For apparel and footwear audits, the auditor pulls a statistical random sampling of all SKU’s within the PO. In the case where there are 20 to 30+ SKU’s, the auditor will pull samples from the 10 largest SKU’s. The auditors determine the number of units to pull by using the Military Standard 105E single sampling plan at a 4.0 AQL (Acceptable Quality Level). Example: If the PO contains 5,000 units, then the auditor will pull an 80 unit sample. If the auditor finds 7 or fewer units with major defects, the audit passes. If 8 or more units are defective, then the appropriate Sourcing or Buying area is notified, and a course of action is determined. PO Size InspectAccept Less Than , , , Quality Assurance Audits (No Changes)

Vendor Compliance Academy will begin issuing non-compliance Chargebacks for the below occurrences: Accurate Shipping Documents not submitted to the forwarder’s origin office within 72 hours of vessel departure from port of origin Freight not booked 14 days prior to 1 st ship date on P.O. Cancellation of booking not made at least 7 days from vessel departure Accurate ASN not received by Academy within 72 hours of vessel sailing Storage/demurrage charges due to incorrect or missing information to clear shipment with U.S. Customs Carton contents not matching ASN Quality Assurance – poor quality shipment

Non-Compliance Chargeback Schedule Accurate Shipping Documents not submitted to the forwarder’s origin office within 72 hours of vessel departure from port of origin Freight not booked 14 days prior to 1 st ship date on P.O. Cancellation of booking not made at least 7 days from vessel departure Accurate ASN not received by Academy within 72 hours of vessel sailing Storage/demurrage charges due to incorrect or missing information to clear shipment with U.S. Customs Carton contents not matching ASN Quality Assurance – poor quality shipment $1000