Exhibit 10.42
XXXX MANAGED VISION
February 6, 2004
Xx. Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
U.S. Vision, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Re: Fourth Amendment to Vision Care Agreement
Dear Xxxx:
The parties entered into the Participating Provider Agreement dated as of
June 1, 1997 as amended on April 9, 1998, October 30, 2002 and December 19, 2003
by and between U.S. Vision, Inc., a Delaware corporation ("USV"), and Xxxx
Vision Corporation, a Delaware corporation ("CVC"), referred hereafter as the
"Vision Care Agreement". Capitalized terms used but not defined herein shall
have the meanings ascribed in the Vision Care Agreement. USV and CVC hereby
agree to amend the Vision Care Agreement as follows:
1. Section 4.1 of the Vision Care Agreement is hereby deleted and replaced in
its entirety with the following:
"The Term of this Agreement shall commence on June 1, 1997 and shall
terminate on December 31, 2008, unless terminated earlier pursuant to the
terms of this Agreement A contract year shall be twelve months of the term
of the Agreement commencing on January 1 and terminating December 31 of any
year."
2. Section 2.6 of the Vision Care Agreement is hereby deleted and replaced in
its entirety with the following:
"CVC shall provide electronic means for USV to submit compliant ANSI X-1 2
837 health care claim- professional for the submission of claims for
Billable Plans and a format to report each Covered Vision Services
transaction of a Non-Billable Plan to CVC or its Affiliates (collectively
referred to as "Claim Forms"). Until such time as the electronic format is
operational, the parties shall continue to use paper forms and web
transactions.
3. Section 3.12 of the Vision Care Agreement is hereby deleted and replaced in
its entirety with the following:
Billable Transactions
"USV agrees that it shall submit a Claim Form consistent with Section 2.6
of this Agreement to CVC or its Affiliates, reflecting all Covered Vision
Services provided to a Member or such Member's eligible dependents within
sixty (60) days of the Member's date of the service. For
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purposes of this Agreement, a Billable Transaction shall mean each separate
optical product (i.e., eyeglasses, frames, lenses, etc.) provided to a
Member or such Member's eligible dependent pursuant to a Billable Plan;
provided, however, the purchase of a complete pair of eyeglasses or more
than one (1) box of contact lenses shall be recorded as one (1) Billable
Transaction. For each Billable Transaction reflected on the Claim Form, USV
agrees that CVC shall have the right to deduct the sum of Eleven Dollars
and fifty cents ($11.50) for Covered Vision Services provided as of
February 1, 2004 and thereafter (the "Transaction Fee") from any sums due
and owing USV for reimbursement under Billable Plans. In the event a Member
purchases more than one (1) optical product at one date of service, USV
will be subject to the payment of a single Transaction Fee. Notwithstanding
the above, for each Transaction for the sale of contact lenses, USV agrees
that CVC may deduct this Transaction Fee of Four Dollars ($4.00) provided
as of February 1, 2004 and thereafter. CVC will increase the amount of each
Transaction Fee described above by three percent (3%) per year. Such
increase shall be effective on January 1 of each subsequent year of the
term of this Agreement.
Non-Billable Plan Transactions
For purposes of this Agreement, a "Non-Billable Plan Transaction"
shall mean any Covered Vision Services provided to a Member or such
Member's eligible dependents pursuant to a Non-Billable Plan. USV agrees
that it shall report any Covered Vision Services provided to a Member or
such Member's eligible dependents of a Non-Billable Plan monthly and in
such format as reasonably required by CVC.
Commencing with the calendar month of February 2004, in full consideration
for the right to participate in the Network of providers to such
Non-Billable Plans, USV shall pay CVC a monthly amount equal to the sum of
(x) The number of Locations that USV is operating multiplied by
(y) Three Hundred Sixty Six Dollars and 67 Cents ($366.67)
Such monthly payments are hereinafter referred to as the "Non-Billable
Transaction Fee" and shall be due on the before the tenth business day of
the each calendar month during the term hereof commencing with the month of
February 2004. Provided, however, that the Non-Billable Transaction Fee
shall be reduced by fifty percent (50%) for the first twelve (12) months of
operation as to any USV location which has been opened for business for
twelve (12) months or less; for the purposes of this provision, a new
location that is located within one (1) mile of a location closed within
thirty (30) days of the opening of the new location, shall not be
considered to have been opened for less than twelve (12) months. CVC will
increase the annual amount of the Non-Billable Transaction Fee three
percent (3%) per year. Such increase shall be effective on January 1 of
each subsequent year of the term of this Agreement. In addition, the
Non-Billable Transaction Fee shall be reduced pro rata in the event that
CVC adds more than five hundred (500) non-rural retail locations to CVC's
Preferred or Retail Only Networks to service Non-Billable Plans in any one
contract year, If CVC increases its Preferred or Retail Only Network by at
least five hundred (500) non-rural retail providers in any one contract
year, the pro rata reduction shall be effective January 1 of the subsequent
contract year and shall be determined by multiplying the Non-Billable
Transaction Fee by the result of the increased number of non-rural retail
locations in the prior contract year divided by the total number of
participating locations as of December31 of the then current contract year.
For purposes of this Agreement, non-rural retail location" shall mean an
individual store location of a national vision retail brand or a chain of
five hundred (500) or more locations operated under
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the same name that is not located in a rural designated zip code.
If the number of aggregate lives contracted under the total number of
Non-Billable Plans increase or decrease by more than twenty percent (20%)
in any one contract year, the parties shall on a prorated basis adjust the
Non-Billable Transaction Fee. If USV's payment of any monthly Non-Billable
Transaction Fee remains outstanding for thirty (30) days or more, CVG shall
have the option to offset such outstanding payments against any
reimbursement for Covered Vision Services performed under Billable Plans.
4. Subsection 4.2(e) and Section 7.7 of the Vision Care Agreement shall be
deleted in their entirety.
5. Section 7.1 of the Vision Care Agreement shall be deleted in its entirety
and replaced with the following:
CVC, its Affiliates, Plans, or any regulatory agency shall have access upon
reasonable notice and during reasonable business hours at Locations or at
USV's corporate headquarters to inspect, audit, and request of copies
records relating to the Covered Vision Services performed pursuant to the
terms of this Agreement during the term of this Agreement and for a period
of 6 years from the termination of this Agreement or as required by federal
and state law. CVC shall not have the right to audit any other records
except those relating to the Covered Vision Services provided by USV
pursuant to the terms of this Agreement.
6 Section 7.2 of the Vision Care Agreement shall be deleted in its entirety
and replaced with the following:
Marketing Charges. In addition to the payment of the Transaction Fees:
a. In the event USV continues to operate between fifty-two (52) and
ninety-eight (98) Sears Optical locations on the first day of
each month during the term of this Agreement, USV shall pay, or
cause to be paid, by bank wire transfer of immediately available
funds to an account designated in writing by Xxxx, an amount in
cash equal to Thirty-Five Thousand Dollars ($35000). In the event
that USV is operating less than 52 Sears Optical location or more
than 98 Sears Optical locations, USV and Xxxx shall agree upon a
prorated adjusted monthly payment for such national advertising
efforts. Such amount shall be used by Xxxx Vision as it considers
appropriate for national advertising efforts for Sears Optical.
b. U.S. Vision shall contribute to CVC's marketing costs associated
with certain Billable and Non-Billable Plans as follows:
i. twenty percent (20%) of CVC's incurred costs for marketing
of the AARP Vision Program~
ii. twenty percent (20%) of CVC's incurred costs for the
marketing of the American Legion Vision Plan;
iii. contribute up to Thirty-Five Thousand Dollars for transition
costs incurred by CareFirst: and,
iv. any amounts as mutually agreed upon by the parties.
USV agrees to make such payments that shall be due and payable upon
USV's receipt of CVC's invoice. Any amounts not paid when due pursuant
to this Section shall accrue interest at the per annum rate of 11.75%.
Such marketing costs may be reduced pro rata in accordance with the
terms of Section 3.12 of this Agreement."
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7. Section 7.8 of the Vision Care Agreement is modified to include the
following:
Notwithstanding the foregoing, USV may be a participating provider in i)
any vision network with respect to any new host stores in which USV
operates and as to which CVC does not consent to the inclusion of such
locations in any CVC Network; or ii) any managed vision network to provide
vision services and/or materials only to groups and/or plans of two
thousand five hundred (2500) or less covered lives or members who contract
with such networks for the provision of vision services and/or optical
materials; and (iii) Opticare to provide vision services and/or materials
to a plan that has contracted with Opticare and CVC chooses not to
participate in such plan; however, CVC must be offered the right to
participate in any plan contracted with or offered by OptiCare and refused
to participate prior to USV having the ability to become a participating
provider in such plan During the term of this Agreement, in all other
circumstances, USV may seek to CVC's approval to participate in other
vision network opportunities.
8. Section 2.2 of the Vision Care Agreement is modified to include:
USV locations will be included in any CVC Network, including Preferred and
Retail Only Networks, except in the following circumstances: i) a Plan
elects not to have USV locations as a participating providers of its Plan;
or, ii) USV does not accept any additional terms or conditions requested by
an individual Plan.
CVC's call centers shall direct callers to retail locations on a random
basis consistent with the parameters sought by the caller and without
preference to CVC's affiliated locations.
9. Except as modified by this letter amendment, the provisions of the Vision
Care Agreement shall remain in full force and effect.
10. This letter amendment may be executed in two (2) counterparts, each of
which shall be deemed the original, but all of which together shall
constitute one and the same agreement.
If this letter amendment is acceptable to you, please execute both copies
of this letter in the space provided below and return one fully executed copy to
the undersigned.
Very truly yours,
XXXX VISION CORPORATION
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Executive Vice President
Acknowledged and agreed to this 6th
day of February, 2004
U.S. VISION, INC.
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
Executive Vice President
cc: Xxxx Xxxxxxxx
Xxxx XxXxxxxxxx
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