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Attention Castle Shareholders

February 7, 2017

Castle Shareholders,

ACE Canada (Rona) is currently circulating a document requiring their customers to sign a binding agreement relative to products purchased through their distribution platform. ACE Canada, as you are aware, is the current operating version of TruServ Canada that was acquired by Rona in 2010.

In early January of this year, Castle was provided notice that ACE Canada (Rona) would be discontinuing their buying agreement with Castle. The intent of their decision to cancel the agreement was to develop a direct relationship with our members. This strategy is similar to what Timbermart attempted shortly after acquiring Canwel Hardware (Chalifour).

I would strongly advise against any member of Castle
signing the documents currently in circulation.

By agreeing to their terms and conditions, you are providing direct access to your business banking accounts. This provides ACE Canada with sole authority on deduction of payment from within your banking facility. Remember, ACE Canada is owned by Rona through a licensing agreement with ACE International. Rona is in turn owned by Lowe’s. The agreement also contains a “Technology Fee” which the value will be determined “from time to time” by ACE Canada. This is also an auto deduct directly from your banking facility. Exposing your business to this type of relationship will be detrimental to your success as an independent retailer. Your ability to dispute invoicing errors, product damage or pricing issues is mitigated through this type of agreement.

To place the current ACE Canada request in context, Castle has in excess of 550 buying agreements with your suppliers throughout North America. We would never, in any instance, provide direct deduction payment opportunities to your suppliers. Never! It preserves our ability to protect your best interests. In our previous buying agreement relationship with TruServ / ACE Canada, Castle did not permit this type of payment arrangement.

In closing, the reality behind the current request from ACE Canada / Rona / Lowe’s is to continue their manipulation of Independent retailers in Canada. If you feel compelled to work with ACE Canada for the distribution of product, I would strongly suggest you receive a legal opinion regarding the implications to your business.

If you have any questions, please contact your regional Business Development Manager, Bruce Holman, James Jones or myself.

As always, we are at your service.

ken jenkins

Ken Jenkins