Document:

Third Amendment to Revolving Credit Agreement

  
 Exhibit 10.31 

  
 THIRD AMENDMENT TO 
 REVOLVING CREDIT AGREEMENT, JOINDER, LIMITED CONSENT AND WAIVER 
  
 Third Amendment to Revolving Credit Agreement, Joinder, Limited Consent and Waiver dated as of December 9, 2004 (the
“Third Amendment”), by and among LIFELINE SYSTEMS COMPANY (f/k/a LIFELINE SYSTEMS, INC.), a Massachusetts corporation (the “Borrower”), LIFELINE SYSTEMS, INC. (f/k/a LIFELINE HOLDINGS, INC.), a
Massachusetts corporation (the “Parent”) CITIZENS BANK OF MASSACHUSETTS and the other lending institutions listed on Schedule 1 to the Credit Agreement (as hereinafter defined) (the “Lenders”),
amending and waiving certain provisions of the Revolving Credit Agreement, dated as of August 28, 2002 (as amended and in effect from time to time, the “Credit Agreement”) by and among the Borrower, the Lenders and
CITIZENS BANK OF MASSACHUSETTS, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) as more fully set forth herein. Terms not otherwise defined herein which are defined in the Credit
Agreement shall have the same respective meanings herein as therein. 
  
 WHEREAS, the Borrower has informed the Administrative Agent and the Lenders that it has consummated a share exchange pursuant to which all of the holders of the Borrower’s Capital Stock immediately prior to the effective date of
the share exchange have exchanged such shares of the Borrower’s Capital Stock for the Capital Stock of the Parent, and, in connection therewith, the Borrower has become a Subsidiary of the Parent (such transaction being hereinafter referred to
as the “Exchange Offer”); and 
  
 WHEREAS, the Parent wishes to become a party to the Credit Agreement; and 
  
 WHEREAS, the Borrower and the Lenders have agreed to modify certain terms and conditions of the Credit Agreement as specifically set forth in this Third Amendment and the Lenders have agreed to waive certain
other provisions of the Credit Agreement as specifically set forth in this Third Amendment and the Lenders have agreed to consent to certain actions as specifically set forth in this Third Amendment; 
  
 NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 §1. Amendment to §1 of the Credit Agreement. Section 1.1
of the Credit Agreement is hereby amended as follows: 
  
 (a) The
definition of “Applicable Margin” is hereby amended by deleting the words “the Borrower and its Subsidiaries” which appear in such definition and substituting in place thereof the words “the Parent and its
Subsidiaries”. 
  

 (b) the definition of “Applicable Pension Legislation” is hereby amended by deleting the words
“the Borrower or any of its Subsidiaries” which appear in such definition and substituting in place thereof the words “the Parent or any of its Subsidiaries”. 
  
 (c) the definition of “Capital Expenditures” is hereby amended by deleting each reference to “the Borrower or
any of its Subsidiaries” which appear in such definition and substituting in place thereof the words “the Parent or any of its Subsidiaries”. 
  
 (d) the definition of “Change of Control” is hereby amended by deleting such definition in its entirety and restating it as follow: 

 
 Change of Control. An event or
series of events by which (a) any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act), directly or indirectly, of thirty percent (30%) or more of the outstanding shares of Capital Stock of the Parent; or, during any period of twelve consecutive calendar months, individuals who were directors of the
Parent on the first day of such period shall cease to constitute a majority of the board of directors of the Parent; or (b) the Parent shall fail to own directly or indirectly, one hundred percent (100%) of the Capital Stock of the Borrower and each
Guarantor (other than itself). 
  
 (e) The definitions of
“Capital Leases”, “Consolidated or consolidated”, “Consolidated Current Assets”, “Consolidated Current Liabilities”, “Consolidated Net Income”, “Consolidated Tangible Net Worth”,
“Consolidated Total Assets”, “Consolidated Total Debt Service”, “Consolidated Total Funded Indebtedness”, “Consolidated Total Interest Expense”, “Consolidated Total Liabilities”, “Consolidated
US EBITDA”, “Consolidated US Net Income (or Deficit)”, “Consolidated US Total Interest Expense”, “Foreign Operating Subsidiary”, “Hedging Agreement”, “Indebtedness”, “Obligations”,
“Real Estate”, “Reference Period” and “Unfunded Capital Expenditures” are hereby amended by deleting each reference to “Borrower” in each such definition and substituting in each place thereof the word
“Parent”. 
  
 (f) The definition of “Consolidated
EBITDA” is hereby amended by (i) deleting the word “Borrower” which appears in such definition and substituting in place thereof the word “Parent”; and (ii) deleting the word “Borrower’s” which appears in such
definition and substituting in place thereof the word “Parent’s”. 
  
 (g) The definition of “Consolidated Operating Cash Flow” is hereby amended by (i) deleting the words “expenditures made by the Borrower or any Subsidiary” which appear in such definition and
substituting in place thereof the words “expenditures made by the Parent or any Subsidiary”; (ii) deleting the words “of a Foreign Operating Subsidiary to the Borrower or 

  

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any Guarantor” which appear in such definition and substituting in place thereof the words “of a Foreign Operating Subsidiary to the Parent, the
Borrower or any Guarantor”; and (iii) deleting the words “plus all Investments made by the Borrower or a Guarantor” which appear in such definition and substituting in place thereof the words “plus all Investments made by the
Parent, the Borrower or a Guarantor”. 
  
 (h) the definition
of “Distribution” is hereby amended by deleting each reference to “of the Borrower” which appears in such definition and substituting in place thereof the words “the Parent or the Borrower”. 
  
 (i) the definitions of “Employee Benefit Plan, “ERISA
Affiliate”, “Guaranteed Pension Plan” and “Multiemployer Plan” are each hereby amended by inserting immediately before the words “the Borrower” in each place in which such words appear in each such definition the
words “the Parent,”. 
  
 (j) the definition of
“Guarantor” is hereby amended by deleting the words “of the Borrower existing” which appear in such definition and substituting in place thereof the words “of the Parent (other than the Borrower) existing”. 

 
 (k) the definition of “Material Adverse Effect” is hereby
amended by (i) deleting the words “individually or the Borrower and its Subsidiaries, taken as a whole” which appear in subparagraph (a) of such definition and substituting in place thereof the words “individually or the Parent and
its Subsidiaries, taken as a whole”; and (ii) deleting the word “Borrower” which appears in subparagraph (b) of such definition and substituting in place thereof the word “Parent”. 
  
 (l) the definition of “Pro Forma Basis” is hereby amended by (i)
deleting the words “Borrower and its Subsidiaries” which appear in such definition and substituting in place thereof the words “Parent and its Subsidiaries”; and (ii) deleting the words “the Borrower or Subsidiary effecting
the acquisition” which appear in such definition and substituting in place thereof the words “the Parent or Subsidiary effecting the acquisition”. 
  
 (m) the definition of “Restricted Payment” is hereby amended by (i) deleting each reference to
“Borrower” contained in such definition and substituting in place thereof the word “Parent”; and (ii) deleting the word “Borrower’s” which appears in such definition and substituting in place thereof the word
“Parent’s”. 
  
 §2. Amendment
to §7 of the Credit Agreement. Section 7 of the Credit Agreement is hereby amended as follows: 
  
 (a) The first sentence of Section 7 of the Credit Agreement is hereby amended by deleting the words “The Borrower represents and warrants” which
appear in such first sentence and substituting in place thereof the words “Each of the Parent and the Borrower represents and warrants”. 
  
 (b) Sections 7.1, 7.2, 7.3, 7.4.1., 7.4.3, 7.6, 7.7, 7.9, 7.10, 7.12, 7.13, 7.20 and 7.22 of the Credit Agreement are each hereby amended by deleting each
reference to “Borrower” which 

  

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appears in each of §§7.1, 7.2, 7.3, 7.4.1., 7.4.3, 7.6, 7.7, 7.9, 7.10, 7.12, 7.13, 7.20 and 7.22 and substituting in each place thereof the word
“Parent”. 
  
 (c) Section 7.5 of the Credit Agreement is
hereby amended by deleting the words “the Borrower has not made any Restricted Payments” which appear in §7.5 and substituting in place thereof the words “neither the Parent nor the Borrower has made any Restricted
Payments”. 
  
 (d) Section 7.8 of the Credit Agreement is
hereby amended by (i) deleting each reference to “Borrower” which appears in §7.8 and substituting in place thereof the word “Parent”; and (ii) deleting the word “Borrower’s” which appears in §7.8 and
substituting in place thereof the word “Parent’s”. 
  
 (e) Section 7.14 of the Credit Agreement is hereby amended by deleting the text of §7.14 in its entirety and restating it as follows: “Each of the Parent and the Borrower are the owners of their respective property and assets free
from any Lien, except for Permitted Liens.” 
  
 (f) Section
7.15 of the Credit Agreement is hereby amended by deleting the first four references to “Borrower” which appear in §7.15 and substituting in each place thereof the word “Parent”. 
  
 (g) Section 7.16 of the Credit Agreement is hereby amended by (i) inserting
before the words “the Borrower” which appear in §7.16.2 the words “the Parent or” and (ii) §7.16.4 of the Credit Agreement is hereby amended by inserting before the words “the Borrower” in each place in which
such words appear in §7.16.4 the words “the Parent,”. 
  
 (h) Section 7.18 of the Credit Agreement is hereby amended by (i) deleting the words “The Borrower has taken” which appear in §7.18 and substituting in place thereof the words “The Parent and the Borrower have
taken”; (ii) deleting each reference to “Borrower” which appears in subparagraphs (a), (b), (c) and (d) of such §7.18 and substituting in each such place the word “Parent”; and (iii) deleting the words “to the best
of the Borrower’s knowledge” which appears in subparagraph (c) of §7.18 and substituting in place thereof the words “to the best of the Parent’s and the Borrower’s knowledge”. 
  
 (i) Section 7.19 of the Credit Agreement is hereby amended by (i) inserting
immediately prior to the first sentence thereof the words “PROTECT and Lifeline Systems Securities Corporation are the only direct Subsidiaries of the Parent, and the Borrower is the only direct Subsidiary of PROTECT.”; (ii) deleting the
words “Lifeline Systems Securities Corporation,” which appear in the first sentence of §7.19; and (iii) deleting each reference to “Borrower” which appear in the second and third sentences of §7.19 and substituting in
each place thereof the word “Parent”. 
  
 §3.
Amendment to §8 of the Credit Agreement. Section 8 of the Credit Agreement is hereby amended as follows: 
  
 (a) The first sentence of Section 8 of the Credit Agreement is hereby amended by deleting the words “The Borrower
covenants and agrees” which appear in such first sentence 

  

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and substituting in place thereof the words “Each of the Parent and the Borrower covenants and agrees”. 
  
 (b) Section 8.1 of the Credit Agreement is hereby amended by deleting the
words “to which the Borrower or any of its Subsidiaries is a party” which appear in §8.1 and substituting in place thereof the words “to which the Parent or any of its Subsidiaries is a party”. 
  
 (c) Sections 8.3, 8.4(a), 8.4(b), 8.4(d), 8.4(e), 8.5.1., 8.5.2., 8.5.4.,
8.6, 8.7, 8.8, 8.9, 8.10, 8.13, 8.15, 8.16, and 8.18 of the Credit Agreement are each hereby amended by deleting each reference to “Borrower” which appears in each such section and substituting in place thereof the word “Parent”.

  
 (d) Section 8.5.3 of the Credit Agreement is hereby amended by
inserting immediately before the words “Borrower’s assets or other property” the words “ Parent’s or the”. 
  
 (e) Section 8.11 of the Credit Agreement is hereby amended by deleting the words “The Borrower will (a)” which appear in §8.11 and
substituting in place thereof the words “Each of the Parent and the Borrower will (a)”. 
  
 (f) Section 8.14 of the Credit Agreement is hereby amended by (i) deleting the word “Borrower” which appears in §8.14 and substituting in
place thereof the words “Parent”; and (ii) inserting immediately after the words “on or after the Closing Date” which appear in §8.14 the words “(other than the Borrower)”. 
  
 §4. Amendment to §9 of the
Credit Agreement. Section 9 of the Credit Agreement is hereby amended as follows: 
  
 (a) The first sentence of Section 9 of the Credit Agreement is hereby amended by deleting the words “The Borrower covenants and agrees” which
appear in such first sentence and substituting in place thereof the words “Each of the Parent and the Borrower covenants and agrees”. 
  
 (b) Section 9.1 of the Credit Agreement is hereby amended by (i) deleting the word “Borrower” in each place in which it appears in §9.1,
other than §9.1(f), and substituting in each place thereof the word “Parent”; and (ii) deleting the words “of the Borrower to the Borrower so long as such Subsidiary is a Guarantor hereunder and remains a Subsidiary of the
Borrower” which appear in §9.1(f) and substituting in place thereof the words “of the Parent to the Parent, the Borrower or another Guarantor so long as such Subsidiary is a Guarantor hereunder and remains a Subsidiary of the
Parent”. 
  
 (c) Section 9.2 of the Credit Agreement is
hereby amended by (i) deleting each reference to “Borrower” which appears in § 9.2.1 and substituting in each place thereof the word “Parent”; (ii) deleting the words “the Borrower” which appear in §9.2.1(i)
and substituting in each place thereof the words “the Parent or the Borrower”; (iii) deleting the word “Borrower” which appears in §9.2.1(iv) and substituting in place thereof the word “Parent”; (iv) deleting the
text of §9.2.2. in its entirety and restating it as follows: “The Parent will not, nor will it permit any of its Subsidiaries to (a) enter into or permit to exist any arrangement or agreement (excluding the Credit Agreement and the other
Loan Documents) which directly or indirectly 

  

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prohibits the Parent or any of its Subsidiaries from creating, assuming or incurring any Lien upon its properties, revenues or assets or those of any of its
Subsidiaries whether now owned or hereafter acquired, or (b) enter into any agreement, contract or arrangement (excluding the Credit Agreement and the other Loan Documents) restricting the ability of any Subsidiary of the Parent or the Borrower to
pay or make dividends or distributions in cash or kind to the Parent or the Borrower, to make loans, advances or other payments of whatsoever nature to the Parent or the Borrower, or to make transfers or distributions of all or any part of its
assets to the Parent or the Borrower; in each case other than (i) restrictions on specific assets which assets are the subject of purchase money security interests to the extent permitted under §9.2.1, and (ii) customary anti-assignment
provisions contained in leases and licensing agreements entered into by the Parent or such Subsidiary in the ordinary course of its business.” 
  
 (d) Section 9.3 of the Credit Agreement is hereby amended by (i) deleting the reference to “Borrower” which appears in the first sentence of
§9.3. and substituting in place thereof the word “Parent”; (ii) deleting the word “Borrower” which appears in §9.3(e) and substituting in place thereof the word “Parent”; and (iii) deleting the word
“Borrower” which appears in §9.3(i) and substituting in place thereof the word “Parent”. 
  
 (e) Section 9.4 of the Credit Agreement is hereby amended by (i) deleting the words “The Borrower will not make any Restricted Payments” which
appear in §9.4 and substituting in place there the words “Neither the Parent nor the Borrower will make any Restricted Payments”; and (ii) deleting the words “any Subsidiary of the Borrower” which appear in §9.4(a) and
substituting in place thereof the words “any Subsidiary of the Parent”; and (iii) deleting the word “Borrower” which appears in §9.4(b) and substituting in place thereof the words “Parent”. 
  
 (f) Section 9.5 of the Credit Agreement is hereby amended by (i) deleting the
first paragraph of §9.5.1. in its entirety and restating it as follows: “The Parent will not, and will not permit any of its Subsidiaries to, become a party to any merger, amalgamation or consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets in the ordinary course of business consistent with past practices) except, so long as no Default of Event of Default then exists or would occur as a result thereof, (a) the
merger or consolidation of one or more of the Subsidiaries of the Parent, other than the Borrower, with and into the Parent; (b) the merger or consolidation of two or more Subsidiaries of the Parent, provided if (i) one such Subsidiary is the
Borrower, the Borrower shall be the survivor of such merger or consolidation; and (ii) only one such Subsidiary is a Guarantor, then the Guarantor shall be the survivor of such merger or consolidation; and (c) the acquisition by the Parent through
any merger or asset or stock acquisition by the Parent or any of its Subsidiaries of Persons (or, in the case of an asset acquisition, assets of a Person) in the same or a similar line of business as the Borrower (a “Permitted
Acquisition”) so long as”; (ii) deleting each reference to “Borrower” contained in §9.5.1(c)(i), (ii), (iv), (v) and (vii) and §9.5.2 and substituting in each place thereof the word “Parent”.

  
 (g) Sections 9.6, 9.7, 9.8, 9.10, 9.11, 9.12 and 9.13 of the
Credit Agreement are each hereby amended by deleting each reference to “Borrower” which appears in each such section and substituting in place thereof the word “Parent”. 
  

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 (h) Section 9.9 of the Credit Agreement is hereby amended by inserting immediately before the words
“Borrower nor any ERISA Affiliate” the words “Parent, the” 
  
 §5. Amendment to §10 of the Credit Agreement. Section 10 of the Credit Agreement is hereby amended by as follows: 
  
 (a) The first sentence of Section 10 of the Credit Agreement is hereby
amended by deleting the words “The Borrower covenants and agrees” which appear in such first sentence and substituting in place thereof the words “Each of the Parent and the Borrower covenants and agrees”; 
  
 (b) Sections 10.1, 10.2, and 10.3 of the Credit Agreement are hereby amended
by deleting each reference to “Borrower” contained in each such section and substituting in each place thereof the word “Parent”. 
  
 §6. Amendment to §12 of the Credit Agreement. Section 12.1 of the Credit Agreement is
hereby amended by deleting the word “Borrower” which appears in §12.1 and substituting in place thereof the word “Parent”. 
  
 §7. Amendment to §13 of the Credit Agreement. Section 13 of the Credit Agreement is
hereby amended as follows: 
  
 (a) Sections 13.1(b), (d), (e),
(f), (g), (h), (i), (j), (l), (m), (n) and (o) of the Credit Agreement are each hereby amended by deleting each reference to “Borrower” contained in each such section and substituting in place thereof the word “Parent”.

  
 (b) Section 13.1(c) of the Credit Agreement is hereby amended
by deleting the words “the Borrower shall fail” which appear in §13.1(c) and substituting in place thereof the words “the Parent or the Borrower shall fail”. 
  
 (c) Section 13.1(k) of the Credit Agreement is hereby amended by (i) inserting immediately prior to the words “Borrower
or any ERISA Affiliate” which appear in §13.1(k) the words “Parent, the”; and (ii) deleting the words “Borrower or any of its Subsidiaries” which appear in §13.1(k) and substituting in place thereof the words
“Parent or any of its Subsidiaries”. 
  
 §8.
Amendment to §15 of the Credit Agreement. Section 15 of the Credit Agreement is hereby amended by deleting the words “except that the Borrower may not assign or otherwise transfer”
which appear in the first sentence of §15 and substituting in place thereof the words “except that neither the Parent nor the Borrower may assign or otherwise transfer”. 
  
 §9. Amendment to §16 of the Credit Agreement. Section 16
of the Credit Agreement is hereby amended as follows: 
  
 (a)
Section 16.6(a) of the Credit Agreement is hereby amended by deleting the words “if to the Borrower” which appear in §16.6(a) and substituting in place thereof the words “if to the Parent or the Borrower”. 
  

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 (b) Section 16.7 of the Credit Agreement is hereby amended by (i) inserting immediately prior to the
words “BORROWER AGREES THAT ANY SUIT FOR” which appear in the second sentence of §16.7 the words “PARENT AND THE”; (ii) inserting immediately prior to the words “BORROWER BY MAIL AT THE ADDRESS” which appear in the
second sentence of §16.7 the words “PARENT OR THE”; and (iii) inserting immediately prior to the words “THE BORROWER HEREBY WAIVES” which appear in the third sentence of §16.7 the words “EACH OF THE PARENT
AND”. 
  
 (c) Section 16.11 of the Credit Agreement is hereby
amended by (i) inserting immediately after the words “EACH OF THE BORROWER,” which appears in the first sentence of §16.11 the words “THE PARENT,”; (ii) inserting immediately after the words “Except as prohibited by
law,” which appear in the second sentence of §16.11 the words “each of the Parent and”; and (iii) inserting immediately prior to the words “Borrower (a) certifies” which appear in the third sentence of §16.11 the
words “Parent and the”. 
  
 §10.
Joinder. The Parent hereby joins the Credit Agreement and agrees to become a party to the Credit Agreement and to comply with and be bound by all of the terms, conditions and covenants of the Credit Agreement and Loan Documents. The
Parent hereby acknowledges, and, as applicable, represents and warrants, the following (a) its books and records are kept at its chief executive office and principal place of business; (b) no provision of its governing documents prohibits the Parent
from entering into this Third Amendment; (c) it is capable of complying with and is in compliance with all of the provisions of the Credit Agreement and other Loan Documents applicable to it; and (d) each of the representations and warranties set
forth in §7 of the Credit Agreement is true and correct in all material respects with respect to the Parent as of the date hereof (except to the extent of changes resulting from transactions contemplated or permitted by the Credit Agreement and
the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and except to the extent that such representations and warranties relate expressly to an earlier date).

  
 §11. Limited Waiver. The Borrower
hereby acknowledges that (a) pursuant to §8.14 of the Credit Agreement, the Borrower is required to immediately cause each Domestic Subsidiary created or acquired after the Closing Date to become a Guarantor and the Borrower is otherwise
required to comply with the provisions of §8.14 of the Credit Agreement; (b) pursuant to §8.15 of the Credit Agreement, the Borrower is required to immediately notify the Administrative Agent of the creation or acquisition of any new
Subsidiary and provide the Administrative Agent with an updated Schedule 7.19 and otherwise comply with all the covenants contained in § 8.14; (c) pursuant to §9.4 of the Credit Agreement, neither the Borrower nor any Subsidiary of the
Borrower may make a Distribution if a Default or Event of Default then exists; and (d) pursuant to § 9.5.1 of the Credit Agreement, to the extent the Borrower makes a Permitted Acquisition, the Borrower is required to comply with the conditions
set forth in §9.5.1(c) thereof. The Borrower further acknowledges that (a) it did not immediately cause PROTECT Emergency Response Systems, Inc. (“PROTECT”) nor the Parent to become a Guarantor immediately upon such
Person’s acquisition or creation, as the case may be, and did not otherwise comply with the provisions of §8.14 of the Credit Agreement as it pertains to each such Person; (b) it did not immediately notify the Administrative Agent of the
creation of the Parent or the acquisition of PROTECT and provide the Administrative Agent with an updated Schedule 7.19 and otherwise comply with the covenants contained in §8.14 as was 

  

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required by §8.15; (c) any Restricted Payment constituting the Exchange Offer which was made when a Default or Event of Default existed was not
permitted by §8.4; and (d) the Borrower did not comply with certain of the provisions of §9.5.1(c) in connection with the acquisition of PROTECT. Upon the effectiveness of this Third Amendment, the Lenders hereby waive any Event of Default
which may have arisen (a) pursuant to §8.14 and §8.15 of the Credit Agreement as a result of the Borrower’s failure to comply with the provisions of §8.14 and §8.15 as they relate to the creation or acquisition, as the case
may be, of the Parent and PROTECT; (b) pursuant to §8.4 of the Credit Agreement as a result of the Borrower consummating the Exchange Offer at a time when a Default or Event of Default existed; and (c) pursuant to §9.5.1 of the Credit
Agreement as a result of the acquisition of PROTECT. In addition, upon the effectiveness of this Third Amendment, the Lenders hereby waive any Event of Default which may have arisen as a result of the occurrence of a Change of Control which occurred
as a result of the consummation of the Exchange Offer. 
  
 §12. Limited Consent. The Borrower has informed the Administrative Agent and the Lenders that after the effective date of this Third Amendment the Borrower will convert itself from a Massachusetts corporation to a
Massachusetts business trust and has requested the Administrative Agent and the Lenders consent to such conversion. So long as (a) the Borrower provides the Administrative Agent and the Lenders with written notice two (2) days prior to such
conversion; (b) immediately upon such conversion, the Borrower provides the Administrative Agent and the Lenders with copies of all such documents, agreements and instruments evidencing such conversion, together with a legal opinion from
Borrower’s counsel as to the continued enforceability of the Loan Documents; and (c) the Borrower takes all such action as the Administrative Agent and the Lenders may request to assume or otherwise remain liable for all the obligations under
the Loan Documents, the Administrative Agent and the Lenders hereby consent to such proposed conversion. 
  
 §13. Conditions to Effectiveness. This Third Amendment shall not become effective until the Administrative Agent receives
the following: 
  
 (a) a counterpart of this Third Amendment,
executed by the Borrower, the Parent, the Guarantor and the Lenders; 
  
 (b) a duly executed and delivered Guaranty, executed by the Parent and PROTECT; 
  
 (c) certified copies of the Governing Documents for each of the Parent and PROTECT, together with a certificate of incumbency for each such Person; and 
  
 (d) evidence satisfactory to the Administrative Agent and the Lenders that the Parent, the Borrower and PROTECT has
authorized all the transactions contemplated hereby. 
  
 §14. Conditions Subsequent. The Borrower hereby agrees to provide to the Administrative Agent legal opinions in form and substance satisfactory to the Administrative Agent and the Lenders from counsel to the Parent
and California counsel to PROTECT, opining as to the authorization, validity and enforceability of the Guaranty of each of the Parent and PROTECT, by not later than (a) December 30, 2004 for the Parent; and (b) sixty (60) days after the date on
which the total assets of PROTECT exceed $2,000,000. The Borrower agrees that the 

  

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failure to deliver such legal opinions by the dates specified in this §14 shall constitute an immediate Event of Default under the Credit Agreement.

  
 §15. Representations and
Warranties. The Borrower hereby repeats, on and as of the date hereof, each of the representations and warranties made by the Borrower in §7 of the Credit Agreement (except to the extent of changes resulting from transactions
contemplated or permitted by this Third Amendment, the Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date), provided, that all references therein to the Credit Agreement shall refer to such Credit Agreement as amended hereby. In addition, the Borrower hereby represents and
warrants that the execution and delivery by the Borrower and each of its Subsidiaries of this Third Amendment and the performance by the Borrower and each of its Subsidiaries of all of its agreements and obligations under the Credit Agreement as
amended hereby are within the corporate authority of the Borrower and each such Subsidiary and have been duly authorized by all necessary corporate or similar action on the part of the Borrower and each such Subsidiary. 
  
 §16. Ratification, Etc. Except as expressly
amended hereby, the Credit Agreement and all documents, instruments and agreements related thereto, including, but not limited to the Guaranty, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The Credit
Agreement and this Third Amendment shall be read and construed as a single agreement. All references in the Credit Agreement or any related agreement or instrument to the Credit Agreement shall hereafter refer to the Credit Agreement as amended
hereby. 
  
 §17. No Waiver. Nothing
contained herein shall constitute a waiver of, impair or otherwise affect any Obligations, any other obligation of the Borrower or any rights of the Administrative Agent or the Lenders consequent thereon. 
  
 §18. Counterparts. This Third Amendment may be executed in
one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. 
  
 §19. Governing Law. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS). 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as a document under seal
as of the date first above written. 
  

			
	LIFELINE SYSTEMS COMPANY
		
	By:	 	 /s/ Mark Beucler

	 	 	 Mark Beucler, Vice President, Finance,
 Chief Financial Officer and Treasurer

  

			
	LIFELINE SYSTEMS, INC.
		
	By:	 	 /s/ Mark Beucler

	 	 	 Mark Beucler, Vice President, Finance,
 Chief Financial Officer and Treasurer

  

			
	CITIZENS BANK OF MASSACHUSETTS
		
	By:	 	 /s/ Victoria P. Lazzell

	 Title: Vice President

  

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 RATIFICATION OF GUARANTY

  
 The undersigned guarantor (the
“Guarantor”) hereby acknowledges and consents to the foregoing Third Amendment as of December 9, 2004, and agrees that the Guaranty from the Guarantor dated as of August 28, 2002 in favor of the Administrative Agent and the Lenders
and all other Loan Documents to which the Guarantor is a party remains in full force and effect, and the Guarantor confirms and ratifies all of its obligations thereunder. 
  

			
	 LIFELINE SYSTEMS SECURITIES CORPORATION

		
	By:	 	 /s/ Ronald Feinstein

	 	 	 Ronald Feinstein, President

  

 -12-2005 Officer Incentive Plan

 Exhibit 10.34 
  
 

 
  
 Confidential Materials omitted
and filed separately with the 
 Securities and Exchange Commission. Asterisks denote omissions. 
  
 2005 OFFICER INCENTIVE PLAN 
  
 PARTICIPANT: 
  
 OBJECTIVE: 
  
 The objectives of the Lifeline Officer Incentive Plan are: 
  

	•	 	to motivate and reward Officers who have the accountability and responsibility that significantly impact the attainment of the Company’s goals, and 

  

	•	 	to provide a total compensation package that is competitive and consistent with the Company’s pay for performance philosophy. 

  
 ELIGIBILITY: 
  
 All Officers are eligible to participate. Officers participating in this incentive plan are not eligible to participate in other plans
(e.g., Sales Incentive Plans). 
  
 An Officer must be actively employed at the
time of the payout to receive his/her payment (unless on medical leave or reservist call-up). The Chief Executive Officer, along with the Compensation Committee of the Board of Directors, in their sole discretion, has the ability to make exceptions
to this requirement. 
  
 Officers hired after the beginning of the year or
promoted during the year into an executive position that is bonus eligible may, at the discretion of the Chief Executive Officer along with the Compensation Committee of the Board of Directors, be eligible to receive a pro-rated bonus based on the
portion of their base salary earned while in the executive position. 
  
 No
incentive bonus will be earned during paid or unpaid leaves of absence of more than 30 days, including leaves for illness. If an Officer who took a leave of absence during the year is off leave and actively employed at the time of the payout, a
pro-rated bonus based on actual time worked during the year will be paid. 
  
 BONUS TYPES: 
  
 Each Officer is eligible to receive two types of
bonus payments. One bonus is based on the Company’s achievement of certain profit before tax objectives and the other bonus type is based on the Officer’s achievement of certain individual long-term objectives. The Chief Executive Officer
participates in only the profit-based bonus. 
  
  

 2005 OFFICER INCENTIVE PLAN 
 Page 2 of 4 
  
 BONUS
PARTICIPATION PERCENTAGES: 
  
 Each Officer has a Bonus Participation
Percentage for each bonus type mentioned above. The percentages are determined by the Chief Executive Officer along with the Compensation Committee of the Board of Directors. Bonus Participation Percentages do not differ among Officers. Bonus
Participation Percentages are expressed as a percent of the Officer’s base salary (25%). In calculating the bonus, the base salary as of November 1, 2005 will be used. 
  
 TIMING OF PAYMENT: 
  
 Bonuses earned under the plan will be paid as soon as possible following the close of the year, after audited financial results are available. Award payments will be in
the form of a payroll check and are subject to all regular withholding taxes. 
  
 BONUS A: PROFIT BASED BONUS 
  
 FINANCIAL TARGETS FOR BONUS
PAYMENTS: 
  
 Bonus payments for 2005 will be determined according to the
level of pre-tax profit attained by the Company and will be based on the following schedule. Please note that the payments will be linearly determined between each set of points. Pre-tax profit attainment beyond $[**] will accrue additional bonus
payout points at a rate of 1% for each $[**] in pre-tax earnings. There will be no cap on bonus payments. However, in the event of unusual non-operational profit windfalls, the Board of Directors may at their sole discretion adjust the profit
calculation to exclude such items.  
  

				
	 Pre-tax Profit
 Attainment
 (000)

	  	 Bonus Payout
 (As a % of Officer’s
 Bonus Participation Percentage)

	 
	 $[**]
	  	0	%
	 $[**]
	  	50	%
	 $[**]
	  	100	%
	 $[**]
	  	200	%

  
  

 2005 OFFICER INCENTIVE PLAN 
 Page 3 of 4 
  
 Examples: 
  
 The following examples illustrate the
calculation of the Bonus Payment based upon an Officer with a base salary of $160,000 and a Bonus Participation Percentage of 25%. 
  

	A.	Pre-tax profit
attained                =                $[**] 

  

	    	Bonus Payment as a percentage of an Officer’s Bonus Participation Percentage = 100% (See chart on page 2.) 

  

															
	 Base Salary

	  	 	  	 Bonus
 Participation
 Percentage

	  	 	  	 Bonus
 Payout
 Percentage

	  	 	  	 Bonus
 Payment

	  	 
	 $160,000
	  	x	  	25%	  	x	  	100%	  	=	  	$40,000	  	 

  

	B.	Pre-tax profit
attained                =                $[**] 

  

	    	Bonus Payment as a percentage of an Officer’s Bonus Participation Percentage = 150%, calculated as follows: 

  

	 	1.	Profit Target at 200% less 

  

	 	    	        Profit Target at 100%             equals Profit to Interpolate Per
Percentage Point 

	 	    	       Bonus Payout Spread 

  

	 	    	  $[**]       equals     $[**]       equals     $[**]

	 	    	200 - 100                    100 

  

	 	2.	Profit Target Attained less 

  
                  Profit Target at
100%                    equals Additional Percentage Points Earned 
 Profit to Interpolate Per Percentage Point 
  
 $[**]     equals     $[**]     equals 50.0 
 $[**]                     $[**] 
  

	 	3.	100% + 50.0% = 150.0% 

  

																	
	4.    	  	 Base Salary

	  	 	  	 Bonus
Participation
Percentage

	  	 	  	 Bonus Payout
Percentage

	  	 	  	 Bonus Payment

	  	 
	 	  	$160,000	  	x	  	25%	  	x	  	150%	  	=	  	$60,000	  	 

 2005 OFFICER INCENTIVE PLAN 
 Page 4 of 4 
  
 BONUS B:
LONG TERM OBJECTIVE BASED BONUS 
  
 DESCRIPTION 
  
 At the beginning of each year, each Officer and the Chief Executive Officer will jointly
develop one or more objectives, the achievement of which will impact the long term strategic success of the Company. Upon completion of the year, the Chief Executive Officer will evaluate the Officer’s accomplishment of the stated objective.
Depending upon the level of success attained, the Chief Executive Officer will grant a bonus payout ranging from 0% to 200% of the Officer’s Bonus Participation Percentage (5% in 2005) for the Long Term Objective Based Bonus, (i.e., from 0% to
10% of base salary). 
  
 Example: 
  
 The following example will illustrate the calculation of the Bonus Payout based upon an
Officer with a base salary of $160,000 and a Long Term Objective Based Participation Percent of 5%. 
  
 An Officer exceeds expectations on the accomplishment of the stated objective and is awarded a bonus payout of 200% of his/her Bonus Participation Percentage. 
  

															
	 Base Salary

	  	 	  	 Bonus
Participation
Percentage

	  	 	  	 Bonus
 Payout
Percentage

	  	 	  	 Long Term
Objective
 Based Bonus

	  	 
	 $160,000
	  	x      	  	5%	  	x	  	200%	  	=	  	$16,000

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