Page 1August 1, 2003
P.O. Box 110
Amsterdam
New York 12010
July 24, 2003
Dear Mr. Mohawk Distributor
Attention: XXXXXXX
Re: NACCO Material Handling Group Inc.
Mohawk Resources Ltd and their contracted distributors have a new and extremely lucrative business opportunity to become the sole supplier to NACCO Material Handling Group Inc. of Greenville NC. NACCO are a $2.6 Billion corporation that own Yale, Hyster, Sumitomo Fork Truck Companies as well as National Coal, Proctor Silex, Hamilton Beach, and The Kitchen Collection.
The previous lift supplier to NACCO and their over 425 distributors with 2000 plus sales people was ARI Hetra. We have their previous purchase volume and needless to say it is impressive. The NACCO distributors are encouraged to buy their fork truck lift equipment from their company supply program. Their equipment purchases are included in their parts volume and help to earn large volume rebates from NACCO for exceeding annual sales quotas.
What Mohawk brings to the table is a greater variety of fork truck lifting options from the TP-15 or System I, to the MP12-2 or MP-18-2 Mobile Columns, FL series four-post and the TL series Mid Rise Columns. Mohawk also has a national distributor and service network throughout the USA and Canada to service their needs in every market.
This program, is structured so all billings are between Mohawk Resources Ltd and NACCO in Greenville NC. The NACCO discounts are approximately 26% off list price FOB destination. The Mohawk distributor would earn 10% of the invoiced price to NACCO plus get the full installation and training proceeds that have been negotiated: System I - $700.00, TP-15 - $900.00, FL-25 - $1,800.00, MP-18-2 or MP-12-2 - $700.00, and TL-24-2 - $300.00.
If we look back at the past sales history for any of these specialty products used for fork truck lift applications, the purchase volume has been extremely small. Before we move forward with a national program, attend the seven day national sales conference in Scottsdale AZ in August and participate in the Yale/Hyster national tool and equipment catalog, it is imperative that we have your full support.
NACCO have visited our facility to review or products and engineering. We are in the process of signing a one-year supply agreement that should result in a large amount of incremental new sales and profit opportunities. We need everyone’s support and cooperation or the program will fail and become an embarrassment to the entire organization.
Please sign and return the attached confirmation document on or before August 4th, 2003 that verifies that your company will support this National Account Program with NACCO Material Handling Group. Our non-receipt of the attached will be considered as your declining to participate. We can appreciate the concern of some that they have an exclusive distributor agreement for their market. It is our intention going forward to review these opportunities with our valued distributors before committing their involvement. If you do not feel that this is a good business decision please indicate as such.
Mohawk Resources Ltd does have the right to set up national buying programs that are in the best interest of the company and the majority of their field sales force. If you would rather not participate in the new NACCO program please we will respect your input and business decision.
NACCO Material Handling Group Participation Form
Purchases of the FL-25 fork truck lift over the past 3 years from Mohawk are – XX units
____ Yes, XXXXXXXXXXX agrees to fully support the new NACCO national program and the terms of this program as outlined by Mohawk Resources Ltd.
______Distributor Principal Date: ______
____ No, XXXXXXXXX prefers not to participate in the new NACCO national program and the terms of this program as outlined by Mohawk Resources Ltd. and agrees to allow Mohawk Resources Ltd to manage this national account through other means.
______Distributor Principal Date: ______
Best Regards,
David Q. Bowman
Sales Manager HD Lifts