RECIPROCAL EXCLUSIVE DEALING AGREEMENTExclusivity No Shop Agreement |
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Exhibit 10.1
RECIPROCAL EXCLUSIVE DEALING AGREEMENT
This
Agreement is made effective on the 12th
day of March, 2005 between GENTEX
OPTICS, INC. (“Gentex”), a Delaware corporation, with an office at
324 Main Street, Simpson, PA 18407, ESSILOR INTERNATIONAL COMPAGNIE GENERALE
D’OPTIQUE, S.A. (“Essilor”), a limited entity known as a
Societé Anonyme, with its commercial seat at 147 rue de Paris,
Charenton, Cedex 94227 France, both on the one hand, and OAKLEY, INC.
(“Oakley”), a Washington corporation with principal offices at One
Icon, Foothill Ranch, CA 92610, on the other hand.
INTRODUCTION
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A. |
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Gentex is an
indirect, wholly-owned subsidiary of Essilor. |
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B. |
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Gentex
manufactures eyewear lenses and has previously sold lenses to Oakley and desires
to continue to be the sole supplier to Oakley and its
“Affiliates” (as hereinafter defined) of all their requirements
for the Products (as hereinafter defined) that are the subject of this
Agreement. |
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C. |
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Oakley has
previously purchased substantially all its Decentered Lenses from Gentex, and
during the “Term” (as hereinafter defined) of this Agreement (and
any extension or renewal thereof, as hereinafter provided), Oakley desires to
purchase and to have its Affiliates purchase all of their respective
requirements of the Products, except as otherwise provided herein. |
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D. |
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Subject to
certain exceptions, Gentex is willing to cease selling the Products to any
other “Entity” (as hereinafter defined). |
THE PARTIES HEREBY AGREE AS
FOLLOWS:
1. Definitions
used in this Agreement
(a) “Affiliate”
of an “Entity” (as hereinafter defined) means any Entity which
directly or indirectly controls, is controlled by, or is under common control
with such Entity.
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(b)“Bailment
Agreement” means the separate Agreement between the parties that governs
their respective rights and obligations with respect to Vendor Managed
Inventory (VMI) held at Oakley.
(c) “Contract
Year” means the period commencing with the “Effective Date”
hereof (April 1, 2005) and continuing for 12 months, and each of the
four immediately following twelve month periods.
(d) “Decentered
Lenses” means *
(e) “Effective
Date” means April 1, 2005.
(f) “Entity”
means any individual, proprietorship, partnership, corporation or other entity
whether or not of limited liability
(g) “Force
Majeure” means an occurrence beyond the reasonable control of a Person,
including, without limitation, fire, strike, directives of any governmental
authority, civil or military war, insurrection, riot, embargoes, shortages,
delays in transportation, or inability to obtain necessary labor, materials, or
manufacturing facilities.
(h) “Hard
Coat” means *
(i) “Minimum
Purchases” means *. In the event of early Termination of this Agreement
during a Contract Year or Renewal Year, the Minimum Purchases for such Contract
Year or Renewal Year, as the case may be, shall be prorated.
(j) “Optical
Standards” means those standards as set forth in schedule-hereto
specifying the minimum optical standards of the products to be supplied by
Gentex under this Agreement.
(k) “Period
of Exclusivity” means the period commencing on the Effective Date and
ending on the earlier of the end of the Term or the effective date of
termination, in all events subject to earlier termination as provided in this
Agreement.
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* |
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Material omitted pursuant
to a request for confidential treatment and filed separately with the
Securities and Exchange Commission. |
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(l) “Plano”
means non-glass, non-powered lenses and lens blanks which are or are intended
to be made into non-corrective, non-ophthalmic, non-powered, non-glass lenses.
(m) “Polarized
Decentered Lenses” means Decentered Lenses that have a polarizing
function.
(n) “Products”
means the lenses listed on Schedule A hereto.
(o) “Purchaser”
means Oakley and any Affiliate of Oakley that purchases The Products from
Gentex or any Affiliate of Gentex.
(p) “Renewal
Year” means the 12 month period immediately following the end of the
fifth Contract Year, and each 12 month period thereafter, commencing on
the day following the end of the fourth Contract Year and each one year
anniversary thereof, until this Agreement is terminated, as hereinafter
provided.
(q) “Seller”
means Gentex or any Affiliate of Gentex that sells Product to a Purchaser.
(r) “Shields”
means Plano in single or twin lens form which is used or is designed to be used
as a one-piece eye shield.
(s) “Stocking
Level” means that level of inventory requested by Oakley to be delivered
to Oakley into VMI.
(t) “Technology”
means technology or technical information in the possession of Gentex or
Essilor or their Affiliates not available from a “Third Person” (as
hereinafter defined) which is used principally in the manufacture of The
Products, but does not include Hard Coat, photochromic or other coatings,
applications or processes (other than profiling or orienting the Lens) which
are undertaken upon or made or applied to lenses after they have been molded.
(u) “Toric”
means lenses which are curved about each of two substantially perpendicular
axes, each with a different radius.
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(v) “Unit”
means a pair (two) of The Products or a single Shield.
(w) “VMI”
means Vendor Managed Inventory that will be held at Oakley’s warehouse,
subject to the provisions of the Bailment Agreement.
2. Exclusive
Dealing in The Products. Subject to the remaining provisions of this
Agreement, during the Period of Exclusivity.
(a) Oakley
and its Affiliates will purchase from Gentex, and Gentex will use commercially
reasonable best efforts to sell and supply to Oakley and its Affiliates, all
the requirements of Oakley and its Affiliates for the Products. It being understood
that the requirements of Oakley and its Affiliates for the subject Lenses is
determined solely by Oakley but that Oakley and its Affiliates will not
purchase the subject Lenses from anyone besides Gentex and its Affiliates,
except as expressly permitted by other provisions of this Agreement;
(b) Gentex
will not sell or otherwise supply any other Entity with the Products, except as
expressly permitted by other provisions of this Agreement.
(c) Oakley
will not purchase the Products from any Entity other than Gentex or its
Affiliates, except as provided herein and in 4(b). However, Oakley has the
right to manufacture decentered lenses contingent on meeting the defined
minimum Purchases. If Oakley fails to meet the minimum Purchases in any given
year, the parties will enter into negotiations as subject to section 5(b).
3. Conditions
to Oakley Obligation to Purchase From Gentex Only
(a) The
obligation of Oakley and its Affiliates to purchase all of their respective
requirements of the subject Lenses from Gentex, or from any Affiliate of Gentex
on a temporary bases, is conditioned upon Gentex supplying the Products to
Oakley and its Affiliates (i) of a quality consistent with the
specifications and the quality standards as set forth in Schedule B,
attached hereto, and as revised from time to time pursuant to the Mutual
Agreement of the parties and (ii) Gentex supplying the Products in the
quantities specified within the delivery schedule specified provided that
sufficient time is given by Oakley to Gentex consistent with the past practice
between Oakley and Gentex and pursuant to the Bailment Agreement between the
parties.
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(b) As
a condition to the obligations of Gentex in Subsection 3(a) hereof: Oakley will
provide Gentex with a written three month rolling forecast which will include
Oakley’s best estimate of its requirements for the subsequent three
months. Said forecast will be provided to Gentex in writing by the 15th of each
month. The forecast will include an estimate of Oakley’s monthly
requirements by geometry and color.
(c) Oakley
will periodically provide Gentex with a requested Stocking Level to be
maintained in VMI.
(d) Gentex
will use commercially reasonable best efforts to provide Products to maintain
the current Stocking Level requested by Oakley.
(e) The
prices for the products shall be as identified on Schedule A attached
hereto as revised pursuant to the terms of this Agreement and/or the mutual
agreement of the parties.
4. Purchases
from Affiliates and Third Parties
(a) If,
for any reason, Gentex is, from time to time, unable to satisfy the provisions
of Subsection 3(a), despite commercially reasonable best efforts to do so, then
Gentex will promptly notify Oakley and may designate one or more Affiliates of
Gentex to supply Products to Oakley and its Affiliates, but only for so long as
Gentex is unable to supply Oakley and its Affiliates therewith in accordance
with Section 3 hereof.
(b) If
Gentex and Gentex’s Affiliates are unable to satisfy Subsection 3(a) with
respect to any Product, for a period of not less than 60 days (“Grace
Period”), the Oakley may thereafter notify Gentex to that effect. Such
notice will specify in what respects Gentex continues to fail to satisfy
Subsection 3(a) hereof at the end of the Grace Period, including identifying
the provision or provisions thereof which have not been complied with by
Gentex, and the facts on which Oakley has based such determination. The parties
will discuss in good faith Oakley’s contentions and concerns. Gentex will
have the period specified in such notice from Oakley (“Cure
Period”) (but not less than 180 days as same may be extended in
writing on the basis of the discussions between the parties) within which to
again comply with the provisions of Subsection 3(a) cited by Oakley. If Gentex
(or its Affiliates) are still unable to comply with Section 3(a) at the
expiration of the Cure Period, Oakley by notice to Gentex may terminate this
Agreement at any time thereafter. In no event will damages be payable by Gentex
to Oakley as a result of such termination and failure to satisfy Subsection
3(a) if Gentex has used its commercially reasonable best efforts.
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(c) From
the commencement of the Cure period with respect to a particular type of
Product, through the expiration of the thirtieth (30) day after the date
on which Gentex is able to satisfy Subsection 3(a) with respect to such
Product, Oakley and its Affiliates may purchase such Product type from any
Entity other than Gentex and its Affiliates or may manufacture its own Product
of that type for its own use. The number of Units purchased by Oakley and/or its
Affiliates from others or manufactured by Oakley and/or its Affiliates pursuant
to this Subsection, will be deducted from the Minimum Purchases required during
the Contract Year and/or Renewal Year in which such Products were so
manufactured or so purchased from others.
5. Minimum
Purchases
(a) In
each Contract Year during the Term, Oakley and its Affiliates agree to purchase
the minimum purchases from Gentex and its Affiliates of the Products.
(b) If,
at the expiration of any Contract Year the actual purchases by Oakley and its
Affiliates exceed the Minimum Purchases for such year, then such excess, (up to
a maximum of ten percent (10%), will be applied to reduce the Minimum Purchases
required in the immediately subsequent Contract Year. If the actual purchases
by Oakley and its Affiliates do not meet the Minimum Purchases for any Contract
Year, but said shortfall equals five percent (5%) or less of the Minimum
Purchases, then the amount of the shortfall will be added to the Minimum
Purchases for the following Contract Year. If Oakley’s actual purchases
or any Contract Year fall more than five percent (5%) below the Minimum
Purchases amount, then the parties agree that they will enter into good faith
negotiations regarding a modification of the Purchase Prices, as defined in the
Bailment Agreement. If Oakley’s actual purchases during any Contract Year
fall more than 25% below the Minimum Purchases amount, then Gentex may elect to
terminate this Agreement by giving Oakley no less than one year’s written
notice. During this notice period, the Parties shall negotiate in good faith to
agree upon a new Purchase Price. Failing written agreement on a new Purchase
Price, the Agreement will terminate at the end of the one year notice period.
6. Hard
Coat
(a) Oakley
will have the exclusive right to purchase from Gentex as far and/or their
respective Affiliates the Products with Hard Coat applied at no additional
cost. Products ordered without Hard Coat will be supplied at the cost as listed
on Schedule A hereto with no additional cost.
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(b) Except
as permitted by other provisions of this Agreement, Gentex will not supply Hard
Coat to any other Entity for use on Decentered Lenses and, if it is determined
that any Person is using such Hard Coat on Decentered Lenses, then Gentex will
cease selling Hard Coat to such Entity.
(c) Neither
Oakley, nor any Affiliate thereof, will analyze or reverse engineer any Hard
Coat or New Hard Coat to learn its composition (other than for the sole purpose
of determining its compatibility with Oakley’s coatings or processes) or
how to make it or manufacture it, nor will any Person directly or indirectly be
employed by or retained by Oakley or any Affiliate thereof for such purpose.
This obligation will continue after the expiration or termination of the Term.
7. Product
Specifications
(a) Seller will manufacture each Product in accordance with the applicable Product Specifications as set forth in Schedule B attached hereto, (Product Specification Schedule”) and all applicable federal, state and local laws and regulations. The parties will negotiate in good faith an






