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                                                                     EXHIBIT 4-B


                                     BY-LAWS

                                       OF

                               TRUSERV CORPORATION








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                                     BY-LAWS
                                       OF
                               TRUSERV CORPORATION

                           Effective February 23, 2001

                                    ARTICLE I
                                     OFFICES


SECTION 1. OFFICE IN DELAWARE. The registered office of the Corporation in the
State of Delaware shall be located in the City of Wilmington, County of New
Castle.

SECTION 2. ADDITIONAL OFFICES. The principal office of the Corporation in the
State of Illinois shall be located at 8600 West Bryn Mawr Avenue in the City of
Chicago, County of Cook. The Corporation may have such other office or offices
within or without the State of Illinois as the Board of Directors may from time
to time determine or the business of the Corporation may require.

                                   ARTICLE II
                                     PURPOSE

SECTION 1. PRINCIPAL PURPOSE. The principal purposes of the Corporation are to
benefit its members ("Members") through the manufacture, buying and selling of
merchandise and supplies as are or may be handled by retail hardware, retail
commercial and industrial supply, lumber and building supply, general rental and
home and garden center Members; the rendering of services and furnishing of
benefits as will be useful or beneficial to Members; the maintenance of offices,
facilities and warehouses to offer services and benefits and to stock and
deliver merchandise and supplies to Members; and to do any lawful act concerning
any or all lawful business for which corporations may be incorporated under the
Delaware General Corporation Law.

                                   ARTICLE III
                            MEETINGS OF STOCKHOLDERS

SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the election
of directors or for any other purposes shall be held at such location, within or
without the State of Delaware, as the Board of Directors may from time to time
designate and shall be held at such time as shall be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof.

SECTION 2. DATE AND TIME OF ANNUAL MEETING. An annual meeting of stockholders
shall be held on a date and at a time designated by resolution of the Board of
Directors and such date and time shall be stated in the notice to stockholders
of the meeting, or in a duly executed waiver of such notice. At the annual
meeting, the stockholders shall elect by ballot directors of the Board and
transact such other business as may properly be brought before the meeting.

SECTION 3. STOCKHOLDERS' PROPOSALS. To bring a proposal to be voted upon at the
annual meeting of stockholders, a stockholder of record must do so by submitting
adequate notice, as described herein, to the Secretary of the Corporation, at
its principal office, for receipt no later than ninety (90) days prior to the
annual meeting. In no event shall an adjournment of an annual meeting commence a
new time period for the giving of adequate notice. Such notice shall be signed
and dated by the stockholder of record and shall state the name and address of
the stockholder, a representation that the stockholder is a holder of record of
shares of the Corporation entitled to vote at the meeting and intends to appear
in person or by proxy at the meeting to make the proposal, a brief description
of the proposal desired to be brought before the meeting, the reasons for
requesting the proposal, and any material interest that the stockholder or any
beneficial owner(s) may have in the outcome of the proposal. Any proposal must



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(i) relate to operations which account for at least five percent (5%) of either
the Corporation's total assets or gross sales, (ii) be otherwise deemed by the
Corporation significantly related to its business operations, and (iii) be
determined, in the discretion of the Board, or the Chairman if the Board so
designates, to be in the best interest of the Corporation. A proposal that does
not meet these requirements shall not be presented for stockholder vote.

SECTION 4. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting shall
be served upon, either personally or by any electronic communication, or mailed
to each stockholder entitled to vote thereat at such address as appears on the
books of the Corporation, at least ten (10) days prior to the meeting, or such
longer period of time as may be required by law.

SECTION 5. LIST OF STOCKHOLDERS. At least ten (10) days before every election of
directors by the stockholders, a complete list of the stockholders entitled to
vote at said election, arranged in alphabetical order, with the address of each
and the number of voting shares held by each, shall be prepared by the
secretary. Such list shall be open at the place where the election is to be held
for said ten (10) days to the examination of any stockholder, and shall be
produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.

SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by Certificate of
Incorporation, may be called by the chairman of the board with the approval of a
majority of the Board of Directors, or may be called by the president, and shall
be called by the president or secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of stockholders owning
at least ten percent (10%) of the shares of voting stock of the Corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.

SECTION 7. NOTICE OF SPECIAL MEETINGS. Notice of a special meeting of
stockholders, stating the time and place and object thereof, shall be served
upon, either personally or by any electronic communication, or mailed, at least
twenty (20) days before such meeting, to each stockholder entitled to vote
thereat at such address as appears on the books of the Corporation.

SECTION 8. BUSINESS AT SPECIAL MEETINGS. Business transacted at all special
meetings shall be confined to the objects stated in the call.

SECTION 9. QUORUM; ADJOURNMENTS. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the stockholders for the transaction of business, except as otherwise provided
by statute, by the Certificate of Incorporation or by these By-Laws. If,
however, a quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally called. When a quorum is present or
represented at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Certificate of Incorporation or of
these By-Laws a different vote is required, in which case such express provision
shall govern and control the decision of such question.

SECTION 10. VOTING; NO PRE-EMPTIVE RIGHTS. At any meeting of the stockholders
every stockholder of record having the right to vote shall be entitled to vote
in person, or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three (3) years prior to said
meeting, unless said instrument provides for a longer period. Each share of
Class A Common Stock shall be entitled to one (1) vote for all purposes. No
holder of any class of stock of the Corporation shall have any pre-emptive or
preferential right to subscribe to or purchase any shares of stock of the
Corporation or shares or securities of any kind, either convertible



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into or evidencing the right to purchase any shares of stock of the Corporation,
other than such thereof, if any, as the Board of Directors in its discretion may
from time to time determine.

                                   ARTICLE IV
                                    DIRECTORS

SECTION 1. NUMBER; TERM. The number of directors which shall constitute the
whole board shall be not less than nine (9) nor more than sixteen (16),
including one management representative who shall be the person holding the
position of president and chief executive officer of the Corporation. To be
eligible to serve as a director, except for the president of the Corporation, a
director must be a current Member of the Corporation or possess an ownership
interest and actively participate in the business of a Member, or be a
non-member approved by the affirmative vote of two-thirds of the Board of
Directors.

Within the limits above specified, the number of directors shall be determined
by resolution of the Board of Directors. The directors shall be elected at the
annual meeting of the stockholders to serve for a term of one (1) year, except
as provided in section 4 of this Article, so that the term of office of each
director shall expire in the following year, and each director shall hold office
for the term elected and until a successor shall be elected and shall qualify,
except in the event of death, resignation, retirement, disqualification or
removal of a director where termination shall be immediate. The president of the
Corporation shall be eligible for election or re-election or appointment as a
director by the Board of Directors at any time without regard to the period of
time during which the president has previously served as a director.

SECTION 2. CHAIRMAN OF THE BOARD. The Board of Directors shall annually elect a
chairman of the board. Unless otherwise resolved, each chairman elect's term
shall commence as the first order of business at the meeting of the Board of
Directors immediately following the annual stockholders' meeting. The chairman
of the board shall preside at all meetings of the stockholders and directors and
shall be ex-officio a member of all standing committees. The chairman shall
perform all duties incident to the position of chairman of the board and such
other duties as may be prescribed by the Board of Directors from time to time.

SECTION 3. PLACE OF MEETINGS. The directors may hold meetings and to the extent
permitted by law keep the books of the Corporation outside of Delaware, at such
places as they may from time to time determine.

SECTION 4. VACANCIES. If any vacancies occur in the Board of Directors, caused
by death, resignation, retirement, disqualification or removal from office of
any directors or otherwise, or any new directorship is created by any increase
in the authorized number of directors, a majority of the directors then in
office, though less than a quorum, may choose a successor or successors, or fill
the newly created directorship and the directors so chosen shall hold office for
the remainder of the unexpired term. In order for a non-member to fill any such
vacancy, the non-member must be approved by the affirmative vote of two-thirds
of the Board of Directors.

SECTION 5. GENERAL POWERS. The property and business of the Corporation shall be
managed by its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by applicable law,
the Certificate of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.

SECTION 6. FIRST MEETING. The first meeting of each newly elected board shall be
held immediately following the annual meeting of stockholders, within or without
the State of Delaware and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, or they may meet at such place and time as shall be
fixed by the consent in writing of all the directors.

SECTION 7. REGULAR MEETING. Regular meetings of the board may be held without
notice at such time and place either within or without the State of Delaware as
shall from time to time be determined by the board.



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SECTION 8. SPECIAL MEETINGS. Special meetings of the board may be called by the
chairman or the president or any four (4) directors on five (5) days' notice to
each director, either personally, by telephone, by any electronic communication,
or by mail. Special meetings shall be called by the chairman, president or
secretary in like manner and with like notice on the written request of five (5)
directors. Special board meetings may take place by any means through which all
participating directors can hear each other, when properly called.

SECTION 9. QUORUM. At all meetings of the board a majority of the directors then
in office and entitled to vote shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be present at any
meeting of directors the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.

SECTION 10. AGENDAS AND MINUTES. Agendas for all regular meetings shall be
delivered, either personally or by any electronic communication, or mailed at
least ten (10) days before the date of each such meeting. An item proposed by a
Director for the agenda shall be delivered to the chairman's and secretary's
offices fifteen (15) days before the meeting. Minutes of each meeting of the
Board of Directors shall be approved at the next regular meeting. They shall be
attested to by the chairman and the secretary.

SECTION 11. COMPENSATION. Directors shall not receive a salary for their
services as directors, but, by resolution of the board a fixed fee and expenses
of attendance will be paid; provided that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.

SECTION 12. COMMITTEES. The Board of Directors may by resolution or resolutions
passed by a majority of the entire board designate one (1) or more committees,
each committee to consist of three (3) or more of the directors of the
Corporation, which, to the extent provided in said resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. A majority of the members of
any such committee may determine its action and fix the time and place of its
meetings unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve any committee. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.

                                    ARTICLE V
                                     NOTICES

SECTION 1. FORM; DELIVERY. Whenever applicable law or the Certificate of
Incorporation or these By-Laws requires notice to any director or stockholder,
it shall not be construed to mean personal notice, but such notice may be given
in writing, by telephone, by any electronic communication, or by mail addressed
to such director or stockholder at such address as appears on the books of the
Corporation, and such notice shall be deemed to be given at the time when the
same shall be thus delivered, conveyed by telephone call, entered into the
electronic process or mailed.

SECTION 2. WAIVER. Whenever any notice is required, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.

                                   ARTICLE VI
                                    OFFICERS

SECTION 1. OFFICERS. The officers of the Corporation shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chief executive officer, a president, a vice
president, a secretary and a treasurer. The Board of Directors may also choose
additional vice presidents and one (1) or more assistant secretaries and
assistant treasurers. Two (2) or more offices may be held by the same person.



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SECTION 2. OTHER OFFICERS AND AGENTS. The board may appoint such other officers
as it shall deem necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the board. All officers shall have power to sign certificates
for shares of the Corporation, deeds, mortgages, bonds, contracts, loans, and
any other instruments which the Board of Directors has authorized to be
executed.

SECTION 3. SALARIES. The salaries of the chief executive officer and president
of the Corporation shall be fixed by the Board of Directors.

SECTION 4. TENURE AND REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed at any time by the affirmative vote of a two-thirds
(2/3) majority of the entire Board of Directors, with or without cause, and
without prejudice to any of such officer's contract rights. If the office of any
officer becomes vacant, the vacancy may be filled by the Board of Directors.

SECTION 5. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The president shall be the
chief executive officer, and shall perform all duties incident to the offices of
president and chief executive officer and such other duties as shall from time
to time be assigned by the Board of Directors, and shall report to the Board of
Directors on the affairs, performance and direction of the Company.

SECTION 6. VICE PRESIDENTS. The vice presidents in the order of their seniority
shall perform the duties and exercise the powers of their offices, and shall
perform such other duties as the Board of Directors shall require.

SECTION 7. SECRETARY. The secretary shall attend all sessions of the board and
all meetings of the stockholders and record and preserve all votes and the
minutes of all proceedings for the corporation's records. The secretary shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall be the keeper of corporate
records and shall perform such other duties as may be prescribed by the Board of
Directors, chief executive officer, or president, under whose supervision the
secretary shall act.

SECTION 8. ASSISTANT SECRETARIES. The assistant secretaries in order of their
seniority shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties as the secretary and Board of Directors shall require.

SECTION 9. TREASURER. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.

The treasurer shall manage the funds of the Corporation, and shall report at the
regular meetings of the Board of Directors, or whenever the board may require
it, an account of all transactions as treasurer and of the financial condition
of the Corporation.

If required by the Board of Directors, the treasurer shall give the Corporation
a bond (which shall be renewed every six (6) years) in such sum and with such
surety as shall be required for the full and faithful performance of the duties
of office, and for restoration to the Corporation of all books, papers, checks,
money and other property of whatever kind in the treasurer's possession or
control belonging to the Corporation.

SECTION 10. ASSISTANT TREASURERS. The assistant treasurers in the order of their
seniority shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties as the treasurer and Board of Directors shall prescribe.



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                                   ARTICLE VII
                CERTIFICATES OF STOCK AND CERTAIN QUALIFICATIONS,
                  LIMITATIONS AND RESTRICTIONS OF CAPITAL STOCK

SECTION 1. STOCK CERTIFICATES. The certificates of stock of the Corporation
shall be consecutively numbered and shall be entered on the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by an officer. The designations, preferences and
relative, participating, optional or other special rights of each class of stock
and the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificates which the Corporation shall issue to represent such class of stock.
If any stock certificate is signed (1) by a transfer agent or an assistant
transfer agent or (2) by a transfer clerk acting on behalf of the Corporation
and a registrar, the signature of any such officer may be by facsimile.

SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or the owner's legal
representative, to advertise the same in such manner as it shall require and/or
give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.

SECTION 3. TRANSFER OF SHARES. Subject to the qualifications, limitations and
restrictions set forth in the Certificate of Incorporation and these By-Laws,
upon surrender to the Corporation, or the transfer agent of the Corporation, of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

SECTION 4. CLOSING OF TRANSFER BOOKS. The Board of Directors shall have power to
close the stock transfer books of the Corporation for a period not exceeding
fifty (50) days preceding the date of any meeting of stockholders or the date
for payment of any dividend or the date for the allotment of rights or the date
when any change or conversion or exchange of capital stock shall go into effect
or for a period of not exceeding fifty (50) days in connection with obtaining
the consent of stockholders for any purpose; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors may fix in
advance a date, not exceeding fifty (50) days preceding the date of any meeting
of stockholders or the date for the payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment or
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at such
meeting and any adjournment thereof, to receive payment of such dividend, to
receive such allotment of rights, to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.



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SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.

SECTION 6. REDEMPTION OF STOCK.

                  (a) TERMINATION REDEMPTION. Upon termination of a Member
Agreement (as referred to in Article VIII hereof) for any reason whatsoever, the
stockholder shall sell to the Corporation and the Corporation shall redeem from
the stockholder all of its stockholder's capital stock in the Corporation for
the par value thereof upon the terms and conditions set forth in section 7 of
this Article VII.

                  (b) OPTIONAL REDEMPTION.

                  (i) Whenever the Board of Directors shall by the affirmative
                  vote of two-thirds or more of the directors then in office
                  decide that it is in the best interests of the Corporation
                  that any stockholder shall cease to be associated with the
                  Corporation in that capacity, the Corporation shall have the
                  right, upon written demand addressed to such stockholder at
                  the address as shown on the books of the Corporation, to
                  purchase all (but not less than all) of such stockholder's
                  capital stock in the Corporation for the par value thereof
                  upon the terms and conditions set forth in section 7 of this
                  Article VII.

                  (ii) The Corporation shall, in the discretion of management,
                  have the right to purchase, in cash at par value, all or any
                  portion of outstanding shares of capital stock of the
                  Corporation which are in excess of the number of shares
                  required to be held by a stockholder or which are distributed
                  as non-qualified written notices of allocation. Upon the
                  effective date of the exercise of an option to purchase any
                  stock redeemed pursuant to this section 6(b)(ii), the stock
                  redeemed shall be deemed to be and shall be and become the
                  property of this Corporation; from and after such date all
                  rights and privileges incident to the ownership of the shares
                  shall cease, except only the right to receive the purchase
                  price, without interest, and subject to the Corporation's
                  liens and right of setoff.

                  (c) NOTICE OF REPURCHASE RIGHTS. The right or obligation of
purchase or redemption hereby reserved to the Corporation may be stated in the
subscription agreement under which the Corporation's stock is sold, in the
Member Agreement and on any stock certificates.

                  (d) REPURCHASE RIGHTS NOT EXCLUSIVE. The right or obligation
of purchase or redemption provided for in this section 6 of Article VII of the
By-Laws is in addition to, and not in derogation of, the rights reserved to the
Corporation by the provisions of Article Fourth of the Certificate of
Incorporation and any other rights to repurchase, redeem or otherwise acquire
its stock that the Corporation may now have or ever obtain.

SECTION 7. MECHANICS, TERMS AND CONDITIONS OF REDEMPTION. Any purchase or
redemption of shares of stock of this Corporation made pursuant to section 6(a)
and 6(b)(i) of these By-Laws or the Certificate of Incorporation, unless
expressly provided otherwise, shall proceed as follows:

                  (a) TERMINATION OF RIGHTS AND PRIVILEGES AS STOCKHOLDER. Upon
the effective date of the termination of a Member Agreement or upon the date of
exercise of any option to repurchase or redeem stock under section 6(b)(i) or
upon such other date set by these By-Laws, the Certificate of Incorporation, or
the Member and this Corporation, whichever shall be appropriate in the
circumstances, all of this Corporation's stock owned by such stockholder
(hereinafter referred to as "Terminated Stockholder") shall be deemed to be and
shall be and become the property of this Corporation; from and after such date
all rights and privileges incident to the ownership of the shares (including but
not limited to the right to dividends thereon) shall cease, except only the
right to receive the purchase price (as hereinafter provided) plus a sum equal
to any dividends declared but unpaid at said date and accrued Patronage
Dividends for the relevant year or portion thereof (to be paid in the manner



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provided for payment of all Patronage Dividends) all without interest and
subject to the Corporation's liens and right of setoff. The Terminated
Stockholder shall promptly remit any certificates duly endorsed in blank or with
stock powers.

                  (b) PAYMENT OF REDEMPTION PRICE. Immediately upon receipt of
properly endorsed certificates representing all of a Terminated Stockholder's
stock of the Corporation, the Corporation shall remit the redemption price to
the Terminated Stockholder in the following manner:

                (i) Cash equal to the par value of Terminated Stockholder's
                Class A Common Stock reduced by the amount of any lien or setoff
                to which the Corporation may be entitled;

                (ii) Cash equal to the par value of that portion, if any, of
                Terminated Stockholder's Class B Common Stock which has been
                designated by the Corporation as "non-qualified" B Common Stock
                reduced by the amount of any lien or setoff to which the
                Corporation may be entitled; and

                (iii) A note in face amount equal to the par value of Terminated
                Stockholder's remaining Class B Common Stock. The note shall be
                payable in five (5) equal annual installments of principal, the
                first of which shall be due on the December 31 next following
                termination of the Terminated Stockholder's rights and
                privileges as a stockholder (as provided in section 7(a) of this
                Article VII) and shall bear a fixed rate of interest, payable
                with the installments of principal, from the date of the note at
                a rate equal to the United States Treasury five (5) year notes
                plus one percent (1%), as determined on the first business day
                of the calendar year in which termination occurs. The note shall
                be dated as of the date upon which the Terminated Stockholder's
                rights as a stockholder terminated (as provided in section 7(a)
                of this Article VII) and shall be subject to any lien or right
                of setoff to which the Corporation may be entitled.

                  (c) AVAILABILITY OF FUNDS. Notwithstanding anything to the
contrary expressed or implied herein, should the Board of Directors in its
discretion determine that the funds of the Corporation available for such
purpose are insufficient for immediate payment of all or any part of the
redemption price in light of the Corporation's legal or business requirements,
or that immediate payment of all or any part of the redemption price is
otherwise not in the best interests of the Corporation, the Corporation may
delay (without interest) the payment of all or any part of the redemption price
(including the issuance of any promissory note) until such time as the Board of
Directors determines that sufficient funds are available for such purpose and
that it is otherwise in the Corporation's best interests to recommence payments
for such purpose, at which time the Corporation shall pay to those entitled
thereto, in the chronological order in which such payments were delayed starting
with those whose payment has been longest delayed and continuing until
sufficient funds are no longer available, or through another equitable manner
determined by the Board of Directors, the unpaid redemption price in accordance
with Section 7(b), except that any promissory note shall be dated the date of
its issuance.

                  (d) HARDSHIP. Notwithstanding the provisions of Paragraph 7(b)
of this Article VII, the Board of Directors in its discretion and with due
regard for the financial condition and requirements of the Corporation, may
authorize and cause payment in cash for all or part of the redemption price
which would otherwise be paid by a note if the Board of Directors determines
that the prescribed method of payment imposes an undue hardship upon the
Terminated Stockholder. The Board of Directors may implement this provision by
delegating authority to an officer or officers.

SECTION 8. LIEN ON STOCK AND NOTES. The Corporation shall have a lien on, and a
right of setoff against, any stock or notes, including those issued as Patronage
Dividend and against any cash portion of such Patronage Dividend which is in
excess of twenty percent (20%) of the overall patronage dividend payable in any
year for such indebtedness of the stockholder to the Corporation as may, for
whatever cause, exist. In the event that the



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Corporation initiates proceedings to recover amounts due it by the stockholder,
the Corporation shall be entitled to the recovery of all associated costs,
interest and reasonable attorney's fees.

                                  ARTICLE VIII
                                MEMBER AGREEMENTS

SECTION 1. CORPORATE PURPOSE. The Corporation shall be organized and operated on
a cooperative basis for the benefit of the holders of shares of its Class A
Common Stock (who are its Members).

SECTION 2. GENERAL TERMS. As a condition of Membership every prospective Member
shall enter into a contract (the "Member Agreement") with this Corporation, must
be actively engaged in buying, selling and/or renting merchandise, supplies
and/or services as are handled by retail hardware dealers and/or dealers in
lumber and building supplies or dealers engaged in business as stated in Article
II, Section 1 hereof, must complete and receive approval of a Member Agreement
in form and manner adopted by the Board of Directors and must become and remain
the owner of such number of shares of stock of the Company as shall be
established from time to time by the Board of Directors or have subscribed to
purchase such shares by whatever plan of payment may be authorized by the Board
of Directors. The Member Agreement shall contain such terms, conditions and
agreements as the officers of this Corporation shall deem necessary or desirable
or as shall be required hereunder, pursuant to the Certificate of Incorporation
or these By-Laws, or pursuant to direction of the Board of Directors. The Member
Agreement shall specify the servicemark under which such member may conduct his
or her business. The Member Agreement shall not be assignable, or transferable,
in any manner whatsoever, without the express written consent of the Corporation
and shall contain, at a minimum, the following terms and provisions:

                  (a) An express consent by the Member to the tax treatment and
effects specified in section 2(b) of Article IX hereof;

                  (b) An express condition to operate the business at the
specific location stated in the Member Agreement. Member must apply for and
obtain Membership for each location at which such Member sells or rents
hardware, lumber and building supplies, and/or other merchandise or services
received from or through the Company;

                  (c) A requirement that the Member notify the Corporation in
writing immediately upon any change in business name, form of organization
(proprietorship, partnership, corporation or whatever), ownership or control;

                  (d) A requirement that the Member purchase qualifying shares
of the Corporation (as referred to in Article XII of these By-Laws) pursuant to
a subscription agreement;

                  (e) Automatic modification of the Member Agreement upon notice
by the Corporation to the Member of any relevant changes in the Certificate of
Incorporation, By-Laws, or by approval of the Board of Directors; and

                  (f) Necessary conditions regarding use of the True Value and
any other Company owned trademarks which must be complied with.

SECTION 3. TERMINATION. Each Member Agreement may be terminated as provided
therein.

SECTION 4. CHANGE IN FORM OF BUSINESS. In the event a Member changes a sole
proprietorship, partnership or joint venture to a corporate form, where the
Corporation has agreed to accept the corporate successor-in-interest as a
Member, then the Member shall sell, transfer or otherwise assign to such
successor-in-interest all shares of stock of this Corporation owned by such
Member. Such shares shall remain subject to the Corporation's liens and right of
setoff and all other rights provided for in the Certificate of Incorporation,
By-Laws or Member Agreement.



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<PAGE>   11

SECTION 5. MECHANICS OF SETOFF. Notes issued by the Corporation, whether issued
incidental to the distribution of Patronage Dividend or to the redemption of
Class B Common Stock, shall provide that if the Corporation exercises its right
of setoff, the value of the note to be setoff against the holder's indebtedness
to the Corporation or one of its subsidiaries shall be determined at the time of
setoff as follows: The Corporation shall have the right to discount the note to
its then current cash value, which shall be in the lesser of the face amount of
the note or the yield to maturity of the note as discounted at a rate per annum
equal to the prime rate at the time of setoff at the Harris Trust and Savings
Bank, Chicago, Illinois, plus two (2) percentage points.

                                   ARTICLE IX
                               PATRONAGE DIVIDENDS

SECTION 1. PAYMENT OF PATRONAGE DIVIDENDS. The Corporation shall distribute
Patronage Dividends to Members annually on the basis of the volume of and
margins applicable to merchandise and/or services purchased by each Member,
which equal the excess (if any) of gross margins and other income from business
done with or for Members, after deducting therefrom the following:

                  (a) Expenses directly or indirectly related to such business;

                  (b) Such reasonable reserves for necessary corporate purposes
as may from time to time be provided by the Board of Directors for depreciation
and obsolescence, state and federal taxes, bad debts, casualty losses, insurance
and other corporate and operating charges and expenses, all established and
computed in accordance with generally accepted accounting principles;

                  (c) Such reasonable reserves for working capital necessary for
the operation of the Corporation and for deficits arising from such operation,
(including deficits from business other than business done with or for Members).

Any amount set aside for reserves shall first be set aside from net earnings, if
any, of the Corporation from business other than business done with or for
Members, and only the excess shall be deducted from gross margins from business
done with or for Members in the computation described above.

The amounts set aside for reserves in any year from gross margins of the
Corporation from business done with or for Members shall be allocated, to the
extent possible, to Members on the books of the Corporation on a patronage basis
for that year, or, in lieu thereof, the books or records of the Corporation
shall afford a means of doing so at any time, so that in the event of a
distribution of amounts formerly carried in reserves each Member may receive, to
the extent possible, Member's pro rata share thereof.

SECTION 2.

                  (a) METHOD AND TIMING OF PAYMENT. The Patronage Dividend to
which stockholder-Members become entitled for each fiscal year shall be
distributed no later than the fifteenth day of the ninth month following such
fiscal year. The Board of Directors may, in its discretion, determine to pay
Patronage Dividends either all in a form that will be treated as a deductible
qualified written notice of allocation within the meaning of section 1388(c) of
the Internal Revenue Code of 1986, as amended (hereinafter referred to as the
"IRC"), all in a form that will be treated as a nonqualified written notice of
allocation within the meaning of section 1388(d) of the IRC, or part in
qualified form and part in nonqualified form. At least twenty percent (20%) of
any qualified payment of Patronage Dividends shall be paid in cash. Subject to
this limitation with respect to qualified distributions, the Board of Directors
may decide that the balance of any Patronage Dividend be paid, in whole or in
part, in cash, property, Class B Common Stock, promissory notes or other
evidences of indebtedness, or in any other form of written notice of allocation
(within the meaning of section 1388(b) of the IRC).



                                       11
<PAGE>   12

                  (b) TAX TREATMENT OF PATRONAGE DIVIDEND BY MEMBERS. Each
person who is a Member of the Corporation on the effective date of this section
2(b) of this Article IX of the By-Laws and continues as a Member after such date
and each person who becomes a Member of the Corporation after such effective
date shall, by such act alone, consent and be deemed to have consented that the
amount of any distributions with respect to the Member's patronage which are
made in written notices of allocation (as defined in section 1388 of the IRC)
and which are received by the Member from the Corporation, will be taken into
account by the Member at their stated dollar amounts in the manner provided in
section 1385(a) of the IRC in the taxable year in which such written notices of
allocation are received by the Member. This consent, however, shall not extend
to written notices of allocation received by the Member as part of a
nonqualified payment of patronage which clearly indicate on their face that they
are nonqualified. By way of illustration, the term "written notice of
allocation" shall include such items as the Promissory Notes, the shares of
Class B Common Stock, a notice or statement that such securities have been
deposited with a bank or other qualified agent on behalf of the Member, a notice
of credit to the account of the Member on the books of the Corporation (against
stock subscription or any other indebtedness as the Corporation may elect) and
such other forms of notice as the Board of Directors may determine, distributed
by the Corporation in payment, or part payment of the Patronage Dividends. The
stated dollar amount of the Promissory Notes is the principal amount thereof and
the stated dollar amount of the shares of Class B Common Stock is the par value
thereof.

SECTION 3. ISSUANCE OF CLASS B COMMON STOCK. In order to ensure the
Corporation's opportunity for healthy growth and expansion and in order to meet
the corresponding needs for additional working capital the following plan for
the investment by Members of part of the Patronage Dividend shall, subject to
modification or termination by the Board of Directors, be in effect:

                  (a) ANNUAL ISSUANCE. With respect to the Patronage Dividend
payable for each fiscal year, the Corporation may pay each Member a portion of
such Patronage Dividend, not to exceed two percent (2%) of Member's net
purchases (computed to the nearest multiple of $100) from the Corporation during
such fiscal year, in shares of Class B Common Stock of the Corporation at the
par value thereof; provided, however, that at least twenty percent (20%) of such
Member's Patronage Dividend shall be paid in money or by qualified check.

SECTION 4. PROMISSORY NOTES. Subject only to the payment of at least twenty
percent (20%) of each Member's annual Patronage Dividend in cash and
distribution of Class B Common Stock as provided in section 3 of this Article
IX, the Corporation may pay each Member all or any portion of the annual
Patronage Dividend in Promissory Notes which shall bear interest at the rate
from time to time fixed by the Board of Directors and shall mature at the time
fixed by the Board of Directors not later than five (5) years from the date of
issuance, and may be subordinated to any liabilities or obligations of the
Corporation, existing, contingent or created after date of issuance. The
Corporation shall have a lien upon and a right of setoff against any said
Promissory Notes issued to a Member to secure payment of any indebtedness due
the Corporation or any of its subsidiaries by the Member.

SECTION 5. HARDSHIP. If, upon application by a Member, the Board of Directors
shall determine that payment of such Member's Patronage Dividend for any year by
the method herein provided or prescribed by the Board of Directors imposed an
undue hardship upon such Member, the Board of Directors, in its discretion and
with due regard for the financial condition and requirements of the Corporation,
may authorize and cause the payment of all or any additional part of such
Patronage Dividends in cash. The Board of Directors may implement this provision
by adopting hardship guidelines and delegating authority to an officer or
officers.

                                    ARTICLE X
                               GENERAL PROVISIONS

SECTION 1. DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, may be declared
out of gross margins of the Corporation, other than gross margins from business
done with or for Members, after deducting therefrom all expenses directly or
indirectly allocable thereto, by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, property,
Promissory Notes, or shares of the capital stock, subject to the provisions of
the Certificate of Incorporation.



                                       12
<PAGE>   13

SECTION 2. ANNUAL STATEMENT. The Board of Directors shall present at each annual
meeting and when called for by vote of the stockholders at any special meeting
of the stockholders, a full and clear statement of the business and conditions
of the Corporation.

SECTION 3. CHECKS. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or as the Board of Directors may
from time to time designate.

SECTION 4. FISCAL YEAR. The fiscal year shall end on December 31 of each year.

                                   ARTICLE XI
                                BY-LAW AMENDMENTS

SECTION 1. BY-LAW AMENDMENTS. These By-Laws may be altered or repealed at any
annual meeting of the stockholders or at any special meeting of the stockholders
at which a quorum is present or represented, provided notice of the proposed
alteration or repeal be contained in the notice of such special meeting, or by
the affirmative vote of two-thirds of the Board of Directors then in office at
any regular meeting of the board or at any special meeting of the board if
notice of the proposed alteration or repeal be contained in the notice of such
special meeting; provided, however, that no change of time or place of the
meeting for the election of directors shall be made within sixty (60) days next
before the day on which such meeting is to be held, and that in case of any
change of such time or place, notice thereof shall be given to each stockholder
in person, by any electronic communication, or by letter mailed to the
stockholder's last known post office address at least twenty (20) days before
the meeting is held.

                                   ARTICLE XII
                       QUALIFYING SHARES OF CAPITAL STOCK

SECTION 1. QUALIFYING SHARES. The unit ownership of Class A Common Stock shall
consist of sixty (60) shares and no person shall be deemed to be a stockholder
of the Corporation or shall exercise any of the rights of a stockholder until
such person has become the holder of record of sixty (60) fully paid and
nonassessable shares of said Class A Common Stock, $100 par value, for each
store owned up to a maximum of three hundred (300) such shares, representing
five (5) or more stores.

                                  ARTICLE XIII
              INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES

SECTION 1. INDEMNIFICATION.

         (a) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses for which such person has
not otherwise been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner which was reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that the conduct in question
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which was reasonably believed to be in or not
opposed to the best interest of the Corporation, and, with respect to any
criminal action or proceeding had reasonable cause to believe that the conduct
in question was unlawful.

         (b) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is




                                       13
<PAGE>   14

or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses for which such person has not otherwise been
reimbursed (including attorneys' fees and amounts paid in settlement) actually
and reasonably incurred by such person in connection with the defense or
settlement of such suit or action if such person acted in good faith and in a
manner which was reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of such
person's duty to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which the Court of Chancery of
Delaware or such other court shall deem proper.

         (c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Paragraphs 1(a) or (b) of this
Article, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees), actually and
reasonably incurred by such person in connection therewith.

         (d) Any indemnification under Paragraphs 1(a) or (b) of this Article
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because such person
has met the applicable standard of conduct set forth in such Paragraphs 1(a) or
(b) of this Article. Such determination shall be made (i) by the Board of
Directors by a majority vote of a quorum, consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, and a quorum of disinterested directors so directs, by independent
legal counsel in written opinion, or (iii) by the stockholders.

         (e) Expenses incurred by defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation.

         (f) The indemnification provided in this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, or of any other indemnification which may be granted to
any person apart from this Article, both as to action in its official capacity
and as to action in another capacity while holding office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

SECTION 2. INSURANCE. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
and incurred by such person in any such capacity, or arising out of its status
as such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Article.



                                       14