Exhibit 99(a)
[FLUKE ELECTRONICS CORPORATION LOGO]
Effective Date: December __, 2001
DISTRIBUTOR AGREEMENT
Fluke Electronics Corporation Transmation, Inc.
P.O. Box 9090 m/s: 215 10 Vantage Point Drive, Ste. 1
Everett, WA 98206-9090 Rochester, NY 14606
Telephone: (425) 446- Telephone: (716) 352-9720
Fax: (425) 446-5778 Fax: (716) 352-1486
/s/ Christopher C. McMahon /s/ Robert G. Klimasewski
- --------------------------- -------------------------------------
(Signature) (Signature)
Christopher C. McMahon Robert G. Klimasewski
- ---------------------------------- -------------------------------------
(Typed Name) (Typed Name)
Secretary President
- ---------------------------------- -------------------------------------
(Title) (Title)
This agreement consisting of 3 numbered pages and the following Exhibits has
been executed in duplicate originals.
Exhibit A: Transmation/Altek Products
Exhibit B: Product Purchase Commitments
- --------------------------------------------------------------------------------
NOTICES: All notices shall be in writing by mail or fax to the address of each
party above.
- --------------------------------------------------------------------------------
This Agreement is entered into between Fluke Electronics Corporation ("Fluke")
and Transmation, Inc. ("Transmation") Subject to the terms and conditions of
this Agreement, the parties agree as follows:
1. APPOINTMENT
Fluke appoints Transmation to purchase, inventory, promote and resell on an
exclusive basis to end user customers or resellers anywhere in the world, the
Altek/Transmation products ("Products") listed on the Fluke price schedule(s)
identified in each Product Exhibit.
2. TERM
This Agreement shall commence on the Closing of the Stock Purchase Agreement
between Transmation, Altek Industries Corp. and Fluke and shall expire on
December 31, 2006 unless earlier terminated in accordance with the provisions of
Article 13. Thereafter this Agreement shall automatically renew for one-year
terms unless either party gives ninety (90) days written notice prior to the
expiration of the then-current term of the Agreement.
3. PRODUCTS/PRICES
a. Fluke agrees to sell and Transmation agrees to buy Products at the
net price stated on the price schedules referenced in each Product
Exhibit A attached.
b. Fluke reserves the right to obsolete any of the Products upon
giving at least 60 days advance notice to Transmation. Obsolete
Products are Products removed from the line with no direct or
substantially similar replacement. Fluke will not accept inventory
returns of Obsolete Products.
c. Fluke reserves the right to increase the prices of Fluke Products
by giving Transmation 90 days advance notice. If the price of a
Product is increased, Fluke will apply the old price to firm
orders received prior to the effective date, for shipment no later
than 30 days after the effective date.
d. Fluke reserves the right to decrease the prices of Fluke Products
by giving Transmation 30 days advance notice. If the list price of
a Product is reduced, Fluke will credit Transmation for the
difference between the old and new Transmation net price for items
in Transmation's inventory purchased during the 90 days preceding
the effective date of the price reduction. To obtain credit,
Transmation must send Fluke within 15 days of the effective date
of the price reduction an inventory report including quantity,
model and serial number. Fluke reserves the right to audit such
report. Promotional and other short term pricing adjustments are
not subject to this provision.
4. ORDERS/DELIVERY
a. Transmation shall comply with the Product Purchase Commitment
requirements described in Exhibit B hereto.
b. Orders will be initiated by Transmation's written purchase order
and will be binding upon acceptance by Fluke. Each order for
Product must:
(1) Be received by Fluke during the term of this Agreement;
(2) Specify delivery dates no more than 60 days after the
Agreement's expiration date; and
(3) Specify delivery to an Authorized Shipping location
established in Exhibit A.
c. All deliveries shall be subject to Fluke's delivery schedule.
Fluke shall endeavor to ship according to Transmation's requested
schedule but shall not be liable for any failure or delay in
filing an order due to causes beyond its reasonable control.
d. Delivery shall be F.O.B. Fluke shipping point. Title and risk of
loss or damage shall pass to Transmation upon Fluke's delivery of
Product to a common carrier.
d. Subject to Fluke's delivery schedule, Transmation may request
changes in delivery dates of Products ordered by giving written
notice prior to shipment.
5. PAYMENT
Payment shall be made in accordance with terms established in Exhibit A.
Fluke reserves the right to modify these payment terms if, in its
judgment, the Transmation's financial condition or payment record
warrants, or upon giving notice of termination.
6. RESPONSIBILITIES OF DISTRIBUTOR
Transmation agrees:
a. To meet the annual targets established by the Exhibits hereto or
as otherwise agreed to in writing between Transmation and Fluke or
Fluke Representative.
b. To issue a minimum initial stocking order and/or place minimum
reorders as established in each Product Exhibit.
c. To use its best efforts to vigorously promote and expand the sale
of Fluke Products by stocking Products and by devoting such
management, manpower, time and effort as may be reasonably
necessary to fully develop the available market potential for
Fluke Products.
d. To provide a Resale Certificate whenever requested by Fluke. Until
receipt of a requested certificate, Fluke will charge sales tax
where applicable.
e. If in Fluke's sole discretion a Product recall or Product safety
notice is required, Transmation shall deliver to its customers any
notice provided by Fluke, or make the information required to
deliver such notice available to Fluke solely for such purpose.
7. INVENTORY ADJUSTMENT
a. During the months of January, April, July and October, Transmation
may return, freight and insurance prepaid, an unlimited quantity
of current Products, for credit at the current net purchase price
under the following conditions:
(1) A new order for an EQUAL DOLLAR VALUE is placed with Fluke
at the time of return;
(2) Fluke has given prior approval for the return of such
Products;
(3) The Products are unused and in their original cartons;
(4) Products are not obsolete models, unless Fluke has provided
notice as stated under Article 3b.; and
(5) Products were purchased no more than 1 year prior to the
return date.
(6) The amount of each such credit shall be applied to and
reduce Transmation's Product Purchase Commitment
requirement described in Exhibit B, for the year the
product is returned.
Fluke Transmation Agreement
12/26/01
3
b. Fluke will not accept return of used equipment from Transmation
under any circumstances.
c. Instructions for return of damaged and DOA Products are included
in the warranty statement.
8. ADVERTISING
a. Transmation agrees to vigorously promote the sales of Products
through advertising and appropriate media including trade show
exhibits, catalogs, sales aids, direct mailings, space advertising
and other Fluke approved methods.
b. Fluke will provide sales literature and advertising materials in
reasonable quantities as well as promotional plans and information
to assist Transmation in selling the Products. Shipment shall be
made F.O.B. point of origin. Such Material shall remain Fluke's
property, and Transmation agrees to return material remaining in
its possession upon request or upon termination or expiration of
this Agreement.
9. RELATIONSHIP
Transmation shall perform the terms of the Agreement as an independent
contractor engaged in purchasing Products from Fluke for resale to Transmation's
END-USE customers ("Buyer"). Transmation and its employees are not agents,
employees, or legal representatives of Fluke for any purpose and have no
authority, express or implied, to represent or bind Fluke. Nothing contained in
this Agreement shall be construed as creating a joint venture or partnership
between Fluke and Transmation.
10. LIMITED WARRANTY & LIMITATION OF LIABILITY
Each Fluke Product is warranted to be free from defects in material and
workmanship under normal use and service. The warranty period is controlled by
the documents furnished with each Product and begins on the date of shipment.
This warranty extends only to the original buyer or end-user customer of a Fluke
authorized reseller, and does not apply to fuses, disposable batteries or to any
Product which, in Fluke's opinion, has been misused, altered, neglected or
damaged by accident or abnormal conditions of operation or handling. Fluke
warrants that software will operate substantially in accordance with its
functional specifications for 90 days and that it has been properly recorded on
non-defective media. Fluke does not warrant that software will be error free or
operate without interruption.
Fluke authorized resellers shall extend this warranty on new and unused Products
to end-user customers only but have no authority to extend a greater or
different warranty on behalf of Fluke. Warranty support is available if Product
is purchased through a Fluke authorized sales outlet or Buyer has paid the
applicable international price. Fluke reserves the right to invoice Buyer for
importation costs of repair/replacement part when Product purchased in one
country is submitted for repair in another country.
Fluke's warranty obligation is limited, at Fluke's option, to refund of the
purchase price, free of charge repair, or replacement of a defective Product
which is returned to a Fluke authorized service center within the warranty
period.
To obtain warranty service, Buyer or Transmation must contact its nearest Fluke
authorized service center or send the Product, with a description of the
difficulty, postage and insurance prepaid (FOB Destination), to the nearest
Fluke authorized service center. Fluke assumes no risk for damage in transit.
Following warranty repair, the Product will be returned to Buyer, transportation
prepaid (FOB Destination). If Fluke determines that the failure was caused by
misuse, alteration, accident or abnormal condition of operation or handling,
Fluke will provide an estimate of repair costs and obtain authorization before
commencing the work. Following repair, the Product will be returned to the Buyer
transportation prepaid and the Buyer will be billed for the repair and return
transportation charges (FOB Shipping Point).
THIS WARRANTY WILL BE BUYER'S SOLE AND EXCLUSIVE REMEDY AND IS IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. FLUKE SHALL NOT
BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR
LOSSES, INCLUDING LOSS OF DATA, WHETHER ARISING FROM BREACH OF WARRANTY OR BASED
ON CONTRACT, TORT, RELIANCE OR ANY OTHER THEORY.
Since some countries or states do not allow limitation of the term of an implied
warranty, or exclusion or limitation of incidental or consequential damages, the
limitations and exclusions of this warranty may not apply to every buyer. If any
provision of this Warranty is held invalid or unenforceable by a court of
competent jurisdiction, such holding will not affect the validity or
enforceability of any other provision.
11. TERMINATION
a. Fluke may terminate this Agreement immediately by giving written
notice at any time to Transmation, if Transmation:
(1) Makes any extraordinary arrangement with its creditors
generally, becomes bankrupt or insolvent, goes into
liquidation or winding up, ceases to function as a going
concern or changes ownership or control; or
(2) Is delinquent by more than eighty (80) days in payment of
amounts due to Fluke and Fluke has given Transmation ten
(10) days notice to cure such breach; or
(3) Makes or attempts to make any assignment of this Agreement
or any other obligation hereunder without the prior written
consent of Fluke, or has, in Fluke's sole opinion, engaged
in willful misconduct or any act which is detrimental to
the goodwill or best interest of Fluke; or
(4) Engages in solicitation of sales outside of the United
States.
b. Upon termination of this Agreement, except with respect to firm
orders already received, Transmation shall cease all sales of
Products and shall discontinue all advertising of or reference to
Products and to Fluke in relation to the Products, except in
catalogs or literature that advertise Products with other
manufacturer's Products and were printed prior to receipt of the
termination notice. Fluke may, at its discretion, accept orders on
C.O.D. terms for Products which Transmation was contractually
obligated to furnish prior to the termination date and does not
have available in its inventory, provided Transmation gives Fluke
written notice of any such orders within 10 days of the
termination date.
c. Within thirty (30) days after termination of this Agreement, shall
repurchase from Transmation at Transmation's cost, all remaining
inventory of new and unused Products, but not obsolete Products.
Transmation shall prepay freight and insurance to return inventory
to Fluke.
Fluke Transmation Agreement
12/26/01
4
e. Articles 5., 6.e, and 10 shall continue in effect after
termination.
12. MISCELLANEOUS
a. This Agreement shall be governed by and construed in accordance
with the laws of the state of Washington.
b. This Agreement is independent of and unrelated to any existing
distribution agreement between Transmation and Fluke for the
purchase and sale of Fluke equipment. This Agreement sets forth
the entire understanding of the parties regarding Transmation's
purchase and sale of Transmation/Altek products and supersedes all
prior agreements, and communications, whether oral or written,
pertaining to its subject matter. This Agreement may not be
modified or amended, including by purchase order or other
document, except by Fluke. The failure of either party to enforce
any of the provisions of this Agreement or the Exhibit(s) shall
not be construed as a waiver of such provisions or of the right of
such party thereafter to enforce each and every provision
contained herein. If any term, clause or provision contained in
the Agreement is declared or held invalid by a court of competent
jurisdiction, such declaration or holding shall not affect the
validity of any other term, clause or provision herein contained.
Neither party shall assign this Agreement except with the consent
of the other party.
* * * * *
Fluke Transmation Agreement
12/26/01
5
DISTRIBUTOR AGREEMENT
EXHIBIT A
TRANSMATION/ALTEK PRODUCTS
- - PRODUCT AND DISCOUNT SCHEDULES
------------------------------
See attached pages 2 and 3 to Exhibit A.
- - ORDER REQUIREMENTS
------------------
Minimum Reorder Per Authorized Location $[***] Net Price
- - TERMS
-----
Net 30 days from date of invoice
- - FREIGHT
-------
Freight collect via UPS account number [***]
- - DELIVERY
--------
FOB Shipping Point
- - SHIPPING LOCATIONS
------------------
10 Vantage Point Drive, Rochester, New York
35 Vantage Point Drive, Rochester, New York
- - CO-OP
-----
Annual Co-Op Reimbursement: [***]% of Previous Year Net Shipments.
Programs for which co-op funds will be used and Fluke's cooperative share
shall be pursuant to the terms and conditions of Fluke's Eligible
Cooperative Advertising Programs, in its current or subsequently modified
form, except that there shall be no co-op reimbursement for trade show
expenses.
Fluke Transmation Agreement
- - QUARTERLY GROWTH REBATES
------------------------
Fluke will pay Transmation a rebate on quarterly shipments of Product if
Transmation meets or exceeds the moving shipment total of the prior four
quarters and provides monthly point of sale reports.
The first rebate will apply to an annualized five-month period from
August 1 to December 31 of each year of this Agreement's term, and will
be paid in January of the following year. Growth during the period is
based on a rebate percentage that is based on annualized shipments from
the same time period in the preceding year.
Subsequent rebates will be paid quarterly based on a rebate percentage
established using the growth of a moving four quarter shipment total
compared to the previous moving four quarters shipment total. This
shipment total will be provided under separate cover at the beginning of
each new quarter. The rebate percentage determined will be multiplied by
the current quarter's shipments to calculate the rebate to be paid.
-------------------- ------------ ------------ ------------- --------
Growth [***]% [***]% [***]% [***]%
-------------------- ------------ ------------ ------------- --------
Rebate
Percentage [***]% [***] [***] [***]
-------------------- ------------ ------------ ------------- --------
Fluke Transmation Agreement
[***]
Fluke Transmation Agreement
EXHIBIT B
DISTRIBUTION AGREEMENT - TRANSMATION/ALTEK PRODUCTS
PRODUCT PURCHASE COMMITMENTS
1. PURCHASE COMMITMENT FOR FIRST TWO YEARS. Transmation hereby guarantees
that it will purchase from Fluke at least [***] of Product during each of the
first two years of this Agreement's initial five-year term. "Product," as used
in this Exhibit B for commitment purposes, shall include only [***].
2. SUBSEQUENT PURCHASE COMMITMENTS. After the first two years of the
Agreement's term, Transmation's Product purchase commitment shall be for the
following amounts under the same terms and conditions as those set forth herein:
YEAR 3: $[***]
YEAR 4: $[***]
YEAR 5: $[***]
Commitments for subsequent years will be as mutually agreed by the parties.
3. PRODUCT PRICE INCREASES. In the event Fluke increases its Product prices,
Transmation's guaranteed purchase commitment shall be increased proportionately.
4. ORDER PROCESS REQUIREMENTS. To ensure that Transmation does not attempt
to meet the guaranteed amount at the end of any year during this Agreement's
term by placing an unusually large order that manufacturing requirements would
prohibit Fluke from reasonably fulfilling, Transmation will meet the following
requirements:
a. Transmation shall place its last order of the year no later than
October 31. Fluke shall not be required to deliver any number of Products
in that purchase order that exceeds by [***] percent ([***] %) the
average number of Products purchased each month over the preceding six
months (the "Excess Product"). Fluke will make reasonable and diligent
efforts to manufacture and deliver the Excess product, but it shall not
be penalized if it is unable to do so until the next year. The Excess
Product shall not be applied to Transmation's guaranteed $[***] purchase
requirement for that subsequent year.
b. If Transmation's final order for the year does not raise total purchases
to the guaranteed annual purchase amount, Fluke will invoice Transmation for the
difference between the total amount ordered and the balance needed to reach the
guaranteed amount. Transmation shall pay that amount to Fluke within 45 days of
receipt of Fluke's invoice. Delinquent amounts shall incur per annum interest of
[***] percent ([***]%),
5. TERMINATION OF COMMITMENT OBLIGATIONS. If this agreement is terminated by
Fluke without cause, expires according to its terms, or if Transmation becomes a
non-exclusive distributor under this Agreement, Transmation shall not be
obligated to meet the purchase commitments described in this Exhibit B.
Fluke Transmation Agreement