This Distributorship Agreement (“Agreement”), effective as of ___________ , is between China Hongyang Group (“HONGYANG”), a company located at NO.3,Gaoxiang Road, Hi-Technology Industry Zone,Ouhai District,Wenzhou City, 325006, China, and ___________________
authorized distributor (“Distributor”), with headquarters at _________________

This Agreement has been developed because HONGYANG wishes to sell certain products to its customers through distribution, and believe that Distributor can sell such products and service such sales effectively.

By its execution of this Agreement Distributor accepts its appointment as a HONGYANG’s exclusive distributor on the terms and subject to the conditions set forth in this Agreement.

                            THE PARTIES AGREE AS FOLLOWS:

1. APPOINTMENT OF DISTRIBUTOR

2. HONGYANG’S OBLIGATIONS TO DISTRIBUTOR

3. DISTRIBUTOR’S OBLIGATIONS TO HONGYANG

4. ORDER TERMS AND RETURNS

5. WARRANTY;REMEDY;LIMITATION OF LIABILITY

6. TERM AND TERMINATION

7. MISCELLANEOUS

1. APPOINTMENT OF DISTRIBUTOR
HONGYANG hereby appoints Distributor as an exclusive distributor of Hongyang’s
products (“Products”), together with such other products as HONGYANG may designate from time to time by notice to Distributor and Distributor accepts such appointment. Distributor’s authorized sales territory is the geographical area of
(“Territory”).

2. HONGYANG’S OBLIGATIONS TO DISTRIBUTOR
HONGYANG represents that it is equipped to extend the following services to Distributor:
2.1 The availability of qualified technical assistance.
2.2 Maintenance of high standards of product quality.
2.3 The availability of education and sales assistance for the Distributor’s sales representatives.

3. DISTRIBUTOR’S OBLIGATIONS TO HONGYANG
The Distributor represents that its place of business is equipped to extend at least the following services to HONGYANG and Distributor acknowledges that breach of any of the following obligations is material to improper performance hereunder and shall constitute grounds for termination by HONGYANG.
3.1 Maintain a satisfactory credit relationship with HONGYANG
3.2 Maintain warehouse facilities, delivery facilities and stock of Product adequate to provide customer service out of Distributor’s stock.
3.3 Maintain well trained, competently directed and managed sales representatives qualified to serve the markets intending to be reached.
3.4 Sell, promote and advertise HONGYANG products to best generate increased sales of these products. Neither Distributor nor any of its sales representatives will disparage HONGYANG products, but rather will promote them in a manner and with the energy necessary to create as widespread a demand as possible.
3.5 Distributor’s accumulative orders for HONGYANG’ Products during the effective period of this Agreement should be no less than US$ .
3.6 Annually review previous year’s sales and agree to a minimum acceptable sales level for the ensuing year commensurate with the overall sales of Products and sales by other Distributors of Products.
3.7 Cooperate with HONGYANG in preparing reports, order forecasts, and other information concerning sales. Distributor shall follow all reasonable recommendations as to marketing policy and shall take such action(s) to preserve and enhance HONGYANG’ good will and reputation as HONGYANG reasonably may request.
3.8 Provide HONGYANG with monthly sell reports showing the dollar amount and geographical location of each shipment of HONGYANG product within 30 days of the end of month.

4. ORDER TERMS AND RETURNS
4.1 Initial Stocking Order. Initial Distributor stocking order is for a minimum of US$ . Distributor will issue the initial order at the time this agreement is signed.
4.2 Orders. Orders by Distributor shall be subject to acceptance by HONGYANG. Excepts as modified by this Agreement, all orders shall be accepted subject to the terms and conditions of HONGYANG’ then current Terms and Conditions of Sale (“Order Terms”).
4.3 Price and Terms. The price and terms to Distributor for Products shall be the published Authorized Distributor Price List in effect on the date of acceptance of an initial order by HONGYANG. Any price or term maybe changed by HONGYANG upon thirty (30) days written notice to Distributor.
4.4 Price Increase. Distributor will receive notice of a price increase thirty (30) days in advance and may order at the old (lower) price until the effective date of the price change. Product ordered for deliveries beyond the effective date of the price change cannot be scheduled by Distributor to ship more than thirty (30) days after the effective date of the price change at the old (lower) price.
4.5 Returns. Distributor may return any Product that does not comply with applicable HONGYANG specifications due to HONGYANG’ fault.

5. WARRANTY;REMEDY;LIMITATION OF LIABILITY
5.1 Limited Warranty. HONGYANG warrants HONGYANG Products to be free from defective materials and workmanship for a period of one year from date of delivery. Any part found to be defective should be returned to HONGYANG by prepaid transportation. If part is found to be defective, it will be replaced on a no charge basis. Warranty does not cover labor costs of removing part or replacing new part.
5.2 Limitation of Liability In no event, including breach or non-fulfillment of the foregoing limited remedy, shall HONGYANG be liable for loss of profits of indirect, incidental, consequential or special damages of any kind.

6. TERM AND TERMINATION
6.1 Events of Termination. This Agreement shall remain in effect for the period commencing on the date first written above and expiring December 31 of the same year. This Agreement shall automatically be extended for additional, consecutive terms of one year, unless prior to the thirtieth (30th) day before the end of the initial term or of any succeeding term, as the case may be, either party to this Agreement gives written notice to the other party that the Agreement gives notice to the other party that the Agreement will not be renewed beyond the then current term. In such event, this Agreement shall terminate at the end of such term.
In addition, this Agreement maybe terminated as follows:
(a) By Distributor or HONGYANG for any reason upon ninety (90) days prior written notice;
(b) By mutual consent in writing at any time;
(c) By either party immediately upon the giving of notice that the other party is in breach of any of its material obligations under this Agreement order the Order Terms and Conditions.
(d) By HONGYANG immediately (i) if, without HONGYANG’ prior written consent, control of more than twenty-five (25) percent of the ownership of Distributor or substantially all of Distributor’s assets are transferred to a person or entity; (ii) f any proceeding in bankruptcy, reorganization or arrangement for the appointment of a receiver or trustee to take possession of Distributor’s assets or any other proceeding under any law for the relief of creditors shall be instituted by or against Distributor; or (iii) if Distributor shall make an assignment for the benefit of its creditors.
Distributor agrees that Distributor shall given notice to HONGYANG of the occurrence of any event of the type described in Section 6.1 (d) above.
6.2 Rights and Obligations upon Termination. All orders from Distributor not shipped on the date that notice of termination of this Agreement is delivered or on the date that this Agreement otherwise terminates may be deemed canceled at HONGYANG’ discretion.
Upon termination of this Agreement, Distributor shall cease all conduct, which might cause anyone to believe that Distributor is a distributor of Products or otherwise connected with HONGYANG.

7. MISCELLANEOUS
7.1 Any dispute arising from or in connection with the Agreement shall be settled through friendly negotiation. In case no settlement can be reached, the dispute shall then be submitted to China International Economic and Trade Arbitration Commission (CIETAC), Shenzhen Commission for arbitration in accordance with its rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
7.2 Waiver. Any waiver by either party to this Agreement of any provision of this Agreement shall not be construed as a wavier of any other provision of this Agreement, nor shall such waiver be construed as a waiver of such provision with respect to any other event or circumstance, whether past, present or future.
7.3 Severability. If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, the remaining provisions shall be enforceable to the maximum extent possible.
7.4 Force Majeure Neither HONGYANG nor Distributor shall be liable for the failure to perform its obligations under this Agreement due to events beyond its reasonable control including, but not limited to, strikes, riots, wars, fire, acts of God, and acts in compliance with any applicable law, regulation, or order (whether valid or invalid) of any governmental body.
7.5 Use of Trademarks and Copyrighted Material. Distributor shall not use or permit to be used by any person any trademarks, service marks, or trade names of HONGYANG without HONGYANG’ prior written consent. Distributor shall not make any copies of HONGYANG’ copyrighted material including, but not limited to, any printed matter concerning any product, without HONGYANG’ prior written consent.
7.6 Notices Any notice contemplated by or made pursuant to this Agreement shall be in writing and shall be transmitted via FAX or major international overnight or two-day delivery service. Notice shall be deemed delivered one day after transmission of FAX or three days after consignment to delivery service, all fees prepaid, addressed to Distributor headquarters or HONGYANG, as the case may be, at the address shown at the beginning of this Agreement or such other address as shall be designated by at least thirty (30) days written notice.
7.7 The Distributor shall not directly or indirectly sell or distribute the same or similar products produced or supplied by other companies in China.
7.8 No part of HONGYANG products shall be sold to anybody, company or corporate body in _______directly or indirectly without full knowledge and consent of ____________. Indirectly includes obtaining or collecting HONGYANG products through another agent in China to obtain the same Hongyang products or spare parts.
7.9 This Agreement is in Two (2) copies held by the HONGYANG and the Distributor respectively.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives and it will be effective as of the date first above written.