Legal Instruction to Manufacture

LEGAL INSTRUCTION TO MANUFACTURE

This Legal Instruction to Manufacture (the Instruction) is made and entered into as of by and between Client Name: with principal place of business at and Manufacturer Name: with principal place of business at .

RECITALS

WHEREAS, Client has developed certain designs, specifications, tooling information and confidential technical data relating to the Products described in this Instruction and desires to engage Manufacturer to manufacture such Products in accordance with the terms of this Instruction;

WHEREAS, Manufacturer represents that it has the facilities, personnel, equipment and expertise necessary to manufacture the Products to the specifications, schedules and quality standards required by Client;

WHEREAS, the parties desire to set forth their respective rights and obligations with respect to the manufacture, delivery, inspection, intellectual property, confidentiality and payment for the Products.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Instruction, the following terms shall have the following meanings:

"Products" means the items to be manufactured as described in the Specifications and Purchase Instructions provided by Client to Manufacturer.

"Specifications" means the technical drawings, bills of materials, tolerances, test procedures and any approved change orders delivered by Client and incorporated into this Instruction.

2. INSTRUCTION TO MANUFACTURE

Client hereby instructs Manufacturer to manufacture the Products strictly in accordance with the Specifications. Manufacturer shall manufacture the Products only upon receipt of written production orders or release documents issued by Client in the form specified in Section 4 (each, a Production Order).

3. SPECIFICATIONS, TOOLING AND CHANGE ORDERS

Manufacturer shall strictly comply with the Specifications provided by Client. Manufacturer shall not modify, deviate from, or alter the Specifications without Client's prior written approval, which may be given or withheld in Client's sole discretion. All tooling, molds, fixtures and prototypes supplied by Client shall remain Client property and shall be identified and returned upon termination unless otherwise agreed in writing.

4. PRODUCTION ORDERS; SCHEDULE; DELIVERY

Production Orders shall specify quantities, required delivery dates, shipping terms and any special packaging or marking requirements. Manufacturer shall adhere to the production and delivery schedule included in each Production Order and shall notify Client promptly in writing of any actual or anticipated delay.

5. INSPECTION, ACCEPTANCE AND REJECTION

Client and its designated representatives shall have the right to inspect, audit and test Products at Manufacturer's facility during normal business hours. Delivery is subject to final acceptance by Client at the delivery location following inspection and testing. Client may reject nonconforming Products and require repair, replacement or credit at Manufacturer's expense. Rejected Products shall be returned to Manufacturer at Manufacturer’s expense if so directed by Client.

6. QUALITY CONTROL AND WARRANTY

Manufacturer warrants that all Products supplied hereunder shall conform to the Specifications, be free from defects in material and workmanship and be merchantable and fit for their intended purpose. The warranty period shall be as specified in the applicable Production Order or, if not specified, for a period of twelve (12) months from delivery.

7. INTELLECTUAL PROPERTY; LICENSE

All intellectual property rights in the Specifications, designs, tooling and Client-provided materials shall remain the exclusive property of Client. Manufacturer is granted a limited, nonexclusive, nontransferable license to use Client's intellectual property solely to perform its obligations under this Instruction and for no other purpose. Any improvements, modifications or inventions developed by Manufacturer in direct connection with the manufacture of the Products shall be assigned to Client, and Manufacturer shall execute such instruments as may be reasonably required to effect assignment.

Check if Manufacturer is authorized to produce Products for resale under a separate written license agreement.

8. CONFIDENTIALITY

Manufacturer shall keep confidential and shall not disclose to any third party any Confidential Information received from Client, including but not limited to Specifications, tooling, processes, drawings and pricing, except as necessary to perform the manufacturing services and subject to written confidentiality obligations at least as protective as those contained herein. Confidential Information shall not include information that is or becomes publicly known through no breach by Manufacturer or that Manufacturer can demonstrate was independently developed.

9. PRICING, INVOICING AND PAYMENT

Prices for each Production Order shall be set forth in the applicable Production Order and shall include all labor, materials, tooling amortization (if applicable), packaging and customary testing unless otherwise specified. Manufacturer shall submit invoices in the form required by Client. Unless otherwise agreed in writing, Client shall pay properly submitted undisputed invoices within thirty (30) days of Client's receipt of invoice and accepted Products.

10. TAXES AND DUTIES

Unless otherwise stated in a Production Order, prices exclude applicable taxes, duties and other governmental charges. Each party shall be responsible for its own taxes, except that Manufacturer shall be responsible for taxes based on Manufacturer's income and Client shall be responsible for sales, use or value added taxes imposed on the sale of the Products.

11. TERMINATION

Either party may terminate this Instruction for material breach by the other party if such breach is not cured within thirty (30) days after written notice. Client may terminate for convenience upon thirty (30) days' written notice and shall pay Manufacturer for Products completed and reasonable costs incurred prior to termination, subject to Client's rights to offset for nonconforming work.

12. INDEMNIFICATION

Manufacturer shall indemnify, defend and hold Client and its officers, directors and affiliates harmless from and against any third-party claims, liabilities, damages, losses and expenses (including reasonable attorneys' fees) arising out of (a) Manufacturer's breach of this Instruction, (b) defects in the Products, or (c) Manufacturer's negligence or willful misconduct.

13. INSURANCE

Manufacturer shall maintain insurance coverages customary for the industry, including commercial general liability, product liability and workers' compensation, in amounts sufficient to protect Client from claims arising from Manufacturer's performance. Manufacturer shall provide certificates of insurance upon request.

14. COMPLIANCE WITH LAWS

Manufacturer shall comply with all applicable laws, rules, regulations and industry standards in performing its obligations under this Instruction, including export control and environmental laws. Manufacturer shall obtain and maintain all permits, licenses and approvals required to perform manufacturing services.

15. RECORDS AND AUDIT RIGHTS

Manufacturer shall maintain accurate books and records relating to the manufacture of Products and shall retain such records for a period of no less than five (5) years. Client shall have the right to audit such records upon reasonable notice during normal business hours to verify compliance with this Instruction.

16. NOTICES

Any notice, demand or communication required or permitted under this Instruction shall be in writing and shall be delivered by hand, commercial overnight carrier, or certified mail, return receipt requested, to the addresses set forth below or to such other address as a party may designate in writing.

17. AMENDMENTS; WAIVER

No amendment, modification or waiver of any provision of this Instruction shall be effective unless in writing and executed by both parties. The failure of either party to enforce any provision shall not constitute a waiver of future enforcement of that or any other provision.

18. GOVERNING LAW

This Instruction shall be governed by and construed in accordance with the laws of the State specified below without regard to conflict of law principles.

19. ENTIRE AGREEMENT; SEVERABILITY

This Instruction, together with any referenced Production Orders and attachments, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior and contemporaneous agreements, understandings and communications. If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force and effect.

20. COUNTERPARTS

This Instruction may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

EXECUTION

The persons signing below represent and warrant that they are duly authorized to execute this Instruction on behalf of their respective parties.

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