard to any Intellectual Property acquired by Respondent Graco in the Acquisition or developed or otherwise obtained by the Hold Separate Business during the Hold Separate Period, and owned or licensed by Respondent Graco VOLUME 158 Decision and Order relating to the Gema Powder Finishing Business or to the Liquid Finishing Business Assets as of the Divestiture Date, if such suit or action would, or would have the potential to, interfere with the Commission-approved Acquirer’s freedom to practice in the research, development, manufacture, use, import, export, distribution, offer to sell, or sale of any Liquid Finishing Products or LFB Powder Finishing Products; and 2. shall not (i) assert, directly or indirectly through a third party, any Intellectual Property rights acquired by Respondent Graco in the Acquisition against the Commission-approved Acquirer or any of its customers or affiliates, or assigns or successors in interest, if such assertion would, or would have the potential to, interfere with the Commission-approved Acquirer’s freedom to practice in the research, development, manufacture, use, import, export, distribution, offer to sell, or sale of any Liquid Finishing Products or LFB Powder Finishing Products; or (ii) seek to challenge or invalidate any rights under the Liquid Finishing Business Intellectual Property or the LFB Powder Finishing Intellectual Property in a civil action or administrative proceeding, to the extent that the Commission-approved Acquirer or any of its customers or affiliates, or assigns or successors in interest, exercise the rights divested by, expressly granted by, or that are required to be granted by Graco pursuant to the requirements of this Order;

provided, however, that the scope of the prohibitions in sub-Paragraphs II.E.1 and II.E.2 of this Order shall be limited for the Devilbiss Powder Finishing Products to South America and for the Ransburg Powder Finishing Products to transportation and related supply chain markets; and 3. shall include a covenant not to sue or take any other action effecting the foregoing prohibitions in GRACO INC. 629 Decision and Order sub-Paragraphs II.E.1 and II.E.2 of this Order in any Divestiture Agreement related to the Liquid Finishing Business Assets;

provided, however, that Respondent Graco may, subject to the prior approval of the Commission, receive a covenant not to sue from the Commissionapproved Acquirer not to assert against the Gema Powder Finishing Business any Intellectual Property that is divested by Respondent Graco to the Commission-approved Acquirer pursuant to this Order; and provided further that any such covenant not to sue the Gema Powder Finishing Business received by Respondent Graco from the Commission-approved Acquirer shall be limited to the following field/application: powder finishing.

F. At the request of the Commission-approved Acquirer, pursuant to an agreement that receives the prior approval of the Commission, Respondent Graco shall, for a period not to exceed twelve (12) months from the Divestiture Date, or as otherwise approved by the Commission, provide Transitional Services to the Commission-approved Acquirer:

1. Sufficient to enable the Commission-approved Acquirer to operate the divested assets and business in substantially the same manner as they were operated prior to the Acquisition; and 2. At substantially the same level and quality as such services were provided by Respondents in connection with the operation of the divested assets and business prior to the Acquisition. Provided, however, that Respondent Graco shall not (i) require the Commission-approved Acquirer to pay compensation for Transitional Services that exceeds the Direct Cost of providing such goods and services, (ii) terminate its obligation to provide Transitional VOLUME 158 Decision and Order Services because of a material breach by the Commission-approved Acquirer of any agreement to provide such assistance, in the absence of a final order of a court of competent jurisdiction, except if Respondent Graco is unable to provide such services due to such material breach, or (iii) seek to limit the damages (such as indirect, special, and consequential damages) which a Commission-approved Acquirer would be entitled to receive in the event of Respondent Graco’s breach of any agreement to provide Transitional Services.

G. Respondent ITW shall provide the Commissionapproved Acquirer, at the request of the Commissionapproved Acquirer, the transition and support services Respondent ITW has agreed to provide to Respondent Graco in the Asset Purchase Agreement on the terms and subject to the conditions contemplated by the Asset Purchase Agreement.

H. Respondent Graco shall provide the Commissionapproved Acquirer with the opportunity to identify, recruit, and employ any Liquid Finishing Business Employee in conformance with the following: 1. No later than ten (10) days after a request from a Prospective Acquirer, or staff of the Commission, Respondents shall provide the Prospective Acquirer with the following information for each Liquid Finishing Business Employee, as and to the extent permitted by law:

a. name, job title or position, date of hire, and effective service date;

b. a specific description of the employee’s responsibilities;

c. the base salary or current wages;

d. the most recent bonus paid, aggregate annual compensation for Respondent ITW’s last fiscal GRACO INC. 631 Decision and Order year, and current target or guaranteed bonus, if any;

e. employment status (i.e., active or on leave or disability; full-time or part-time);

f. any other material terms and conditions of employment in regard to such employee that are not otherwise generally available to similarly-situated employees; and g. at the Prospective Acquirer’s option, copies of all employee benefit plans and summary plan descriptions (if any) applicable to the relevant Liquid Finishing Business Employee.

2. No later than thirty (30) days before the Divestiture Date, after a request from a Prospective Acquirer, Respondent Graco shall provide the Prospective Acquirer with an opportunity (i) to meet, personally and outside the presence or hearing of any employee or agent of any Respondent, with any Liquid Finishing Business Employee for the purpose of discussing potential employment, (ii) to inspect the personnel files and other documentation relating to any such employee, to the extent permissible under applicable laws, and (iii) to make offers of employment to any Liquid Finishing Business Employee.

3. Respondent Graco shall (i) not interfere, directly or indirectly, with the hiring or employing by the Prospective Acquirer of any Liquid Finishing Business Employee, (ii) not offer any incentive to any Liquid Finishing Business Employee to decline employment with the Prospective Acquirer, (iii) not make any counteroffer to any Liquid Finishing Business Employee who receives a written offer of employment from the Prospective Acquirer; provided, however, that nothing in this Order shall be construed to require Respondent Graco to terminate the employment of any VOLUME 158 Decision and Order employee or prevent Respondent Graco from continuing the employment of any employee; (iv) remove any impediments within the control of Respondent Graco that may deter any Liquid Finishing Business Employee from accepting employment with the Prospective Acquirer, including, but not limited to, any non-compete or confidentiality provisions of employment or other contracts with Respondent Graco that would affect the ability of such employee to be employed by the Prospective Acquirer, and (v) not otherwise interfere with the recruitment of any Liquid Finishing Business Employee by the Prospective Acquirer.

I. Until the Divestiture Date, Respondent Graco shall provide each Liquid Finishing Business Employee with reasonable financial incentives to continue in his or her position consistent with past practices and/or as may be necessary to preserve the marketability, viability, and competitiveness of the Liquid Finishing Business Assets pending divestiture. Such incentives shall include employee benefits, including regularly scheduled raises, bonuses, vesting of current and accrued retirement benefits (as permitted by law), on the same basis as provided under the Asset Purchase Agreement to other employees hired by Respondent Graco in the Acquisition, and such additional incentives as may be necessary to assure the continuation and to prevent any diminution of the viability, marketability, and competitiveness of the Liquid Finishing Business Assets until the Divestiture Date, and as may otherwise be necessary to achieve the purposes of this Order and the Hold Separate. J. For a period of two (2) years after the Divestiture Date, Respondent Graco shall not, directly or indirectly, solicit, induce, or attempt to solicit or induce any Liquid Finishing Business Employee who has accepted an offer of employment with the Commissionapproved Acquirer, or who is employed by the Commission-approved Acquirer, to terminate his or GRACO INC. 633 Decision and Order her employment relationship with the Commissionapproved Acquirer; provided, however, Respondent Graco may:

1. Advertise for employees in newspapers, trade publications, or other media, or engage recruiters to conduct general employee search activities, so long as these actions are not targeted specifically at any Liquid Finishing Business Employees; and 2. Hire Liquid Finishing Business Employees who apply for employment with Respondent Graco, so long as such individuals were not solicited by Respondent Graco in violation of this paragraph; provided further, that this sub-Paragraph shall not prohibit Respondent Graco from making offers of employment to or employing any Liquid Finishing Business Employees if the Commission-approved Acquirer has notified Respondent Graco in writing that the Commission-approved Acquirer does not intend to make an offer of employment to that employee, or where such an offer has been made and the employee has declined the offer, or where the individual’s employment has been terminated by the Commission-approved Acquirer.

K. No later than the Divestiture Date, Respondents shall assign, transfer, convey, and divest all rights, title and interest in and to the 3M Agreements, the DeKups Products, and the DeKups IP and Tooling (including upon termination of the 3M Agreements) to the Liquid Finishing Business and/or the Commission-approved Acquirer pursuant to the 3M-ITW Settlement-Related Agreements or otherwise; provided, however, that in the event Respondent ITW obtains ownership, possession, or control of any rights, title or interest in or to the 3M Agreements, the DeKups Products, and/or the DeKups IP and Tooling after the Divestiture Date, then Respondent ITW shall immediately transfer, convey, and deliver all such rights, title, and interest, absolutely and in good faith, to the Liquid Finishing Business and/or the Commission-approved Acquirer. VOLUME 158 Decision and Order L. The purpose of the divestiture of the Liquid Finishing Business Assets is to ensure the continuation of the Liquid Finishing Business Assets as an ongoing, viable business operating in the same relevant markets in which such assets were competing at the time of the announcement of the Acquisition by Respondents, and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission’s Complaint.

III.

IT IS FURTHER ORDERED that:

A. Respondents shall (i) keep confidential and not disclose (including with respect to Respondents’ employees) and (ii) not use for any reason or purpose, any Confidential Business Information pertaining to the Liquid Finishing Business, the LFB Powder Finishing Business, and the Liquid Finishing Business Assets; provided, however, that the Respondents may disclose or use such Confidential Business Information:

1. In the course of performing their obligations as permitted under this Order or the Hold Separate, including as necessary to effect the marketing and divestiture of the Liquid Finishing Business Assets pursuant to Paragraph II. of this Order and the provision of Transitional Services; provided further, that Respondents’ employees who provide support services under the Hold Separate or Transitional Services under the Divestiture Agreement(s), or who staff the Hold Separate Business, shall be deemed to be performing obligations under this Order or the Hold Separate. 2. In the course of performing their obligations under the Divestiture Agreement(s);

GRACO INC. 635 Decision and Order 3. To enforce the terms of the Divestiture Agreement(s) or to prosecute or defend against any dispute or legal proceeding;

4. To comply with financial reporting requirements, obtain legal advice, defend legal claims, enforce actions threatened or brought against the Liquid Finishing Business, the LFB Powder Finishing Business, or the Liquid Finishing Business Assets, or as required by applicable law, regulations, and other legal requirements (including in connection with tax returns, reports required by securities laws and payroll, benefits, or personnel reports or information) or in overseeing compliance with policies and standards concerning health, safety, and environmental aspects of the operation of the Liquid Finishing Business and the LFB Powder Finishing Business and the integrity of the Liquid Finishing Business and LFB Powder Finishing Business financial controls;

5. To Respondent Graco’s lenders, auditors, attorneys, and financial advisors; and 6. As otherwise permitted by the Commission staff, this Order, the Hold Separate, or the Divestiture Agreement(s).

B. If the disclosure or use of any Confidential Business Information is permitted to Respondents’ employees or to any other Person under Paragraph III.A. of this Order, then Respondents shall limit such information (i) only to those employees or other Persons who require such information for the purposes permitted under Paragraph III.A., (ii) only to the extent such information is required, and (iii) only after such employees or other Persons have signed an agreement in writing to maintain the confidentiality of such information.

C. Respondents shall enforce the terms of this Paragraph III. as to their employees and any other Person and VOLUME 158 Decision and Order take such action as is necessary to cause each of their employees and any other Person to comply with the terms of this Paragraph III., including implementation of access and data controls, training of their employees, and all other actions that Respondents would take to protect their own trade secrets and proprietary information.

IV.

IT IS FURTHER ORDERED that:

A. The Divestiture Agreement(s) shall not limit or contradict, or be construed to limit or contradict, the terms of this Order, it being understood that nothing in this Order shall be construed to reduce any rights or benefits of the Commission-approved Acquirer or to reduce any obligations of the Respondents under such agreements.

B. The Divestiture Agreement(s) shall be incorporated by reference into this Order and made a part hereof. C. Respondent Graco shall comply with all provisions of the Divestiture Agreement(s), and any breach by Respondent Graco of any term of such agreement shall constitute a violation of this Order. If any term of a Divestiture Agreement varies from the terms of this Order (“Order Term”), then to the extent that Respondent Graco cannot fully comply with both terms, the Order Term shall determine Respondent Graco’s obligations under this Order. Any failure by Respondent Graco to comply with any term of a Divestiture Agreement shall constitute a failure to comply with this Order.

D. Respondent Graco shall not modify or amend any of the terms of the Divestiture Agreement(s) without the prior approval of the Commission, except as otherwise provided in Rule 2.41(f)(5) of the Commission’s Rules of Practice and Procedure, 16 C.F.R. § 2.41(f)(5). Notwithstanding any paragraph, section, or other GRACO INC. 637 Decision and Order provision of the Divestiture Agreement, any modification of the Divestiture Agreement without the prior approval of the Commission, or as otherwise provided in Rule 2.41(f)(5), shall constitute a failure to comply with this Order.

V.

IT IS FURTHER ORDERED that:

A. If Respondent Graco has not divested the Liquid Finishing Business Assets and otherwise fully complied with its obligations as required by Paragraphs II.A.-I., of this Order, the Commission may appoint a trustee (“Divestiture Trustee”) to divest the Liquid Finishing Business Assets, grant a Graco License, and/or perform Respondent Graco’s other obligations in a manner that satisfies the requirements of this Order. The Divestiture Trustee appointed pursuant to this Paragraph may be the same Person appointed as Hold Separate Trustee pursuant to the relevant provisions of the Hold Separate entered in this matter.

B. In the event that the Commission or the Attorney General brings an action pursuant to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondent Graco shall consent to the appointment of a Divestiture Trustee in such action to divest the relevant assets and grant the relevant license in accordance with the terms of this Order. Neither the appointment of a Divestiture Trustee nor a decision not to appoint a Divestiture Trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed Divestiture Trustee, pursuant to § 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order.

VOLUME 158 Decision and Order C. The Commission shall select the Divestiture Trustee, subject to the consent of Respondent Graco, which consent shall not be unreasonably withheld. The Divestiture Trustee shall be a person with experience and expertise in acquisitions and divestitures. If Respondent Graco has not opposed, in writing, including the reasons for opposing, the selection of any proposed Divestiture Trustee within ten (10) days after notice by the staff of the Commission to Respondent Graco of the identity of any proposed Divestiture Trustee, Respondent Graco shall be deemed to have consented to the selection of the proposed Divestiture Trustee.

D. Within ten (10) days after appointment of a Divestiture Trustee, Respondent Graco shall execute a trust agreement that, subject to the prior approval of the Commission, transfers to the Divestiture Trustee all rights and powers necessary to permit the Divestiture Trustee to effect the relevant divestiture or transfer required by this Order.

E. If a Divestiture Trustee is appointed by the Commission or a court pursuant to this Order, Respondent Graco shall consent to the following terms and conditions regarding the Divestiture Trustee’s powers, duties, authority, and responsibilities: 1. Subject to the prior approval of the Commission, the Divestiture Trustee shall have the exclusive power and authority to divest, assign, grant, license, transfer, deliver, or otherwise convey the relevant assets that are required by this Order to be divested, assigned, granted, licensed, transferred, delivered, or otherwise conveyed.

2. The Divestiture Trustee shall have twelve (12) months from the date the Commission approves the trust agreement described herein to accomplish the divestiture and/or other obligations required by this Order, which shall be subject to the prior approval of the Commission. If, however, at the end of the GRACO INC. 639 Decision and Order twelve (12) month period, the Divestiture Trustee has submitted a plan of divestiture or compliance with other obligations, or believes that the divestiture or compliance with other obligations can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a court-appointed Divestiture Trustee, by the court; provided, however, that the Commission may extend the period only two (2) times.

3. Subject to any demonstrated legally recognized privilege, the Divestiture Trustee shall have full and complete access to the personnel, books, records, and facilities related to the relevant assets that are required to be divested, assigned, granted, licensed, delivered, or otherwise conveyed by this Order and to any other relevant information, as the Divestiture Trustee may request. Respondent Graco shall develop such financial or other information as the Divestiture Trustee may request and shall cooperate with the Divestiture Trustee. Respondent Graco shall take no action to interfere with or impede the Divestiture Trustee’s accomplishment of the divestiture. Any delays in divestiture caused by Respondent Graco shall extend the time for divestiture under this Paragraph V in an amount equal to the delay, as determined by the Commission or, for a court-appointed Divestiture Trustee, by the court.

4. The Divestiture Trustee shall use commercially reasonable best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondent Graco’s absolute and unconditional obligation to divest expeditiously and at no minimum price. The divestiture shall be made in the manner and to a Commission-approved Acquirer as required by this Order; provided, however, if the Divestiture Trustee receives bona fide offers from more than one acquiring entity, VOLUME 158 Decision and Order and if the Commission determines to approve more than one such acquiring entity, the Divestiture Trustee shall divest to the acquiring entity selected by Respondent Graco from among those approved by the Commission; provided further, however, that Respondent Graco shall select such entity within five (5) days of receiving notification of the Commission's approval.

5. The Divestiture Trustee shall serve, without bond or other security, at the cost and expense of Respondent Graco, on such reasonable and customary terms and conditions as the Commission or a court may set. The Divestiture Trustee shall have the authority to employ, at the cost and expense of Respondent Graco, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the Divestiture Trustee’s duties and responsibilities. The Divestiture Trustee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission and, in the case of a court-appointed Divestiture Trustee, by the court, of the account of the Divestiture Trustee, including fees for the Divestiture Trustee’s services, all remaining monies shall be paid at the direction of Respondent Graco, and the Divestiture Trustee’s power shall be terminated. The compensation of the Divestiture Trustee shall be based at least in significant part on a commission arrangement contingent on the divestiture of all of the relevant assets that are required to be divested by this Order. 6. Respondent Graco shall indemnify the Divestiture Trustee and hold the Divestiture Trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the Divestiture Trustee’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the GRACO INC. 641 Decision and Order preparation for, or defense of, any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from gross negligence or willful misconduct by the Divestiture Trustee. For purposes of this Paragraph V.E.6., the term “Divestiture Trustee” shall include all Persons retained by the Divestiture Trustee pursuant to Paragraph V.E.5. of this Order.

7. The Divestiture Trustee shall have no obligation or authority to operate or maintain the relevant assets required to be divested by this Order. 8. The Divestiture Trustee shall report in writing to Respondent Graco and to the Commission every thirty (30) days concerning the Divestiture Trustee’s efforts to accomplish the divestiture. 9. Respondents may require the Divestiture Trustee and each of the Divestiture Trustee’s consultants, accountants, attorneys, and other representatives and assistants to sign a customary confidentiality agreement; provided, however, such agreement shall not restrict the Divestiture Trustee from providing any information to the Commission. F. If the Commission determines that a Divestiture Trustee has ceased to act or failed to act diligently, the Commission may appoint a substitute Divestiture Trustee in the same manner as provided in this Paragraph V.

G. The Commission or, in the case of a court-appointed Divestiture Trustee, the court, may on its own initiative or at the request of the Divestiture Trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this Order.

VOLUME 158 Decision and Order VI.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days after the date this Order becomes final and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II and V of this Order, Respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with this Order, and the Hold Separate. Respondent Graco shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with this Order and with the Hold Separate, including a description of all substantive contacts or negotiations relating to the divestiture and approval, and the identities of all parties contacted. Respondents shall include in their compliance reports copies, other than of privileged materials, of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning the divestiture and approval, and, as applicable, a statement that the divestiture approved by the Commission has been accomplished, including a description of the manner in which Respondent Graco completed such divestiture and the date the divestiture was accomplished. B. One (1) year after the date this Order becomes final, Respondents, and annually thereafter for the next five (5) years on the anniversary of the date this Order becomes final, and at such other times as the Commission may request, Respondent Graco shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with the Order and any Divestiture Agreement.

GRACO INC. 643 Decision and Order VII.

IT IS FURTHER ORDERED that Respondent Graco shall notify the Commission at least thirty (30) days prior to: A. Any proposed dissolution of Respondent Graco; B. Any proposed acquisition, merger, or consolidation of Respondent Graco; or C. Any other change in Respondent Graco, including, but not limited to, assignment and the creation or dissolution of subsidiaries, if such change might affect compliance obligations arising out of this Order. VIII.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, subject to any legally recognized privilege, upon written request and five (5) days’ notice to the relevant Respondent, with respect to any matter contained in this Order, the relevant Respondent shall permit any duly authorized representative of the Commission: A. Access, during business office hours of the relevant Respondent(s) and in the presence of counsel, to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and all other records and documents in the possession or under the control of the relevant Respondent(s) related to compliance with the Consent Agreement and/or the Orders, which copying services shall be provided by such Respondent(s) at the request of the authorized representative(s) of the Commission and at the expense of such Respondent(s); and B. Without restraint or interference from such Respondent(s), to interview officers, directors, or employees of such Respondent(s), who may have counsel present.

VOLUME 158 Decision and Order IX.

IT IS FURTHER ORDERED that this Order shall terminate on October 6, 2024.

By the Commission, Commissioner Ohlhausen abstaining, and Commissioner Wright and Commissioner McSweeny not participating.

ATTACHMENTS [Confidential Exhibits Redacted From the Public Record Version, But Incorporated By Reference] APPENDIX 1: DeKups Products and 3M Agreements CONFIDENTIAL Exhibit 1: The 3M Agreements CONFIDENTIAL Exhibit 2: 3M-ITW Settlement-Related Agreements Exhibit 3: DeKups Intellectual Property Transferred Pursuant to 3M-ITW Settlement-Related Agreements APPENDIX 2: LFB Powder Finishing Products Exhibit 1: Devilbiss Powder Finishing Products Exhibit 2: Ransburg Powder Finishing Products APPENDIX 3: Ransburg Powder Finishing Intellectual Property Exhibit 1: Ransburg Powder Finishing Intellectual Property Exhibit 2: Divested Ransburg Powder Finishing Intellectual Property Exhibit 3: Retained Ransburg Powder Finishing Intellectual Property APPENDIX 4: Graco Retained Intellectual Property APPENDIX 5: Licensed-Back Powder Finishing Intellectual Property GRACO INC. 645 Decision and Order APPENDIX 6: Liquid Finishing Business Intellectual Property Exhibit 1: Patents and Patent Applications CONFIDENTIAL Exhibits 2 and 2A: Unpublished and Unfiled Patent Applications CONFIDENTIAL Exhibit 3: Abandoned or Expired Patents Exhibit 4: Trademarks Exhibit 5: Inactive Trademarks VOLUME 158 Decision and Order Appendix 1 GRACO INC. 647 Decision and Order APPENDIX 1 Confidential Exhibit 1: The 3M Agreements 3M Settlement Agreement VOLUME 158 Decision and Order GRACO INC. 649 Decision and Order APPENDIX 1 Confidential Exhibit 2: 3-ITW Settlement-Related Agreements Mutual Release, dated as of June 6, 2013, by and among Illinois Tool Works Inc., Graco Inc., Gema USA Inc., Graco Minnesota Inc. and Finishing Brands Holdings Inc.

Assignment and Assumption Agreement and Bill of Sale, dated as of June 6, 2013, by and between Finishing Brands Holdings Inc. and Illinois Tool Works Agreement, dated as of June 6, 2013, by and between Illinois Tool Works Inc. and Finishing Brands Holdings Inc. in respect of the assignment of the DeKups trademark VOLUME 158 Decision and Order GRACO INC. 651 Decision and Order Appendix 2 APPENDIX ?:

LFB POWDER FINISHING PRODUCTS Exhibit 1: Devilbiss Powder Finishing Products Exhibit 2: Ransburg Powder Finishing Products VOLUME 158 Decision and Order GRACO INC.

Decision and Order Part Number Description BFC-0175 SCREW BFC-0177 2-STAGE MANIFOLD BFC-0527 ADAPTER BFC-0528 ADAPTER BFC-0542 MANIFOLD BFC-0545 HOSE BFC-0546 HOSE BFC-0547 HOSE BFC-0548 MANIFOLD 2? EST WITH RESTR BFC-0561 FLUIDIZATION HOSE BFC-0562 POWDER HOSE CONTROL N°? BFC-0563 DOSING HOSE BFC-0755 NEEDLE VALVE BFC-0754 NEEDLE VALVE BFC-0755 VALVE BFP-0035 STEM BFP-0158 POWDER HOSE BFP-0183 ADAPTER BFP-0188 FLAPPER BFP-0198 POWDER TUBE BFP-0199 POWDER HOSE BFP-0223 ADAPTER BFP-0224 NIPPLE BFP-0236 TRIGGER BFP-0237 ADAPTER BFP-0254 ADAPTER BFP-0255 COVER BFP-0266 TRIGGER BFP-0281 DEFLECTOR BFP-0289 ADAPTER BFP-0290 ELBOW BFP-0510 DEFLECTOR PUSHER BFP-0312 COVER BFP-0333 POWDER TUBE BFP-0345 COVER BFP-0347 DEFLECTOR PUSHER BFP-0350 COVER ELLIPTICAL FAN BFP-0415 BACK COVER BFP-0416 BACK COVER VOLUME 158 Decision and Order GRACO INC.

Decision and Order Part Number Description BFP-0748 DEFLECTOR BFP-0749 METALLIC POWDER DIFFUSER BFP-0750 NOZZLE METALLIC POWDER BFP-0751 NOZZLE METALLIC POWDER BFP-0761 BARREL POWDER GUN 1 STAGE BFP-0762 BARREL POWDER GUN 2 STAGES BFP-0763 BARREL CASCADIUM METALLIC GUN BFP-0765 BARREL CASCADIUM GUN 1 STAGE BFP-0766 BARREL CASCADIUM GUN 2? STAGES BFP-0768 BARREL CASCADIUM GUN 32 STAGES BFP-O770 EXTENSION CASCADIUM GUN BFP-0771 DEFLECTOR BFP-O772 DEFLECTOR BFP-0775 BODY ASSEMBLY BFP-O776 GUN BODY BFP-O777 BARREL CASCADIUM GUN 1 AND? STAGES BFP-O778 BARREL CASCADIUM METALLIC GUN BFP-0779 BARREL POWDER POP GUN BFP-0780 EXTENSION CASCADIUM GUN BFP-0783 BARREL CASCADIUM METALLIC GUN BFP-0815 METALLIC POWDER GUN BFP-0816 POWDER GUN CASCADIUM 2 STAGES BFP-0817 METALLIC POWDER GUN CASCADIUM BFP-0818 METALLIC POWDER GUN CASCADIUM BFP-0819 METALLIC POWDER GUN POWDERPOP BFP-0821 POWDER GUN 1 STAGE BFP-0822 POWDER GUN 2 STAGES BFP-0823 METALLIC POWDER GUN CASCADIUM BFP-0824 METALLIC POWDER GUN CASCADIUM BFP-0825 POWDER GUN CASCADIUM 1 STAGE BFP-0826 POWDER GUN CASCADIUM 2 STAGES BFP-0827 POWDER GUN CASCADIUM 1 STAGE BFP-0828 POWDER GUN CASCADIUM 2 STAGES BFP-0833 AUTOMATIC POWDER GUN BFP-0834 POWDER GUN CASCADIUM 1 STAGE BFP-0835 POWDER GUN CASCADIUM 2 STAGES BFP-0837 POWDER GUN CASCADIUM 1 STAGE BFP-0838 POWDER GUN CASCADIUM 2 STAGES VOLUME 158 Decision and Order GRACO INC.

Decision and Order Part Number Description BGA-O419 MODULE 4 BGA-0420 DIGITAL MICKOAMPMETER BGA-0421 HARNESS CABLE BGA-0422 TAEREN WITH WORMTAIL BGA-0423 SOLENOID VALVE BGA-0424 HARNESS MICROAMP BGA-0425 HARNESS EEY COAT/RECOAT BGA-0426 POTENTIOMETER BGA-0427 HARNESS FOR MOD 1 BGA-0428 MODULE 4 BGA-0513 TRANSFORMER 220V BGA-0527 HARNESS BGA-0537 POTENTIOMETER BGA-0547 POTENTIOMETER BGA-0553 MODULE 3 BGA-0566 MODULE 2 BGA-0568 MODULE 4 BGA-0570 DIGITAL MICROAMPMETER BGA-0571 MODULE 2 CASCADIUM BGA-0372 HARNESS BGA-0573 HARNESS BGA-0574 CONNECTOR BGA-0575 CONNECTOR BGA-0576 POTENTIOMETER BGA-0580 MODULE 3 220V BGA-0581 MODULE 3 220V BGA-0585 HARNESS BGA-0556 HARNESS BGA-0587 HARNESS BGA-0590 MODULE 3 220V BGA-0591 MODULE 3 220V BGA-0592 MODULE 2 CASCADIUM BGA-0593 MODULE 3 BFX-980 BGA-0594 MODULE 3 BFX-982 BGA-0595 HARNESS BGA-0598 HARNESS BGA-0599 HARNESS BGA-0603 MODULE 3 BGA-0604 MODULE 4 VOLUME 158 Decision and Order GRACO INC.

Decision and Order Part Number Description E-8086 REPLACEMENT EIT E-8087 REPLACEMENT EIT E-8092 REPLACEMENT EIT E-8093 REPLACEMENT EIT E-8094 REPLACEMENT KIT E-8095 REPLACEMENT EIT E-8096 REPLACEMENT EIT E-8098 FLUIDIZATION SCREEN REPALCEMENT KIT E-8099 FLUIDIZATION SCREEN REPALCEMENT KIT E-8100 REPLACEMENT EIT E-#101 REPLACEMENT EIT E-8102 REPLACEMENT EIT E-8103 REPLACEMENT EIT E-8104 REPLACEMENT EIT E-8105 REPLACEMENT EIT E-8107 REPLACEMENT EIT BFP-0345 COVER E-8109 REPLACEMENT EIT E-8112 DEFLECTOR REPLACEMENT EIT E-8114 REPLACEMENT EIT E-8115 DEFLECTOR REPLACEMENT EIT E-8116 TRIGGER REPLACEMENT EIT E-8117 REPLACEMENT KIT E-8118 REPLACEMENT EIT E-8119 HOSE KIT OF BFX-1000 VOLUME 158 Decision and Order GRACO INC.

Decision and Order RPA-? Applicator Top Assembly All items below are part of RPA-2 Top Assembly (A12950-3X EE EEERE: AL]T89-2X Standalone'Control Pak Assembly (MuicroPak) A12239-EX Low Voltage Cable (quick connect} Al12941-3 Low Voltage Cable Extension (discreet) Al2443-2 Low Voltage Cable Extension (quick connect) A11680-2X Ground Cable Assembly Special Toole: A135001-00 Tool; 76772-00 Adjustable Spanner wrench Recommended Spare Parts for RPA-2:

RANSBURG RPA-? POWDER APPLICATOR RECOMMENDED SPARE PARTS Part Description Open Bore Nozzle Application A13053-00 Open Bore Nozzle A11138-00 Conductive Seal 7554-126 O-nng A11163-00 O-nng A11149-00 O-nng Electreds HolderShape dir dpplication Option A11195-EX Electrode Holder Assembly A11135-00 Conductive Seal A11163-00 O-nng A11150-00 O-nng A11149-00 O-nng A11148-00 O-nng A11147-00 O-nng A11304-00 Wear Bar A11290-01 Electrode Holder (use with A11504-00 Wear Bar) A11303-01 Electrode Holder with non-replaceable Wear Bar Counrer Elecrrade Applicanan 78365-00 Resistor (5 giz ohm) A12645-00 Screw (M3 = 10 Fit Hd 55) A12862-00 Charging Fing, Secondary A10123-00 Plug, Contact 75831-00 Spring No Counrer Electrode Applicarion A12894-00 Charging Ring Blank VOLUME 158 Decision and Order GRACO INC. 663 Decision and Order Appendix 3 APPENDIX 3:

RANSBURG POWDER FINISHING INTELLECTUAL PROPERTY Exhibit 1: Ransburg Powder Finishing Intellectual Property Exhibit 2: Divested Ransburg Powder Fimshing Intellectual Property Exhibit 3: Retained Ransburg Powder Finishing Intellectual Property VOLUME 158 Decision and Order ba GRACO INC. 665 Decision and Order U. 5. Patent No. 5,978,244, enttled “Programmable Logic Control System for a HVDC Power Supply,” as well as any and all continuations, divisionals, contmmuattons-in-patt, reissues, reexamunations, and foreign counterparts thereof. U. 5. Patent No. 5,853,126, entitled “Quick Disconnect for Powder Cozting Apparatus,” as well as any and all contimuations, divisionals, continuations-in-part, reissues, reexaminations, and foreign counterparts thereof. RPA-1 Service Manual RPA-2 Service Manual RPAA-O24 Serice Manual Drawing package for RPA-1, RPA-2 and RPAA-074 Drawing package for RPAA-01 Service Manual for Powder Bell Service Manual for MicroPak Drawing set for Powder Bell Drawing set for MicroPak VOLUME 158 Decision and Order GRACO INC. 667 Decision and Order 0. U.S. Patent No. 3,853,126, entitled “Quick Disconnect for Powder Coating Apparatus,” as well as any and all continuations, divisionals, continuations-in-part, reissues, reexamunations, and foreign counterparts thereof. 1. RPA-1] Service Manual ba RPA-2 Service Manual 3. RPAA-O24 Service Manual 4. Drawing package for RPA-1, RPA-2 and RPAA-024 5. Service Manual for Powder Bell 6. Service Manual for Micron-ak 7. Drawing set for Powder Bell 8. Drawing set for MicroPak Tncluston by the FTC of Intellectual Property on this Exhibit 2 of Appendix 3 shall not be construed as a representation that amy such Intellectual Property 1s active or otherwise enforceable. Such information is provided solely for the purpose of this Order. VOLUME 158 Decision and Order GRACO INC. 669 Decision and Order Appendix 4 APPENDIX 4:

GRACO RETAINED INTELLECTUAL PROPERTY “Graco Retamed Intellectual Property” means (1) Category 1- the Retained Ransburg Powder Finishing Intellectual Property, which is specifically identified and desenbed on Appendix 3, Exhibit 3 to this Order, and (i) Category 2: Intellectual Property included as am asset of the Gema Powder Fimshing Business for which a license to the Commussion-approved Acquirer is necessary to assure the continued and unmmpeded operations of the Liquid Fimishime Business and the LFB Powder Fimishing Business after the Divestiture Date. The Graco Retained Intellectual Property that must be licensed to the Commuission-approved Acquirer pursuant to a Graco License is specifically identified and described on this Appendix 4 to this Order, as further specified below. CATEGORY 1:

1. U.S. Patent No. 7,478,763, entitled “Spray Coating Device for Spraying Coating Material, im Particular Coating Powder,” as well as any and all continuations, divisionals, continuations-in-part, reissues, reexamimations, and foreign counterparts thereof. 2. Drawing package for RPAA-O1.

CATEGORY 2:

1. U.S. Patent No. 6,557,789, entitled “Manual Spray Coatmg Gun,” as well as any and all continuations, divistonals, continuations-in-part, reissues, reexaminations, and foreign counterparts thereof.

2. U.S. Patent No. 6,562,158, entitled “Electrode Holder for a Powder Spray Gun,” as well as any and all continuations, divisionals, contmuations-in-part, reissues, reexamimations, and foreign counterparts thereof.

3. U.S. Patent No. 6,712,291, entitled “Spray Coating Apparatus,” as well as any and all continuations, divistonals, continuations-in-part, reisswes, reexaminations, and foreign counterparts thereof.

4. US. Patent No. 6,935,583, entitled “Coatng-Powder Spray Gun,” as well as any and all continuations, divistonals, continuations-in-part, reissues, reexaminations, and foreign counterparts thereof.

VOLUME 158 Decision and Order GRACO INC. 671 Decision and Order Appendix 5 APPENDIX 3:

LICENSED-BACKk POWDER FINISHING INTELLECTUAL PROPERTY “Licemsed-Back Powder Finishmeg Intellectual Property” means the Divested Ramsburg Powder Finishing Intellectual Property, which is specifically identified and desenbed on Appendix 5 to this Order, and which Graco is permitted to license back from the Commission-approved Acquirer consistent with the divestiture requirements of Paragraph ILA of this Order pursuant to an LFB License-Back:

1. U.S. Patent No. 7,918,409, entitled “Multiple Charging Electrode,” as well as any and all continuations, divisionals, continuations-in-part, reisswes, reexaminations, and foreign counterparts thereof.

ba U.S. Patent No. 8,371,517, entttled “Powder Gun Deflector,” as well 25 amy and all continuations, divisionals, continuations-in-part, reisswes, reexaminations, and foreign counterparts thereof.

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VOLUME 158 Decision and Order GRACO INC. 691 Decision and Order Appendix 6 Exhibit 4: Trademarks As of May 14, 2014 BINKS [2 BINKS sc Ted0si326 BINKS BINKS BINKS BINKS BINKS BINKS BINKS BINKS BINKS BINKS (Stylized) BINKS DX BINKS DX BINKS in Chinese Characters BRONTO CAMAIR, CASCADIUM CHAMPION BY DEVILBISS.

CHAMPION BY DEVILBISS (Stylized) CHAMPION BY DEVILBISS (Stylized, colors) COBRA BY DEVILBISS COMPACT BY DEVILEISS COMPACT BY DEVILEISS Cvi Cvi DAGR Tw 8888 us 1345776 uy a77es9 VE Fo2a298 mA sss Cn BR e2erasiss eR e20245084 eM are cs es eM ses) BR 830167682 cA _|TMA7ES579— DEKUPS DEKUPS DEKUPS CN 7165451 DEKUPS 554785 DEKUPS VFF4271 DEKUPS 1093903 DEKUPS AU 400208 DEKUPS DEV AU 181269 DEV IN 462985 DEV & Design BR \ooerssa42 DEV (Stylized) DEV DEVILBISS & Design '99 indicates Japanese characters which were unable to translate into this document. Page 2 Printed 7/1/2014 VOLUME 158 Decision and Order DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS GRACO INC. 693 Decision and Order Appendix 6 Exhibit 4: Trademarks As of May 14, 2014 DEVILBISS DEVILBISS 153389 DEVILBISS 153381 DEVILBISS 153382 DEVILBISS “eS DEVILBISS m5 DEVILBISS 44517 DEVILBISS 264116 DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS DEVILBISS (Stylized in Calo DEVILBISS (Stylized in Calo DEVILBISS (Sh DEVILBISS (Stylized) wil é HN O1be4o4 DEVILBISS AG-260 DEVILBISS AG-360 DEVILBISS GLEAN DEVILBISS GLEAN (black & orange design) DEVILBISS GLEAN (black & white design) DEVILBISS GOMPACT DEVILBISS DEV & Design DEVILBISS EMG DEVILBISS EUROLINE le 1173.

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I IN 263770 Cn ‘99 indicates Japanese characters which were unable to translate into this document. Page 4 Printed 7/1/2014 VOLUME 158 Decision and Order GRACO INC.

Decision and Order Appendix 6 Exhibit 4: Trademarks As of May 14, 2014 GTI us BB457B GTI PRO a GTI PRO (Series FXO HURRICANE BR |aivai7eio 1ON-O-VAG EM |aieaso0 IR. SMART us jeseeniso JGA Design (Mise D us |i45oge3 JUPITER with katakana (77???) JP 54a7 483 Kyru-Kyoku JF 4016864 Kiyru-Kyoku in Kanji JP 4916865 LOW MIST wo (417726 LOW MIST (Part of WO Registration) BX AEB LOW MIST (Part of WO Registration) DE 417726 LOW MIST (Part of WO Registration) (2 LOW MIST (Part of WO Registration) CL LUNA with katakana (??) 5103886 MEOBELL us e14Bae MEDE'STAT us =: |B 124838 MEDPRO us 861450 MEDSPRAY us |86124831 O-LIGHT with katakana OMX a PLUS us | 4501447 PLUS & Design us POGO TE POLY-CRAFT us reg POP & Desi BR |a2gipeeeo PRI cA |TMABISEB2 PRI us (2834578 PRI Stylized EM (| 2664416 PULSETRACK Us RANSBURG AT RANSBURG RANSBURG RANSBURG RANSBURG RANSBURG RANSBURG RANSBURG RANSBURG BR roarray APEEBERRE wl ) | | 17823 199 indicates Japanese characters which were unable to translate into this document. Page 6 Printed 7/1/2014 VOLUME 158 Decision and Order

VOLUME 158 Decision and Order GRACO INC. 699 Analysis to Aid Public Comment ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT The Federal Trade Commission (“Commission”), subject to its final approval, has accepted for public comment an Agreement Containing Consent Orders, containing both a Proposed Decision and Order (“Proposed Order”) and an Order To Hold Separate and Maintain Assets, with Graco, Inc. (“Graco”), Illinois Tool Works Inc., and ITW Finishing LLC (“ITW”), collectively referred to as the Respondents, to resolve an Administrative Complaint issued by the Commission on December 15, 2011. The Complaint alleged that Graco’s proposed acquisition of ITW would substantially reduce competition in various markets for industrial liquid finishing equipment in North America. The proposed acquisition would harm industrial liquid finishing equipment customers by resulting in higher prices and less choice in the relevant markets. The Proposed Order requires Graco to divest all overlapping ITW businesses and to hold those assets separate pending that divestiture. The Proposed Order is for settlement purposes only and tailored to remedy the effects of Graco’s proposed acquisition of ITW.

The Commission has placed the Proposed Order on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during the comment period will become part of the public record. After thirty days, the Commission will review the Proposed Order and comments received and will decide whether it should withdraw from the Agreement or make final the Proposed Order. I. The Commission’s Complaint The Federal Trade Commission voted 4-0 to issue an Administrative Complaint against Respondents on December 15, 2011.1 Graco is a Minnesota corporation with its principal place of business in Minneapolis, Minnesota. Illinois Tool Works Inc. is a Delaware corporation with its principal place of business in Glenview, Illinois. Illinois Tool Works Inc., at the time of the Commission’s Complaint, wholly owned ITW, a Delaware 1 http://ftc.gov/os/adjpro/d9350/111215gracoadmincmpt.pdf. VOLUME 158 Analysis to Aid Public Comment limited liability company with its principal place of business in Glenview, Illinois.2 Graco and ITW manufacture and sell industrial liquid finishing equipment throughout North America and the world. Industrial manufacturers use industrial liquid finishing equipment to apply paint and other coatings to all kinds of finished goods, including automobiles, office furniture, and home appliances.

The Complaint alleged that Graco’s proposed acquisition of ITW would harm competition in five specific product markets: the manufacture and sale of (1) liquid finishing pumps for industrial uses; (2) liquid finishing spray guns, which apply paint and other liquid coatings to surfaces in industrial uses; (3) proportioners, which mix and blend paint with catalysts and other liquids before applying the coating in industrial uses; (4) circulation pumps for paint systems in automotive assembly plants; and (5) industrial liquid finishing equipment for resale. The Complaint charged that if the proposed acquisition were completed, the combined firm would control a dominant share of all North American sales of industrial liquid finishing equipment and create a monopoly for circulation pumps used in paint systems in the automobile industry.

The Complaint also alleged that the proposed transaction would end the close competition between Graco and ITW, its largest competitor, reduce or eliminate the substantial one-time price breaks or other discounts both firms offer to distributors, and lessen Graco’s incentives to develop new products after the 2 On March 13, 2012, the Secretary withdrew the Commission’s administrative challenge to Graco’s acquisition of ITW in order to consider Graco’s proposed settlement. Graco agreed to an Agreement Containing Consent Orders requiring it to hold separate all of the ITW liquid finishing businesses and to divest up to all of the hold-separate assets to a Commission-approved acquirer. On March 27, the Commission issued an Order to Hold Separate and Maintain Assets (“Hold Separate”) covering the ITW liquid finishing equipment businesses worldwide, allowing Graco to close on the Acquisition but to retain and integrate only the ITW powder finishing assets. The Commission deferred voting to accept the Consent Agreement to allow staff an opportunity to investigate whether a narrower divestiture package would fully remedy the competitive harm alleged in the Complaint. http://ftc.gov/opa/2012/03/ graco.shtm.

GRACO INC. 701 Analysis to Aid Public Comment merger. The competition lost by the acquisition could not be easily replaced, as Exel North America, the firm in the market with a distant third place in sales, as well as other fringe firms, lack the brand acceptance and distribution to challenge a combined Graco/ITW. Significant hurdles and barriers would also deter new competitors from entering the markets. II. The Agreement Containing Consent Orders The purpose of the Proposed Order is to ensure the continuation of ITW’s liquid finishing business assets as an ongoing, viable business operating in the same relevant markets in which they were competing at the time Graco announced the proposed acquisition, and to remedy the lessening of competition resulting from the proposed acquisition as alleged in the Commission’s Complaint. In order to do that, the Proposed Order requires Graco to divest ITW’s liquid finishing business assets, including the Binks, Devilbiss, Ransburg, and BGK brands, no later than 180 days after the date the Proposed Order becomes final, to a Commission-approved Acquirer. If Graco has not divested ITW’s liquid finishing business assets within 180 days, the Commission may appoint a trustee to divest ITW’s liquid finishing business assets in a manner that satisfies the requirements of the Proposed Order.

The divestiture maintains that status quo ante in the markets alleged in the Commission’s Complaint. The Proposed Order permits Graco to complete its acquisition of ITW, but requires it to hold the businesses containing ITW’s industrial liquid finishing equipment assets separate and to maintain them while it looks for a buyer for the assets to be divested. The Order to Hold Separate and Maintain Assets will protect the competitive status quo during this process.

The Proposed Order requires Graco, or the divestiture trustee, if appointed, to file periodic reports detailing efforts to divest the assets and the status of that undertaking. Commission representatives may have reasonable access to Graco’s business records related to compliance with the Proposed Order. VOLUME 158 Analysis to Aid Public Comment III. Opportunity for Public Comment By accepting the Proposed Order subject to final approval, the Commission anticipates that the competitive problems alleged in the Complaint will be resolved. The purpose of this analysis is to invite and facilitate public comment concerning the Proposed Order to aid the Commission in its determination of whether it should make final the Proposed Order contained in the Agreement. This analysis is not intended to constitute an official interpretation of the Proposed Order, nor is it intended to modify the terms of the Proposed Order in any way. PRESTIGE BRANDS HOLDINGS, INC. 703 Complaint