Exhibit 10.38
MATERIAL IN THIS DOCUMENT
HAS BEEN OMITTED PURSUANT
TO A CONFIDENTIAL TREATMENT REQUEST
FIFTH AMENDMENT
TO
LICENSED DEPARTMENT AGREEMENT
This Fifth Amendment To Licensed Department Agreement (the "Amendment"), is
entered into by and between ▇. ▇. ▇▇▇▇▇▇ Corporation, Inc., a Delaware
corporation having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter "Penney"), and U. S. Vision, Inc., a Delaware
corporation, having its principal place of business at ▇▇▇▇ Oaks Industrial
Park, P. 0. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ (hereinafter "Operator").
WHEREAS, Penney and Operator have entered into a Licensed Department
Agreement, dated February 1, 1995 (the "Agreement");
WHEREAS, Penney and Operator amended the Agreement by an Amendment
("Amendment Number 1") to Licensed Department Agreement, dated December 18,
1996, by an Amendment No. 2 ("Amendment Number 2") to License Department
Agreement, dated April 13,1998, by a Third Amendment to License Agreement
("Amendment Number 3"), dated as of September 30, 2002, and by a Fourth
Amendment to License Agreement ("Amendment Number 4"), dated as of May 22, 2003;
WHEREAS, Penney and Operator temporarily supplemented the Agreement by a
letter, dated December 1997, and that supplemental letter is no longer in
effect; and
WHEREAS, in accordance with the terms of the Agreement, the parties desire
to amend certain terms and provisions of the Agreement relating to the operation
of a "JCPenney Optical" website to reflect the current agreement of the parties;
WHEREAS, capitalized terms not otherwise defined in this Amendment are used
as defined in the Agreement; and
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration. the receipt and sufficiency of which is hereby
acknowledged, Penney and Operator hereby agree as follows:
Article I
The provisions of Amendment Number 2 and Article VIII of Amendment Number 3
are hereby amended and restated to provide as follows:
1. Optical Website. Operator shall be responsible, at its sole expense, for
the maintenance (during the term of the Agreement) of valid domain name
registrations for, and the
construction, maintenance, site hosting, content and operation of a website
utilizing the tradename "JCPenney Optical" (the "Optical Website"). The domain
names for the Optical Website shall be ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇.▇▇▇▇▇▇▇.▇▇▇
or, subject to Penney's prior approval, any other domain name containing
Trademarks of Penney or a Trademark used by Operator in connection with the
advertising and sale of Merchandise under the Agreement. The Optical Website
shall be considered a "Licensed Department" under the Agreement, except where
the context in which the defined term "Licensed Department" is used clearly
relates only to a physical in-store location.
2. Compliance with Laws. Operator shall comply with all applicable laws and
regulations, including without limitation all applicable laws and regulations
pertaining to data protection, and shall not breach, infringe or encroach upon
the rights of third parties in connection with its registration, construction,
maintenance, site hosting, content and operation of the Optical Website. For the
avoidance of doubt, Operator's obligations under this provision shall be in
addition to those imposed by section 4 of the Agreement and not in lieu thereof.
3. Penney Website Link. Penney shall provide a link between its website at
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ or any successor website and the Optical Website. For the
avoidance of doubt, it is agreed that this provision shall not require Penney to
maintain the ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ website or any successor website. It is further
agreed that Penney may disable the link to the Optical Website in the event
system issues reasonably believed to be associated with the link arise, provided
that Penney promptly reports the disabling to Operator. Upon request, Operator
shall furnish a report(s) to Penney regarding the number of customers and
potential customers that visit the Optical Website.
4. Termination. Upon the expiration or termination of the Agreement,
Operator shall cease operation of the Optical Website and shall transfer and
assign to Penney the domain name registration ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and any other domain name containing Trademarks of Penney.
5. Content. All content of the Optical Website shall be consistent with
Penney's advertising practices and procedures. Operator shall furnish Penney an
opportunity to review and comment on all Optical Website content. In the event
that Penney notifies Operator that certain content is not consistent with
Penney's advertising practices and procedures, Operator shall have 48 hours
within which to either remove the offending content or modify the content to
comply with Penney's advertising practices and procedures.
6. Updates. The Merchandise listed on the Optical Website and the Optical
Website itself shall be updated by Operator at least annually.
7. Confidentiality. All information, including without limitation, names,
addresses, email addresses, and credit and debit card account numbers, gathered
from the Optical Website shall be subject to the provisions of section 15 of the
Agreement relating to the ownership, confidentiality and use of customer names
and other information related to the operation of the Licensed Departments. Upon
Penney's request or the expiration or termination of the Agreement, Operator
will furnish copies of that information to Penney. Additionally, Operation shall
use all such
information solely in accordance with Penney's and Operator's published website
privacy policies.
8. Privacy Policy. Operator shall adopt, publish on the Optical Website and
abide by a privacy policy regarding the use or information gathered from the
Optical Website and such policy shall be substantially the same as Penney's
website privacy policy or contain such other terms as are approved by Penney.
9. Information Security. Operator shall implement and maintain appropriate
administrative, technical, and physical safeguards to (i) protect the security,
confidentiality, and integrity of all information about customers or potential
customers, including without limitation names, addresses, email addresses, and
credit and debit card account numbers; (ii) protect against any anticipated
threats or hazards to the security or integrity of that information; and (iii)
protect against unauthorized access to or use of that information or associated
records which could result in substantial harm or inconvenience to any customer.
Operator shall also require that any third party to which information about
customers or potential customers is transferred by or on behalf of Operator
implements and maintains safeguards meeting the above standards. Without
limitation, Operator shall (i) establish and maintain a web site security policy
and shall host the Optical Website on a server(s) that maintains the security of
the data, identifies and prevents intruder activity, maintains the security of
data, identifies and prevents intruder activity, maintains expected
functionality and controls proprietary software and (ii) encrypt all credit card
transactions. If Operator connects to Penney's network via dial-up, leased line,
or the Internet, Operator shall complete Penney's security questionnaire and
satisfy Penney's connectivity requirements. If Operator personnel access
Penney's network, Operator shall cause such personnel to comply with Penney's
access requirements. Operator shall immediately give notice to Penney if it
reasonably believes or has a reasonable suspicion that unauthorized use or
unauthorized disclosure of confidential customer information has occurred and
agrees to promptly take action to stop and or remedy any such unauthorized use
or unauthorized disclosure. Operator agrees that Penney, at any reasonable time
and place, and upon reasonable notice, may examine Operator's books, records and
procedures relevant to the Optical Website to verify compliance with the terms
of this section.
10. Performance Standards. Operator will cause the Optical Website to meet
the minimum performance standards set forth in Schedule 1 to this Fifth
Amendment and will report to Penney monthly regarding its performance.
11. Order Fulfillment. Operator will maintain a sufficient inventory of
Merchandise to reasonably satisfy all orders received from Optical Website
customers in a timely fashion.
12. Shipping. Operator will ship Merchandise directly to each customer
ordering Merchandise through the Optical Website. Operator may not insert any
product offers or written materials of Operator (other than those pertaining
solely to JCPenney Optical Centers) or a third party without the prior approval
of Penney.
13. Credit and Off-line Debit Card Transactions.
(a) Operator shall accept the JCPenney credit card, and American
Express, Discover, MasterCard and Visa credit and debit cards in
payment for Merchandise ordered from the Optical Website.
(b) Operator shall submit all credit and debit card transactions in
connection with orders of Merchandise from the Optical Website to
Penney for authorization, processing and settlement. Operator shall
follow all authorization, processing and settlement procedures
furnished to it by Penney from time to time.
(c) Operator shall be liable, and reimburse Penney, for any and all
amounts "charged back" to Penney by credit or debit card issuers in
connection with purchases of Merchandise from the Optical Website.
Penney is permitted to deduct such amounts from any payments due
Operator. Penney shall cooperate with Operator to challenge
chargebacks. Operator shall follow all chargeback-handling procedures
furnished to it by Penney from time to time.
(d) Operator shall reimburse up to and including $100,000 of Penney's
costs in developing and modifying its information systems in order to
implement the authorization, processing and settlement of credit and
debit card sales of Merchandise on the Optical Website. For the
avoidance of doubt, Operator acknowledges that such payment is over
and above any amounts that Operator has agreed to pay pursuant to
section 5(b) of the Agreement.
14. Returns. Defective or Damaged Merchandise. The Optical Website shall
contain Operator's policy regarding returns, and defective or damaged
Merchandise. That policy shall provide that all returns of Merchandise purchased
from the Optical Website, whether or not damaged or defective, are to be made to
an address specified by Operator and not to Operator's in-store Licensed
Departments or to Penney's stores. Operator shall promptly issue any credits due
to customers in connection with such returns.
15. Customer Service Communications. Operator will maintain a toll free
telephone number and an e-mail address for customer service communications
relating to Merchandise purchases from the Optical Website and will promptly
respond to all such communications. Penney will promptly forward to Operator any
such customer service communications received by Penney.
ARTICLE II
Schedule A to the Agreement is hereby amended by deleting paragraph 5 of
such Schedule in its entirety and substituting the following Paragraph 5 in its
place:
"5. License fees:
Percentage of cash Net Sales, excluding doctor's fees received in cash
by doctors within a Licensed Department: [CONFIDENTIAL]
Percentage of credit and debit card Net Sales, excluding doctors' fees
received by doctors within a Licensed Department: [CONFIDENTIAL]
Percentage of doctors' fees received through credit and debit card
sales by doctors within a Licensed Department: [CONFIDENTIAL]
Percentage of Net Sales, excluding shipping, from orders placed
through the Optical Website: [CONFIDENTIAL]
ARTICLE III
The parties agree that all references to "credit sales" or "credit card
sales" contained in the Agreement shall be deemed to include sales charged to
debit cards as well as credit cards.
ARTICLE IV
Section 13, Taxes and Fees, of the Agreement is hereby amended as follows:
(a) deleting the following provision from the first sentence: "provided,
however, that state and local retail sales taxes assessed upon
Licensed Department sales shall be collected by Penney and remitted
directly to the appropriate taxing authorities; and
(b) adding the following provision to such section 13:
"State and local retail sales taxes assessed upon Licensed Department
sales shall be collected by Operator and remitted directly to the
appropriate taxing authorities."
ARTICLE V
Except as expressly modified by this Amendment, all terms and conditions of
the Agreement, as previously amended by Amendment Number 1, Amendment Number 2,
Amendment Number 3, and Amendment Number 4 shall remain in full force and
effect. All terms and provisions of the Agreement, as so amended, not
specifically amended by this Fifth Amendment shall apply to the Optical Website.
IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to
Licensed Department Agreement to be executed as of the day of September 2003.
U. S. VISION, INC. ▇.▇. ▇▇▇▇▇▇ CORPORATION, INC.
By: JCP Procurement & LP as agent
▇.▇. Penney Corporation, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ C. Haggatt
--------------------------------- ----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: C. Haggatt
Title: Chief Executive Officer Title: Procurement Group Mgr.
and Chairman of the Board
Recommended by /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Procurement Agent
