<PAGE>

                                                                   Exhibit 10.35

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 3rd day of March, 2003
but with effect from January 1, 2003, is entered into by Lifeline Systems
Canada, Inc., an Ontario Corporation with its principal place of business at 95
Barber Greene Road, Suite 105, Toronto, Ontario M3C 3E9, (the "Company"), and
Leonard Wechsler, residing at 58 Millwood Road, Toronto, Ontario, M4S 1J7,
Canada (the "Employee").

                                   ARTICLE 1
                               TERM OF EMPLOYMENT

The Company hereby agrees to continue to employ the Employee, and the Employee
hereby accepts the continuing employment with the Company, upon the terms set
forth in this Agreement, for an indefinite term.

                                   ARTICLE 2
                                 TITLE; CAPACITY

The Employee shall serve as President of the Company. As President, the Employee
shall report to the Chief Executive Officer (the "CEO") of Lifeline Systems,
Inc., a Massachusetts corporation with its principal place of business at 111
Lawrence Street, Framingham, Massachusetts, 01702 ("Lifeline"). The Employee
shall be subject to the supervision of, and shall have such authority as is
delegated to him by, the CEO.

The Employee agrees to undertake the duties and responsibilities inherent in the
position of President and such other duties and responsibilities as the Board or
its designee shall from time to time reasonably assign to him. The Employee
agrees to devote his entire business time, attention and energies to the
business and interests of the Company during his Employment. The Employee agrees
to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.

In the event that Lifeline or the Company is a party to a business transaction,
whether by way of purchase or sale of assets, merger, liquidation or otherwise,
whereby there is a change in the organizational structure of Lifeline or the
Company subsequent to which the Employee may be required to report to another
executive responsible for foreign subsidiaries or the like, the Employee's
reporting arrangements shall be altered accordingly, provided that the
Employee's responsibilities and authority remain intact.

                                   ARTICLE 3
                            COMPENSATION AND BENEFITS

3.1          Salary

The Company shall pay the Employee, in bi-weekly installments in arrears, an
annual gross salary, less all applicable tax withholdings and statutory
deductions. Effective March 1, 2003 and annually thereafter, such salary shall
be subject to increase as determined by the Company, based on performance of the
Employee.

<PAGE>

3.2          Bonuses

The Employee shall be entitled to bonus payments in accordance with Schedule "A"
attached hereto. All such bonus payments are subject to applicable tax
withholdings and statutory deductions. The Employee's rights to bonuses on
termination are set forth in Article 5 below. The parties agree to renegotiate
the Schedule "A" thresholds in good faith on the date which is three years from
the signing of this Agreement and every third anniversary thereafter in an
effort to achieve compensation no less favourable than the prior term if it is
reasonably possible to do so based on the Company's performance.

3.3          Fringe Benefits

The Employee shall be entitled to participate in all benefit programs, if any,
that the Company establishes and makes available to its employees and to its
senior management to the extent that the Employee's position, tenure, salary and
other qualifications make him eligible to participate (the "Employee Benefits").
The Employee shall be entitled to 4 weeks paid vacation per year in addition to
all statutory holidays in Ontario, to be taken at such times as are reasonable.
The Employee understands and agrees that the Company reserves the right to
unilaterally revise the terms of the Employee Benefits or to eliminate any
Employee Benefits thereunder altogether. Benefits will be provided in accordance
with the formal plan documents or policies and any issues with respect to
entitlement or payment of benefits under any of the Employee Benefits will be
governed by the terms of such documents or policies establishing the benefit in
issue.

3.4          Reimbursement of Expenses

The Employee shall comply with, and shall be entitled to the reimbursement
established pursuant to the Company's policies in effect from time to time with
respect to travel, entertainment and other expenses incurred or paid by the
Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement.

3.5          Automobile Expenses

The Company shall pay the Employee a monthly automobile allowance of Cdn$1,000
in bi-weekly installments in arrears.

3.6          Stock Options

Lifeline shall make an annual grant of options to the Employee under Lifeline's
Stock Option Plan at such times as Lifeline grants options to its other senior
executives. The number of options to be granted in each fiscal year, if any,
shall be determined by Lifeline, in its sole discretion, based on the Employee's
performance during such fiscal year.

                                   ARTICLE 4
                             EMPLOYMENT TERMINATION

The employment of the Employee by the Company pursuant to this Agreement shall
terminate upon the occurrence of any of the following:

<PAGE>

4.1      At the election of the Company, for cause, immediately upon written
notice by the Company to the Employee. For the purposes of this Section 4.1,
cause for termination shall mean (a) willful misconduct or gross negligence by
the Employee or willful failure to perform his responsibilities in the best
interest of the Company (provided, that except in the case of criminal
behaviour, the Employee shall be given at least one written notice specifying
the nature of his misconduct) to provide an opportunity for the Employee to
remedy such misconduct; or (b) the breach of the Employee of Article 6 or
Article 7 of this Agreement, which breach continues for 30 days subsequent to
written notice from the Company to the Employee of the breach (unless such
breach is material and is not susceptible to cure, in which case termination
shall be deemed to be immediate).

4.2      Upon the death or, at the election of the Company, upon the disability
of the Employee. As used in this Agreement, and subject to applicable human
rights legislation, the term "disability" shall mean the inability of the
Employee, due to a physical or mental disability, for a period of 90 days,
whether or not consecutive, during any 360 day period to perform the services
contemplated under this Agreement. A determination of disability shall be made
by a physician satisfactory to both the Employee and the Company; provided that
if the Employee and the Company do not agree upon a physician, the Employee and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all
parties;

4.3      At the election of the Employee, upon not less than two months prior
written notice of termination, in which event the Company may waive such notice,
in whole or in part, upon payment to the Employee of salary and benefits
otherwise payable in respect of such two month period.

4.4      At the election of the Company without cause by providing the payments
set out in Section 5.2 below.

4.5      Upon material breach of this Agreement by the Company, in which case
the Employee shall provide written notice of such material breach to the CEO of
Lifeline and Lifeline shall have a two week period in which to cure such
material breach (or to take all reasonable steps towards curing a material
breach which is not capable of being cured within such two week period), failing
which the payments set out in Section 5.2 below shall be payable. For purposes
of clarity, and without limitation, any reduction in base salary and any failure
to abide by paragraph 3 of Article 2 of this Agreement shall constitute a
material breach.

                                   ARTICLE 5
                              EFFECT OF TERMINATION

5.1          Termination for Cause or Voluntary Termination

In the event the Employee's employment is terminated for cause pursuant to
Section 4.1, or at the election of the Employee pursuant to Section 4.3, the
Company shall pay to the Employee the compensation and benefits otherwise
payable to him under Sections 3.1, 3.2, 3.3, 3.4 and 3.5 through the Termination
Date. All amounts due to the Employee will be paid within seven (7) days of the
Termination Date. For greater certainty, bonuses pursuant to Section 3.2 are
payable and earned at the end of the relevant fiscal year and no bonus (pro rata
or otherwise) will be paid or payable by the Company to the Employee in the
event the Employee's employment is terminated for cause pursuant to Section 4.1,
or in the event the Employee voluntarily resigns his employment unless such
termination or resignation becomes effective on or after the completion of the
relevant fiscal year.

<PAGE>

5.2          Termination Without Cause

In the event the Employee's employment is terminated at the election of the
Company pursuant to Section 4.4 or terminated in accordance with Section 4.5, or
if the Employee's employment is terminated by the Company or the Employee for
any reason whatsoever within the two (2) year period following a Change of
Control (as defined in Lifeline's Stock Option Plan), and in consideration of
the Employee entering into this Agreement and the post-termination non-compete
and non-solicitation agreement set forth in Article 6, the Company shall pay to
the Employee:

             (i)     a lump sum amount equal to [two (2)] times his then current
                     base salary; plus

             (ii)    the pro-rated portion of Annual Performance Bonus [and
                     Strategic Bonus] earned in that calendar year up to the
                     Termination Date; plus

             (iii)   two (2) times the average of the Annual Performance Bonus
                     and Strategic Bonus paid to the Employee for each of the
                     two most recently completed fiscal years; plus

             (iv)    if, and only if, the Company is performing above the NIBT
                     Goal thresholds which are described in Schedule "A" an
                     amount of $300,000, less any Progress Payments paid in
                     respect of Long Term Performance Bonus on the Termination
                     Date in lieu of the Long Term Performance Bonus.

The payments contemplated in this Section 5.2 include all entitlement to either
notice of termination or pay in lieu of notice and severance pay under the
Employment Standards Act of Ontario. If the minimum statutory requirements as at
the Termination Date provide a greater benefit than provided in this Agreement,
such statutory requirements will replace the payments contemplated under this
Agreement. All amounts due to the Employee, other than any bonuses which shall
be paid out in accordance with Section 5.5, will be paid within fifteen (15)
days of the end of the month during which the employment terminates. In addition
to the payments set out herein, the Company shall, to the extent permitted by
its applicable plans and policies, continue the Employee's basic group health
and dental benefits until the earlier of the date the Employee obtains
alternative employment providing health and dental benefits, or twenty-four (24)
months from the Termination Date. As a condition of payment, the Employee agrees
to deliver to the Company (including affiliates, subsidiaries, parents and
affiliated corporations and their respective directors, officers and employees)
a general release of all claims in a form reasonably satisfactory to the
Company.

5.3          Termination for Death or Disability

If the employment of the Employee is terminated by death or because of
disability pursuant to Section 4.2, the Company shall pay to the estate of the
Employee or to the Employee, as the case may be:

             (i)     the compensation which would otherwise be payable to the
                     Employee through the Termination Date; plus

             (ii)    a lump sum payment equal to his then current base salary
                     for a one year period (payable within fifteen (15) days
                     following his death or termination due to disability); plus

             (iii)   the pro-rated portion of Annual Performance Bonus and
                     Strategic Bonus earned in that calendar year up to the
                     Termination Date; plus

<PAGE>

             (iv)    the pro-rated portion of Long Term Performance Bonus earned
                     up to the Termination Date, less any Progress Payments paid
                     in respect of Long Term Performance Bonus.

5.4          Options

In the event of a termination pursuant to Article 4 herein, the Employee shall
have the right to exercise all options of Lifeline previously granted that have
vested as of the Termination Date. The Employee ceases to vest any additional
options of Lifeline on such Termination Date and the Employee has three (3)
months from such date to exercise any vested options of Lifeline.

Notwithstanding the foregoing, in the event of a termination pursuant to Section
4.4 herein which occurs within the two (2) year period following a Change of
Control, all unvested options of Lifeline shall vest in accordance with
Lifeline's Stock Option Plan.

5.5          Bonus Payments

In the event that any bonus for the current fiscal year is payable pursuant to
Sections 5.2 or 5.3 herein, then such bonus will be payable within thirty (30)
days after the end of the relevant fiscal year and once the figures necessary to
calculate the applicable bonus payments are available. Bonus calculations and
calculations of the financial information upon which bonuses are based shall be
calculated consistent with generally accepted accounting principles and
consistent with the Company's approach to such calculations in fiscal years
prior to the termination. The Employee shall be granted such reasonable access
he may request to all books and records of the Company as may be reasonably
required with respect to the calculation of bonus payments for the relevant
fiscal year. All bonus amounts shall be deemed final, binding and conclusive
unless, within sixty (60) days of payment by the Company, the Employee has given
written notice to the Company disputing any such amounts.

5.6          Termination

For the purposes of this Article 5, "Termination Date" means the last day of the
Employee's actual employment by the Company, without regard to any damages,
severance obligations or notice of termination (contractual, statutory or at
common law).

                                   ARTICLE 6
                                   NON-COMPETE

6.1          Non-Compete

      (a)    The Employee acknowledges that the restrictions contained in this
             Article 6 will not materially or unreasonably interfere with the
             Employee's ability to earn a living.

      (b)    During his Employment with the Company and for a period of two (2)
             years after the Termination Date (howsoever caused), the Employee
             will not directly or indirectly, within Canada or the United States
             of America:

             (i)     as an individual proprietor, partner, stockholder, officer,
                     employee, director, joint venturer, investor, lender, or in
                     any other capacity whatsoever (other than as the holder of
                     not more than one (1%) percent of the total outstanding
                     stock of a publicly held company), engage in the business
                     of developing, producing, marketing or selling personal and
                     medical emergency response products and services of the
                     kind or type produced, marketed or sold by Lifeline
                     Systems, Inc.

<PAGE>

                     or by the Company on the date hereof or any other
                     business engaged in by the Company after the date
                     hereof in which the Employee has material involvement
                     (collectively, the "Business"); or

             (ii)    recruit, solicit or induce, or attempt to induce, any
                     employee or employees of the Company to terminate
                     their employment with, or otherwise cease their
                     relationship with, the Company or to accept any
                     employment or consulting relationship with the
                     Employee or any third party; or

             (iii)   solicit for any purpose competitive with the Business
                     of the Company, divert or take away, or attempt to
                     divert or to take away, the business or patronage of
                     any of the clients, customers or accounts, or
                     prospective clients, customers or accounts, of the
                     Company which were contacted, solicited or served by
                     employees of the Company while the Employee was
                     employed by the Company.

      (c)    If any restriction set forth in this Article 6 is found by any
             court of competent jurisdiction to be unenforceable because it
             extends for too long a period of time or over too great a range of
             activities or in too broad a geographic area, it shall be
             interpreted to extend only over the maximum period of time, range
             of activities or geographic area as to which it may be enforceable.
             The parties intend that the restrictions in this Article 6 shall be
             deemed to be a series of separate covenants, one for each and every
             county of each and every state of the United States of America and
             each and every political subdivision of Canada.

      (d)    The restrictions contained in this Article 6 are necessary for the
             protection of the business and goodwill of the Company and are
             considered by the Employee to be reasonable for such purpose. The
             Employee agrees that any breach of this Article 6 will cause the
             Company substantial and irrevocable damage and therefore, in the
             event of any such breach, in addition to such other remedies which
             may be available, the Company shall have the right to seek specific
             performance and injunctive relief.

      (e)    For purposes of this Article 6, the "Company" refers to Lifeline
             Systems Canada, Inc. and any of its respective affiliates, parents
             or subsidiaries.

      (f)    The Employee acknowledges that he is party to non-competition and
             non-solicitation covenants in Sections 30.02 and 8.03 of that
             certain Stock Purchase Agreement among Caretel, the Company and the
             former stockholders of the Company dated as of the date hereof (the
             "Stock Purchase Agreement"). The Employee agrees that nothing in
             this Agreement shall be deemed to affect any provision of the Stock
             Purchase Agreement, including without limitation such
             non-competition and non-solicitation covenants. In the event that
             the non-competition and non-solicitation covenants in this
             Agreement would expire before those in the Stock Purchase
             Agreement, or vice versa, the Employee acknowledges his intention
             that he shall, following the first to expire of such covenants,
             continue to be bound until the other of such covenants expire by
             their terms.

      (g)    Nothing contained in this Agreement and in particular 6.1(b)(i) is
             intended to restrict the Employee from, directly or indirectly,
             engaging in the business of security systems, access control
             systems or environmental monitoring or participating in any entity
             provided that the activities that compete with the Company are not
             a significant portion of the business of the entity and do not
             become so within the period of restriction.

<PAGE>

                                   ARTICLE 7
                    PROPRIETARY INFORMATION AND DEVELOPMENTS

7.1                Proprietary Information

         (a)       The Employee agrees that all information and know-how,
                   whether or not in writing, of a private, secret or
                   confidential nature concerning the Company's business or
                   financial affairs (collectively, "Proprietary Information")
                   is and shall be the exclusive property of the Company. By way
                   of illustration, but not limitation, Proprietary Information
                   may include inventions, products, processes, methods,
                   techniques, formulas, compositions, compounds, projects,
                   developments, plans, research, data, clinical data, financial
                   data, personnel data, computer programs and customer and
                   supplier lists. Employee will not disclose any Proprietary
                   Information to others outside the Company other than for the
                   Company's purposes and the performance of his services
                   hereunder or use of the same for any unauthorized purposes
                   without written approval by an authorized officer of the
                   Company, either during or after his employment, unless and
                   until such Proprietary Information has become public
                   knowledge without fault by the Employee.

         (b)       The Employee agrees that all files, letters, memoranda,
                   reports, records, data, sketches, drawings, laboratory
                   notebooks, program listings or other written, photographic or
                   other tangible material containing Proprietary Information,
                   whether created by the Employee or others, which shall come
                   into his custody or possession, shall be and are the
                   exclusive property of the Company to be used by the Employee
                   only in the performance of his duties for the Company, and
                   will be returned by the Employee at the termination of his
                   employment hereunder.

         (c)       The Employee agrees that his obligation not to disclose or
                   use information, know-how and records of the types set forth
                   in paragraphs (a) and (b) above, also extends to such types
                   of information, know-how, records and tangible property of
                   customers of the Company or suppliers to the Company or other
                   third parties who may have disclosed or entrusted the same to
                   the Company or to the Employee in the course of the Company's
                   business.

         (d)       For the purposes of this Article 7, the "Company" refers to
                   the Company Lifeline and any of their respective affiliates.

7.2                Developments

         (a)       The Employee will make full and prompt disclosure to the
                   Company of all inventions, improvements, discoveries,
                   methods, developments, software and works of authorship,
                   whether patentable or not, which are created, made, conceived
                   or reduced to practice by the Employee or under his direction
                   or jointly with others during his employment by the Company,
                   whether or not during normal working hours or on the premises
                   of the Company which relate to the Business of the Company
                   (all of which are collectively referred to in this Agreement
                   as "Developments"). The Employee waives any and all moral
                   rights he may have to all such developments.

         (b)       The Employee agrees to assign and does hereby assign to the
                   Company (or any person or entity designated by the Company)
                   all his right, title and interest in and to all Developments
                   and all related patents, patent applications, copyrights and
                   copyright applications.

<PAGE>

         (c)       The Employee agrees to provide reasonable cooperation to the
                   Company, both during and after his employment with the
                   Company, with respect to the procurement , maintenance,
                   enforcement of copyrights, patents (in the United States,
                   Canada and foreign countries) relating to Developments.
                   Employee shall sign all papers, including, without
                   limitation, copyright applications, patent applications,
                   declarations, oaths, formal assignments, assignment of
                   priority rights, and powers of attorney, which the Company
                   may deem necessary or desirable in order to protect its
                   rights and interests in any Development.

7.3                Other Agreements

The Employee hereby represents that he is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.
The Employee further represents that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by him in confidence or in trust to his employment with the Company.

                                    ARTICLE 8
                                    SURVIVAL

The provisions of Sections 6 and 7 shall survive the termination of this
Agreement.

                                    ARTICLE 9
                                     NOTICES

All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon personal delivery or facsimile transmission or on
the fourth business day following deposit in either the Canada Post Office or
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party at the address shown above, or at such other
address or addresses as either party shall designate to the other in accordance
with this Article 9.

                                   ARTICLE 10
                                    PRONOUNS

Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns and pronouns shall include the plural, and vice versa.

                                   ARTICLE 11
                                 DOLLAR AMOUNTS

All dollar amounts referenced in this Agreement shall mean Canadian dollars.

                                   ARTICLE 12
                                ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties and
supercedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this Agreement.

<PAGE>

                                   ARTICLE 13
                                    AMENDMENT

This Agreement may be amended or modified only by a written instrument executed
by both the Company and the Employee.

                                   ARTICLE 14
                                  GOVERNING LAW

This Agreement shall be construed, interpreted and enforced in accordance with
the Laws of Ontario.

                                   ARTICLE 15
                             SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon and inure to the benefit of both parties
and their respective successors and assigns, including any corporation with
which or into which the Company or Lifeline may be merged or which may succeed
to its assets or business, provided, however, that the obligations of the
Employee are personal and shall not be assigned by him.

                                   ARTICLE 16
                                  MISCELLANEOUS

16.1    No delay or omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.

16.2    The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.

16.3    In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.

                                   ARTICLE 17
                          AGREEMENT NOT TO SELL SHARES

The Company acknowledges that the restriction on the Employee's ability to sell
his shares in Lifeline Systems, Inc. as contained in the initial Employment
Agreement entered into between the parties is no longer applicable. The Employee
is free to sell his shares at any time and Lifeline Systems, Inc. agrees to
remove the endorsement on any share certificate immediately upon request by the
Employee.

                                   ARTICLE 18
                                 ACKNOWLEDGMENTS

The Employee acknowledges that, (a) he has had sufficient time to review this
Agreement; (b) he has read and understands the terms of the Agreement and the
obligations hereunder; (c) he has been given an opportunity to obtain
independent legal advice concerning the interpretation and affect of this
Agreement; and (d) he has received a fully executed counterpart copy of this
Agreement.

<PAGE>

                                   ARTICLE 19
                                      TAXES

The Employee acknowledges and agrees that he is solely responsible for all tax
liability resulting from his receipt of monies or benefits pursuant to this
Agreement and that all payments, perquisites or benefits shall be subject to
withholding of such amounts, if any, relating to tax or other payroll deductions
as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation.

IN WITNESS WHEREOF, each of the parties have executed counterpart copies of this
Agreement under seal.

LIFELINE SYSTEMS CANADA INC.



By: /s/ Ronald Feinstein                             By: /s/ Leonard Wechsler

    --------------------------------------------         -----------------------
    Name:  Ronald Feinstein                              Leonard Wechsler (l/s)
    Title: Chairman, Lifeline Systems Canada
    Inc.



LIFELINE SYSTEMS INC.



By: /s/ Ronald Feinstein

    ------------------------------------------------------------
    Name:  Ronald Feinstein
    Title: President and Chief Executive Officer

<PAGE>

                                   Schedule A
                                 Bonus Payments


I.       Annual  Performance Bonus

         The Employee shall be entitled to an Annual Performance Bonus payment,
         a portion of which will be based upon the level of revenue ("Revenue")
         actually attained by the Company in such year in relation to Goal, Plan
         and Target revenue, and the other portion of which will be based upon
         the level of net income before taxes ("NIBT") actually attained by the
         Company in such year in relation to Goal, Plan and Target NIBT. The
         2002 profit and loss statement will reflect the actual revenue and NIBT
         baseline for the Company. The 2002 Base Revenue is $[**] and the 2002
         Base NIBT is $[**].

         The profit and loss statement will reflect only those revenues and
         costs that are directly associated with the Company, and will not
         include any allocation of management fees from Lifeline Systems, Inc.

         The Employee's annual bonus is to be calculated as follows. The Bonus
         Payout is expressed as a percentage of the Employee's annualized base
         salary for the applicable calendar year, and shall be paid by the
         Company promptly following the availability of audited financial
         results for such year, but in any event no later than February 28 of
         each fiscal year.

         Revenue

         The portion of the Employee's bonus payment based on Revenue, shall be
         calculated for each fiscal year as follows:

         For each fiscal year, Goal Revenue will be determined by increasing the
         prior year's actual Revenue by [**]%. Plan Revenue will be determined
         by increasing the prior year's actual Revenue by [**]%. Any
         non-operational Revenue windfalls that have been excluded for the
         purposes of Annual Performance Bonus in the prior year, will be
         excluded when determining the following year's Goal and Plan Revenue.

                                             Bonus Payout
         Revenue                             (As a Percentage of
         Attainment                          Base Salary)
         ----------                          ------------

         Prior Year Actual                      [**]%

         Goal Revenue                           [**]%

         Plan Revenue                           [**]%

Bonus Payout will be linearly determined between each set of points.

Revenue in excess of Plan Revenue will accrue additional Bonus Payout at a rate
of [**]% of the excess.

<PAGE>

                                      -2-


There will be no cap on bonus payments; however, in the event of unusual
non-operational revenue windfalls to the Company, the CEO of Lifeline Systems,
Inc. may, in his sole discretion, adjust the revenue calculation for purposes
hereof and consider the appropriateness of a one-time bonus payment associated
with such unusual items, or may exclude such items from the bonus calculation.
PricewaterhouseCoopers will be responsible for arbitrating any disputes over
whether an item is unusual.

Net Income Before Taxes("NIBT")

The portion of the Employee's bonus payment based on NIBT shall be calculated
for each fiscal year, as follows:

For each fiscal year, Goal NIBT will be determined by increasing the prior years
actual NIBT by [**]%. Plan NIBT will be determined by increasing the prior years
actual NIBT by [**]%. Any non-operational NIBT windfalls that have been excluded
for the purposes of the Annual Performance Bonus in the prior year, will be
excluded when determining the following years Goal and Plan NIBT. NIBT will be
net of accruals for the employee's bonus when calculating the bonus payout.

                                            Bonus Payout
         NIBT                               (As a Percentage of
         Attainment                         Base Salary)

         Prior Year Actual                     [**]%

         Goal NIBT                             [**]%

         Plan NIBT                             [**]%

Payments will be linearly determined between each set of points.

NIBT in excess of Plan NIBT will accrue additional Bonus Payout at a rate of
[**]% of NIBT in excess of the applicable Plan NIBT.

There will be no cap on bonus payments; however, in the event of unusual
non-operational NIBT windfalls to the Company, the CEO of Lifeline Systems, Inc.
may, in his sole discretion, adjust the NIBT calculation for purposes hereof and
consider the appropriateness of a one-time bonus payment associated with such
unusual items, or may exclude such items from the bonus calculation.
PricewaterhouseCoopers will be responsible for arbitrating any disputes over
whether an item is unusual.

II.      Strategic Bonus

At the beginning of each year, the Employee and the CEO of Lifeline Systems,
Inc. 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 CEO will evaluate the Employee's accomplishment of the stated
objective. Depending upon the level of success attained, the CEO will grant a
Bonus Payout ranging from 0% to 10% of the Employee's base salary.

III.     Long Term Performance Bonus

The Employee shall be entitled to a Long Term Performance Bonus Payout in
respect of the three (3) year term of the Agreement, which will be based upon
the level of Revenue actually attained by the Company

<PAGE>

                                      -3-


at the end of year 2003, 2004 and 2005 in relation to Target Revenue, and the
other portion of which will be based upon the level of NIBT actually attained by
the Company at the end of year 2003, 2004 and 2005 in relation to the Target
NIBT.

The 2002 profit and loss statement will reflect the actual revenue and NIBT
baseline for the Company. The 2002 Base Revenue is $[**] and the 2002 Base NIBT
is $[**].

The profit and loss statement will reflect only those revenues and costs that
are directly associated with the Company, and will not include any allocation of
management fees from Lifeline Systems, Inc.

The Long Term Performance Bonus is expressed as a total dollar payment for both
Revenue and NIBT, and shall be paid by the Company promptly following the
availability of audited financial results for the third year of each term, but
in any event no later than February 28.

In each year, a minimum payment ("Progress Payment") of $[**] for the Long Term
Performance Bonus for Revenue and NIBT will be paid by no later than February
28, provided that the NIBT Goal for that year has been exceeded. The Progress
Payments will be deducted from the total of Revenue and NIBT Long Term
Performance Bonus otherwise calculated and payable. NIBT will be net of accruals
for the employee's bonus when calculating the NIBT portion of the Long Term
Performance Bonus. In the event that a $[**] progress payment was paid for over
Goal achievement in 2003 and 2004, but the long term cumulative Goal NIBT
threshold of $[**] is not exceeded, the employee will repay $[**] of the
Progress Payments.

There will be no Long Term Performance Bonus payout for Revenue if the
cumulative three year NIBT achievement has not exceeded the NIBT Goal threshold
of $[**]. For this purpose, when calculating NIBT achievement for either annual
or cumulative three year performance, any accruals for Long Term Performance
Bonus will be added back to NIBT.

Revenue

The Revenue portion of the Employee's Long Term Performance Bonus shall be
calculated as follows:

                                 Revenue
Revenue                          Attainment       Long Term Performance
Attainment                       ($000)           Bonus Payment
----------                       ------           -------------

Base Year -2002                  $[**]

Three Year Target

            2003                 $[**]

            2004                 $[**]

            2005                 $[**]
            --------------------------

              Three Year Target  $[**]            [**]% of excess of 3 year
                                                  total revenue achieved over 3
                                                  year Plan Revenue up to 3 year
                                                  Target Revenue; and [**]% of
                                                  excess of total revenue
                                                  achieved over Target Revenue.

<PAGE>

                                      -4-


There will be no cap on bonus payments; however, in the event of unusual
non-operational revenue windfalls to the Company, the CEO of Lifeline Systems,
Inc. may, in his sole discretion, adjust the revenue calculation for purposes
hereof and consider the appropriateness of a one-time bonus payment associated
with such unusual items, or may exclude such items from the bonus calculation.
PricewaterhouseCoopers will be responsible for arbitrating any disputes over
whether an item is unusual.

NIBT

The NIBT portion of the Employee's Long Term Performance Bonus Payment shall be
calculated as follows:

                                 NIBT
NIBT                             Attainment       Long Term Performance
Attainment                       ($000)           Bonus Payment
----------                       ------           -------------

Base Year -2002                  $[**]

Three Year Target

            2003                 $[**]

            2004                 $[**]

            2005                 $[**]
            --------------------------

            Three Year Target    $[**]            [**]% of excess of 3 year
                                                  total NIBT achieved over 3
                                                  year Plan NIBT up to 3 year
                                                  Target NIBT; and [**]% of
                                                  excess of total NIBT achieved
                                                  over Target NIBT.

There will be no cap on bonus payments; however, in the event of unusual
non-operational NIBT windfalls to the Company, the CEO of Lifeline Systems, Inc.
may, in his sole discretion, adjust the NIBT calculation for purposes hereof and
consider the appropriateness of a one-time bonus payment associated with such
unusual items, or may exclude such items from the bonus calculation.
PricewaterhouseCoopers will be responsible for arbitrating any disputes over
whether an item is unusual.

<PAGE>

                                      -5-


Thresholds:

<TABLE>
<CAPTION>
                                    2002          2003             2004              2005           Total
                                    ------------------------------------------------------------------------
<S>                               <C>             <C>             <C>              <C>               <C>
Goal Revenue                      $[**]           $[**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
Increase %                                         [**]%           [**]%            [**]%
                                             --------------------------------------------------

Plan Revenue                      $[**]            [**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
Increase %                                         [**]%           [**]%            [**]%
                                             --------------------------------------------------

Target Revenue                    $[**]           $[**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
                                                   [**]%           [**]%            [**]%
                                             --------------------------------------------------


Goal NIBT                         $[**]           $[**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
Increase %                                         [**]%           [**]%            [**]%
                                             --------------------------------------------------

Plan NIBT                         $[**]           $[**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
Increase %                                         [**]%           [**]%            [**]%
                                             --------------------------------------------------

Target NIBT                       $[**]           $[**]           $[**]            $[**]             $[**]
                            --------------------------------------------------------------------------------------
</TABLE>