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Company Business Policies

New Account Payment Information:

In order to buy from Cal Hobby, a completed Dealer Application must be submitted and
approved. No order of any kind, including C.O.D., will be shipped until a credit form is
submitted and approved. Approved dealers may purchase C.O.D. Until the credit references
are checked, the acceptable forms of payment are C.O.D., cash, cashiers check or Credit Card
(note: cash, cashiers check or a Credit Card in advance will save C.O.D. fees).

Pricing:

All merchandise is invoiced at the current list price less a trade discount. Due to the changing
nature of prices, Cal Hobby cannot guarantee prices. If the pricing is critical for a purchase,
please call for the latest price. Finally, all prices quoted on an invoice are current and final.

Discounts:

In order to offer the best values, Cal Hobby sets discounts on product lines and individual
items. Most lines are discounted at 40, 43 (40+5), 46% (40+10), some lines at 50%. Sale and closeout
merchandise can carry discounts of 60 or 70% (or more).

Terms:

Each invoice is payable under the terms printed on that invoice. Prompt payment terms apply
to all accounts that are current and paid within the terms stated on each invoice. C.O.D.
accounts that are not past due are entitled to the applicable discounts and freight allowances.

Examples of terms are listed below:

    - 2% 14 days, net 15 days: Two percent may be deducted from the merchandise total
    of the invoice if it is paid within 14 days of the invoice date. The net amount for the
    invoice is due on the 15th day, after which the invoice become past due.

    - 5% 14 days, net 15 days: This applies to accounts whose orders total over $1200 per
    month. Five percent may be deducted from the merchandise total of the invoice if it
    is paid within 14 days of the invoice date. The net amount for the invoice is due on
    the 15th day, after which the invoice become past due.

    - 2% 30 days, net 31 days: Two percent may be deducted from the merchandise total
    of the invoice if it is paid within 30 days of the invoice date. The net amount for the
    invoice is due on the 31st day, after which the invoice become past due.

    - 5% 30 days, net 31 days: This applies to accounts whose orders total over $1200 per
    month. Five percent may be deducted from the merchandise total of the invoice if it
    is paid within 30 days. The net amount for the invoice is due on the 31st day, after
    which the invoice become past due. ESTES and REVELL are 14 Days MAXIMUM!
   
    - 2% Credit Card, Discover-Master Card-Visa: 2% Cash Discount on Accounts Averaging
    over $1200 per month in a calendar year, and Zero Cash Discount on Accounts buying less
    then $1200.00 per month.

    - Net: No additional discount applicable from the invoiced amount. This applies   
    primarily for sale items and merchandiser racks.

    - Any account not satisfying the terms under which they purchased will be moved to
    less favorable terms.


Delinquent Accounts:

If for any reason payment is not received within the invoice terms, an additional charge of
1.5% per month (minimum $5.00) will be applied to the delinquent invoice. Until the account
is balanced and current, further shipments will be on a C.O.D. plus on-account basis.

Refused Order:

Any refused order will be charged freight and a 15% restocking fee unless the error was
caused by Cal Hobby warehouse error.

Credit Account Limit:

Every account will have a credit limit established based on longevity, volume, and prior credit
history. Payment history with Cal Hobby will determine a potential increase or decrease of the
credit limit as well as the potential modification of the terms.

NSF Checks:

If any NSF check is received on a C.O.D. order, all further shipments will be C.O.D. Cash or
certified check.

All NSF checks also incur the following charges:

        Returned Check:        $25.00 plus discount charged back

        Returned twice:         $25.00 cash or cashiers check only for any future orders

Freight Policy:

Cal Hobby pays the first 3% of the shipping charge on orders over $250 in billed merchandise.

Exceptions include: items listed as F.O.B. or Net, and orders sent Insured Parcel Post. For these
exceptions, full freight is charged. Special classes of service such as Next Day Air or Second
Day Air (i.e. situations requiring special handling or packing, or shipments of exceptionally
heavy items) will be billed at the difference between that class's price and the regular ground
service.

LIONEL IS FOB ALHAMBRA

Hazardous Materials:

Current regulations allow shipment of model rocket engines by Insured Parcel Post without a
hazardous materials fee. Consequently, standard shipment of such products will be by Parcel Post.

Receiving Shipments:

In order to maintain trouble free shipments, please abide by the following ABC's:

        - Always count cartons when you sign for the shipment.

        - Be sure they all have your name on them.

        - Check in merchandise on the invoice before throwing out any cartons or
        packing material. Many hobby items are small and can be hidden in the
        packing material.

On UPS / FedEx Ground shipments, carton numbers are printed on the white label (1 of 3, 2
of 4, etc). If it should occur that there are one or more cartons missing, they will be
normally delivered within two days. In the case that they take more than two days to arrive,
please call Cal Hobby for tracing. In order to aid the locating of the delinquent shipment,
please provide the specific carton number that is still not accounted for. For example, I am
short box 3 of 6 on my last shipment.

Damage Claims:

Merchandise damaged in transit, obvious or concealed, is the responsibility of the carrier.
Claims must be made immediately. The damaged carton(s) containing concealed damage must
be preserved in order to file the necessary claim. Upon receipt, it is advisable to refuse all
damaged boxes.

Freight (Truck Shipment)
Claim must be put in with the freight company. Note any damage on the Bill of Landing at the
time of signing for the shipment. Phone the freight carrier and ask for the Claims
Representative to inspect the package. On small claims, approval is often given over the
phone with confirmation by mail. Save cartons and packing material until the inspection is
complete.


Parcel Post Shipments
Claim must be put in with the local post office if sent insured. Notify Cal Hobby for original
insurance certificate. Save the carton.

U.P.S., FedEx, etc.
Note damage in writing when signing for the shipment. Dealer must call Customer Service
number of the carrier for inspection within five days. Advise Cal Hobby as we may be able to
expedite the claim. Save the carton until the inspection is complete

Billing Errors:

Any error in picking or billing must be reported within five days. Please have the invoice
number, the stock number of the item billed, the stock number of the item short (or received by
error), or the nature of the error.

Stock Adjustments:

No stock adjustments will be accepted without prior approval from Dennis or Marta. If
return of saleable current merchandise is approved, a 15% restocking fee will be charged. An
RA number will be issued upon approval.

No stock adjustment will be accepted if it is: unsealed, unwrapped, marked in any way (including
price stickers), no longer cataloged by Cal Hobby, or otherwise unfit for resell.

Defective Return Policy:

In general, the manufacturers guarantees will apply for a customer to invoke compensation
directly from the manufacturer. If, for some reason, the customer was not aided directly by the
manufacturers customer service department, Cal Hobby does accept select returns:

Plastic Kits: Complete kits under twenty dollars may be returned. Please indicate the missing
or defective part(s). Kits over twenty dollars or any kit for which assembly has begun or has
been pilfered may not be returned. The manufacturer may offer replacement parts.

Wood Kits:
Complete kits under twenty dollars may be returned. Please indicate the missing or
defective part(s). Kits over twenty dollars may not be returned. However, the manufacturer or
Cal Hobby may be contacted in search or replacement parts.

Locomotives:
Must be returned to manufacturer from the consumer.

Train Sets:
The complete train set need not be returned. Instead, simply send the defective part
to us. However, Bachmann is an exception that deems the customer return to Bachmann directly.

Power Packs:
Dealer or consumer must return these directly to the manufacturer.

Defective merchandise returned to Cal Hobby may or may not be returned to the dealer, sent for
repair, replaced or credited solely by the judgment of Cal Hobby. All defective items must be
clearly marked with what is wrong with the item in order to receive the credit.