The following statement details current requirements for authorized Watlow distributors. Watlow's current credit terms for distributors are published as net 30 days from the date of invoice, allowing for up to a 25-day grace period.

Any Invoices that reach 75 days past the date of the Invoice will result in credit hold and/or any other credit measures Watlow deems advisable. When on credit hold, Watlow will accept no new orders and will ship no product.

Watlow requires all of our Distributors to maintain a maximum Average Days to Pay (ADTP) of 55 days. We consider this to be a Minimum Standard for Payment. The ADTP looks at each paid Invoice and calculate the difference, if any, between the Invoice date and the date the payment is actually received by Watlow. Each of the invoices will then be weighted based on dollar amount. The weighted differences for each Invoice will then be added up to provide the ADTP measurement.

Watlow measures the ADTP on a monthly basis. Effective May 1 2011, If the ADTP exceeds 55 days, that Distributor's blanket discount will be reduced by five percent (5%). That discount reduction will take effect on any orders received between the 15th of the month following the month that the ADTP exceeded 55 days. This discount reduction will remain in effect for a minimum of 30 days and continue until such time as the ADTP averages 55 days for at least one month. Once the ADTP averages 55 days for one month the five percent (5%) will be reinstated. In addition should the ADTP exceeds 75 days, that Distributor's blanket discount will be reduced by ten percent (10%). The following is a few examples of how this credit policy is applied.

1. Assume a distributor's ADTP was 55 days or less from January 1 through January 31, then this distributor's discount would remain unchanged on orders placed February 15 through March 15.
2. Assume a distributor's ADTP was over 55 days from January 1 through January 31, then this distributor's discount would be reduced 5% (if the standard discount for this distributor was 45% from list, it would now be 40% from list) on orders placed February 15 through March 15.
3. Assume the distributor in example #2 has an ADTP that was 55 days or less from February 1 through February 28, then this distributor's discount would be reinstated to 45% for orders placed March 15 through April 15.
4. Assume the distributor in example #2 has an ADTP that was over 55 days from February 1 through February 28, then this distributor's discount would remain at the reduced level of 40% for all orders placed March 15 through April 15.

It is important that you pay within 55 days for your ADTP. You should make sure that you are averaging well below 55 days, as we will enforce this Policy.

Watlow's long term goal for all distributors is net 30 terms with a 15-day grace period. This is in line with other manufacturers in our industry. In fact, many of our existing distributors are required by their other suppliers to pay within 45 days.

PAYMENT METHODS

Payments to Watlow may be sent in any of the following ways:

If you need to get your ADTP measure or have any questions, please contact our credit department at (314) 628-4363.