Exhibit 10.1
SETTLEMENT AGREEMENT AND MUTUAL
RELEASE
This Settlement Agreement and Mutual
Release (“Settlement Agreement”) is entered into by and
among 1-800 CONTACTS, Inc., Vision Direct, Inc., and drugstore.com,
inc. as follows:
DEFINITIONS
The following definitions shall
apply to this Settlement Agreement:
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A.
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The term
“1-800 Contacts” shall refer to 1-800 CONTACTS,
Inc.
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B.
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The term
“Vision Direct” shall refer to Vision Direct,
Inc.
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C.
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The term
“Drugstore.com” shall refer to drugstore.com,
inc.
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D.
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The term
“Effective Date” shall refer to May 8, 2009 as the
effective date of this Settlement Agreement.
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E.
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The term
“New York Action” shall collectively refer to the
action filed by 1-800 Contacts against Vision Direct, on or about
February 27, 2008, titled 1-800 Contacts, Inc. v. Vision
Direct, Inc., No. 08-cv-1949, which is pending in the
United States District Court for the Southern District of New York,
and the counterclaim asserted by Vision Direct against 1-800
Contacts.
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F.
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The term
“Utah Action” shall refer to the action filed by 1-800
Contacts against Vision Direct and Drugstore.com on or about
February 26, 2008, titled 1-800 Contacts, Inc. v.
Drugstore.com, Inc. and Vision Direct, Inc.,
No. 08-cv-00157, which was subsequently dismissed from the
United States District Court for the District of Utah, Central
Division for improper venue.
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G.
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The term
“Dispute” shall collectively refer to the New York
Action, the Utah Action, and all claims raised in the New York
Action and the Utah Action.
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H.
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The term
“2004 Settlement Agreement” shall refer to a prior
settlement agreement entered into by 1-800 Contacts and Vision
Direct effective June 24, 2004 (the “2004 Settlement
Agreement”).
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I.
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The term
“trademark” or “trademarks” shall refer to
trademarks, trade names or service marks.
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J.
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The term
“Settlement Sum” shall refer to the payment of Four
Hundred Seventy Five Thousand Dollars ($475,000) to 1-800 Contacts
by Vision Direct. The Settlement Sum reflects a partial
reimbursement of 1-800 Contacts’ attorneys’
fees.
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K.
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The term
“Parties” refers to 1-800 Contacts, Vision Direct and
Drugstore.com.
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L.
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The term
“Negative Keyword List” shall refer to each list of
negative keywords to be implemented by each Party for the purpose
of preventing a Party’s Internet advertising from appearing
in response to a search for another Party’s Intellectual
Property Rights, which are currently set forth in Exhibits A and B
to the Order of Permanent Injunction to be submitted to the Court
in the New York Action, as updated in accordance with the procedure
set forth in this Settlement Agreement.
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M.
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The term
“Intellectual Property Rights” shall refer to: (a)(1) a
Party’s trademarks, (2) any identical or confusingly
similar variation of the Party’s trademarks, (3) domain
names containing the Party’s trademarks, (4) domain
names containing any identical or confusingly similar variation of
the Party’s trademarks, (5) URLs containing the
Party’s trademarks, or (6) URLs containing any identical
or confusingly similar variation of the Party’s trademarks;
and (b) that are used by the Party in good faith in commerce
for the purpose of selling contact lenses.
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RECITALS
WHEREAS, the Dispute arises out of
the allegations that Vision Direct’s Internet advertisement
appeared in the search results pages of one or more Internet search
engines when a user searched for 1-800 Contacts.
WHEREAS, 1-800 Contacts claims that
the appearance of such Internet advertisements violates the 2004
Settlement Agreement, and infringes 1-800 Contacts’
trademarks;
WHEREAS, Vision Direct and
Drugstore.com have raised a concern that an agreement with a
competitor to implement negative keywords could implicate the
antitrust laws of the United Sates, and 1-800 Contacts has taken
the position that no antitrust laws would be violated by such an
agreement;
WHEREAS, the Parties, without any
admission of wrongdoing or liability and without conceding any
infirmity in any claim or defense asserted or intended to be
asserted, wish to resolve the Dispute and mutually agree to release
each other from any claims arising from or related to said Dispute,
on the terms set forth in this Settlement Agreement.
TERMS
The Parties agree to resolve the
Dispute as follows:
1. Consideration. In
consideration for the Release of Claims and other provisions set
forth in this Settlement Agreement, and upon full execution of this
Settlement Agreement:
(a) Vision Direct will pay the
Settlement Sum by wire transfer to 1-800 Contact’s account on
or before June 6, 2009, unless the payment date is extended as
provided for in this Settlement Agreement, as follows:
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Account Name:
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1-800 Contacts,
Inc.
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Bank
Name:
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Zion First
National Bank
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Account
No.:
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071014039
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ABA Routing No.:
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124000054
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SWIFT
Code:
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ZFNBUS55
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(b) The parties will comply with the
operating terms set forth in Exhibit 2.
2. Release of Claims Against
Vision Direct and Drugstore.com . Except with respect to the
obligations created by or arising out of this Settlement Agreement,
1-800 Contacts, on behalf of itself and its officers, directors,
employees accountants, experts, investors, agents, shareholders,
administrators, attorneys, divisions, affiliates, subsidiaries,
parent entities, assigns, predecessor and successor entities,
hereby fully and forever releases and absolutely discharges Vision
Direct and Drugstore.com and their respective officers, directors,
employees, investors, shareholders, administrators, attorneys,
affiliates, divisions, subsidiaries, parent entities, predecessor
and successor corporations, and assigns from, and agrees not to sue
concerning, any claim, demand, duty, debt, liability, account,
reckoning, obligation, cost, expense, lien, attorneys’ fee,
action, cause of action, or rights 1-800 Contacts has or may have
against Vision Direct and/or Drugstore.com as of the Effective
Date, known or unknown, accrued or unaccrued, relating
to:
(a) any and all claims relating to
the Dispute, including all claims that were alleged or could have
been alleged in the Dispute;
(b) any and all claims relating to
or arising from a breach of the 2004 Settlement Agreement,
including all claims that were or could have been
alleged;
(c) any and all claims relating to
the appearance of a Party’s Internet advertisement in
connection with the sale of contact lenses, in response to an
Internet search for another Party’s Intellectual Property
Rights; and
(d) any and all claims for
attorneys’ fees and costs incurred in connection with the
Dispute.
3. Release of Claims Against
1-800 Contacts . Except with respect to the obligations created
by or arising out of this Settlement Agreement, Vision Direct and
Drugstore.com, on behalf of themselves and their respective
officers, directors, employees, accountants, experts, investors,
agents, shareholders, administrators, attorneys, divisions,
affiliates, subsidiaries, parent entities, assigns, predecessor and
successor entities, hereby fully and forever release and absolutely
discharge 1-800 Contacts, its officers, directors, employees,
investors, shareholders, administrators, attorneys, affiliates,
divisions, subsidiaries, parent entities, predecessor and successor
corporations, and assigns from, and agree not to sue concerning,
any claim, demand, duty, debt, liability, account, reckoning,
obligation, cost, expense, lien, attorneys’ fee, action,
cause of action, or rights Vision Direct and/or Drugstore.com has
or may have against 1-800 Contacts as of the Effective Date, known
or unknown, accrued or unaccrued, relating to:
(a) any and all claims relating to
the Dispute, including all claims that were alleged or could have
been alleged in the Dispute;
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(b) any and all claims relating to
or arising from a breach of the 2004 Settlement Agreement,
including all claims that were or could have been
alleged;
(c) any and all claims relating to
the appearance o
