This Exclusive National Distributor Agreement is made and entered into by and between the parties concerned on on the basis of equality and mutual benefit to develop business on terms and conditions mutually agreed upon as follow:
SWC Precision Bearings                (Herein after referred to as SWC)
#807, JiaHe Square, SongJiang District, Shanghai, China

1. TERRITORY OF EXCLUSIVITY:
   
SWC hereby appoints B as its authorized exclusive national distributor in _________.
2. Exclusive Right:
   
In consideration of the exclusive rights granted herein, SWC shall not, directly or indirectly, sell or export the commodity to customers in ________ through channels other than B. SWC shall refer to B any enquiries or orders for the commodity in question received by SWC from other firms in ______during the validity of this agreement.
3. PRODUCT:
   
B will distribute full range of Ball & Roller Bearings, Heavy Duty Grease, Automatic Grease Injector, Bearing Inductive Heater & other products from SWC in her territory.
4. Property Rights:
   
B may use the trade-marks owned by SWC for the sale of the full range of SWC products within the validity of this agreement, and shall acknowledge that all patents, trademarks, copy rights or any other industrial property rights used or embodied in the products shall remain to be the sole properties of SWC. Should any infringement be found, B shall promptly notify and assist SWC to take steps to protect the latter's right.
5. Regular transaction export credit:
   5-1. The payment for the regular transaction export is D/P at 90 days sight.
   5-2. For amount under US$2000.00 we will ship under open account on 90 days term from invoice date.
6. MARKETING, ADVERTISING & SALES
   PROMOTION
SWC will support authorized distributors with printed materials and point of sale materials identifying B as an authorize distributor.
E-business:
Through E-business tools SWC will ensure its distributor partners and staff to be informed and up-to-date on product availability, pricing and innovations.

7. DISTRIBUTOR PRICING - SCHEDULES
   7-1. SWC will provide National distributor Price Schedule in printed or electronic form.
   7-2. SWC will strive to give 30 days notice of any price changes.
   7-3. Price in effect at time of order entry applies, provided that the product is shipped as soon as it is available.
   7-4. SWC will allow authorized distributors to make sales to original equipment manufacturers (OEMs) by quoting competitive prices appropriate for OEMs. Distributors must provide adequate proof of authenticity of the OEM sales, including but not limited to customer name, application, part numbers expected production volume and OEM invoice. If distributors are unable to provide adequate proof, SWC will quote aftermarket prices. SWC reserves the final right in deciding the quote to distributor.
8. INCENTIVE COMPENSATION PROGRAM
   8-1. SWC provides an incentive compensation program that is tied to Distributor actual sales performance.
   8-2. The Incentive Compensation package has two elements. First for large service contracts, distributors entitled to different pricing incentives based on the contract proposal. Second for aftermarket retailing, distributors are entitled to rebates based on actual sales growth. Both elements are specified by the tier level that each distributor earns.
   8-3. The Incentive Compensation Program aims to encourage authorized distributor partners to not solely compete on price, but also on value added packages to the end users.
9. Rebate Incentive for National Distributor:
   9-1. First 300,000.00                              No rebate
   Over 300,000.00, Under 600,000.00 portion         3%
   Over 600,000.00, Under 900,000.00 portion         4%
   Excess of 900,000.00 portion                     5%.
   For example: Total annual sale $780,000.00 USD in          .
   Rebate calculation: 300,000.00 (sale)             0%
   300,000.00 (sale)            3%
   180,000.00 (sale)            4%
   Total: 780,000.00 (sale)           $16,200.00USD (rebate)
   9-2. SWC will remit the rebate due to B, after B’s full payment of all invoices during the year.
10. CREDIT, PAYMENT TERMS AND CASH DISCOUNTS
    10-1. Credit terms: The SWC Company will specify credit terms in this Distributor Agreement.
    10-2. A credit of 1% will be earned on the net value of all orders received by SWC Company through electronic data interchange means.
    10-3. SWC customer service representatives must be notified in writing of any invoice discrepancies within 15 days of invoice date.
11. PRODUCT WARRANTY
    
As a general practice, SWC warrants for one year from the date of shipment that the products sold are free of defects in material or workmanship. This warranty shall not be effective unless the products are properly handled at all times after leaving SWC's possession, including properly mounted and lubricated and kept free of all foreign matter.
12. VALIDITY OF AGREEMENT:
    
This agreement, when duly signed by the both parties concerned, shall remain if force for 5 years from April 1, 2003 to March 31, 2008.
13. Force Majeure :
    
Either party shall not be held responsible for failure or delay to perform all or any part of this agreement due to flood, fire, earthquake, draught, war or any other events which could not be predicted, controlled, avoided or overcome by the relative party. However, the party affected by the event of Force Majeure shall inform the other party of its occurrence in writing as soon as possible and thereafter send a certificate of the event issued by the relevant authorities to the other party within 15 days after its occurrence.
14. Termination:
    
During the validity of this agreement, if either of the two parties is found to have violated the stipulations herein, the other party has the right to terminate this agreement by written notice to the other party 90 days in advance.
15. Arbitration:
    
All disputes arising from the performance of this agreement shall be settled through friendly negotiation. Should no settlement be reached through negotiation, the case shall then be submitted for arbitration to the China International Economic and Trade Arbitration Commission (Beijing) and the rules of this Commission shall be applied. The award of the arbitration shall be final and binding upon both parties.

Sky zhang