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Century Furniture Minimum Retail Price Policy Century Furniture believes a significant factor in the company’s continuing success will be the ability of its retailers to provide both excellent products and excellent service to today’s consumer of better, upper-end furniture. This requires that our products be sold at prices which are based on the value and quality we have designed and built into them, and which also enable our retailers to provide the superior level of customer service demanded by the consumer buying in the upper-end market. Accordingly, Century will periodically provide to its retailers a list of minimum retail prices for certain collections of Century wood furniture and all Century Leisure furniture, which includes all outdoor furniture. Century may change the MRP designation periodically. The current requirements, as well as any updates to the Distribution Policy, may be found on our dealer website at www.CenturyFurniture.com/DesignerStudio. We intend to distribute Century wood products and Century Leisure only to retailers who resell the products at prices no lower than our stated minimum retail prices. We will refuse to sell to the offending retailer, for a period of one year, any wood collection(s) or Century Leisure product involved in a policy violation. This Policy does not apply to Century Upholstery, Century Leather, or Century Chair products. Century does not desire or solicit and will not accept any agreement or assurance from any retailer that the retailer will not sell below our stated minimum retail prices. Our dealers may sell any Century or product at any price they think appropriate. Century’s representatives and employees have been instructed not to discuss the Minimum Retail Price Policy with any retailer or person outside of Century. Century alone, independent of its retailers, will determine whether its products are being sold in violation of our Minimum Retail Price Policy. For the purpose of determining compliance with this Policy, the effective retail price will be the retailer’s selling price, reduced by the value of any gift or promotional giveaway or by the amount of any special discount given if partial payment is required. The effective retail price must comply with the Minimum Retail Price Policy. In calculating effective retail selling price, no reduction will result from a retailer’s use of such standard merchandising tools as free delivery, payment of sales tax, extended terms, or extended credit. Revised September 9, 2010 EXPECTED QUESTIONS AND OUR RESPONSES When will the policy become effective? The policy is currently in effect.. What products are included? All Century wood furniture including Complements occasional and all Century Leisure furniture (“MRP Products”). This policy does not include Century Upholstery, Century Leather, or Century Chair. Does this include floor samples for the MRP Products? Yes. Exceptions will be made only for damaged or discontinued items, clearly marked for the consumer as such. What happens if Century’s prices change? Should the price on a MRP Product change, our retailers will be promptly advised in writing of the new minimum price and its effective date. What constitutes a violation? Any advertised or posted offer, written invoice, sales ticket, or price quote made below Century’s stated minimum retail price. Will factory rebates be included in the calculation of the effective retail selling price? No; but retailer rebates, retailer discount coupons, or gift certificates to be redeemed for the purchase of a MRP Product, while not prohibited, could conceivably result in a price that violates the policy. What about promotional giveaways, free delivery, payment of the sales tax, or extended credit terms? In determining compliance with this policy, the effective retail price will be calculated by reducing the retailer’s selling price by the value of any gifts or promotional items given or reduced in price as a part of the purchase of MRP Product. That determination will be made solely by Century. Certain merchandising tools will not be considered a price reduction; among them are extended credit, extended payment terms, payment of sales tax, and free delivery. May I sell selected the MRP products at less than minimum price so long as the total on the order reaches the total stated minimum prices for the items? No. To sell or promote any individual MRP Product below its minimum retail price will be a violation, even if the total price of the sale equals or exceeds the total minimum retail price of all the items combined. What will Century do if it discovers a violation? For a period of one year, Century will not sell to that retailer any items from the collection or collections involved. Questions - page 2 Should I assure my Century sales representative of my compliance, or report another retailer’s non-compliance? No. We believe the policy is clear. Century’s management alone will determine if a retailer is violating this policy. Century’s sales representatives are not to investigate or monitor retailer compliance, nor to discuss these issues with their retailers. Please do not ask them to do so. What should I do if I have documented evidence of a policy violation? Century does not encourage retailers to police one another concerning its minimum retail price policy, but if you possess documents indicating a violation of our policy, you may send them to Vice President - Sales, Century Furniture, P.O. Box 608, Hickory, NC 28603; 828-328-1851. However, Century will not discuss the alleged violation with you or report to you any action taken as a result of your report. In planning and implementing its Minimum Retail Price Policy, Century has acted unilaterally and will continue to do so. What are the laws related to a policy of this kind? A supplier of goods may lawfully announce a policy of refusing to deal with retailers who sell below a stated price and may choose not to do business with those who do not comply as long as the supplier’s actions are taken unilaterally. Suppliers may not make agreements with retailers on the prices to be charged or whether they will follow the policy. The supplier must simply announce and act upon its policy. In planning and implementing its Minimum Retail Price Policy, Century has acted unilaterally and will continue to do so. To protect Century and its retailers and to avoid any appearance of conspiring with retailers to fix pricing, there shall be no discussion or negotiation between Century and its authorized retailers concerning pricing or compliance with this policy. There shall be no discussions about the pricing used by other retailers, or about other retailers’ compliance or non-compliance with this policy. If a retailer has documented evidence of a violation by another retailer, Century will accept it without engaging in any discussion of whether it constitutes a violation or how Century will respond. Questions - page 3 How would offering a gift certificate to my customers create a policy violation? A gift certificate or a rebate certificate from retailer to consumer (factory rebates excluded) effectively reduces the retail selling price, and if that price falls below the minimum retail price stated by Century, the policy is violated. However, if the retail price of an item is set at or above Century’s stated minimum retail price, and a gift certificate is purchased by another consumer and given and used as partial payment, the retailer is still in receipt of the full minimum retail selling price and no violation has occurred. Would a sale to my employee for his or her personal use violate the minimum retail price policy if the price is below Century’s stated minimum retail price? No. The policy applies only to sales to the retail consumer, not to an accommodation sale to a retailer’s employee for personal use. How does the Minimum Retail Price Policy apply to advertisements for discon- tinued or damaged goods not sold at the retailer’s usual prices? Century’s Minimum Retail Price Policy does not apply to its discontinued products or to clearly damaged items, whether they are floor samples, inventory, or sold orders. It is not a policy violation to advertise such goods at any price, so long as the advertisement is completely clear that the prices or discounts attached apply only to those items or suits that are damaged or discontinued by Century. How does the policy apply to sales at Century’s stated minimum prices when a retailer wishes to pay sales tax on behalf of a consumer? Century’s stated minimum retail prices do not include sales tax. It is assumed that either the retailer or the consumer will pay any sales taxes due in accordance with the laws of their state. If a sale is made at the minimum retail price, sales tax is owed on that amount. If a retailer reduces the selling price by an amount equal to the sales tax, and the result is an advertised/quoted price before taxes that is below Century’s stated minimum retail price, the policy is violated even if the retailer then collects sales tax on the reduced, belowminimum price.