Exhibit 10.35

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote such omissions.

 

MASTER CONTRACT FINANCING PROGRAM AGREEMENT

 

This Master Contract Financing Program Agreement (“Agreement”) is entered into
as of November 18, 2003, between Lifeline Systems, Inc., a Massachusetts
corporation with a principal place of business at 111 Lawrence Street,
Framingham, MA 01702 (“Lifeline”) and De Lage Landen Financial Services, Inc.
(“DLL”), a Michigan corporation, having a business office located at 1111 Old
Eagle School Road, Wayne, Pennsylvania 19087.

 

Recital of Facts. This Agreement is entered into in reference to the following
facts:

 

a. Lifeline is engaged in the sale of medical equipment and, in connection
therewith, desires to offer its customers the opportunity to lease, rent and/or
use such equipment (“Equipment”) and any associated software license
(“Software”) for commercial or business purposes. DLL and Lifeline desire to
establish a private label lease program whereby Lifeline will offer DLL the
opportunity to enter into (in the name Lifeline Capital, a program of Lifeline
Systems, Inc. pursuant to the terms of this Agreement) lease agreements (“Lease
Agreements”) and rental agreements (“Rental Agreements”) with certain customers
(the “Lessees/Customers”) for the Equipment (such lease agreements and rental
agreements may hereafter be referred to as “Contracts”) identifying Lifeline as
the Lessor and Lifeline will sell and/or assign to DLL all of Lifeline’s right,
title and interest in and to a Contract together with any guaranties given to
secure a Lessee’s/Customer’s performance of the Contract (“Guaranty”), all
purchase orders and invoices relative to any Equipment subject to a Contract and
all payments due or to become due pursuant to such a Contract (“Payments”);

 

b. DLL agrees, at its sole discretion, to purchase from Lifeline and accept the
assignment of Lifeline’s interest in the Contracts, including any Guaranties,
all purchase orders and invoices relative to any Equipment subject to a
Contracts, and the Payments due under each Contract and to service Contracts
assigned from Lifeline in the name of Lifeline, upon the terms and conditions
contained herein.

 

THEREFORE, in consideration of the mutual covenants and agreements contained in
this Agreement, and for other valuable consideration received by Lifeline, and
intending to be legally bound, the parties hereby agree as follows:

 

SECTION ONE - CONDITIONS OF AGREEMENT

 

As conditions precedent to the effectiveness of this Agreement, Lifeline and DLL
shall deliver the following documents in form and substance satisfactory to each
party:

 

a. Duplicate originals of this Agreement duly executed by each party;

 

b. A Secretary’s Certificate executed by the Secretary of Assistant Secretary of
each party certifying that the party is authorized to enter into this Agreement
and that the individual executing this Agreement on behalf of the party is
authorized to do so.

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SECTION TWO - CONTRACT ORIGINATION

 

2.1 Credit Review. DLL requires complete credit and financial information on
each prospective Lessee/Customer in order to complete its credit review. For
each proposed Contract, Lifeline shall provide DLL with or assist DLL in
obtaining the following:

 

a. A full and complete description of the Equipment, including its cost;

 

b. The terms of the proposed Contract;

 

c. A complete and legible copy of the Contract; and

 

d. All pertinent details and other such credit and financial data as DLL might
require.

 

2.2 Rejection Notification. In the event Lessee’s/Customer’s application is
declined and the Lessee’s/Customer’s application is not accepted by another
leasing source, DLL will provide Lifeline with the necessary information to
enable Lifeline to send the Lessee/Customer the required notification pursuant
to Regulation B of the Equal Credit Opportunity Act and the Fair Credit
Reporting Act (“Credit Laws”) and Lifeline agrees to send the required
notification to the Lessee/Customer. Lifeline agrees to indemnify and hold DLL
harmless at Lifeline’s expense for any and all claims and/or actions or losses
arising out of or in connection with Lifeline’s failure to comply with the
notice requirements as set forth in the Credit Laws.

 

2.3 Credit Approvals. Credit approvals shall remain in effect for a period of
ninety (90) days after the approval date subject to cancellation by DLL with
respect to any such Lessee/Customer before the end of such ninety (90) day
period if DLL determines, in its sole and absolute discretion, that: (i) the
operational business or financial condition of such Lessee/Customer has
materially and adversely changed, (ii) any material representation made by
Lifeline or any affiliate or agent or any Lessee/Customer in the related credit
application or in any applicable evaluation information or otherwise is false or
misleading, or (iii) Lifeline is in default or an event has occurred with
respect to Lifeline which, with the passage of time or the giving of notice or
both, would become a default under this Agreement. The default in sub-part (iii)
above will be subject to applicable cure periods set forth in this Agreement.

 

2.4 Rates.

 

a. DLL shall provide Lifeline with its current rate cards reflecting its current
Contract rates (the “Rates”). The Rates are subject to adjustment at any time
based on a change in like term United States Treasury Note rates of [**] or
more, as reflected in the Dow Jones Telerate Service. In the event this index is
not available, the parties shall agree on the use of an alternate index. DLL
shall also have the option to increase or decrease Rates applicable to Contracts
on a quarterly basis and such Rate increases or decreases will be implemented on
the first day of the quarter after DLL calculates the new Rates. For Contracts
which are credit approved prior to the Rate increase or decrease, DLL will hold
the Rates for an additional thirty (30) days. DLL agrees to provide Lifeline
with written notice of any change in Rates prior to any adjustment.

 

b. All trade-up and buyout values from previous transactions will be priced at
DLL’s current rates or on a one-dollar purchase option basis as set forth in
Section 3.2.

 

2.5 Types of Contracts. The following types of Contracts are eligible for
inclusion in this Program (all such Contracts shall be in form and substance
satisfactory to DLL):

 

a. Contract With Fair Market Value Purchase Option. A Lessee/Customer entering
into a Contract with a fair market value purchase option may purchase the
Equipment at the end of the Contract term for its then fair market value.

 

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b. Dollar Purchase Option Contract. A Lessee/Customer entering into a Contract
with a dollar purchase option is entitled to purchase the Equipment at the end
of the Contract term for $1.00.

 

c. Fixed Price Purchase Option Contract. A Lessee/Customer executing a Contract
containing a fixed price purchase option is extended the right to purchase the
Equipment at the end of the Contract term for an amount equal to the stated
purchase price.

 

d. Coterminous Addendum. A Lessee/Customer may add like or related Equipment to
its existing Contract by use of a Contract Addendum which lease of additional
Equipment shall be coterminous with the Contract as amended by the Addendum. The
Contract Payments shall be increased to reflect the additional Equipment.

 

2.6 Contract Documentation.

 

a. General

 

1. All sales and Contract documentation shall be prepared by DLL and identified
with the inclusion of Lifeline’s name and logo as Lessor or Owner on Contracts
to be assigned to DLL.

 

2. Each Equipment invoice must have an Equipment cost equal to or greater than
$[**] and the minimum monthly payment on any transaction must be $[**] or more.

 

SECTION THREE - PURCHASE OR ACCEPTANCE OF CONTRACTS

 

3.1 Conditions Precedent to Purchase or Accept a Contract. The obligation of DLL
to purchase or accept any Contract hereunder shall be subject to the
satisfaction of the following conditions precedent:

 

a. DLL’s receipt of all required credit information and Contract documents
including UCC-1 Financing Statements, deemed necessary by DLL;

 

b. DLL’s credit approval of the Lessee/Customer;

 

c. As assignment of Lifeline’s right, title and interest in and to purchase
orders and invoices relative to the Equipment being effected in accordance with
Section 4;

 

d. DLL’s written or verbal confirmation that the Lessee/Customer has accepted
the Equipment; and

 

e. Lifeline shall have performed and complied in all material respects with all
covenants, agreements and conditions contained in this Agreement, which are
required to be performed or complied with by Lifeline as part of or prior to the
date DLL accepts the Contract.

 

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3.2 Funding.

 

a. Upon satisfaction of the conditions precedent set forth in Section 3.1 above,
DLL will fund Lifeline the Equipment cost and may, at its sole discretion,
permit Soft Costs (as defined below) to be included in the amount funded on the
Contracts. Soft Costs are defined as all non-Equipment items and may include,
but are not limited to: service, maintenance, supplies, reagents, installation,
delivery, and shipping and handling. In the event that Lifeline sells an
additional contract where soft costs relate to service and maintenance, Lifeline
will retain ownership in relation to the servicing contract. Lifeline has
advised or will advise each Lessee/Customer of the availability of the service
and maintenance agreements for Equipment covered under any Contract for a term
not shorter than the remaining term of such Contract and on such terms and at
rates determined by Lifeline.

 

b. Lifeline will provide DLL with an original invoice for the Equipment and the
Soft Costs and each invoice must itemize the Equipment (including serial
numbers) and the Soft Costs, including the price for each item of Equipment and
a breakdown of Soft Costs, if any.

 

c. Subject to DLL’s approval of any trade-up or buyout, Lifeline must provide
DLL with a written trade-up or buyout amount for an existing transaction (not
financed by DLL) from the original funding source. DLL will forward the trade-up
and buyout amount directly to the original financing source.

 

d. Any Soft Costs not funded by DLL along with payment of the Equipment price
will be remitted to Lifeline as collected by DLL on a semi-monthly basis. In the
event DLL collects less than the full Payment and any related Soft Costs being
billed by DLL on behalf of Lifeline, the amount so collected shall be applied
first to the Payment owing to DLL and next to the Soft Costs owing to Lifeline.

 

e. DLL will fund Lifeline via Automated Clearing House transfer as agreed upon
by the parties.

 

3.3 True Sale. The parties agree that, upon Lifeline’s receipt of the purchase
price of the Equipment, Lifeline sells and assigns to DLL all of Lifeline’s
right, title and interest in and to the Equipment free and clear of all liens
and encumbrances. This Agreement shall constitute a blanket bill of sale for all
Equipment subject to this Agreement. Notwithstanding the foregoing, in the event
this Agreement is deemed to be one intended as security with respect to the
Equipment subject to this Agreement, then Lifeline grants to DLL a first
priority security interest in such Equipment and shall take such action as
necessary to perfect DLL’s interests. Further, Lifeline agrees that DLL may file
Uniform Commercial Code financing statements against Lifeline against the
Equipment subject hereto as determined by DLL at its sole discretion.

 

SECTION FOUR - GRANTING CLAUSE

 

On all Contracts to be assigned to DLL, Lifeline hereby sells, assigns and
transfers and sets over to DLL, its successors and assigns all of its right,
title and interest in (a) any Contract, including any Guaranty, financing
statements, insurance policies and all documents related thereto and submitted
to DLL for approval and accepted by DLL; (b) all Payments due and to become due
thereunder; (c) all purchase orders and invoices related to the Equipment
subject to the Contract, it being understood that title to the Equipment passes
directly to DLL upon DLL’s funding of the purchase price; and (d) all of
Lifeline’s rights and remedies thereunder. Lifeline hereby subordinates its
rights under any Contract or other agreement between a Lessee/Customer and
Lifeline or otherwise against a Lessee/Customer to any rights DLL may now or
hereafter have against a Lessee/Customer relative to an assigned Contract or

 

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otherwise. Lifeline will execute and deliver such further documents including,
but not limited to, assignments or notices thereof and take such further action
as DLL may reasonably request to effectuate this assignment.

 

SECTION FIVE - REPRESENTATIONS, WARRANTIES AND COVENANTS

 

5.1 Mutual Representations and Warranties. DLL and Lifeline each represents and
warrants to the other as follows:

 

a. It is a duly organized and validly existing corporation and has full power to
enter into this Agreement and to carry out the transactions contemplated hereby
and is in good standing in the state of its incorporation;

 

b. The execution and delivery of this Agreement and the performance by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and do not violate the terms of it’s articles of incorporation
or organization, bylaws or any other agreement to which it is bound and no
approvals or consents other than those already obtained are required from any
shareholders, members, government entity or any other person or entity to
consummate the transactions hereunder, and this Agreement constitutes a legal,
valid and binding obligation enforceable in accordance with its terms; and

 

c. It has all governmental approvals, permits, certificates, inspections,
consents and franchises necessary to conduct its respective business,
substantially as now conducted and to own or finance and operate its properties
as now owned, financed or operated by it, except where the failure to obtain any
of the foregoing does not materially and adversely impair the ability of each to
operate its business or to perform its obligations under this Agreement.

 

5.2 Representations, Warranties and Covenants of Lifeline. Lifeline represents
and warrants to DLL that as of the date each Contract is submitted for approval
and assigned to DLL and covenants at all times thereafter as follows:

 

a. The Contract and related Guaranty conform, in form and substance, to the form
of Contract and Guaranty approved by DLL for this Program.

 

b. Lifeline has delivered the sole original of the Contract and any related
Guaranty to DLL and Lifeline has not pledged, assigned, sold, granted a security
interest in, or otherwise placed a lien upon such Contract or Guaranty except as
set forth herein. Lifeline agrees to execute and deliver, or cause to be
executed and delivered such documents to evidence the passage of title free and
clear of any liens or encumbrances arising through Lifeline.

 

c. To the extent Lifeline is involved in the documentation, execution or
delivery of the Contract, the Contract and all related documents, including any
Guaranty, have been duly authorized, executed and delivered and are a legal,
valid and binding obligation of the Lessee/Customer enforceable in accordance
with its terms. To the extent Lifeline is not involved in the documentation,
execution or delivery of the Contract, to the best of Lifeline’s knowledge, the
Contract and all related documents, including any Guaranty, have been duly
authorized, executed and delivered and are a legal, valid and binding obligation
of the Lessee/Customer enforceable in accordance with its terms. There are no
other agreements between Lifeline and the Lessee/Customer or any guarantor which
will modify, amend or waive any terms or conditions of the Contract or Guaranty.
The only expressed or implied warranties or representations made by Lifeline or
its agents to the Lessee/Customer are those contained in the manufacturer’s
standard product warranty or any maintenance agreement. There are no set-offs,
counterclaims or defenses on the part of the Lessee/Customer to make the
payments except as the foregoing may be limited by bankruptcy, insolvency or
similar laws affecting creditor rights generally.

 

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d. Lifeline and its agents, and employees have not committed any fraudulent act
or participated in any fraudulent act or activity in connection with the
execution, delivery or assignment of the Contract or any Guaranty or the
performance of this Agreement.

 

e. Ownership of the Equipment shall be vested in DLL upon its initial funding to
Lifeline, free and clear of any and all liens and encumbrances whatsoever and
such sale shall vest DLL with full, complete and unencumbered title to the
Equipment and unless otherwise set forth in the Contract, the Equipment shall be
new and unused when it is delivered to the Lessee/Customer.

 

f. Lifeline will perform such maintenance and service and provide such supplies,
other Soft Costs and warranties as agreed to by Lifeline and Lessee/Customer,
for the Equipment and/or as required by the Contract. In the event that Lifeline
sells an additional contract where soft costs relate to service and maintenance,
Lifeline will retain ownership in relation to the servicing contract. Lifeline
has advised or will advise each Lessee/Customer of the availability of the
service and maintenance agreements for Equipment covered under any Contract for
a term not shorter than the remaining term of such Contract and on such terms
and at rates determined by Lifeline.

 

g. To the best of Lifeline’s knowledge, all credit information concerning the
Lessee/Customer or Lessee’s guarantor, if any, given to Lifeline and relative to
DLL’s evaluation of such Contract application, has been disclosed to DLL
(including information of any fact or circumstance which would constitute a
default under a Contract).

 

h. All applicable sales, use or property taxes which may apply to the value,
sale or use of the Equipment other than those assessed or imposed at or after
the time DLL acquires the Equipment, shall have been paid to the appropriate
taxing authority.

 

i. To the best of Lifeline’s knowledge, the Lessee/Customer has not been or is
not currently in default under the Contract and there has been no event which,
with the giving of notice or the passage of time, would constitute an event of
default under the Contract.

 

j. Lifeline has not received any Payments, or other money from the
Lessee/Customer or any guarantor of the Contract which by agreement belongs to
DLL and will immediately remit such funds to DLL if any are received by
Lifeline.

 

k. Lifeline’s conduct in soliciting, arranging or consummating the Contract or
in accepting any Guaranty has not violated in any material respect any federal
or state law, rule or regulation which will result in the rescission of any
Contract.

 

l. Lifeline will not take any action or omit to take any action which will cause
the Contract or any related document, including any Guaranty, to become invalid,
cancelable or unenforceable.

 

m. Lifeline covenants that (1) no Equipment shall be delivered to a
Lessee/Customer prior to DLL’s issuance of a purchase order to Lifeline for such
Equipment or (2) in the event Equipment was shipped to a Lessee/Customer prior
to DLL’s issuance of a purchase order to Lifeline for such Equipment, Lifeline
will provide DLL with written notice of any such Equipment that was delivered to
the Lessee/Customer prior to DLL’s issuance of a purchase order and such notice
shall include the date on which such Equipment was shipped to such
Lessee/Customer.

 

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5.3 Representations and Warranties of DLL. DLL represents and warrants to
Lifeline that as of the date each Contract is accepted by and assigned to DLL
and covenants thereafter as follows:

 

a. DLL and its agents and employees have not committed and will not commit any
fraudulent act or have not participated and will not participate in any
fraudulent act or activity in connection with the execution and performance of
the Contract, any related Guaranty, or this Agreement.

 

b. The conduct of DLL in processing any Contract application, including the
granting or denial of credit, and the servicing of the Contract, and any
Guaranty in the name of Lifeline, has not violated and will not violate in any
material respect any federal or state law, rule or regulation.

 

c. DLL has not taken and will not take any action or omit to take any action
which will cause the Contract and all related documents, including any Guaranty,
or the collection of Payments due thereunder, to become invalid, or
unenforceable.

 

d. If DLL receives any funds which by this Agreement belong to Lifeline, DLL
will immediately remit such funds to Lifeline via ACH.

 

e. DLL has and will conduct all of its activities relative to the
Lessee/Customer, any guarantor, and the Contract and any Guaranty, including
without limitation, the collection of Payments due thereunder, reasonably,
fairly, and in good faith.

 

5.4 Additional Affirmative Covenants of Lifeline.

 

a. In the sole event that the following information is no longer publicly
available, from the date hereof until the date on which all obligations of
Lessees/Customers under all Contracts have been fully paid and otherwise
discharged, Lifeline shall deliver to DLL the following, which shall be prepared
in accordance with generally accepted accounting principles and practices,
consistently applied:

 

1. As soon as available, but not later than ninety (90) days after the close of
each of the first three (3) quarters of each fiscal year, Lifeline’s balance
sheet as of the close of such quarter and Lifeline’s statement of income and
retained earnings and of changes in financial position for such quarter and that
portion of the fiscal year ending with such quarter, prepared on a consolidated
basis and certified by a responsible officer of Lifeline as being complete and
correct and fairly representing Lifeline’s financial condition and results of
operations;

 

2. As soon as available, but no later than ninety (90) days after the close of
each fiscal year, a complete copy of Lifeline’s balance sheet as of the close of
such year and Lifeline’s statement of income and retained earnings and changes
in financial position for such year, prepared on a consolidated basis and
certified by a public accounting firm of recognized standard.

 

b. Lifeline will promptly fulfill and perform all obligations, covenants,
liabilities, warranties and duties, if any, on its part to be fulfilled and
performed in connection with a Contract and any other agreements or instruments
executed by Lifeline with respect to the installation, maintenance or servicing
by Lifeline of the Equipment covered by a Contract. DLL, or any subsequent
assignee, shall have no obligation or liability under a Contract and shall not
be obligated to perform any of Lifeline’s obligations thereunder; Lifeline’s
obligations under a Contract may be performed by DLL or any subsequent assignee
only after a default, however, without releasing Lifeline therefrom.

 

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c. Lifeline will inform DLL promptly of any default by a Lessee/Customer under
any other Lifeline agreement of which Lifeline becomes aware.

 

d. For the term of any Contract, Lifeline shall advise DLL of any matter of
which Lifeline has knowledge which may be detrimental to a Lessee’s/Customer’s
financial condition.

 

e. So long as this Agreement is in effect, Lifeline will notify DLL of any
change in the persons authorized to represent Lifeline in the transactions
contemplated hereby and in the event of any such change will provide DLL with
updated evidence of authority and specimen signatures for each individuals.

 

SECTION SIX - CONTRACT SERVICING

 

6.1 Servicing of Contracts.

 

a. DLL, as assignee of Lifeline and owner of the Contracts and Equipment, shall
provide general administrative services with respect to the Contracts in the
name of Lifeline, including billing and collecting all Payments, fulfilling the
obligations as Lessor or Owner under the Contracts, the enforcement of DLL’s
rights under the Contracts including any Guaranty, and/or this Agreement and the
taking of such other actions that may be necessary to protect DLL’s rights and
interest in and to the Contracts including any Guaranty and/or in and to the
Equipment. DLL shall invoice each Lessee/Customer for all amounts due under a
Contract in the name of Lifeline and will direct the Lessee/Customer to make
Payments to the lockbox established in the name of DLL. DLL’s collection
personnel will perform collection activities in the name of Lifeline in
accordance with the power of attorney set forth in Section 8 and DLL will bill
and collect applicable use and property tax in the name of Lifeline, however,
DLL shall report and remit said taxes to the appropriate tax authorities on DLL
returns.

 

b. Upon the occurrence of an Event of Default as defined in a Contract, DLL
shall have the option to notify the Lessee/Customer and Guarantor, if any, of
the transfer and assignment of the Contract, and the purchase of the Equipment
subject to the Contract and shall thereafter conduct all future activities with
respect to the Contract (including, without limitation, billing and collecting
all payments due thereunder) in its own name and not under the name of Lifeline.

 

6.2 Servicing Lifeline’s Sales Organization. Lifeline agrees to provide DLL
under the terms of any signed non-disclosure agreement between the parties, with
full access to all sales personnel which shall include (a) providing DLL with a
list and periodic updates of Lifeline’s sales personnel; (b) providing DLL with
a periodic update of its designated branches; (c) providing DLL with periodic
sales results by unit and dollar amount for its branches; (d) facilitating the
attendance of DLL’s training personnel at scheduled Lifeline branch sales
meetings; (e) working with DLL to develop procedures to include lease/finance
proposals with all of Lifeline’s Equipment quotations; and (f) facilitating
attendance of DLL corporate personnel at scheduled Lifeline corporate and
designated regional marketing and strategic planning meetings.

 

6.3 Primary Source. Lifeline designates DLL as the primary source for senior
living and site monitored business units with a first right of refusal to
provide the leasing or rental services on any of Lifeline’s prospective
transactions and Lifeline shall inform all of its sales personnel that DLL has
been designated as the primary source to provide the leasing or rental services
for senior living and site monitored business units on any of Lifeline’s
prospective transactions.

 

6.4 Portfolio Reports. DLL shall provide periodic reports concerning the
activities of the Program as mutually agreed upon. All such reports to be in
such form and content as mutually agreed to by the parties.

 

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6.5 Insurance Program. Lifeline agrees that DLL in order to make its property
insurance program available to Lessees/Customers on individual Contracts (not
Master Agreements), DLL may provide any insurance broker or agent approved by
DLL, with information about the Lessee/Customer in the same nature and to the
same extent that DLL provides customer information to any approved party for
DLL’s Lessees/Customers. Lifeline agrees that any approved party, for purposes
of providing the property insurance program or any other approved insurance
program, may communicate with the Lessees/Customers to the extent any approved
party communicates with DLL’s Lessees/Customers and that all such communications
shall identify Lifeline and not DLL as the Lessor or Owner. Lifeline agrees that
in the event a Lessee/Customer accepts the property insurance program or any
other approved insurance program, DLL may add the insurance charges related to
the property insurance program or any other approved program to the regular
invoices sent to such Lessee/Customer. Lifeline agrees that the insurance
obtained by DLL through any approved party on the Contract shall name DLL as the
sole loss payee and that Lifeline shall have no interest in the policy or in any
of the proceeds of this insurance. DLL agrees to indemnify and hold Lifeline
harmless for any and all claims and/or actions arising out of or in connection
with DLL providing insurance coverage as herein contemplated.

 

6.6 Substituted Service/Maintenance and Pro Rata Refunds. In the event Lifeline
defaults on its contracted maintenance, service and/or repair responsibilities,
DLL may assign such maintenance, service or repair obligations to another
vendor. Upon such assignment, Lifeline shall no longer be entitled to any
service/maintenance payments received from a Lessee/Customer. In the event a
Lessee/Customer defaults on a Contract or Lifeline ceases or fails to provide
the required supplies, service and/or maintenance, Lifeline shall reimburse DLL
for all supplies, service and/or maintenance funded in advance on a prorata
basis from the date of default or the date Lifeline ceased to provide service,
supplies and/or maintenance.

 

6.7 Option to Repurchase Equipment - Defaults. Upon a Contract becoming ninety
(90) days past due, Lifeline shall have the option to purchase the Equipment
subject to such Contract for an amount equal to the greater of (i) the highest
bid received by DLL for such Equipment or (ii) [**] percent ([**]%) of the
original purchase price paid by DLL for the Equipment if the default occurs in
the first year of the Contract; [**] percent ([**]%) of the original purchase
price paid by DLL for the Equipment if the default occurs in the second year of
the Contract; [**] percent ([**]%) of the original purchase price paid by DLL
for the Equipment if the default occurs in the third year of the Contract; [**]
percent ([**]%) of the original purchase price paid by DLL for the Equipment if
the default occurs in the fourth year of the Contract; or [**] percent ([**]%)
of the original purchase price paid by DLL for the Equipment if the default
occurs in the fifth year of the Contract. Lifeline must exercise this option
within thirty (30) days of the Contract becoming ninety (90) days past due.

 

6.8 Equipment – End of Term. Upon (i) the expiration in due course of a
Contract, (ii) the Lessee/Customer not exercising any end of term purchase
option set forth in the Contract and returning the Equipment to DLL pursuant to
the terms of the Contract, and (iii) DLL’s receipt of the Unrecovered Investment
(as defined below), DLL shall and does hereby reassign and transfer to Lifeline
all of DLL’s right, title and interest in the Equipment subject thereto “AS IS”
and without warranty except that DLL represents and warrants that such Equipment
shall be free and clear of all liens and encumbrances created by or through DLL.
DLL shall have no liability to Lifeline to the extent the Lessee/Customer fails
to comply with the return provisions of the Contract for return of the Equipment
at the expiration of the Contract term; however, the parties shall operate in a
good faith manner and cooperate with each other with respect to Lifeline
attaining possession of the Equipment at Lifeline’s sole cost and expense.
Notwithstanding the foregoing, except as otherwise provided above in Section
6.7, Lifeline shall have no rights or interests in the Equipment subject to a
Contract upon any default thereunder and, upon the occurrence of any default
under a Contract, DLL shall be entitled to exercise any and all rights and
remedies available to DLL under the Contract (including, without limitation, the
repossession and sale of the Equipment).

 

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6.9 Renewal Payments. If a Contract is renewed beyond its original term as a
result of a Lessee/Customer’s failure to provide notice of its intent not to
renew the Contract or return the Equipment, any payments received during the
renewal period will be shared by Lifeline and DLL. Lifeline’s portion shall be
[**] percent ([**]%) of such payments and DLL’s portion shall be [**] percent
([**]%) of such payments. DLL shall bill and collect all such renewal payments.
DLL shall remit Lifeline’s portion of all renewal payments to Lifeline on a
quarterly basis via automated clearing house transfer or as otherwise agreed
upon by the parties.

 

SECTION SEVEN - SERVICE AGREEMENT

 

DLL agrees that Lifeline will be the exclusive provider of repair, maintenance
and warranty service for all Equipment sold pursuant to this Agreement. DLL
agrees to immediately forward all Lessee/Customer calls related to repair,
maintenance and warranty service to Lifeline’s service department.

 

SECTION EIGHT - REPURCHASE OF CONTRACTS

 

Breach of Contracts. If Lifeline has breached any of its representations,
warranties, covenants or other obligations contained in this Agreement and, as a
result of such breach, a Contract becomes in default, Lifeline shall have thirty
(30) days after receipt of notice from DLL to cure such breach. If Lifeline
fails in this regard, then Lifeline shall repurchase from DLL such Contract,
within three (3) business days of the receipt of such a request from DLL, for an
amount as follows:

 

a. An amount equal to the sum of: (i) the aggregate amount of all Payments and
other amounts presently due under the Contract, plus (ii) all future unpaid
Payments to be made under the Contract until the expiration of the initial term
of the Contract, plus the estimated fair market value of the Equipment at the
end of the initial term of the Contract with all accelerated payments and the
estimated fair market value of the Equipment discounted to the date of default
at the lesser of (A) a per annum interest rate equivalent to that of a U.S.
Treasury constant maturity obligation (as reported by the U.S. Treasury
Department) that would have a repayment term equal to the remaining Contract
term, all as reasonably determined by DLL; or (B) 3% per annum.

 

b. The amounts set forth in subparagraph a. above shall be referred to as
“Unrecovered Investment”. Upon receipt of the Unrecovered Investment, DLL shall
assign to Lifeline all of its right, title and interest of DLL in and to such
Contract, any related documents, including any Guaranty, the Equipment and the
payments, without warranty except that the same shall be re-assigned to Lifeline
free of all liens, encumbrances or interest arising through DLL.

 

c. In the event that DLL suffers a change in ownership that would potentially
affect the relationship between Lifeline and DLL, Lifeline will have the right,
without limitation, to repurchase all Contracts then subject to this Agreement
for the Unrecovered Investment of all such Contracts.

 

SECTION NINE - LIMITED POWER OF ATTORNEY

 

9.1 Limited Power of Attorney. For any Contract, Lifeline hereby constitutes DLL
its true and lawful attorney with full power in the name of Lifeline: to execute
Contracts; to lawfully ask, require, demand, receive, compound and give
acquittance for any and all Payments and claims for money due or to become due
under any Contract or any related Guaranty; to endorse any checks or other
instruments delivered to the lockbox or otherwise received by DLL and
constituting Payments or other sums legally due DLL under this Agreement; to
bill and collect from Lessee/Customer applicable use and property tax; and to
take such other action as necessary to effectuate the intent of this Agreement.

 

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9.2 Blanket Assignment. This Agreement shall constitute a blanket assignment of
Contracts and the assignment shall be effective for each Contract upon DLL’s
acceptance of such Contract.

 

SECTION TEN - INDEMNIFICATION AND LIMITATION OF LIABILITY

 

10.1 Indemnification.

 

a. Lifeline agrees to indemnify and hold harmless DLL and its affiliates,
subsidiaries, employees, officers and agents from any and all losses, claims,
liabilities, demands and expenses (“Losses”) whatsoever (including without
limitation reasonable attorneys’ fees) sustained by DLL in connection with or in
any way related to the breach of any of its representation, warranties,
covenants or other obligations under this Agreement. This indemnification shall
also apply to the assertion of any claims by the Lessee/Customer or any third
party based upon damage to the environment allegedly caused by the Equipment
and/or the assertion of claims based upon a theory of product liability or
strict liability and any claim asserted against DLL for United States patent,
trademark or copyright infringement.

 

b. DLL agrees to indemnify and hold harmless Lifeline and its affiliates,
subsidiaries, employees, officers, and agents from any Losses (including without
limitation reasonable attorneys’ fees) sustained by Lifeline in connection with
or in any way related to any breach by DLL of its representations, warranties or
covenants under this Agreement.

 

10.2 Survival of Indemnity. All obligations under this section shall survive any
expiration or termination of this Agreement and the termination of any Contract,
but in no event longer than the applicable statute of limitations.

 

SECTION ELEVEN - CONFIDENTIALITY

 

11.1 Confidentiality

 

a. Procedures. All documents transmitted by one party to the other during the
existence of this Agreement and identified on their face by the transmitting
party as confidential to the recipient shall not be disclosed to anyone other
than employees or independent contractors of the recipient. The recipient shall
undertake the following procedures to preserve the confidentiality of
Confidential Documents:

 

1. It shall limit the access of Confidential Documents to those who have need to
their access; and

 

2. It shall inform those who use Confidential Documents that they shall maintain
such documents as confidential.

 

b. Excluded Information. Section 11.1 shall not apply to information contained
in documents identified as confidential if such information is:

 

1. Known to the recipient, as shown by its written records, prior to the time of
receipt of such information under this Agreement.

 

2. Made publicly available by the transmitting party; or

 

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3. Made available to the recipient from a source under no duty of
confidentiality to the transmitting party.

 

SECTION TWELVE - GENERAL PROVISIONS

 

12.1 Independent Contractors. DLL and Lifeline are separate entities who have
entered into this Agreement for independent business reasons. Neither DLL nor
Lifeline have acted, act, or shall be deemed to have acted or act, as an agent
for the other, except with respect to those acts of DLL specifically permitted
to be taken and actually taken pursuant to and in accordance with the limited
power of attorney granted DLL by Lifeline in Section 8 hereof.

 

12.2 Term and Termination.

 

a. This Agreement shall be deemed effective upon its execution by DLL and
Lifeline. The term of this Agreement shall continue from such effective date for
one (1) year and will be automatically extended for successive one (1) year
periods unless either party to this Agreement shall notify the other party not
later than ninety (90) days prior to the end of the term that it elects not to
renew this Agreement. Except as otherwise specifically provided for below,
either party may terminate this Agreement at any time upon ninety (90) days
prior written notice if the other party: has suffered a material adverse change
in its financial, business or operating condition; shall fail to perform or
observe any material obligation, covenant, or agreement contained in this
Agreement, or in any other document or agreement in connection herewith or in
connection with any Contract or any Equipment, and such failure shall continue
for a period of ninety (90) days from notice thereof from the other party; or
any representation, warranty, covenant or agreement made by the non-terminating
party or in any other document or agreement in connection herewith shall prove
to have been materially false or misleading when made. Upon the occurrence and
during the continuance of a termination event involving Lifeline and a
termination by DLL, all obligations of DLL to evaluate Contract applications and
to grant approvals shall cease. Upon the occurrence and continuation of a
termination event involving DLL and a termination by Lifeline, all rights of DLL
to fund any unfunded proposed Contracts shall cease. Notwithstanding any
termination of this Agreement, the rights and obligations of the parties under
this Agreement with respect to the Contracts and Equipment assigned to DLL prior
to such termination shall remain in full force and effect until expiration of
all such Contracts.

 

12.3 Accounting. DLL and Lifeline shall cooperate with each other by furnishing,
subject to each party’s then-current internal policies, such records and
supporting material relating to Payments under this Agreement or Payments under
the Contracts as may be reasonably requested in the event either party is
audited by any taxing authority.

 

12.4 Assignability. The rights and obligations of the parties hereunder may not
be assigned without the prior written consent of the other party except DLL may
assign its rights under a Contract and the related Equipment as well as all
rights and obligations of DLL under this Agreement related to such Contract and
Equipment without the consent of Lifeline.

 

12.5 Notices. Notices under this Agreement shall be deemed to have been given if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, or by courier service to the other party at the address stated below
or such other address as such party may have provided by written notice.

 

If to DLL:

 

De Lage Landen Financial Services, Inc.

   

1111 Old Eagle School Road

   

Wayne, PA 19087

   

Attn: General Counsel

   

Fax: (610) 386-5440

 

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If to Lifeline:

 

 

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Attn:

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Fax:

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12.6 Governing Law; Consent to Jurisdiction; and Jury Trial Waiver. This
Agreement, all related documents and all related controversies shall in all
respects be governed by and construed in accordance with the internal laws of
the Commonwealth of Pennsylvania without giving effect to Pennsylvania choice of
law principles. Lifeline hereby: (i) submits to the non-exclusive jurisdiction
of the Courts of the Commonwealth of Pennsylvania and the Federal District Court
for the Eastern District of Pennsylvania for the purpose of any action or
proceeding arising out of or relating to this Agreement, (ii) agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such courts, (iii) irrevocably waives (to the extent permitted by applicable
law) any objection which it now or hereafter may have to the laying of venue of
any such action or proceeding brought in any of the foregoing courts and any
objection on the ground that any such action or proceeding in any such court has
been brought in an inconvenient forum, and (iv) agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.
LIFELINE AND DLL HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY.

 

12.7 Miscellaneous

 

a. Paragraph headings appearing in this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.

 

b. If at any time any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the enforceability of
any provision of this Agreement.

 

c. This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and incorporates all representations made
in connection with negotiation of the same.

 

d. The terms hereof may not be terminated, amended, supplemented or modified
orally, but only by an instrument in writing duly authorized by each of the
parties hereto.

 

e. This Agreement and any amendments hereto shall be binding on and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.

 

f. This Agreement may be executed by one or more of the parties on any number of
separate counterparts each of which counterparts shall be an original, but all
of which when together shall be deemed to constitute one and the same
instrument.

 

LIFELINE SYSTEMS, INC.

A Massachusetts corporation

111 Lawrence Street,

Framingham, MA 01702

 

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BY:

 

/s/ Mark Beucler

--------------------------------------------------------------------------------

PRINT NAME: Mark Beucler

TITLE: CFO

DE LAGE LANDEN FINANCIAL SERVICES, INC.

A Michigan Corporation

1111 Old Eagle School Road

Wayne, PA 19087

BY:

 

/s/ Donald R. Flassing

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PRINT NAME: Donald R. Flassing

TITLE: VP/GM Healthcare

 

 

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