Document:

Exhibit
10.7

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

Project
Statement of Work

 

This
Project Statement of Work (this “SOW”) is effective as of the 18th day of October, 2016 (“Effective
Date”) entered into by and between Hon Hai Precision Ind. Co., Ltd. (“Foxconn”), a corporation
organized and existing under the law of Taiwan, with its registered address at 5F-1, 5Hsin-An Road, Hsinchu City 300, Taiwan,
and ToughBuilt Industries Inc. formally known as Phalanx Inc. (“Purchaser”), a corporation organized
and existing under the law of the state of Nevada with its registered address at 6671 S. Las Vegas Blvd Building D, Las Vegas,
NV, 89119, USA. Foxconn and Purchaser herein will be referred to individually as the “Party” or collectively
as the “Parties”.

 

BACKGROUND

 

WHEREAS,
Foxconn, either itself or through its affiliates, is in the business of designing, manufacturing and supplying electronic products
and devices;

 

WHEREAS,
Purchaser is in the business of selling and supporting the electronic devices; and

 

WHEREAS,
Purchaser is willing to engage Foxconn to develop the Project (as defined below), and Foxconn is willing to supply the development
service in accordance with this SOW.

 

AGREEMENT

 

NOW,
THEREFORE, the Parties hereto agree as follows:

 

	1.	DEFINITION.

 

“Deliverable”
shall mean the development result or deliverables of the Project as set out in Section 4.3 hereof. “Kickoff”
shall mean the commencement of the Project, as mutually confirmed by the Parties.

 

“Milestone”
shall mean the timelines of the completion of the Deliverables as set out in Section 4.2 hereof.

 

“NRE
Fee” shall mean the amount to be paid by Purchaser to Foxconn for its development of the Project under this SOW.

 

“Project”
shall mean the development of the Product.

 

“Product”
shall mean certain rugged phone which will be with the logo “ToughBuilt” of Purchaser or its representative.

 

“Prototype”
shall mean a pre-production or pilot unit of a Product, including without limitations to, an engineering sample, design sample,
or production verification sample.

 

    	1

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

“R&R”
shall mean each Party’s role and responsibilities of the Project as set out in Section 4.1 hereof. “Specification”
shall mean the technical specification of the Product as described in Section 3 hereof.

 

	2.	PURPOSE
    OF SOW.

 

This
SOW outlines the activities to be performed by Parties regarding the development of the Project and other details thereof, including
without limitations to, Specification, R&R, Deliverables, Milestones and NRE Cost.

 

With
respect to the mass production and supply of the Product, the Parties will in good faith discuss and determine the terms and conditions
thereof and enter into a separate Supply Agreement.

 

		3.	SPECIFICATION.

 

The
Specification of the Product is as the following. In addition, Foxconn and Purchaser may in good faith review and update the Specification.
Upon completion and confirmation of any updated Specification by the Parties (as evidenced by written agreement or emails by the
authorized person for each of Foxconn and Purchaser), such updated Specification will become part of this SOW. The authorized
person(s) for Foxconn and Purchaser are as follows.

 

For
Purchaser: Michael Panosian

 

For
Foxconn: Vincent Chen

 

	Chipset	***
	Memory	***
	 	***
	 	***
	Display	***
	 	***
	 	***
	 	***
	Camera	***
	 	***
	 	***
	 	***
	 	***
	 	***
	 	***

 

    	2

    	 

    

  

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

 

	WAN	***
	 	***
	 	***
	 	***
	 	***
	 	***
	 	***
	 	***
	Connectivity	***
	 	***
	 	***
	 	***
	 	***
	 	***
	Audio	***
	 	***
	 	***
	Battery	***
	 	***
	Sensor	***
	 	***
	 	***
	 	***
	 	***
	 	***
	 	***
	Operating
    system	***

 

	4.	R&R,
    DELIVERABLES AND MILESTONES.

 

For
purposes of the development of the Project, each Party will be responsible to fulfill its development obligation in accordance
with the following R&R, the Deliverables and the Milestones. Subject to Purchaser’s fulfilling its payment obligation
as set out in Section 6 hereof, Foxconn shall in no event discontinue its development services as described herein.

 

    	3

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	4.1	R&R.
    The R&R of the Project is as agreed as below:

 

	Task	 	Purchaser	 	Foxconn
	Product
    Specification	 	Purchaser
    will create specifications compliance sheet.	 	Foxconn
    will review specifications compliance sheet and get approval of any modification from Purchaser
	 	 	 	 	 	 
	Program
    Management	 	Purchaser
    will involve in project oversight.	 	1.	Foxconn
    will create project schedule including milestone schedule
	 	 	 	 	 	2.	Foxconn
                                         will identify risks and create risk mitigation plans

         

	 	 	 	 	 	3.	Foxconn
                                         will facilitate weekly project meetings and publish weekly open action item

         

	 	 	 	 	 	4.	Foxconn
    will be responsible for resource management
	 	 	 	 	 	5.	Foxconn
                                         will provide solution of known issues and bugs

        with
        the product.

	 	 	 	 	 	6.	Foxconn
    will provide written notification of any schedule delays.
	 	 	 	 	 	7.	Foxconn
    will procure all required materials to build product according to specifications and ensure material availability and shortage
    reports for all builds.
	 	 	 	 	 	8.	Foxconn
    will load and track any issues/bugs in Mantis database. Purchaser can also load and track any issues via Mantis.
	 	 	 	 	 	 	 
	Industrial
    Design	 	1.	Purchaser
    to provide conceptual product dimensional layout.	 	1.	Foxconn
    will work with the ID provided by Purchaser. Any deviation from the initial concept must be approved by Purchaser.
	 	 	2.	Purchaser
    will provide CMF (Color Material and Finish) to Foxconn.	 	2.	Foxconn
    will provide final 3D.
	 	 	 	 	 	 	 
	Mechanical

        Engineering
	 	1.	Purchaser
    to purchase of mechanical production parts tooling and additional tooling modifications, which are required by Purchaser.	 	1.	Foxconn
    will be responsible for all mechanical design CAD files and tooling of parts.
	 	 	2.	Purchaser
    will assist and monitor ruggedized product design.	 	2.	Foxconn
                                         will test Mechanical Design for specification

        compliance
        to reliability requirements & provide report.

	 	 	3.	Purchaser
    will provide packaging design, artwork of package, label and logo related items.	 	3.	Foxconn
                                         will engineer and create CAD for packaging

        design.

	 	 	4.	Purchaser
    will sign off on final packaging.	 	 	 
	 	 	5.	Purchaser
    will sign off on final housing and accessories	 	 	 

 

 

    	4

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	Hardware
    Engineering	 	1.	Purchaser
    will define band configurations.	 	1.	Foxconn
    will be responsible for all circuit board layout and assembly, including schematic and documentation.
	 	 	2.	Purchaser
    will assist and monitor where required.	 	2.	Foxconn
    will test hardware designs for compliance of Specification & report.
	 	 	 	 	 	 	 
	Software
    Engineering	 	1.	Purchaser
    will be responsible for developing Purchaser customized application and provide to Foxconn to integrate.	 	1.	Foxconn
    will design & develop BSP/driver software (no source code provided).
	 	 	2.	Purchaser
    will provide the UI related materials including but not limited to boot animation, ringtone, wallpaper.	 	2.	Foxconn
    will provide default Android N SW without any customized applications (no source code provided).
	 	 	3.	Purchaser
    will assist and monitor where required.	 	3.	Foxconn
    will design & develop manufacturing SW (no source code provided).
	 	 	 	 	 	4.	Foxconn
    will design & develop service & repair tool software (no source code provided).
	 	 	 	 	 	 	 
	Manufacturing
    Engineering	 	Purchaser
    will assist and monitor where required.	 	Foxconn
    will have full manufacturing engineering responsibility.
	 	 	 	 	 
	Supply
    Chain Management	 	Purchaser
    will assist and monitor where required.	 	Foxconn
    will be responsible for managing the supplier relationship, product price and supplier contract.
	 	 	 	 	 
	New
                                         Products

        Purchasing
	 	Purchaser
    will be responsible for providing forecasts and purchase orders.	 	Foxconn
    will manage subcontractors and suppliers. Responsible for long lead time component lists.
	 	 	 	 	 
	Test
    Engineering	 	Purchaser
    will oversee the test design, development, and implementation.	 	Foxconn
    will create and execute test plan for product development phase to demonstrate that product specifications can be met.
	 	 	 	 	 	 
	Certification	 	Purchaser
    will be responsible for applying and obtaining the Required Certifications in Section 4.5 hereof.	 	1.	Foxconn
    will pass Google certification as required in Section 6.1 hereof.
	 	 	 	 	 	2.	Foxconn
    will be responsible for debugging for any certification failures as requires in Section 4.5 hereof.

 

	4.2	Milestones. 
    The Milestones of the Project are as agreed as below:

 

	Item

        number
	 	Milestone
    name	 	Target
    date (dd/mm/yyyy)
	1	 	***	 	01/04/2016
	2	 	***	 	01/11/2016
	3	 	***	 	30/11/2016
	4	 	***	 	27/12/2016
	5	 	***	 	21/02/2017
	6	 	***	 	12/04/2017
	7	 	***	 	28/04/2017
	8	 	***	 	28/06/2017

 

    	5

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

In
the event that Foxconn shall delay the target date of mass production of the Product for any reason caused by and attributed to
Foxconn for more than three (3) months, the Parties shall in good faith discuss and determine the compensation of the costs and
expenses incurred to Purchaser arising therefrom; provided that the total amounts of such compensation shall not exceed 100% of
the paid human resources fee.

 

	4.3	Deliverables.
                                         The Deliverables herein will include the key Deliverables as listed below and other related
                                         information and documentation:

 

	 	 	Purchaser	 	Foxconn
	Kickoff	 	1.	Product
    Specification and Requirements.	 	1.	Project
    plan and milestone.
	 	 	2.	Final
    Industrial design Requirements based on Foxconn’s Mechanical concepts.	 	2.	Mechanical
    concept drawing.
	 	 	3.	Program
    schedule.	 	3.	Program
    cost including unit cost in development/production stages, sample cost, NRE cost, Purchaser service cost.
	 	 	4.	Accessories
    list including but not limited to user manual, headphone, wall charger.	 	4.	Product
    design specification and test plan.
	 	 	 	 	 	5.	CNC
    sample 3pcs
	 	 	 	 	 	 	 
	 	 	1.	Participation
    in conference calls to discuss Program Status.	 	1.	Participation
    in weekly conference calls to discuss Program Status.
	 	 	2.	Issue
    purchase orders:	 	2.	Weekly
    meeting and meeting minute.
	 	 	 	 	a)
    Build of units for Product Development, and	 	3.	Response
    to Purchaser service strategy:
	 	 	 	 	b)
    Production phases.	 	 	 	a)
    Work with Purchaser service to create a list of parts that can be used to repair this product.
	 	 	3.	Purchaser
    service strategy:	 	 	 	b)
    Provide functional test equipment for Purchaser service.
	 	 	 	 	a)
    Work with Foxconn to determine how product will be serviced and identify repair parts if needed.	 	 	 	c)
    Spare parts plan for providing replacement parts & assemblies designated by Purchaser service.
	 	 	 	 	b)
    Provide the quantity of functional test fixtures and test software (if any) that Purchaser service will need.	 	4.	Manufacturing
    summary report.
	 	 	4.	Release
    document including Quick Start Guide.	 	5.	Certification
    pre-test report for BT, Wi-Fi, NFC, IEEE, EMI, EMC, FCC, IC, UL, PTCRB/GCF.
	 	 	 	 	 	 	6.	Label
    printing plan for Prototypes, Pilot and Production.

 

    	6

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	EVT	 	Shipment
    information.	 	1.	EDVT
    report.
	 	 	 	 	 	2.	Prototype
    50pcs (5pcs for use by Purchaser/45pcs for development by Foxconn), subject to Section 4.4 hereof.
	DVT1	 	1.	Graphics
    and artwork for package and labeling in an acceptable electronic format.	 	1.	SW
    test report.
	 	 	2.	Android
    Application APK.	 	2.	EDVT
    report.
	 	 	3.	Shipment
    information.	 	3.	MDVT
    report.
	 	 	 	 	 	4.	Prototype
    175pcs (45pcs for use by Purchaser/130pcs for development by Foxconn), subject to Section 4.4 hereof.
	 	 	 	 	 	 	 
	DVT2	 	1.	Graphics
    and artwork for package and labeling in an acceptable electronic format.	 	1.	SW
    test report.
	 	 	2.	Android
    Application APK.	 	2.	EDVT
    report (if required).
	 	 	3.	Shipment
    information.	 	3.	MDVT
    report (if required).
	 	 	 	 	 	4.	Prototype
    285pcs (100pcs for use by Purchaser/185pcs for development by Foxconn), subject to Section 4.4 hereof.
	 	 	 	 	 	5.	Design,
    built and test package proposal to Purchaser.
	 	 	 	 	 	 	 
	PVT	 	1.	Graphics
    and artwork for package and labeling in an acceptable electronic format.	 	1.	SW
    Test report.
	 	 	2.	Android
    Application APK.	 	2.	Yield
    rate report
	 	 	3.	Shipment
    information.	 		
	 	 	4	Purchase
    order by actual quantity	 	3.	Prototype
    1000pcs (165pcs for use by Purchaser/835pcs for development by Foxconn), subject to Section 4.4 hereof. The quantity of 1000pcs
    here is for reference only, and it It will be subject to further change of the actual quantity of the PVT Prototype to be
    further discussed by the Parties.

 

	4.4	Prototype.

 

		(a)	Ordering
                                         Prototypes.

 

Purchaser
may order Prototypes in connection with each build as defined in Section 4.3 hereof from Foxconn by submitting a purchase order
in accordance with the price of Prototypes as set forth in Section 6.1 hereof or otherwise as mutually agreed, and Foxconn will
manufacture and deliver each Prototype that Purchaser orders.

 

(b)
Payment term for Prototypes.

 

Purchaser
hereby agrees the payment of the Prototype will be paid in accordance with Section 6.2(g) hereof.

 

	4.5	Required
    Certifications. Except as otherwise agreed by the Parties, upon the completion of DVT2 as described in Section
    4.3 hereof, Purchaser will, at its own costs and expenses, apply and obtain the certifications required for the Product as
    set forth below (collectively, “Required Certifications”).

 

    	7

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	 	●	FCC
	 	●	GCF/PTCRB
	 	●	Wi-Fi
	 	●	NFC
	 	●	Bluetooth
	 	●	CE
    (EU Optional)

 

	4.6	All
    of the designs, including without limitations to industrial design, mechanical design, and tooling design, as customized for
    the Product and fully paid by Purchaser under this SOW will be used solely for the benefit of Purchaser and will not be used
    for any purpose other than Foxconn’s performance of its obligations in providing the design and manufacturing services
    for the Product.

 

	5.	PRODUCT
    RELEASE.

 

Upon
obtaining all Required Certifications and Purchaser’s acceptance of the Product based on the mutually agreed test plans,
Purchaser will send to Foxconn a mass production release notice of the Product.

 

	6.	NRE
    FEE.

 

	 	6.1	NRE
    Fee. In consideration of Foxconn’s development services as set out in Section 4 of this SOW, Purchaser shall be
    obliged to pay the following NRE Fee to Foxconn. The Parties hereby acknowledge and agree that (a) NRE Fee herein will not
    include any costs and expenses of Required Certification, as described in Section 4.5 hereof, and (b) the quantity and costs
    of Prototype in the following table will be subject to further change of additional demand from Purchaser. In the event that
    any Required Certification, additional Prototype or any additional service is confirmed or requested from Foxconn or any change
    of the Project, the Parties will in good faith discuss the additional fees, expenses and costs thereof.

 

6.2

 

	NRE
    Fee Category	 	USD	 	Description
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	 	 	 
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***
	***	 	***	 	***

 

    	8

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	6.2	Payment
    term of NRE Fee. Purchaser hereby agrees to pay the NRE Fee in accordance with the following:

 

	 	(a)	Human
    Resource Fee:

 

	 	I.	50%
    of the human resources fee will be due upon Kickoff; and
	 	 	 
	 	II.	The
    remaining 50% of the human resources fee will be amortized over and added to the unit price of the first 200,000 units of
    the Product sold to Purchaser; provided, however in the event that Purchaser fails to purchase the said
    200,000 units of Product within twelve (12) months from the mass production of the Product, Foxconn will have the right to
    invoice Purchaser the remaining unpaid human resources fee upon the expiration of said twelve (12) months.

 

	 	(b)	Google
    certification fee will be 100% paid upon Kickoff.
	 	 	 
	 	(c)	Fixture
    fee:

 

	 	I.	50%
    of fixtures will be paid upon Kickoff; and
	 	 	 
	 	II.	The
    remaining 50% of fixtures will be paid upon the completion of the applicable fixture.

 

	 	(d)	Lab-pretest
    fee:

 

	 	I.	50%
    of Lab-pretest will be paid on Kickoff; and
	 	 	 
	 	II.	The
    remaining 50% of Lab-pretest fee will be paid upon the completion of the applicable Lab-pretest.

 

	 	(e)	Tooling
    fee:

 

	 	I.	50%
    of tooling will be paid prior to the commencement of the tooling manufacturing; and
	 	 	 
	 	II.	The
    remaining 50% of tooling fee will be paid upon the completion of the applicable tooling.

 

	 	(f)	Certification
    fee of the Required Certification: The payment term of such certification fee will be separately discussed and determined
    by the Parties in good faith.
	 	 	 
	 	(g)	Prototype
    cost: except for PVT, the payment term of the Prototype cost is as follows:

 

	 	I.	50%
    of the Prototype cost will be prepaid no later than the Prototype lead time prior to the estimated delivery thereof for each
    respective build, and the Prototype lead time herein includes the longest component lead time, the production lead time and
    the delivery lead time for each applicable Prototype ; and

 

    	9

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

 

	 	II.	The
    remaining 50% of the Prototype cost will be amortized over and added to the unit price of the first 200,000 units of the Product
    sold to Purchaser; provided, however in the event that Purchaser fails to purchase the said 200,000 units
    of Product within twelve (12) months from the mass production of the Product, Foxconn will have the right to invoice Purchaser
    all of the remaining unpaid Prototype cost upon the expiration of said twelve (12) months.

 

	6.3	Resubmission
    of Required Certification or CTS. In the event that Foxconn shall fail to obtain the Required Certification or CTS for any
    reason caused by and attributed to Foxconn, Foxconn shall, at its own expenses, fix and correct the errors in the sample Product
    and resubmit the corrected sample Product to obtain Required Certification or CTS, as applicable.

 

	7.	T&C
    OF SUPPLYING THE PRODUCT.

 

For
the purposes of manufacturing and supplying the Products upon mass production of the Product, the following terms and conditions
shall apply.

 

	7.1	Delivery
    Term. The delivery term will be FOB Hong Kong on the basis of Incoterms 2010.
	 	 
	7.2	Payment
    Term & Standby LC.

 

(a)
Payment Term. The payment term of any payment due and payable to Foxconn by Purchaser under purchase orders of the Product
is net thirty (30) days after invoice date, provided that Purchaser shall provide an irrevocable Standby LC as described in Section
7.2 (b) hereof. Foxconn shall have the right to invoice Purchaser upon the delivery in accordance with Section 7.1 hereof, and
in the event that Purchaser fails to pay the invoices in accordance with this Section 7.2(b), Purchaser further agrees that Foxconn
may make a payment demand and have the right to draw down an amount under the LC in respect of any payment not made.

 

(b)
Standby LC.

 

No
later than the issuance of the respective purchase order of the Product, Purchaser shall cause to be issued (or amended, as applicable),
irrevocable, standby documentary letters of credit at least equal to the total value of the respective issued purchase order,
other open purchase orders, and other outstanding payments due to Foxconn for the Product purchases (“Standby LC”).
All costs incurred in connection with the issuing of LC shall be borne by Purchaser. Standby LC shall (i) be in favor of Foxconn,
as beneficiary, (ii) be issued by a bank mutually agreed upon by the Parties and confirmed by Foxconn’s bank, and (iii)
include the description that in the event that Purchaser shall fail to make the due payments to Foxconn under a purchase order
or the terms and conditions of this SOW, Foxconn will have the right to draw down an amount under Standby LC in respect of any
due payment not made to Foxconn in accordance with Section 7.2(a) hereof.

 

	7.3	Product
    Warranty.

 

	 	(a)	In-Warranty
    Product.

 

For
a period of three (3) months from Purchaser’s sales of the Product, or six (6) months upon the delivery of the Product in
accordance with Section 7.1 hereof, whichever is earlier (“Warranty Period”), Foxconn warrants that the Product
shall be free from defects in Foxconn’s design, components, and workmanship.

 

    	10

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

If
any Product does not conform to any warranty under this Section 7.3(a) hereof during the Warranty Period (“Defective
Product”), Purchaser shall deliver to Foxconn a notice to such defect. Upon the receipt of such notice by Foxconn, Foxconn
shall deliver to Purchaser an authorization to return the Defective Product to Foxconn.

 

Promptly
after the receipt of such authorization, Purchaser shall (i) send the request of Return Material Authorization (“RMA”)
as well as the descriptions of the defects, the quantity to be returned to Foxconn, and the packaging status, and (ii) upon and
to the extent of Purchaser’s s receipt of the RMA number issued by Foxconn which shall not be unreasonably withheld, Purchaser
shall, at Purchaser’s expense, return the Defective Product to Foxconn designated location in Hong Kong in accordance with
Foxconn’s instructions and Foxconn shall assume all risk of loss to the Defective Product upon Foxconn’s receipt thereof
in Foxconn designated locations in Hong Kong. Upon receipts of the Defective Product, Foxconn shall comply with the following.

 

	 	A.	look
    for the cause of any defect, imperfection or inadequacy in the Product when requested to do so by Purchaser;
	 	 	 
	 	B.	at
    Foxconn’s decision, repair or replace the Defective Product; and
	 	 	 
	 	C.	return
    the repaired or replaced Product to Purchaser’s designated Hong Kong site at Foxconn’s own costs.

 

	 	(b)	Warranty
    Exclusion.

 

Notwithstanding
the foregoing, Foxconn shall have no warranty obligation under Section 7.3 (a) with respect to any Product to the extent any
defect in the Product was caused by:

 

	 	A.	an
    incorrect or improper use, maintenance or installation of the Product;
	 	 	 
	 	B.	accident
    or natural causes;
	 	 	 
	 	C.	modifications
    or repairs carried out by any party other than Foxconn or its affiliates;
	 	 	 
	 	D.	modification,
    deletion or illegibility of the model or serial number, except that Purchaser provides the written evidence proving the defective
    Product shall be within the Warranty Period ;
	 	 	 
	 	E.	breakdown
    attributable to the use of accessories or devices not authorized by Foxconn;
	 	 	 
	 	F.	any
    defect in the components consigned, designated or sold by Purchaser, if any; or
	 	 	 
	 	G.	any
                                         defect in the Purchaser provided design or technology used or incorporated into the Product,
                                         if any.

         

 

	 	(c)	Out-of-Warranty
    Product.

 

This
out-of-warranty provision applies to (i) the Product that is damaged, defected or caused to malfunction that are not attributable
to Foxconn in accordance with Sections 7.3 (a) and 7.3 (b) above, or (ii) the Product that shall be found defective after the
Warranty Period as set forth in Section 7.3 (a). Both Parties hereby agree that out-of-warranty Product returned for repair or
replacement by Purchaser shall be billed based on the Foxconn’s repair quotation as discussed by both Parties.

 

    	11

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	7.4	MPA.

 

In
addition to Sections 7.1 through 7.3 hereof, the Parties shall discuss and negotiate other terms and conditions for manufacturing
and supplying the Product to Purchaser by entering into a Master Supply Agreement.

 

	8.	CONFIDENTIALITY.

 

During
the term of this SOW, the Parties will comply with the terms and conditions of Confidentiality and Non-disclosure Agreement dated
as of January 5th, 2016 (“NDA”). The Parties shall keep the terms of this SOW and any non-public information
relating to the performance of this SOW identified confidential in accordance with the terms of the NDA. Notwithstanding anything
to the contrary in the NDA, the term of the NDA shall continue as long as this SOW is in force.

 

	9.	BINDING
    EFFECT.

 

This
SOW sets forth the understanding of the Parties and supersedes any and all prior or contemporaneous agreements, discussions, communications
and representations, whether written, oral or otherwise, of the Parties with respect to the subject(s) of this SOW. This document
shall have legal binding effect on the Parties.

 

	10.	TERMINATION.

 

This
SOW shall be effective from the Effective Date as set first above until earlier termination determined by both Parties in writing.
In the event that the Project or this SOW shall be terminated by Purchaser, Purchaser’s payment obligation for the NRE Fee
will be limited to the portions of development work completed by Foxconn.

 

	11.	NON-ASSIGNMENT.

 

Neither
Party shall assign any of its rights, or delegate any of its obligations, under this SOW or purchase order, to a third party in
any form whatsoever without the prior written consent of the other Party, which shall not be unreasonably withheld.

 

	12.	GOVERNING
    LAW.

 

This
SOW shall be governed by and construed and enforced in accordance with the laws of the State of California, County of Los Angeles,
without regard to principles of conflicts of law. The Parties explicitly agree that the provisions of the United Nations Convention
on Contracts for International Sale of Goods (CISG) shall not apply to this SOW.

 

    	12

    	 

    

 

[***]
INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE COMMISSION

 

FOXCONN
CONFIDENTIAL

 

	13.	PUBLICITY.

 

Neither
Party may publicize or release any information in relation to this SOW except with the other Party’s prior written consent.

 

	14.	GENERAL
    PROVISIONS.

 

	14.1	Relationship
    of the Parties. Foxconn shall perform its obligations under this SOW as an independent contractor of Purchaser. Nothing
    contained in this SOW is intended or shall be construed to create any partnership, joint venture or agency relationship between
    the Parties. Nothing contained in this SOW is intended or shall be construed to confer upon or give any person or entity other
    than the Parties any rights under or by reason of this SOW.
	 	 
	14.2	Entire
    Agreement. This SOW constitutes the entire agreement between the Parties with respect to the subject matter hereof and
    supersedes any previous oral or written agreements with respect to the subject matter hereof, including without limitation
    any nondisclosure agreements, memorandums of understanding or letters of intent between the Parties with respect to the subject
    matter hereof.
	 	 
	14.3	Counterparts
    and Signatures. The Parties may execute any number of counterparts to this SOW, each of which shall be deemed to be an
    original, and all of which together shall constitute one and the same agreement. A copy or facsimile of the signature on this
    SOW of any authorized representative of either Party shall have the same force and effect as an original thereof.

 

IN
WITNESS WHEREOF, this SOW has been executed by:

 

	Hon
    Hai Precision Industry Co., Ltd.	 	ToughBuilt
    Industries Inc.
	 	 	 	 	 
	Name:	 	 	Name:	/s/
    Michael Panosian
	Title:	 	 	Title:	CEO
	Date:	 	 	Date:	10-18-2016

 

    	13Lock-Up
Agreement

________,
2018

 

Joseph
Gunnar & Co., LLC

30 Broad Street, 11th Floor

New York, New York 10004

 

Ladies
and Gentlemen:

 

The
undersigned understands that Joseph Gunnar & Co., LLC (the “Representative”) proposes to enter into an
Underwriting Agreement (the “Underwriting Agreement”) with TOUGHBUILT Industries Inc., a Nevada corporation
(the “Company”), providing for the initial public offering (the “Public Offering”) of shares
(the “Shares”) of common stock, par value $0.0001 per share, of the Company (“Common Stock”).

 

To
induce the Representative to continue its efforts in connection with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the undersigned will not, during the period commencing on the date hereof
and ending 180 days after the date of the final prospectus (the “Prospectus”) relating to the Public Offering
(the “Lock-Up Period”), (1) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares
of Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter
acquires the power of disposition (collectively, the “Lock-Up Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities,
whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash
or otherwise; (3) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities; or (4)
publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge
or other arrangement relating to any Lock-Up Securities. Notwithstanding anything in this agreement to the contrary, Lock-Up Securities
shall not include (a) securities of the Company acquired in open market transactions after the completion of the Public Offering
or (b) securities (and the shares of Common Stock thereunder, if any) purchased in the Public Offering. Notwithstanding anything
herein to the contrary, and subject to the conditions hereunder, the following transactions shall not be prohibited by this agreement:
(aa) transfers of Lock-Up Securities as a bona fide gift, by will or intestacy or to a family member or trust for the benefit
of a family member (for purposes of this lock-up agreement, “family member” means any relationship by blood, marriage
or adoption, not more remote than first cousin); (bb) transfers of Lock-Up Securities to a charity or educational institution;
or (cc) if the undersigned, directly or indirectly, controls a corporation, partnership, limited liability company or other business
entity, any transfers of Lock-Up Securities to any shareholder, partner or member of, or owner of similar equity interests in,
the undersigned, as the case may be; provided that in the case of any transfer pursuant to the foregoing clauses (b), (aa),
(bb) or (cc), (i) any such transfer shall not involve a disposition for value, (ii) each transferee shall sign and deliver to
the Representative a lock-up agreement substantially in the form of this lock-up agreement and (iii) no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s Lock-Up
Securities except in compliance with this lock-up agreement.

 

    	 

    	 

    

 

The
undersigned agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this
lock-up agreement during the period from the date hereof to and including the 34th day following the expiration of
the Lock-Up Period, the undersigned will give notice thereof to the Company and will not consummate any such transaction or take
any such action unless it has received written confirmation from the Company that the Lock-Up Period has expired.

 

If
the undersigned is an officer or director of the Company, (i) the undersigned agrees that the foregoing restrictions shall be
equally applicable to any issuer-directed or “friends and family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representative agrees that, at least three (3) business days before the effective date of any release
or waiver of the foregoing restrictions in connection with a transfer of Lock-Up Securities, the Representative will notify the
Company of the impending release or waiver; and (iii) the Company has agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at least two (2) business days before the effective date of the
release or waiver. Any release or waiver granted by the Representative hereunder to any such officer or director shall only be
effective two (2) business days after the publication date of such press release. The provisions of this paragraph will not apply
if (a) the release or waiver is effected solely to permit a transfer of Lock-Up Securities not for consideration and (b) the transferee
has agreed in writing to be bound by the same terms described in this lock-up agreement to the extent and for the duration that
such terms remain in effect at the time of such transfer.

 

No
provision in this agreement shall be deemed to restrict or prohibit the exercise, exchange or conversion by the undersigned of
any securities exercisable or exchangeable for or convertible into Shares, as applicable; provided that the undersigned
does not transfer the Shares acquired on such exercise, exchange or conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no provision herein shall be deemed to restrict or prohibit the
entry into or modification of a so-called “10b5-1” plan at any time (other than the entry into or modification of
such a plan in such a manner as to cause the sale of any Lock-Up Securities within the Lock-Up Period).

 

The
undersigned understands that the Company and the Representative are relying upon this lock-up agreement in proceeding toward consummation
of the Public Offering. The undersigned further understands that this lock-up agreement is irrevocable and shall be binding upon
the undersigned’s heirs, legal representatives, successors and assigns.

 

The
undersigned understands that, if the Underwriting Agreement is not executed by September 30, 2018, or if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery
of the Shares to be sold thereunder, then this lock-up agreement shall be void and of no further force or effect.

 

    	 

    	 

    

 

Whether
or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will
only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the
Representative.

 

	 	Very
    truly yours,
	 	 
	 	 
	 	(Name
    - Please Print)
	 	 
	 	 
	 	(Signature)
	 	 
	 	 
	 	(Name
    of Signatory, in the case of entities - Please Print)
	 	 
	 	 
	 	(Title
    of Signatory, in the case of entities - Please Print)

 

	 	Address:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00285-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00285-of-00352.parquet"}]]