Defective Merchandise Policies and Procedures

Policy A

1. Dealer submits defective claims via AceNet.
2. Ace Hardware Corporation then issues credit for the defective item(s) along with instructions to destroy
   the item(s).
3. Ace Hardware Corporation accumulates all dealer claims and debits the vendor on a monthly basis for defectives.
4. Ace Hardware Corporation debits vendor $275.00 per year as compensation for processing all dealer claims against the vendor. This fee is subject to change without notice.

Policy A-1

1. Same as (1) above.
2. Same as (2) above.
3. In lieu of a monthly debit, vendor allows Ace Hardware Corporation a percentage of purchases/ sales, issued on a predetermined time basis, to cover the cost of all defective goods transactions. If the total value of all annual defective claims exceeds the amount allowed to Ace Hardware, vendor agrees to pay Ace the additional amount.

Policy B

1. Dealer returns defective item(s) directly to the vendor or vendor-authorized service center at the dealer’s expense.
2. Vendor issues credit to Ace Hardware Corporation with reference to the dealer’s store number on the credit.

Policy C

1. Dealer sends defective merchandise form to the vendor requesting return goods authorization.
2. Vendor issues RGA with return instructions.
3. Upon receipt of defective item(s), vendor issues credit to Ace Hardware Corporation with reference to the store number on the credit.

Authorization

Please list the undersigned company to Defective Policy ______________.
Note: If Policy A, vendor hereby agrees to the debit charges outlined above.
Vendor Defective Merchandise policy does not conform to any of the standard Ace Hardware
Policies. Attached are details of our specific policy.