Document:

exv10w1

 

EXHIBIT 10.1

2005 Director Compensation

	 	 	 	 	 
	Annual Retainer:
	 	$	20,000	 
	In-Person Board of Director Meetings:
	 	$	2,000	 
	Additional In-Person Board of Director Meetings held on the day
following an In-Person Board Meeting:
	 	$	1,000	 
	Telephonic Board of Director Meetings:
	 	$	1,000	 
	Audit Committee Meeting — Chair:
	 	$	3,000	 
	Audit Committee Meeting — Member:
	 	$	1,000	 
	Compensation Committee Meeting — Chair:
	 	$	1,000	 
	Compensation Committee Meeting — Member:
	 	$	500	 
	Investigative Committee Meetings:
	 	$	1,000exv10w1

 

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

	 	A.	 	Gentex is an indirect, wholly-owned subsidiary of Essilor.
	 
	 	B.	 	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.
	 
	 	C.	 	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.
	 
	 	D.	 	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.

 

			
	*	 	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 any modifications to the specifications or procedures set forth in any Product specification
Schedule, if either party advises the other that such modification of such specification is
desirable to improve the efficiency or quality of the Product or the production of that product or
to lower the cost of production thereof, or to take into account any changes in processes,
equipment or the Product itself, or the availability of material or changes in technology.

               (b) The Parties will negotiate in good faith a Product Specification Schedule for any new
Products that Seller manufactures for Purchaser pursuant to this Agreement.

          8. Plano Polarized Lenses

          Nothing in this Agreement shall be construed to require Oakley to purchase Plano Polarized
Lenses from Gentex. In the event, however, that Oakley is unable to satisfy its own production
requirements for Plano Polarized Lenses, Oakley agrees to grant Essilor’s Affiliate Company, BNL,
the first opportunity to negotiate with Oakley regarding any necessary third party purchases of
Plano Polarized Lenses.

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          9. Inspections, Rejections, Returns.

               Gentex will conduct quality inspections of all Products delivered to Oakley by way of
inspectors stationed at Oakley but remaining on the Gentex payroll. Said inspectors will provide
rejection reports weekly to Oakley which will be forwarded to Gentex. The inspections will be
conducted upon Oakley’s receipt of Products from Gentex but before said Products are received into
the VMI system. Upon receipt of the rejection notice, Gentex will advise Oakley as to whether to
destroy the defective Product or return it to Gentex.

          10. Indemnification

               (a) Each of Essilor and Gentex does hereby indemnify and hold harmless Oakley and its
Affiliates, and each of their respective officers, directors, liabilities, costs, expenses
(including, without limitation, investigative and legal fees and disbursements, both those incurred
in connection with the defense of an indemnifiable claim and those incurred in connection with the
enforcement of this provision) and damages (“Claims and Liabilities”) arising our of, or based
upon, any infringement or alleged infringement of Third Person intellectual property rights by any
Decentered Lens or Shield sold to Oakley or to any Oakley Affiliate by Gentex, Essilor or any
Affiliate of either, but only to the extent such infringement results or is alleged to result from
the process technology used in the design, manufacture or assembly thereof by Gentex or such
Affiliate or the Product resulting therefrom. Notwithstanding the foregoing, there will be no such
indemnification or hold harmless hereunder, for any other reason or (i) to the extent any such
Claims and Liabilities for infringement or alleged infringement result or are alleged to result
from technology, specifications, know-how, techniques or processes for the Product or for its
processing, manufacture or assembly provided to Gentex or any Affiliate thereof by Oakley or by
any Affiliate thereof or the Product resulting therefrom; (ii) to the extent Oakley, any Affiliate
of Oakley or any Third Person modifies or alters such Product to cause such infringement or alleged
infringement; (iii) for Claims and Liabilities that would not have arisen but for the incorporation
by Oakley or any Affiliate thereof of such Product in any other product, or such Product’s joinder
with or use in conjunction with any other product; (this provision is not intended, however, to
relieve Gentex from the responsibility for Lenses if the cause of any defect in the Lens does not
arise by reason of the incorporation with another Product) or (iv) Claims and Liabilities based
upon infringement or alleged infringement of a Third Person’s design patent or trade dress rights
applicable to the cosmetic aspects of such Product, to the extent such infringement is based upon
technology, specifications, know-how, techniques or processes provided by Oakley or by any
Affiliate thereof.

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               (b) If there is any claim for which Oakley indemnifies Gentex, Essilor and their respective
Affiliates pursuant to Subsection 12(c) hereof,
made by a Third Person that any Decentered Lenses or Shields sold by Gentex or any Affiliate
thereof, infringes upon such Third Person’s intellectual property rights, which Claim intellectual
property counsel for Gentex or any such Affiliate (as the case may be) opines is or appears to be
valid, of if, in any proceeding, there is a finding of infringement of a Third Person’s
intellectual property right by any Decentered Lenses or Shields sold by Gentex or any Affiliate
thereof, then Gentex and its Affiliates, on 15 day’s notice to such effect given to Oakley and to
any relevant Affiliate thereof, may cease the sale and delivery of such Product to Oakley and to
any of its Affiliates, including, without limitation, as to all Purchase Orders and Purchase
Contracts for such Product that remain unfilled at the expiration of such notice period until such
time as such Claim is dismissed or adjudicated n favor of Oakley and/or Gentex. Neither Essilor,
Gentex nor any other Affiliate thereof shall have any liability hereunder or under any Purchase
Contract for failure to deliver such Product after the expiration of such notice period and until
such dismissal or favorable adjudication. This Agreement shall continue in effect for other
Products, if any, not subject to such Claim. The Minimum Purchase requirements shall not be
adjusted, or otherwise abated as a result of the operation of this Subsection. Notwithstanding the
provisions of this Subsection, if (i) Oakley offers to indemnify and hold harmless Essilor, Gentex
and any Affiliate of either, from and against any such Claims and Liabilities in form and substance
reasonably satisfactory to the indemnitees, and (ii) the amount of such Claims and Liabilities in
the reasonable judgment of the indemnities are not likely to exceed 50% of the then tangible net
worth of Oakley, upon receipt of such indemnification Gentex will continue to manufacture such
Product and sell and deliver it to Oakley hereunder.

               (c) Oakley will indemnify and hold harmless Gentex, Essilor and their respective Affiliates,
and each of their respective officers, directors, employees, representatives and agents, from and
against any and all Claims and Liabilities, arising out of or based upon, any infringement or
alleged infringement of any Third Person’s intellectual property rights by any Product to the
extent any such Claims and Liabilities result from or are alleged to result (i) from technology,
specifications, know-how, techniques or processes provided to Gentex, Essilor or any Affiliate
thereof by Oakley or by any Affiliate thereof; (ii) from any modifications or alterations by Oakley
or its Affiliates of such Product; (iii) from the incorporation by Oakley or any Affiliate thereof
of such Product in any other product or its joinder with or use in conjunction with any other
product; or (iv) from any infringement or alleged infringement of a Third Person’s design patent or
trade dress rights applicable to the cosmetic aspects of any such Product, to the extent such
infringement is based upon technology, techniques, know-how, specifications, or processes provided
by Oakley or any of its Affiliates.

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               (d) Claims by Oakley and/or any Affiliate thereof (“Oakley Claims”) and Claims by Gentex,
Essilor or any Affiliates thereof (“Gentex Claims”) collectively are referred to in the following
Subsections of this Section as “Claims” and any proceeding commenced by any Third Person against a
party hereto, in respect to which such party hereto believes it is entitled to indemnification
hereunder, is referred to in such Subsections as a “Covered Action”.

               (e) Upon learning of the commencement of a Covered Action or upon the actual receipt by the
party claiming a right of indemnification (the “Indemnified Party”) of a writing claiming the
purported existence of facts or circumstances and threatening the commencement of a Covered Action
or other incurrence of any Claims and Liabilities, the Indemnified Party will promptly, but no
later than fifteen (15) days (i) after learning of such commencement; or (ii) after such receipt,
given notice thereof to each party having the indemnification obligation (“Indemnifying Party”)
and, with reasonable specificity, of the facts and circumstance then known to the Indemnified Party
with respect to such Covered Action, Claims and Liabilities provided, however, failure to
give such timely notice will not release the Indemnifying Party of its obligations hereunder,
except, and only to the extent that, the Indemnifying Party suffers actual prejudice as a proximate
result of such failure.

               (f) The Indemnifying Party will have the right to assume the defense of any such Covered
Action by giving written notice (the “Assumption Notice”) to the Indemnified Party, within 20 days
after notice is given to the Indemnifying Party pursuant to Subsection (e) above., which Assumption
Notice will state that (i) the Indemnifying Party agrees that Indemnified Party is entitled to
indemnification hereunder and that any resulting Claim is an Oakley Claim or a Gentex Claim, as the
case may be, for which the Indemnifying Party is liable; and (ii) the Indemnifying Party agrees to
assume the defense thereof, in the name and on behalf of the Indemnified Party, with counsel
reasonably satisfactory to the Indemnified Party and, in either event, at the sole cost and expense
of the Indemnifying Party. Such costs and expenses of the foregoing counsel (including, without
limitation fees and disbursements), if not paid by the Indemnifying party, but instead paid by the
Indemnified Party, will be Claims. The Indemnified Party, notwithstanding the timely delivery of
an Assumption Notice, may participate in such Covered Action through counsel separately selected
and paid for by the Indemnified Party. If no Assumption Notice is timely given, of if, despite the
timely giving of the Assumption Notice, the defendants in any Covered Action include both the
Indemnified Party and the Indemnifying Party, and if the Indemnified Party has reasonably concluded
that there may be legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, or if there is a conflict of interest which would prevent

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counsel for the Indemnifying Party from also representing the Indemnified Party, then the
Indemnified Party will have the right to select one separate counsel to conduct the defense of such
action on its behalf, and all such costs and expenses will be paid by the Indemnifying Party and,
if paid by the Indemnified Party, will be Claims and Liabilities. Prior to the assumption of the
defense of a Covered Action by an Indemnifying Party, the Indemnified Party may take such
reasonable actions with respect to a Covered Action as it may deem appropriate to protect against
further damage or default, including, without limitation, obtaining an extension of time to answer
the complaint or other pleading or filing an answer thereto, provided that no such action
prejudices the Indemnifying Party’s ability to defend the Covered Action.

               (g) In no event will (i) Oakley or any Oakley Affiliate consent to the entry of any judgment
or enter into any settlement of any Claim and Liability under this Section 12 affecting the rights
or obligations of Gentex, Essilor or their respective Affiliates without the written consent of
Gentex, Essilor or such Affiliate (as appropriate), which consent will not be unreasonably withheld
or delayed; (ii) Gentex, Essilor or any Affiliate thereof consent to the entry of any judgment or
enter into any settlement of any Claim and Liability under this Section 12 affecting the rights or
obligations of Oakley or its Affiliates without the written consent of Oakley, which will not be
unreasonably withheld or delayed.

               (h) This Section will survive the termination or expiration of this Agreement.

          11. Bailment Agreement

               All purchases shall be governed by the Bailment Agreement, executed separately.

          12. Termination.

               (a) In addition to any right to terminate this Agreement in accordance with any other
provision of this Agreement, either party may terminate this Agreement upon a material breach of
the other if such breach has not been cured or waived within 60 days following notice thereof to
the breaching party, which notice will specify in such reasonable detail as is then known to the
non-breaching party the facts constituting the breach.

               (b) This Agreement will automatically terminate, if either party becomes subject to a
judicially ordered reorganization or liquidation or to a reorganization or liquidation proceeding
initiated at its own request or, if such proceeding is initiated at the request of a third party,
then, if such proceeding is

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not dismissed within 60 days following the date of its initiation, or if that party files a
petition for protection from creditors, for a moratorium in payment of its obligations or to
declare bankruptcy or insolvency, of otherwise institutes any proceeding for such relief under any
federal or state bankruptcy law, moratorium law or any law of similar import applicable to it.

          13. Consequences of Termination and other Breaches or
Defaults

               Whether or not this Agreement has been terminated, except to the extent otherwise provided
herein:

               (a) If Oakley, or any Affiliate thereof, commits a material breach of any provision of this
Agreement, or of any Purchase Contract, which has not been cured (if capable of cure) within the
grace period applicable to such breach, then Gentex and/or Essilor will have the right to pursue
all remedies available at law or in equity except that in no event will Oakley or any Affiliate
thereof be liable for consequential damages. The parties acknowledge that the limitation as to
consequential damages (which are not available as a result of a breach of this Agreement) shall not
preclude recovery of the actual damage and loss of profits suffered by the other party directly as
a result of the breach in question, but shall preclude damages and loss of profits suffered
indirectly as a result of such breach.

               (b) If Gentex, Essilor or any Affiliate of either commits a material breach of this Agreement,
or of any Purchase Contract, which has not been cured (if capable of cure) within the grace period
applicable to such breach, then Oakley will have the right to pursue all remedies available to it
at law or in equity except that in no event will Gentex, Essilor or any Affiliate thereof be liable
for consequential damages. The parties acknowledge that the limitation as to consequential damages
(which are not available as a result of a breach of this Agreement) shall not preclude recovery of
the actual damage and loss of profits suffered by the other party directly as a result of the
breach in question, but shall preclude damages and loss of profits suffered indirectly as a result
of such breach.

               (c) No breach of this Agreement by any party will constitute a breach of or a default under
any other agreement between or among the parties hereto, (including without limitation the Bailment
Agreement), unless such breach or default constitutes a breach or default by the terms of such
other agreement.

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               (d) No termination of this Agreement will terminate any Purchase Contract that has a delivery
date within sixty days following the effective
date of termination, unless such termination occurs by reason of a breach of or a default
under that Purchase Contract.

          14. Confidentiality

               (a) Any and all information, correspondence, financial statements, records, computer software,
specifications, technical information, know-how, patent applications, processes and information
pertaining to same, and other documents transmitted or communicated by any of Essilor, Gentex or
any Affiliate of either of them, to Oakley or any of its Affiliates, or by Oakley or any of its
Affiliates to Essilor, Gentex or any Affiliate of either of them while this Agreement is in effect,
that are identified at the time of disclosure as being confidential shall constitute “Confidential
Information” under this Agreement. The terms and the existence of this Agreement and the Bailment
Agreement (including without limitation, any Schedule hereto) transactions contemplated hereby and
thereby, will be considered Confidential Information.

               (b) Each receiving party will use at least the same means of protecting Confidential
Information it receives as is used by the receiving party to protect its own trade secrets and
confidential information, but no less than a reasonable degree of care, and such Confidential
Information will not be used by the receiving party (except in connection with the transactions
contemplated by this Agreement), or disclosed by the receiving party to any Third Person, for a
period of 5 years following the later of (a) the expiration of this Agreement; (b) the termination
of this Agreement; and (c) the 5th anniversary of the date hereof, without the prior express
written consent of the party which first disclosed it to the receiving party, except as otherwise
provided below in this Section.

               (c) The restrictions on use or disclosure of Confidential Information contained in this
Section will not extend to any item of information which:

               (i) is disclosed pursuant to a mutually-agreed upon (A) public release; (B)
announcement; or (C) other form of publicity, concerning the transactions contemplated
hereby;

               (ii) is required by law or by the rules or regulations of any securities exchange
applicable to the disclosing party and which, despite all reasonable efforts of the
disclosing party, is not afforded confidential status by law or by such securities
exchange. To the extent that any disclosure of Confidential Information is claimed to
be required, by law or by such riles and regulations, the other parties hereto will be
notified promptly and, before the disclosure is required to be

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made, the party from whom disclosure is sought, if requested by any other party
hereto, will cooperate with such other party or parties to resist and avoid, to the
extent legally permissible, such disclosure;

               (iii) was or becomes generally available to the public other than as a result of a
disclosure by the receiving party or its agents in violation of this Section;

               (iv) is lawfully received by the receiving party or its agents from a Third
Person, if the receiving party or its agent has no reason to believe that the Third
Person is prohibited from disclosing such information by a legal, contractual or
fiduciary obligation; or

               (v) the receiving party or its agent can demonstrate through documentary evidence,
to the reasonable satisfaction of the non-disclosing party, that the information was in
its possession or known by it before its receipt from the disclosing party.

               (d) Nothing herein will prohibit the disclosure of Confidential Information by the parties
hereto to their respective agents, representatives, advisors and to their respective key employees
to the extent reasonably necessary to perform this Agreement or any Purchase Contract or to analyze
any legal disclosure obligations; provided that such Persons are made aware of this Section hereof
and agree to be bound by its terms.

               (e) No party will issue any press release or other public announcement referring to this
Agreement or to any other agreement bearing even date herewith among some or all of the parties
hereto, or to the transactions contemplated hereby, except with the prior written consent of the
other parties thereto. The parties will mutually determine whether or not to announce this
Agreement, and if they decide to do so, will coordinate the announcement of this Agreement and any
press release relating thereto as to timing, manner and content thereof. Notwithstanding the
foregoing, if either Oakley or Essilor is required to make a press release or public statement
under the securities laws of any jurisdiction, or under the rules of any securities exchange
applicable to such party, then such party will use its best efforts to notify the other party of
that fact and discuss the contents of such proposed statement or release with the other party and
its counsel as soon as the party intending to make such announcement determines that such public
statement is to be made or such press release is to be issued, but in any event at least 24 hours
before such public statement is made or such press release is issued, unless it will have received
advice from its outside counsel that such statement must be made or must be issued in a lesser
period of time, in which

14

 

event it will be permitted to make such public statement or press release within such period
of time.

               (f) The provisions of this Section will survive the expiration or termination of this
Agreement.

          15. Insurance. During the Term each of Gentex and Oakley will maintain product
liability insurance on behalf of itself and its Affiliates of the kinds and in the amounts
customary in their respective industries, will provide the other with copies of such insurance
documents and, at the request of the other, will, in good faith, consider modifications to such
insurance, both as to amount and policy terms, as may be requested by the other. In addition,
Gentex will cause the carrier or carriers of its product liability insurance to name Oakley as an
insured on such policy or policies as its interest may appear, and Oakley will cause the carrier or
carriers of its product liability insurance to name Gentex and Essilor on such policy or policies,
as its interest may appear.

          16. Effect of Force Majeure. No party hereto will be liable for any loss, damage or
delay resulting from Force Majeure. However, any party that believes that there will be a loss,
damage or delay by reason of Force Majeure will promptly notify the other party hereto or to the
Purchase Contract, whereupon the parties will discuss means for minimizing such loss, damage or
delay. The foregoing is not intended to preclude either party’s right to terminate this Agreement
for non-performance arising out of Force Majeure, to the extent such non-performance permits
termination.

          17. Term. The Term will commence on the Effective Date and will continue through the
end of the 5th Contract Year and will be automatically renewed thereafter from Renewal Year to
Renewal Year, unless either Oakley on the one hand or Gentex on the other, gives notice to the
other parties hereto that it desires to terminate this Agreement (“Termination Notice”). Except as
otherwise expressly set forth herein with respect to breach or nonperformance of certain provisions
hereof, the effective date of such Termination Notice must be at the end of a Contract Year or
Renewal Year, at least 24 months following the date of such notice and no earlier than the end of
the fourth Contract year.

          18. Submission to Jurisdiction. This Agreement shall be construed and interpreted
under the laws of the State of California. The State or Federal Courts located in Orange County,
California shall have exclusive jurisdiction over the subject matter and parties to this Agreement
and the parties waive their right to bring any action under this Agreement elsewhere.

15

 

          19. Notices. Except as otherwise provided in Section 20 hereof, all notices and other
communications hereunder will be in writing and will be given by delivery in person, verified
facsimile or other standard form of telecommunications, by overnight courier, or by registered or
certified mail, return receipt requested to the parties at their respective addresses set forth
above with copies as follows:

          If to Gentex, Essilor or any Affiliate of either:

Gerard Malledant

President

Gentex Optics, Inc.

Route 197

183 W. Main Branch

Dudley, MA 01571

Facsimile No.: 508-949-3701

With a copy to:

David J. Milan

General Counsel

Essilor of America, Inc.

13515 N. Stemmons Freeway

Dallas TX 75234

Facsimile No.: 972-241-8601

          If to Oakley or any of its Affiliates:

Weeks, Kaufman, Nelson & Johnson

462 Stevens

Suite 310

Solana Beach, CA 92075

Facsimile No.: 858-794-2141

          20. Miscellaneous

               (a) Rights Confined to Parties. Except as expressly permitted elsewhere herein or as
provided by law, nothing expressed or implied herein is intended to or will be construed to confer
upon or give to any Person,

16

 

other than the parties hereto, and their successors and assigns as permitted hereunder and
their respective Affiliates, any right, remedy, or claim under or by reason of this Agreement or of
any term, covenant, or condition hereof, and, subject to the foregoing, all the terms, covenants,
conditions, promises, and agreements contained herein will be for the sole and exclusive benefit of
the parties hereto, their successors and assigns as permitted hereunder, and their Affiliates.

               (b) Survival. Except as otherwise specifically provided herein, all rights and
obligations of any party hereto to any other party hereto, arising hereunder, or out of this
Agreement, will terminate upon termination of this Agreement, except for obligations for payment of
money which have accrued but which have not yet been paid at that time and except for any rights
and obligations that arise by reason of breach or wrongful termination hereof, all of which will
survive such termination.

               (c) Entire Agreement. This Agreement and the Bailment Agreement referenced herein,
constitutes the entire understanding between the parties hereto with respect to the subject matter
hereof and supersedes any and all prior agreements between the parties hereto with respect to the
subject matter hereof.

               (d) Conflicting Terms. In the event of a conflict in the terms of any purchase order
covering purchases of the Products, the terms of this Agreement shall control and prevail.

               (e) Assignment. Neither this Agreement, any Purchase Contract nor any right hereunder
or thereunder (except the right to payments), is assignable, and no obligation hereunder or
thereunder is delegable, and any such purported assignment or delegation will be null and void and
of no effect.

               (f) Severability. Any provision of this Agreement or any Purchase Contract which is
invalid or unenforceable in any jurisdiction will not affect the validity or enforceability of any
other provision in such jurisdiction or the validity or enforceability of such provision or any
other provision in any other jurisdiction.

               (g) Effect of Headings. Headings contained herein are for convenience only and will
not affect the construction hereof.

               (h) Governing law and Venue. This Agreement shall be governed by the substantive
laws of the State of New York, without regard to conflict of law principles. The Federal and State
courts located in

17

 

the City and State of New York shall be the proper and exclusive venue for, and shall have
exclusive jurisdiction over the parties and the subject matter of any controversy or claim arising
out of or relating to this Agreement, whether at common law or under statute.

               (i) Counterparts. This Agreement may be executed in multiple counterparts, each
of which will be deemed to be an original, and all such counterparts will constitute but one
instrument, when each party hereto has executed at least one counterpart.

               (j) Modification, Waiver. Except as herein otherwise provided, neither this Agreement
nor any Purchase Contract may be modified, amended or terminated, and no provision hereof or
thereof may be waived except by a writing executed by all the parties hereto or thereto.

               (k) Cumulative Rights and Remedies. Except as otherwise provided herein, in the event
of a breach of this Agreement by any party hereto, which breach has not been cured within the time
hereby permitted:

               (i) any other party hereto whose rights hereunder are adversely affected
thereby will have all rights and remedies arising under this Agreement and at law
and in equity;

               (ii) all such rights and remedies of any party hereto will be cumulative and
may be exercised simultaneously or seriatim and no party will be required to make
any election of remedies.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first written above.

	 	 	 	 	 
	 	GENTEX OPTICS, INC.

 	 
	 	By:  	/s/ Gerard Malledant
 	 
	 	 	Gerard Malledant, President

 	 

18

 

	 	 	 	 	 
	 	ESSILOR INTERNATIONAL
COMPAGNIE GENERALE

D’OPTIQUE, SA.

 	 
	 	By:  	/s/ Claude Brignon	 

	 	 	 	 	 
	 	OAKLEY, INC.

 	 
	 	By:  	/s/ Kent Lane
 	 
	 	 	Kent Lane, 	 
	 	 	Senior VP of Manufacturing
and Sourcing 	 

19

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