Exhibit 10.40
October 30, 2002
U.S. Vision, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Re: Amendment to Participating Provider Agreement
Dear Xx. Xxxxxxxx:
Reference is hereby made to that certain Participating Provider Agreement,
dated as of June 1, 1997, as amended (the "Vision Care Agreement"), by and
between U.S. Vision, Inc., a Delaware corporation ("USV"), and Xxxx Vision
Corporation, a Delaware corporation ("Xxxx"). As you are aware USV and Xxxx are
entering into a certain Agreement, of even date herewith (the "Agreement"), to
facilitate USV's merger with Kayak Acquisition Corp. The delivery of this letter
agreement is required pursuant to the Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Agreement
or the Subordinated Note.
Contingent upon the execution and delivery of the Agreement, USV and Xxxx
hereby agree to amend the Vision Care Agreement as follows:
1. In the event of the exercise of the Option and effective upon the
consummation of such Option, Section 1.10 is hereby deleted and replaced in
its entirety with the following:
"'Locations' shall mean the optical outlets owned or operated by USV as of
the effective date of this provision where optical products and services
are provided to Members; provided, however, that USV must obtain the prior
consent of CVC to add any new Locations, except that no consent is required
from CVC for Sears and XX Xxxxx Locations, or additional optical
departments within departments stores where USV had optical departments at
the effective date of this provision."
2. 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,
unless terminated earlier pursuant to the terms of this Agreement, expire
on the earlier to occur of (a) 7 years after the date on which the Option
is consummated or (b) the 30th day following the Option Termination Date.
As used herein, the term "Option Termination Date" shall mean the earlier
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to occur of (i) Xxxxx 0, 0000, (xx) the date on which all outstanding
amounts under the terms of the Subordinated Note are paid in full prior to
the consummation of the Option or (iii) the date on which Xxxx elects to
terminate the Vision Care Agreement following an uncured default by USV of
any of its obligations under the Agreement or the Subordinated Note."
3. Clause (e) of Section 4.2 of the Vision Care Agreement is hereby deleted
and replaced in its entirety with the following:
"(e) if more than ten (10) Location audits conducted by CVC during any six
(6) month period (after the date hereof) during the term hereof reveal that
the Transaction Fees paid by USV to CVC at each such Location have been
understated by more than five percent (5%) and upon such determination, CVC
shall notify USV of the results of such audit;"
4. The last sentence of Section 7.1 of the Vision Care Agreement is hereby
deleted and replaced in its entirety with the following:
"In the event such audit reveals that USV has paid CVC an amount equal to
less than 98% of the total Transaction Fees due CVC at any Location, USV
shall reimburse CVC for the reasonable cost of such audit (including travel
expenses) applicable to such Location."
5. The last sentence of Section 7.2 of the Vision Care Agreement is hereby
deleted and replaced in its entirety with the following:
"In the event such audit reveals that CVC has paid USV an amount equal to
less than 98% of the total sums due USV from Purchasers, CVC shall
reimburse USV for the reasonable cost of such audit (including travel
expenses)."
6. USV shall not be a participating provider in any managed vision network
operated or sponsored by EyeMed Vision Care LLC, Eyecare Plan of America
(aka ECPA) or any of their affiliates after January 1, 2003.
7. The reference to "ECPA" in Section 7.8 is hereby deleted. The first and
second sentences of Section 7.8 are hereby deleted and replaced in their
entirety with the following:
"Except as provided for in this Agreement, USV shall not be a participating
provider in any managed vision network after January 1, 2003, without the
prior written consent of CVC, other than networks that USV is in as of
October 30, 2002 as to which no further consent is required."
8. USV and Xxxx hereby agree to the HIPAA Rider attached hereto, and such
rider shall be deemed part of the Vision Care Agreement.
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9. CVC may amend the Vision Care Agreement upon 30 days prior written notice
to USV to effectuate any change required pursuant to any law or regulation
imposed by any governmental or regulatory authority.
10. USV shall indemnify and hold harmless Xxxx and its Affiliates from and
against any and all losses, liabilities, claims, damages, penalties, fines,
judgments, awards, settlements, costs, fees, expenses (including attorneys'
fees) and disbursements incurred by such Persons relating to the use of the
JC Penney Optical name and logo by Xxxx and its Affiliates in its
advertising and other materials.
11. In the event that the Vision Care Agreement is terminated for any reason,
USV shall, and cause all of its Affiliates to, cease using immediately all
materials and copies thereof containing any Xxxx (including its Affiliates)
trade name, trademark, service xxxx or other intellectual property or
confidential information, and USV and its Affiliates shall return all such
materials to Xxxx unless it provides reasonably satisfactory assurance to
Xxxx that such materials and copies thereof have been destroyed. Xxxx has
the right to supervise the return or destruction of all such materials.
12. The first sentence of Section 7.7 of the Vision Care Agreement is hereby
deleted and replaced in its entirety with the following:
"CVC agrees that it will not enter into an agreement with any multi-unit
retail optical chain (i.e., a retail optical chain with more than one
hundred (100) retail locations) which owns its own manufacturing facility
to participate as a provider in CVC's Preferred Network under terms and
conditions more favorable than the terms and conditions under which USV
serves as a provider pursuant to the terms of this Agreement."
13. The second sentence of Section 7.8 of the Vision Care Agreement is hereby
deleted and replaced in its entirety with the following:
"In the event of any sale or transfer (by purchase, merger, consolidation
or otherwise (including operation of law)), of more than forty percent
(40%) of USV's issued and outstanding stock or sale of substantially all of
the assets of USV to any entity who is, directly or indirectly, engaged in
(i) the retail optical business through the ownership of 100 or more
domestic retail optical outlets, or (ii) the ownership and operation of an
optical managed care network, USV shall promptly notify CVC and CVC shall
have the right, within thirty (30) days of receipt of such notice, to
terminate this Agreement."
14. Notwithstanding anything in the Agreement, the Subordinated Note or the
Vision Care Agreement, as amended hereby, to the contrary, if USV breaches
any of its obligations under the Agreement or the Subordinated Note and any
such breach shall remain uncured by USV as of the end of any applicable
cure period, Xxxx may immediately terminate the Vision Care Agreement, as
amended hereby, only if Xxxx elects not to exercise the Option; provided,
however, that such termination shall not relieve USV of any of its
obligations under the Vision Care Agreement, as amended
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hereby, arising prior to or as a result of any event occurring prior to the
effective date of such termination. For the avoidance of doubt, USV's
obligations under the Agreement and the Subordinated Note shall continue
notwithstanding the termination of the Vision Care Agreement, as amended
hereby.
15. Except as modified by this letter agreement, the provisions of the Vision
Care Agreement shall remain in full force and effect.
16. This letter agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the state of Ohio, exclusive of its choice
of law provisions.
17. This letter agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
If this letter agreement 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
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Title: Executive VP
Acknowledged and agreed to
this 30th day of October, 2002
U.S. VISION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President
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