About Empire Magnetics – Authorized Distributors

Requirements:

An authorized distributor has the following characteristics

1. A signed distribution contract on file at E.M.I.

2.An excellent credit record.

3. Aggregate sales exceeding $25,000 over the last 12 months or, in EMI’s estimation, visible potential to generate this sales volume in the near term.

4. A sizable sales force actively promoting and selling E.M.I. product lines.

5. A history of participation in joint promotional programs.

6. A willingness to commit to sales growth targets for E.M.I. products, establish a sales plan and act to implement that plan.

In all cases, E.M.I. reserves the right to determine, based on these and other factors, if an organization will be authorized as a distributor.

Authorized Distributors enjoy preferential treatment with respect to customer referrals, leads and discounts. This is done in recognition of the efforts and investments made in Empire Magnetics’ sales developments.

Demonstration Equipment:

Most of Empire Magnetics’ products are built to order. As such, few demonstration units will be available. In cases where a distributor requires such units, the cost of demonstration equipment will be borne by the distributor.

Conditional Sales

When conditions justify it, Empire Magnetics may choose to offer a conditional sale to a customer. This may allow the customer to test the product prior to purchase. This option is limited to products in stock and is strictly at E.M.I.’s discretion.

Stocking Requirements

Empire Magnetics does not require product stocking by distributors. Product lead time is generally long and Empire Magnetics is not responsible for customer down time. Distributors are encouraged to negotiate with the customer concerning stocking of spares for critical applications.

Changes to Pricing and Product Obsolescence

For authorized sales organizations Empire Magnetics, Inc. will attempt to advise sales management of price changes 45 days in advance of implementation. Notice of product obsolescence will be given 90 days in advance.

Non-Standard Products

Advance payment of a deposit is required on orders for custom products and special products. The deposit amount shall be 50% of the total amount for custom products and special products. The balance becomes payable upon acceptance of the shipment, per terms specified on confirming order. Special products and services are priced by quotation and are not subject to return or refund. In the event of order cancellation, any deposit is forfeited.

The distributor price list indicates the standard products and the custom products. The combination of a custom product into an assembly with standard products makes the whole assembly a custom product, subject to payment of deposits. One specific example: The addition of cables to an assembly makes the whole assembly a custom product and therefore subject to deposit requirements.

Drop Shipments

A distributor may elect to have products drop shipped directly to the customer within the distributor’s authorized territory. Invoicing will be based on single shipment quantities. The distributor is liable for payment to Empire Magnetics and collection from the receiver. Inability to collect from the customer DOES NOT relieve the distributor from the burden of timely payment.

Rush Orders

Since products have long lead times and distributors are not required to stock products, all orders will be handled on the same first in, first out RUSH basis unless expedite premiums are agreed to at the time of order placement.

Freight

All orders are F.O.B. Rohnert Park, California. Standard freight method will be UPS surface unless otherwise specified time of order.

Change Orders

Changes to orders for standard products made more than 30 days before the scheduled ship date will be subject to a change order fee. Changes less than 30 days prior to schedule shipment may not be allowed or may incur additional costs. Special service products may not be changed once the order is in process unless agreed to by E.M.I.

Literature

Sales brochures, technical data sheets, manuals, catalogs and other promotional materials are provided to Authorized Distributors free of charge. Availability of materials is under Empire Magnetics, Inc. control.

O.E.M. Accounts

If a customer purchases products in such volume that it is no longer economical for the customer to allow a distributor to handle the account, the distributor should notify Empire Magnetics, Inc. In return, the distributor will receive a finder’s fee of 10% of the first 12 months of shipments of designated products to the customer. The period begins with the first direct shipment to the customer. In order to qualify for a finder’s fee, the distributor must make the disclosure BEFORE the customer places the order. Claims after the fact will not be considered.

Split Territories

In instances where the customer engineering is done in one location and the procurement in another, Empire Magnetics, Inc. will assist the Authorized Distributor who supported the engineering to bid the production to the end user. This in some cases will cause Empire Magnetics, Inc. to actively assist a distributor outside of his normal territory. However, the assistance will be limited to making whatever efforts are possible to insure that the Authorized Distributor who supported the engineering has an opportunity to bid to the end user.

Blanket Orders

Blanket orders do not apply to distributors. For direct accounts where the Authorized Distributor is acting in the capacity of a commissioned representative, a blanket order of 12 months will be considered for quantity purposes.

Select representatives which bring unique value to the sales situation are authorized for accounts, products or territories. Rep contracts are handled individually.

NOTE: The V.A.R. classification is created for established sales organizations. It is not intended as a discount instrument for product users, machine builders or others.

An Authorized V.A.R. organization will be eligible for a V.A.R. discount from list prices.

Over time, some of the sales organizations in the V.A.R. group are expected to become Authorized Distributors. Empire Magnetics, Inc. will assist promising candidates or those with limited markets by supplying leads, provided this does not conflict with established Authorized Distributors. In all cases E.M.I. reserves the right to determine eligibility for assistance.

In territories having only V.A.R. representation, Empire Magnetics, Inc. may choose to refer business to the local V.A.R. or handle business on a direct basis depending on the level of V.A.R. participation.

If a V.A.R. identifies a specific sale as one it has been actively working on, Empire Magnetics, Inc. will make good faith efforts to refer the identified business back to the V.A.R. who has registered the information. This does not constitute a legal obligation to do so.

In brief, E.M.I. wishes to reward active sales agents for their efforts but does not feel obliged to provide discounts when no effort was expended.