EXHIBIT 10.65
Ademco Agreement.doc
SUPPLY AGREEMENT
THIS AGREEMENT, made and entered into as of the 28th day of December,
1999, is by and between Alarm Device Manufacturing Company ("Ademco"), a
division of Pittway Corporation, a Delaware corporation ("Pittway"), and
Lifeline Systems, Inc., a Massachusetts corporation ("Lifeline").
WHEREAS, Lifeline is engaged in the manufacture of personal emergency
response communications and related products and the rendering of monitoring
services related to such products;
WHEREAS, Lifeline has decided to cease the internal manufacture of its
personal emergency response communications products; and
WHEREAS, Ademco is willing to supply Lifeline with such personal emergency
response communications products, on the terms and conditions hereafter set
forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Ademco and Lifeline, intending to
be legally bound, hereby agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence upon the
date hereof and, unless earlier terminated in accordance with Section 13, shall
continue until such date as of which it shall be terminated either (i) by
Ademco, upon not less than one year's prior written notice to Lifeline given not
earlier than the first anniversary of the date on which Ademco first ships any
Product (as defined below) to Lifeline in fulfillment of an order placed under
this Agreement or (ii) by Lifeline, upon not less than 180 days' prior written
notice to Ademco.
2. Products and Services; Specifications.
(a) The products to which this Agreement relates are those listed on
Exhibit A hereto on the date of this Agreement (the "Initial Products") and such
other products relating to Lifeline's personal emergency response business as
may be added to Exhibit A from time to time as hereinafter provided, if any (the
"Future Products") (the Initial Products and the Future Products being referred
to individually as a "Product" and collectively as the "Products").
If Lifeline desires to add to Exhibit A a product relating to its personal
emergency response business, it shall propose such addition to Ademco in
writing, which proposal shall include Lifeline's proposed Specifications for
such product. Ademco may decline to add such product to Exhibit A if either (i)
after giving effect to such addition, the number of Future Products added to
Exhibit A during the period of 18 months then ended would exceed five, or (ii)
in Ademco's reasonable judgment, the addition of such product would adversely
impact Ademco in terms of its increased exposure to product liability claims,
its exposure to breach of
contract claims, its financial condition or its reputation; but Ademco may not
decline to add such product to Exhibit A on the basis of anticipated small
production runs or low sales volume of such product. Ademco shall notify
Lifeline in writing within 30 days after its receipt of such a proposal whether
Ademco agrees to add the proposed product to Exhibit A. If Ademco declines, such
notice shall include Ademco's basis for declining and, if such basis is solely
the particulars of the Specifications proposed by Lifeline, its objections to
such proposed Specifications. Ademco and Lifeline shall attempt in good faith to
resolve any such objections to the inclusion of such product on Exhibit A within
30 days after Ademco's delivery of such notice.
Notwithstanding the preceding paragraph, in the event that Lifeline
proposes to add to Exhibit A a product consisting of an RF smoke detector (and
unless Ademco declines to add such product to Exhibit A pursuant to this
Agreement), Ademco shall use commercially reasonable efforts to procure the
components necessary for it to be able to manufacture such product; but in the
event it is unable to procure such components, it shall have no obligation
hereunder with respect to such product.
For purposes of this Agreement, a product shall be treated as a different
Product rather than an enhanced or derivative form of a then-existing Product
only if its "look and feel" differs from any then-existing Product or it
contains functions, features or performance characteristics, or a combination
thereof, materially different from those in any then-existing Product.
(b) Each Product purchased and sold pursuant to this Agreement shall
be manufactured, labeled and packaged by Ademco in accordance with the
applicable specifications (including configurations, communications protocols
and radio frequency signaling protocols, labeling and packaging requirements)
set forth from time to time in Exhibit B attached hereto (the "Specifications").
The Specifications shall not be modified or amended without the express written
consent of Ademco and Lifeline. Ademco shall not substitute Product components
set forth in the Specifications without the prior written consent of Lifeline.
(c) Ademco shall not utilize any subcontractor or other vendor in
connection with the manufacture of any of the Products without the approval of
Lifeline in writing. Exhibit C hereto lists the subcontractors and other vendors
initially approved by Lifeline. Ademco shall not change any such subcontractor
or other vendor without the prior written consent of Lifeline; but in the event
any such subcontractor or other vendor ceases doing business or ceases doing
business with Ademco, Lifeline shall not unreasonably delay approval of a
substitute. Lifeline may direct Ademco in writing to utilize a particular
subcontractor or other vendor for a particular purpose; provided that if Ademco
objects to such utilization Lifeline shall reimburse Ademco for all its
additional costs resulting from such utilization (including without limitation
additional inspection, freight and component costs and costs associated with
changing Ademco's manufacturing process(es) or with increased scrap). A change
in, or direction of, a subcontractor or other vendor pursuant to this Section
2(c) shall not affect Lifeline's obligations with respect to any Product or
component therefor manufactured or obtained by Ademco prior to the effectiveness
of such change or direction. In the event a change or direction related to a
Product results in Lifeline ceasing to have requirements for the Product in its
form prior thereto, Lifeline shall promptly purchase from Ademco all of Ademco's
then inventory of such Product in such form and components therefor, in each
case other than any such inventory for which Ademco is at risk pursuant to
Section 3(c).
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(d) Ademco agrees to provide Lifeline, in a reasonably prompt
manner, with the following services: (i) technical support and design services
for printed circuit board layouts, (ii) design of production test methods,
fixtures and procedures, (iii) mechanical design of production tooling,
including tooling for molded plastic parts, (iv) procurement and supervision of
the fabrication of production tooling and (v) submission, management and
oversight of testing for all regulatory and safety approvals specified by
Lifeline pursuant to Section 11(a), all as reasonably required by Lifeline from
time to time. Ademco's engineering resources will also assist Lifeline in
resolving any issues that arise during a Product's qualification process.
Lifeline will reimburse Ademco for its reasonable out-of-pocket costs in
providing such services, other than costs for its internal usage of facilities,
equipment or labor.
(e) Ademco agrees to fabricate for Lifeline, in a reasonably prompt
manner, all circuit assemblies, feasibility models and prototypes for, and pilot
quantities of, enhancements to or derivatives of existing Products being
considered from time to time by Lifeline as well as products being considered
from time to time by Lifeline for proposal as Future Products pursuant to
Section 2(a), provided that the number of such latter products shall not at any
time exceed five, and provided further that the foregoing is subject to Ademco's
right to decline to add different products as provided in Section 2(a). Ademco's
related costs of components, subcontractor or vendor setup charges, prototype
tooling and fixtures and, in the case of such latter products, non-overhead
related direct costs, including but not limited to actual, direct labor, will be
paid by Lifeline. In the case of such a latter product that becomes a Future
Product, such costs shall be deemed to be a manufacturing cost which shall be
included in the calculation of the price paid by Lifeline to Ademco for such
Future Product. In each other case, such costs shall be paid to Ademco by
Lifeline upon demand.
(f) Ademco will work cooperatively with Lifeline on initiatives that
focus on cost reductions to and performance and reliability improvements of the
Products. During the product design process, Ademco's engineering personnel will
review design approaches with Lifeline's engineering personnel and recommend any
changes or implementations that Ademco's engineering personnel believe will
improve production yields, reduce product cost or improve reliability.
(g) Ademco acknowledges that nothing in this Agreement shall give
Ademco any rights in any Product or Product feature or the design thereof, or in
any intellectual property rights therein, or in any regulatory approval or grant
for any Product (including listing, certification, registration or other), or in
any patent, trademark, trade dress or name of Lifeline used by Ademco in
implementing the labeling and packaging thereof or otherwise. Without limiting
the foregoing, Ademco acknowledges the importance to Lifeline of its proprietary
information and of Lifeline's need to share information with Ademco about
prospective Future Products and enhancements, including in the early stages of
development of those Products or enhancements. Accordingly, in order to enable
Lifeline to protect its intellectual property rights, and to avoid the
inadvertent disclosure or misuse of Lifeline's proprietary information, Ademco
agrees that during the term of this Agreement and for a period of five years
thereafter, (i) it shall not offer or provide, directly or indirectly, personal
emergency response monitoring services (except on an interim basis in connection
with loan defaults by dealers); (ii) neither it nor Ademco Distribution, Inc.
shall knowingly sell personal emergency response products directly to end users,
hospitals, assisted living facilities or health care agencies or to distributors
primarily
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engaged in sales of health care products; and (iii) it shall not design for any
third party (including without limitation any affiliate or other division of
Pittway) personal emergency response products that include any feature that it
and Lifeline agree in writing (such agreement not to be unreasonably withheld)
constitutes a unique feature of Lifeline products (in relation to personal
emergency response products generally).
3. Scheduling/Shipment.
(a) Simultaneously with the execution and delivery of this
Agreement, Lifeline is delivering to Ademco a schedule of Lifeline's anticipated
requirements for each Initial Product for each of the twelve consecutive months
beginning with December 1999, including with respect to December 1999 the
respective anticipated delivery dates, destinations and standard configurations
for such requirements. The requirements, delivery dates, destinations and
standard configurations set forth therein for December 1999 constitute
non-cancelable orders by Lifeline which have been accepted by Ademco.
(b) No later than the fifteenth (15th) day of December 1999 and of
each succeeding month, Lifeline shall deliver to Ademco a schedule of Lifeline's
anticipated requirements for each Product for each of the succeeding twelve
consecutive months, including with respect to the first such month the
respective anticipated delivery dates, destinations and standard configurations
for such requirements. Upon delivery of each such schedule to Ademco, the
requirements, delivery dates, destinations and standard configurations set forth
therein for the first month covered by such schedule shall constitute
non-cancelable orders by Lifeline. Such non-cancelable orders shall be accepted
by Ademco to the extent the quantity of each Product covered by such orders does
not exceed the sum of (i) Lifeline's anticipated requirements for such Product
for such first month set forth in the schedule delivered by Lifeline pursuant to
this Section 3 during the fourth month preceding such first month (or, if such
first month is prior to April of 2000, in the schedule delivered by Lifeline
pursuant to (a) above) and (ii) the safety stock inventory of such Product on
hand at Ademco at the time of delivery of such orders. Ademco may accept, but
shall not be required to accept, some or all of the non-cancelable orders for
any excess.
(c) Ademco shall manufacture Products, and manufacture or obtain
spare parts, to meet Lifeline's anticipated requirements for the succeeding
three months. In addition, Ademco shall build as promptly as practicable, and
thereafter for the Term shall use commercially reasonable efforts to maintain,
in each case consistent with fulfilling non-cancelable orders for Products that
Ademco has accepted, a safety stock inventory of finished Product and components
therefor that for each Product is between the minimum and maximum safety stock
levels then applicable to such Product. The initial minimum and maximum safety
stock levels for each Initial Product are set forth on Exhibit A. Lifeline may
adjust such levels from time to time during the months of December 1999, January
2000 and February 2000, but the aggregate increase in any such initial level
resulting from such adjustments may not exceed 10% of such initial level. For
each calendar month subsequent to February 2000, the maximum and minimum levels
for an Initial Product shall be as specified by Lifeline but in no event greater
than 125% of the averages of the minimum and maximum levels for such Initial
Product during the preceding three calendar months, respectively. The maximum
and minimum safety stock levels for each Future Product for the first three
months it is a Product
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shall be established by the parties at the time such Future Product becomes a
Product, and thereafter shall be determined in a manner corresponding to that
applicable to an Initial Product. Ademco will at Lifeline's request provide
Lifeline with access to information regarding the safety stock levels on hand
from time to time. Any Ademco inventory of any Product or component in excess of
that manufactured and/or obtained by Ademco as contemplated in this Section 3(c)
shall be at Ademco's risk in the event of the termination of this Agreement or a
change (including without limitation a change resulting from an engineering
change pursuant to Section 10(a)) in Lifeline's anticipated requirements for
which orders have not been accepted at the time of such change.
(d) Ademco shall ship Products for which orders are accepted
pursuant to (a) or (b) above on shipment dates reasonably anticipated to result
in deliveries within one day (plus or minus) of the delivery dates designated by
Lifeline therefor. All freight costs shall be borne by Lifeline; provided,
however, that Ademco shall bear the cost of any incremental shipping and related
charges incurred in order to expedite late deliveries by Ademco.
(e) All shipments shall be by common carrier designated by Lifeline,
FOB Syosset, New York or El Paso, Texas, directed to such Lifeline facilities as
are specified by Lifeline. Risk of loss of Products so shipped shall pass to
Lifeline upon Ademco's delivery thereof to the common carrier. Ademco shall
insure such shipments, at Lifeline's expense, as reasonably required from time
to time by Lifeline.
4. Pricing.
(a) Subject to the succeeding provisions of this Section 4, the per
unit prices (FOB Syosset, New York or El Paso, Texas) payable by Lifeline for
Products shipped during the Term (i) for each Initial Product, shall be the
price for such Initial Product set forth on Exhibit D attached hereto, and (ii)
for each Future Product shall be set so as to give Ademco a twenty-four percent
(24%) gross margin with respect to such Future Product, as negotiated in good
faith by Lifeline and Ademco at the time such Future Product is set forth on
Exhibit A.
(b) For orders accepted by Ademco in any year ended on an
anniversary of the date hereof, the per unit price set forth on Exhibit D for
each of the Initial Products which is not a pendant or personal help button is
premised on Lifeline's placing orders during such year for at least 85% of the
aggregate of the minimum yearly numbers of such Products set forth on Exhibit D.
For orders accepted by Ademco in any year ended on an anniversary of the date
hereof, the per unit price set forth on Exhibit D for each of the Initial
Products which is a pendant or personal help button is premised on Lifeline's
placing orders during such year for at least eighty-five percent (85%) of the
aggregate of the minimum yearly number of such Products set forth on Exhibit D.
For purposes of calculating the total number of units of a Product for which
orders have been accepted in any such year, orders accepted for all enhanced
forms of such Product shall be included in the total for such Product. In the
event the premise set forth in this Section 4(b) underlying the price for orders
of a particular Product accepted by Ademco during any such year is not satisfied
(other than as a result of the termination of this Agreement (i) by Ademco
pursuant to Section 1(i) or (ii) by Lifeline pursuant to Section 13 or 17(b)),
the parties shall promptly negotiate in good faith a retroactive increase in
such price for such orders and Lifeline shall promptly thereafter pay the
increase to Ademco.
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(c) The per unit price for each Initial Product payable by Lifeline
to Ademco as set forth on Exhibit D shall be reduced by 50% of any net reduction
in the cost of labor, material or overhead involved in its manufacture that is
realized by Ademco in such manufacture. The per unit price for each Future
Product payable by Lifeline to Ademco as set pursuant to (a) above shall be
reduced by 50% of any net increase above 24% in the gross margin with respect to
such Future Product achieved by Ademco on account of any reduction in the cost
of labor, material or overhead involved in its manufacture that is realized by
Ademco in such manufacture.
(d) Following the second anniversary of the date hereof, the per
unit price payable by Lifeline for any Initial Product shall be increased, on a
full pass-through basis, to reflect any net increase in Ademco's delivered
out-of-pocket cost (for a given volume of purchases) for any components or other
materials used in manufacture thereof above the base cost therefor set forth on
Exhibit E; provided that Ademco provides Lifeline with reasonable prior written
notice and evidence supporting such cost increases.
(e) Prices for the Products are also subject to increase as provided
in Sections 10 and 11.
(f) Shipments shall be invoiced by Ademco no earlier than when such
shipments are made. Payment of each invoice shall be due in full at Ademco
within 30 days after the Products covered by the shipment are received by
Lifeline. Amounts not paid when due shall bear interest at the rate of twelve
percent (12%) per annum (or, if less, the maximum rate permitted by law) from
the due date until paid. There shall be no discount for early payment.
5. Equipment and Tooling/Spare Parts.
(a) Promptly following the execution and delivery of this Agreement,
Lifeline and Ademco (i) shall review Lifeline's testing equipment that is unique
to the Initial Products and Lifeline shall identify any of such testing
equipment that exceeds Lifeline's needs for its own testing of Products and (ii)
shall review Lifeline's tooling and molds that are unique to the Initial
Products (whether located at Lifeline or one of its suppliers) and Lifeline
shall identify any of such tooling and molds that exceed Lifeline's needs for a
reserve for its own potential rework of Products. Within 10 days after Ademco's
request therefor, Lifeline shall deliver or cause to be delivered to such Ademco
facility as Ademco may direct all testing equipment, tooling and molds so
identified that are desired by Ademco. Title to such testing equipment, tooling
and molds, free and clear of all liens or other encumbrances other than the
provisions of (c) below, shall pass to Ademco upon such delivery. Ademco shall
be responsible for the cost of all such transportation. In addition, by written
notice given by Ademco to Lifeline within twenty (20) days after the date of
this Agreement, Ademco shall have the right to purchase the surface mount and
wave soldering equipment used by Lifeline in connection with the manufacture of
the Initial Products, at a price, payable in cash, equal to the fair market
value thereof, as agreed to in good faith by Lifeline and Ademco. Any such
equipment which Ademco elects to purchase shall be delivered, and the cost of
such delivery shall be borne, in the same manner as provided above with regard
to testing equipment.
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(b) To the extent that, consistent with Ademco's customary
manufacturing and testing practices or otherwise necessary for Ademco to meet
its obligations under this Agreement, Ademco reasonably requires additional
testing equipment, tooling or molds which are unique to any Products, Ademco
shall obtain or produce the same. To the extent that, consistent with Lifeline's
customary testing practices, Lifeline reasonably requires testing equipment for
its own internal testing of Products supplied to it by Ademco hereunder, Ademco
shall, following at least 60 days' prior written request from Lifeline, obtain
or produce the same. In the case of testing equipment, tooling or molds for an
Initial Product, the expense therefor shall be incurred by Ademco for its own
account. In the case of testing equipment, tooling or molds for a Future
Product, the expense therefor shall be initially incurred by Ademco, but such
expense shall be deemed to be a manufacturing cost which shall be included in
the calculation of the price paid by Lifeline to Ademco for such Future Product,
assuming that such cost is amortized over the expected sales of such Future
Product during a period agreed upon by the parties, not to exceed three years.
In the event this Agreement terminates or a Future Product is discontinued
before the costs of such testing equipment, tooling and molds are fully
amortized, Lifeline will be liable for (i) in the event of a termination of this
Agreement, the remaining balance of all unamortized costs, or (ii) in the event
of the discontinuance of a Future Product, the remaining balance of the
unamortized cost relative to such Future Product. Notwithstanding the foregoing,
in no event shall Ademco be required to incur expense pursuant to this Section
5(b) with respect to Future Products if the sum of such expense and any
unamortized balance of costs previously so incurred exceed $250,000 (provided
that in any such event, Lifeline may incur a portion of such expense directly to
reduce the portion to be incurred by Ademco).
(c) Ademco shall use such care with respect to the testing
equipment, tooling and molds delivered by Lifeline pursuant to Section 5(a) or
for which Lifeline ultimately bears the expense pursuant to Section 5(b) as it
uses with respect to its other testing equipment, tooling and molds of similar
kinds, and shall be responsible for the normal maintenance and repair thereof.
Ademco may from time to time dispose of any or all of the same as it becomes
worn out or obsolete, after 90 days' prior written notice to Lifeline of
Ademco's intent to do so, unless Lifeline requests that any such equipment,
tooling and/or molds be delivered to it. Ademco shall promptly transfer to
Lifeline title and possession to all such testing equipment, tooling and molds
and any replacements thereof not so disposed of, free and clear of all liens or
other encumbrances, (i) relating to any Initial Product, upon the termination of
this Agreement or upon the discontinuation of such Initial Product, as
applicable, and (ii) relating to any Future Project, upon the termination of
this Agreement or upon the discontinuation of such Future Product, as
applicable, and the payment by Lifeline of the unamortized costs of the testing
equipment, tooling and molds, if any. Each such transfer shall be on an "as is,
where is" basis. Within 10 days after the relevant event, Ademco shall deliver
or cause to be delivered to such Lifeline facility as Lifeline may direct the
testing equipment, tooling and molds to which such event relates. Lifeline shall
be responsible for the cost of such transportation.
(d) Except as expressly set forth above, Ademco shall maintain and
adapt as necessary, at its own cost, the equipment and other materials,
including testing equipment, tooling and molds, required to fulfill its
manufacturing and testing obligations under this Agreement. The foregoing shall
include the rework of tooling to adapt to Ademco's (or its suppliers')
equipment, the testing of tooling in its new environment and the certification
or recertification of tooling at its location of use.
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(e) Ademco agrees at its expense to design, document, construct,
maintain and verify all test, assembly and calibration fixtures and procedures
that are required by it for the construction and testing of all Product
assemblies, final assemblies and component parts. Lifeline will make available
to Ademco all documentation and know-how owned by it or which it is otherwise
permitted to share with Ademco regarding Lifeline's current test fixtures and
procedures.
(f) In order to promote correlation of final assembly test
processes, Ademco shall construct, deliver and maintain at Lifeline's principal
executive office a duplicate set of final test fixtures, software and procedures
which may be used by Lifeline for acceptance testing. All costs incurred by
Ademco in connection therewith shall be borne by Ademco, except that all such
costs related to any Future Product (with internal construction labor deemed to
cost $30 per hour) shall be included in the calculation of the price paid by
Lifeline to Ademco for such Future Product assuming such cost is amortized over
the expected sales of such Future Product during a period agreed upon by the
parties, not to exceed three years. In the event this Agreement terminates or a
Future Product is discontinued before all such costs are amortized, Lifeline
will be liable to Ademco for the remaining balance of (i) all such costs which
have not then been amortized, in the event of a termination of this Agreement,
or (ii) in the event of discontinuance of a Future Product, such costs with
respect to such Future Product which have not been amortized. The test software
and procedures delivered to Lifeline shall be the sole and exclusive property of
Ademco and of a confidential nature, and Lifeline shall use such software and
procedures, and shall not disclose any of them to any third party, on the same
basis that Ademco agrees in Section 6(b) to use and not disclose the know-how
provided to Ademco by Lifeline; provided, however, that upon the termination of
this Agreement or the discontinuation of a Future Product, title to the test
fixtures, software and procedures shall be transferred to Lifeline. Ademco also
agrees to supply to Lifeline from time to time, for the cost of purchased and
custom fabricated parts, any and all fixtures requested by Lifeline that are
required to sustain Lifeline's repair and rework activities related to Products.
(g) To the extent on hand and not required by Ademco for the
performance of its obligations under this Agreement, Ademco agrees to sell
Lifeline such spare parts for the Products as Lifeline may request from time to
time. Ademco also agrees to order for sale to Lifeline such additional spare
parts for the Products as Lifeline may request from time to time. Ademco agrees
to pass through to Lifeline to the extent permitted by Ademco's suppliers of
such spare parts any warranties thereon by such suppliers. Ademco agrees to
price such spare parts at prices equal to Ademco's costs therefor. Ademco agrees
to provide to Lifeline from time to time upon Lifeline's request a summary of
the then current costs to it of all component parts of Products, as well as of
all additional parts then being used by Ademco in its manufacturing of Products.
The cost information provided to Lifeline by Ademco shall be the sole and
exclusive property of Ademco and of a confidential nature, and Lifeline shall
use such information, and shall not disclose any of such information to any
third party, on the same basis that Ademco agrees in Section 6(b) to use and not
disclose the know-how provided to Ademco by Lifeline. SALES OF SPARE PARTS
PURSUANT TO THIS SECTION 5(g) SHALL BE WITHOUT WARRANTY FROM ADEMCO OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
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6. Know-how.
(a) Lifeline shall promptly disclose to Ademco all of the know-how
owned by or licensed to Lifeline that is currently used by Lifeline or its
suppliers in the manufacture of the Initial Products and that is necessary for
Ademco to perform its responsibilities under this Agreement.
(b) The know-how provided to Ademco by Lifeline pursuant to this
Agreement shall be the sole and exclusive property of Lifeline and of a
confidential nature, and Ademco shall use such know-how solely in connection
with this Agreement and shall not disclose any of such know-how to any third
party other than a subcontractor or other vendor approved in writing by Lifeline
(including without limitation any affiliate or other division of Pittway)
without the prior written consent of Lifeline. The foregoing shall not, however,
apply to any such know-how that: (i) is already known to Ademco at the time it
is provided to Ademco by Lifeline (other than pursuant to an obligation of
confidentiality to Lifeline or as a result of Ademco's breach of any legal
obligation to Lifeline); (ii) is at such time generally known to and available
for use by the public, or thereafter becomes generally known to and available
for use by the public other than as a result of Ademco's acts or omission to
act; (iii) is received by Ademco from a third party having the legal right to
disclose such know-how; or (iv) is required by order of a court of competent
jurisdiction (by subpoena or similar process) to be disclosed by Ademco
(provided that in such case Ademco shall promptly inform Lifeline of such order,
shall cooperate with Lifeline, at Lifeline's expense, in attempting to obtain a
protective order or to otherwise restrict such disclosure, and shall only
disclose such know-how to the extent necessary to comply with such court order).
7. Right to Reject; Limited Warranty.
(a) Ademco warrants to Lifeline that each Product shipped pursuant
to this Agreement, when delivered to the common carrier at the FOB point, shall
be free of defects in material and workmanship and shall conform to the
Specifications applicable to it. Lifeline shall have the right to inspect the
Products prior to acceptance thereof and shall reject and return any Products
that are found by it not to comply with the foregoing warranty. Ademco shall
bear the cost of such return. Such rejection and return shall be Lifeline's sole
remedy with respect to Products so found not to comply with the foregoing
warranty.
(b) Ademco further warrants to Lifeline that during the period
covered by Lifeline's warranty to its customer or to any end user with respect
to each Product (but in no event more than 27 months following Ademco's shipment
of such Product to Lifeline), such Product shall not suffer any component
failure (other than any such failure related to lightning). In the event of a
breach of the foregoing warranty, Lifeline shall promptly notify Ademco thereof
and provide Ademco with a reasonable opportunity to elect to repair or rework
such Product at Ademco's expense (in which event Lifeline will ship such Product
to Ademco for repair or rework at Ademco's expense). In the event Ademco
declines such opportunity, Lifeline may then elect to repair or rework such
Product on its own premises or elsewhere, with the cost of related labor (at
Lifeline's then current repair rates; but not to exceed $25.00 per unit),
materials and any related shipping charges to be borne by Ademco. It is
expressly understood and agreed that Ademco's warranty under this Section 7(b)
shall not apply to any Product repaired or
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reworked by Lifeline, to the extent that a failure of such Product to comply
with such warranty is caused by any such repair or rework. Lifeline may offset
any amounts due to it by Ademco under this Section 7(b) against any amounts due
by it to Ademco under this Agreement.
(c) During the Term, Ademco agrees, if Lifeline requests from time
to time, to perform repair or refurbishment of (i) Products shipped by Ademco
pursuant to this Agreement to which Ademco's warranty under (a) or (b) above
does not apply and (ii) Products manufactured by Lifeline which were not shipped
by Ademco. The price for each such repair or refurbishment shall not exceed
$25.00 plus related parts charges. All related inbound and outbound freight
shall be the responsibility of Lifeline.
(d) Ademco represents to Lifeline that all of Ademco's internal
systems used in its business or operations, including, without limitation,
computer hardware systems, software applications, firmware, equipment containing
embedded microchips and other embedded systems are Year 2000 Compliant and will
not be adversely affected with respect to functionality, interoperability,
performance or volume capacity by virtue of the arrival of the year 2000, except
to the extent that Ademco's ability to perform its obligations under this
Agreement would not be materially adversely affected. Ademco is not aware of any
failure to be Year 2000 Compliant of any third-party system used in connection
with the business or operations of Ademco, including without limitation any
system belonging to any of Ademco's suppliers, service providers or customers,
which would materially adversely affect Ademco's ability to perform its
obligations under this Agreement. For purposes of this Agreement, "Year 2000
Compliant" means that the applicable system or item:
(1) will accurately receive, record, store, provide, recognize
and process all date and time data from, during, into and between the twentieth
and twenty-first centuries, the years 1999 and 2000 and all leap years;
(2) will accurately perform all date-dependent calculations
and operations (including, without limitation, mathematical operations, sorting,
comparing and reporting) from, during, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and all leap years; and
(3) will not malfunction, cease to function or provide invalid
or incorrect results as a result of (x) the change of years from 1999 to 2000 or
from 2000 to 2001, (y) date data, including date data which represents or
references different centuries, different dates during 1999 and 2000, or more
than one century or (z) the occurrence of any particular date,
in each case without human intervention, other than original data entry;
provided, in each case, that all applications, hardware and other systems used
in conjunction with such system or item which are not owned or licensed by
Ademco correctly exchange date data with or provide data to such system or item.
(e) THE EXPRESS WARRANTIES SET FORTH IN SECTIONS 7(a) AND (b) AND IN
SECTION 8(a) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
- 10 -
IMPLIED, INCLUDING THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NONINFRINGEMENT.
8. Quality Control/Testing/Record Keeping.
(a) Ademco warrants to Lifeline that each Product shipped by it
pursuant to this Agreement shall be of a quality at least equal to the quality
of any comparable product currently sold by Lifeline. Lifeline shall have the
right, at its own expense, upon reasonable advance notice to Ademco and with
minimum disruption to Ademco's (or its suppliers') operations, to inspect the
facilities, equipment and operations of Ademco (and its suppliers) related to
Ademco's manufacture of Products for the purpose of determining whether Ademco
is in compliance with the foregoing agreement.
(b) Prior to shipment to Lifeline, each Product shall be tested by
Ademco for conformity to the applicable Specifications, in accordance with the
test plan set forth on Exhibit F hereto (which shall be amended as necessary in
connection with the addition of Future Products). Ademco shall maintain the
records of the results of such testing for seven (7) years after shipment, and
shall provide Lifeline with copies of such records, at Lifeline's expense, upon
Lifeline's request.
(c) With respect to each Product shipped pursuant to this Agreement,
Ademco shall maintain for seven (7) years after shipment written records of (i)
any changes in the Specifications therefor approved by Lifeline, (ii) the
component receipt history, (iii) the shipment history by product line and serial
number, (iv) engineering change order implementation history and (v) any
documentation relating to such Product reasonably required to demonstrate its
quality and manufacturing practices. In addition, Ademco shall create and
maintain formally-controlled documentation which would enable Lifeline or a
third party to manufacture and test the Products in the event of the termination
of this Agreement, in each case assuming possession of the requisite
manufacturing skills and resources. Such formally-controlled documentation shall
relate, among other things, to test fixturing, manufacturing and process-related
fixturing, Product manufacturing processes and test procedures and strategies
and shall include copies of all testing software. Ademco will provide a copy of
the foregoing to Lifeline (i) upon Lifeline's request from time to time during
the Term, at Lifeline's expense and (ii) upon Lifeline's request at the
expiration of the Term, at Ademco's expense.
(d) Notwithstanding the provisions of (b) and (c) above, at any time
after the Term Ademco may destroy any or all the records required to be
mentioned by it pursuant thereto if it gives Lifeline at least ninety (90) days
advance written notice of its intention to do so and a reasonable opportunity to
take possession of the records intended to be destroyed.
9. Cooperation. Ademco shall cooperate with Lifeline in Lifeline's
investigation of any issues that may arise related to Product quality and/or
customer dissatisfaction with Products. Lifeline will bring each such issue to
Ademco's attention upon becoming aware of it.
10. Enhancements or Other Engineering Changes.
(a) Lifeline may from time to time direct in writing that Ademco
implement a specific enhancement or other engineering change related to a
Product. Such an enhancement or
- 11 -
other change may consist of, among other things, a substitution of a component
or a revision to a printed circuit board layout, or a modification to tooling
for injection-molded parts. Ademco may decline to make any such enhancement or
other change if the Product as so enhanced or changed is one that Ademco could
decline to add to Exhibit A (other than on the basis of the numerical limitation
applicable to Future Products) if it were being proposed as a Future Product.
(b) If the enhancement or other change results in an increase in
manufacturing cost, Lifeline shall bear any incremental material and labor costs
incurred by Ademco (as supported by evidence satisfactory to Lifeline in its
reasonable judgment) in connection with the manufacturing of the revised Product
as well as any resulting costs incurred by Ademco to modify fixtures and
tooling. Ademco shall bear any other costs of implementation, including without
limitation the costs of changes to Ademco's product documentation, process
sheets and manufacturing engineering support documentation and the cost of
changes to test processes, procedures or software. All such costs to be borne by
Lifeline shall be reflected in an increase in the price of the affected Product
which shall amortize such costs over the expected sales of such Product during a
period agreed upon by the parties, not to exceed three years. In the event this
Agreement terminates or a Product is discontinued before all such costs are
fully amortized, Lifeline will be liable to Ademco for the remaining balance of
(i) all costs to be borne by Lifeline pursuant to this Section 10 which have not
then been amortized, in the event of a termination of this Agreement, or (ii) in
the event of the discontinuance of a Product, the costs to be borne by Lifeline
pursuant to this Section 10 with respect to such Product which have not then
been amortized.
(c) Costs related to enhancements or other changes which would
reduce the cost of manufacturing any Product are governed by Section 4(c) above.
(d) Any enhancement or other change directed by Lifeline and not
declined by Ademco pursuant to Section 10(a) shall be implemented by Ademco as
soon thereafter as practicable or, if later, by a date specified by Lifeline in
its direction. Upon receipt of any such direction not so declined, Ademco (i)
shall provide Lifeline in writing with Ademco's estimate of any related costs to
be borne by Lifeline and the amortization thereof and (ii) shall review Ademco's
inventory of the affected Product and components therefor and advise Lifeline in
writing of Ademco's estimate of the quantity of such inventory (other than any
such inventory for which Ademco is at risk pursuant to Section 3(c)) that will
be rendered excess or obsolete as a result of the directed enhancement or other
change; and Lifeline may then withdraw its direction. If Lifeline does not
withdraw its direction in writing within ten (10) days after its receipt of such
advice, Ademco shall proceed with the implementation of the directed enhancement
or other change and, upon the implementation of such enhancement or other
change, the Specifications shall be deemed modified to reflect such enhancement
or other change (and such enhancement or other change shall be treated as having
been expressly agreed to in writing by Lifeline and Lifeline shall, subject to
Section 3(c) above, purchase from Ademco, at Ademco's cost, all then remaining
inventory that has been rendered excess or obsolete as a result of such
enhancement or other change).
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11. Legal and Regulatory Compliance.
(a) Lifeline shall be responsible for determining the legal and
regulatory requirements applicable to Products (including without limitation the
requirements applicable to Products exported to countries outside the U.S.) and
for keeping Ademco advised thereof in detail (including reasonably in advance of
the effective time of any change therein), and for keeping the Specifications in
compliance with such requirements (including without limitation assuring that
the standard configurations for Products meet such requirements). Ademco shall
not withhold or unreasonably delay its consent to any modification of the
Specifications proposed by Lifeline that is necessary to keep the Specifications
in compliance with such requirements. In the event any change in such
requirements results, in effect, in the discontinuance of any Product or
component therefor, Lifeline shall, subject to Section 3(c) above, purchase from
Ademco, at Ademco's cost, all then remaining inventory of such Product or
component.
(b) Ademco shall submit on behalf of Lifeline applications for such
regulatory approvals as are specified by Lifeline relating to the manufacture
and marketing of the Products, including without limitation approvals required
for electrical safety; electromagnetic compatibility, network interconnection
and medical safety; and shall maintain any such approvals that result. Such
activities shall be at Ademco's expense, provided that (i) costs incurred by
Ademco in connection with any regulatory approval (or application therefor) for
an Initial Product of a kind which such Initial Product does not currently have
or of a kind which such Initial Product currently has but in a country in which
it does not currently have the same shall be reimbursed to Ademco by Lifeline
upon Ademco's request and (ii) costs incurred by Ademco in connection with any
Future Product shall (x) in the case of an approval obtained, be deemed to be a
manufacturing cost which shall be included in the calculation of the price paid
by Lifeline to Ademco for such Product, assuming that such costs are amortized
over the expected sales of such Product during the period of the approval
obtained, and (y) in each other case, be reimbursed to Ademco by Lifeline upon
demand. In the event this Agreement terminates or a Future Product is
discontinued before all costs to be amortized pursuant to (x) above are fully
amortized, Lifeline will be liable to Ademco for the remaining balance of (i)
all such costs which have not then been amortized, in the event of a termination
of this Agreement, or (ii) in the event of discontinuance of a Future Product,
such costs with respect to such Future Product which have not been amortized.
All regulatory approvals obtained by Ademco pursuant to this Section shall be
obtained in the name of Lifeline, and Ademco shall provide Lifeline with copies
of all such approvals promptly upon Ademco's receipt thereof. Ademco shall
maintain all technical files and adhere to all quality assurance practices and
procedures required for the Products shipped by it to be covered by the
applicable regulatory approvals obtained. In the event a Product fails to
receive the necessary approval, Ademco shall promptly provide Lifeline with
copies of any notices or other written information relating to such failure.
(c) At Lifeline's request, Ademco shall, at its expense, perform
such specific tests on Products as are identified to Ademco by Lifeline as
necessary for their regulatory compliance and shall submit the results of such
tests to such regulatory bodies as are identified by Lifeline for such purpose.
- 13 -
12. Indemnification.
(a) Lifeline shall indemnify, defend and hold harmless Ademco,
Pittway and their affiliates, and the respective successors, assigns, directors,
officers, agents, representatives and employees of each of them, with respect to
all claims (including without limitation claims for personal injury, wrongful
death or damage to property), liabilities, damages, losses and expenses,
including without limitation costs of investigation and reasonable attorneys'
fees (collectively, "Losses"), arising out of or in connection with the Products
or the sale, installation or use thereof or the monitoring (or failure of
monitoring) thereof; provided that Lifeline's obligation under this Section
shall not limit Ademco's indemnity obligation under paragraph (c) below and
Lifeline's obligation under this Section shall not include claims for which
Ademco is obligated to indemnify Lifeline or any other person pursuant to
paragraph (c) below. The Losses for which Lifeline is responsible under this
Section shall include, without limitation, Losses attributable to any Product
manufactured or shipped pursuant to this Agreement (or to the manufacture,
labeling or packaging thereof) infringing, or being alleged to infringe, any
patent, trademark, trade dress or other intellectual property of any third
party, other than an infringement or alleged infringement arising from the
manufacturing process used by Ademco to manufacture the Products, and except to
the extent such Losses arise from any breach by Ademco of its express warranties
under this Agreement. Lifeline's indemnification obligation under this Section
12(a) shall be Ademco's sole remedy with respect to the matters covered thereby.
(b) At Lifeline's insistence, Ademco has agreed that there will be
omitted from the Products, and from the packaging and other materials
accompanying the Products, language set forth on Exhibit G identifying
Ademco/Pittway as the manufacturer thereof (to the extent permitted by law) and
purporting to limit their liability to purchasers and end users of the Products
to the warranty obligations set forth in Section 7(b). Lifeline shall indemnify,
defend and hold harmless Ademco, Pittway and their affiliates, and the
respective successors, assigns, directors, officers, agents representatives and
employees of each of them, with respect to all Losses which they could have
avoided had such language not been omitted.
(c) Ademco shall indemnify, defend and hold harmless Lifeline and
its affiliates, and the respective successors, assigns, directors, officers,
agents, representatives and employees of each of them, with respect to all
Losses arising out of or in connection with (i) claims for personal injury,
wrongful death or property damage caused by any failure of a product shipped by
Ademco pursuant to this Agreement to comply with Ademco's express warranties in
this Agreement applicable to such Product (other than any such claims Ademco's
liability for which could have been avoided had the language described in
paragraph (b) above not been omitted), or (ii) intellectual property
infringement claims by third parties arising (A) from the manufacturing process
used by Ademco to manufacture the Products or (B) from the failure of the
Product to comply with all express warranties of Ademco under this Agreement.
Ademco's warranty obligations under Section 7(a) and (b) and 8(a) above, and its
indemnification obligation under clause (i) of the preceding sentence, shall be
Lifeline's sole remedy with respect to the matters covered thereby.
(d) Except as provided in the last sentences of paragraphs (a) and
(c) above, nothing in this Section 12 shall limit either party's remedies
against the other party.
- 14 -
(e) The indemnified party (be it Ademco or any of the other parties
named under paragraphs 12(a) and (b) above or Lifeline or any of the other
parties named under paragraph 12(c) above) hereby agrees that: (i) the
indemnifying party shall have sole control and authority with respect to the
defense or settlement of any claim for which the indemnifying party is
responsible; and (ii) the indemnified party shall cooperate fully with the
indemnifying party, at the indemnifying party's sole cost and expense, in the
defense of any such claim. Any settlement of any such claim that imposes any
liability or limitation on the indemnified party shall not be entered into
without the prior written consent of the indemnified party. In the event that a
claim is based partially on an indemnified claim and partially on an
unindemnified claim, or is based partially on a claim indemnified by Lifeline
pursuant hereto and partially on a claim indemnified by Ademco pursuant hereto,
any Losses incurred in connection with such claims shall be apportioned between
the parties in accordance with the degree of cause attributable to each party.
(f) At all times during the Term and the three (3) years after the
Term, Lifeline and Ademco shall each maintain liability and other insurance
coverage with respect to the Products and the monitoring thereof (in the case of
Lifeline), and the Products and the manufacturing thereof (in the case of
Ademco), in amounts set forth on Exhibit H hereto and with carriers reasonably
satisfactory to the other party. The policies evidencing such insurance shall
name Ademco, Pittway and their affiliates (in the case of policies to be
obtained by Lifeline) and Lifeline and its affiliates (in the case of policies
to be obtained by Ademco) as additional insureds as their interests may appear
and shall provide that such policies may not be modified or canceled prior to
scheduled expiration without 30 days' prior notice to the other party. Each
party shall provide the other party with copies of all such policies it obtains.
13. Termination.
(a) Either party may terminate this Agreement by written notice to
the other party if the other party breaches this Agreement in any material
respect and does not correct such breach within sixty (60) days after receipt of
written notice thereof from such party specifying such breach; provided,
however, that Ademco shall not be liable for, and Lifeline shall have no right
to terminate this Agreement for, a breach of this Agreement caused by the
actions of a subcontractor or other vendor that Lifeline has directed Ademco to
use to which Ademco objected in writing to Lifeline prior to Ademco's first
utilization of such subcontractor or other vendor subsequent to such direction,
if Ademco's objection was based on reasonable concerns about the quality or
performance of such subcontractor or other vendor. In the event of such a
breach, Ademco and Lifeline will promptly cooperate to address the problems
caused by such subcontractor or other vendor, including, at Lifeline's option,
replacing such subcontractor or other vendor (subject to the provisions of
Section 2(c)).
(b) In the event Lifeline gives notice of termination pursuant to
paragraph (a) above or pursuant to clause (ii) of Section 1, then
notwithstanding the other provisions of this Agreement, Ademco shall have no
obligation with respect to the development or manufacture of any Future Product
not then being purchased from it by Lifeline.
(c) Either party may terminate this Agreement immediately by written
notice to the other party upon the happening of any of the following or any
other comparable event: (1)
- 15 -
insolvency of the other party; (2) filing of any petition by or against the
other party under any bankruptcy, reorganization or receivership law which is
not discharged within 60 days after the filing thereof; (3) execution of an
assignment for the benefit of the other party's creditors; or (4) appointment of
any trustee or receiver for the other party's business or assets or any
substantial part thereof, unless such appointment is withdrawn or nullified
within sixty (60) days of such event.
(d) Neither party shall have any further liability or obligation to
the other following the termination of this Agreement except as follows:
(1) The provisions of the last sentence of Section 4(b), the
last two sentences of Section 5(c), Section 7, the first sentence of Section
8(a), the records retention and copy-providing provisions of Section 8, Sections
9 and 12, this Section 13, Section 14, Section 17(a) and any other provision
which by its express terms is to survive such termination shall survive such
termination.
(2) Each party shall remain liable for any liability or
obligation (including any payment liability or obligation and any limitation on
the use or disclosure of information or other items of a confidential nature)
that has arisen or accrued prior to or upon such termination, including any such
liability or obligation for any breach of this Agreement by such party.
(e) Promptly following termination of this Agreement, Ademco shall
return to Lifeline, or destroy or erase, all tangible or electronically recorded
manifestations of any know-how provided to Ademco by Lifeline pursuant to this
Agreement.
(f) Promptly following termination of this Agreement, Lifeline shall
purchase from Ademco all of Ademco's then inventory of (i) finished Products (at
the then prevailing unit prices therefor) that are then in compliance with the
Specifications and regulatory requirements therefor that were applicable to the
Products at the time that they were manufactured or obtained by Ademco, and (ii)
components for Products (at Ademco's cost therefor, on a FIFO basis), in each
case other than, unless requested by Lifeline in writing, any such inventory for
which Ademco is at risk pursuant to Section 3(c).
14. Limitation of Liability. IN NO EVENT SHALL EITHER ADEMCO OR LIFELINE
BE LIABLE TO THE OTHER UNDER OR ON ACCOUNT OF THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION UNDER SECTION 12 HEREOF) FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH ANY ASPECT OF THIS
AGREEMENT OR THE USE OR PERFORMANCE OF ANY PRODUCT, INCLUDING, BUT NOT LIMITED
TO, DAMAGES BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE,
STRICT TORT OR ANY OTHER LEGAL THEORY.
15. Independent Contractor. The parties agree that nothing contained in
this Agreement shall create, or shall be deemed or construed to create, any
partnership or joint venture between Ademco and Lifeline and that Ademco shall
at all times during the Term be an independent contractor. Under no
circumstances shall any employee of Ademco be, or be
- 16 -
deemed or construed to be, an employee of Lifeline, and Ademco shall be
responsible for the payment of local, state and federal payroll taxes and
contributions for unemployment insurance, worker's compensation, pensions,
social security and related protection with respect to all such employees.
Neither Lifeline nor Ademco shall have the power or authority to act on behalf
of or in the name of the other party or to bind the other party, either directly
or indirectly, except for the purpose of pursuing regulatory approvals under
Section 11, in which case Ademco is authorized to act as Lifeline's agent
subject to the terms and conditions of that Section.
16. Mutual Representations. Each party represents and warrants to the
other that it is free to enter into, and to fully perform, this Agreement and
that no agreement or understanding between it and any other person, firm or
corporation exists that would be breached by its execution, delivery or
performance of this Agreement.
17. Miscellaneous.
(a) Audit Right. Each year, Lifeline shall have the right, at its
own expense, and with minimum disruption to Ademco's operations, to audit
Ademco's relevant books and records in order to verify Ademco's compliance with
the cost-related provisions of this Agreement for the preceding year (or, at
Lifeline's election, if compliance for the second preceding year has not been
audited by Lifeline, then for the two (2) preceding years), provided that
Lifeline exercises such right within six (6) months of the end of such year.
Ademco shall promptly (i) pay to Lifeline any overcharge and (ii) in addition,
reimburse Lifeline for any audit expenses incurred by Lifeline which shows that
Ademco has overcharged Lifeline, up to the amount of the overcharge.
(b) Force Majeure. Neither party shall be liable to the other
(including without limitation pursuant to Section 3(d) hereof) for any failure
to perform, or delay in performance, hereunder that results from force majeure
(i.e., acts of god, acts of public enemy, acts of the governments of any state
or political subdivision or any department or regulatory agency thereof or
entity created thereby, quotas, embargoes, subversive activities or sabotage,
fires, floods, explosions, or other catastrophes, epidemics, quarantine
restrictions, or any other cause beyond the control of the non-performing party;
for purposes of which, strikes or other labor stoppages, slowdowns or disputes
shall be deemed beyond the control of the non-performing party); provided,
however, that Ademco shall be required to provide Lifeline with Products
representing no less than Lifeline's pro rata share of Ademco's output from its
manufacturing operations (including products for Ademco's own account) in the
event of force majeure affecting its operations. Upon either party becoming
aware that its obligation to perform will be, or will likely be, excused by
force majeure, such party shall promptly notify the other party and provide an
estimate of the duration of the effect thereof. In the event Ademco is the party
affected by force majeure and the estimated duration of the effect thereof
exceeds one month, Lifeline may terminate this Agreement immediately by written
notice to Ademco. In the event Lifeline does not terminate this Agreement but
instead purchases Products from any other source as a result of such force
majeure, Lifeline's receipts of a Product from such other source during such
period shall be counted toward the minimum yearly number of units of such
Product specified on Exhibit D for the year in which such period occurs. Nothing
in this Agreement shall require Lifeline to utilize Ademco as its sole source of
Products.
- 17 -
(c) Assignment. Neither party hereto may assign or transfer this
Agreement, in whole or in part, or any interest arising hereunder, without the
prior written consent of the other party. A change in the ownership or control
(whether by sale of stock, merger, recapitalization or otherwise) of a party or
its direct or indirect parent corporation shall not be deemed an assignment or
transfer for purposes of this Agreement.
(d) Notices. All notices and communications required or permitted to
be given under this Agreement shall be in writing and shall be personally
delivered, sent by telecopy (with receipt confirmed), sent by Federal Express or
other nationally recognized courier requiring signature on receipt, or sent by
certified mail, postage prepaid and return receipt requested, to the parties at
the following addresses (or, in the case of either party, at such other address
as such party may specify by notice to the other):
For Ademco: Alarm Device Manufacturing Company
000 Xxxxxx Xxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Executive Vice President
For Lifeline: Lifeline Systems, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
Any such notice or communication shall be deemed delivered when actually
received by the party to whom such notice or communication is given.
(e) Entire Agreement. This Agreement, together with the Exhibits
hereto, constitutes the sole and exclusive agreement for the purchase of
Products by Lifeline from Ademco on or after the date hereof, notwithstanding
any term or condition that may have been or may hereafter be contained in any
proposal, schedule, order, acknowledgment, confirmation, invoice or other
document delivered by either party prior hereto or hereafter in connection
herewith, unless such term or condition is hereafter expressly agreed to by the
other party in a writing which expressly states that such writing constitutes an
amendment to this Agreement. Failure by either party at any time to require
performance by the other party of any provision of this Agreement shall in no
way affect the right to require full performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision of this Agreement
constitute a waiver of any succeeding breach of the same or any other provision,
nor constitute a waiver of the provision itself.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State
- 18 -
of New York. In furtherance of the foregoing, the internal law of the State of
New York shall control the interpretation and construction of this Agreement,
even though under that jurisdiction's choice of law or conflict of law analysis
the substantive law of some other jurisdiction would ordinarily apply.
(g) Headings/No Strict Construction. Section headings contained in
this Agreement are for convenient reference only, and shall not in any way
affect the meaning or interpretation of this Agreement. The language used in
this Agreement is the language chosen by the parties to express their mutual
intent and no rule of strict construction against either party shall apply to
any term or condition of this Agreement.
(h) Attorneys' Fees and Costs. If any legal or other proceedings
arise between the parties relating to this Agreement, the prevailing party shall
be entitled to recover from the non-prevailing party all costs and expenses,
including without limitation reasonable attorneys' fees, incurred by the
prevailing party in connection therewith.
(i) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but which together will constitute
one and the same instrument.
(j) Mediation. In the event of any dispute hereunder, if the parties
have not resolved such dispute within thirty days either of the parties shall
have the right to submit the matter under dispute to mediation before a mediator
appointed by the presiding officer of the New York office of the American
Arbitration Association. If either party exercises such right, the mediator
shall be directed to establish an aggressive mediation schedule, and during the
period of 60 days from the submission of such disputed matter to such mediation
(i) no litigation may be brought or proceed with respect to such matter and (ii)
no party that is or may be entitled to suspend the performance of its
obligations under this Agreement on account of such disputed matter, if any,
shall suspend such performance on account of such disputed matter. It is
expressly understood and agreed, however, that nothing in this Section 17(j)
shall preclude or delay either party's right to enforce any limitation on the
other party's use or disclosure of information or other items of a confidential
nature or to terminate this Agreement in accordance with its terms.
- 19 -
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
ALARM DEVICE MANUFACTURING COMPANY, a Division
of Pittway Corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Title: Executive Vice President
-------------------------------
LIFELINE SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------
Title: Vice President and Chief
-------------------------------
Information Officer
-------------------
- 20 -
