Document:

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                                                                     Exhibit 4.1

                       Amendment No. 2 to Rights Agreement

     This Amendment No.2 to Rights Agreement (this "Amendment"), effective as of
June 30, 2002 is between Lifeline Systems, Inc., a Massachusetts corporation
(the "Company"), and State Street Bank and Trust Company, a Massachusetts trust
company, as rights agent (the "Rights Agent").

     WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement, dated as of July 24, 1998, as amended pursuant to Amendment No. 1
thereto dated October 18, 1998 (as amended, the "Rights Agreement"); and

     WHEREAS, Section 27 of the Rights Agreement permits the amendment of the
Rights Agreement by the Company;

     WHEREAS, pursuant to a resolution duly adopted on April 3, 2002, the Board
of Directors of the Company has authorized the amendment of the Rights Agreement
as set forth below; and

     WHEREAS, the Board of Directors of the Company has determined that such
amendment is desirable and is consistent with the objectives of the Board of
Directors in connection with the original adoption of the Rights Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein, the parties hereby agree as follows:

     1. Amendment of Section 1(n). Section 1(n) of the Agreement is hereby
amended in full and replaced in its entirety by the following:

          (n)  "Exempted Person" shall mean:

               (i) any Person, which together with its Affiliates, had reported
          Beneficial Ownership as of July 24, 1998 of more than ten percent
          (10%) of the shares of Common Stock outstanding as of such date on
          Schedule 13G under the Exchange Act, unless and until such time as
          such Person, together with its Affiliates, directly or indirectly,
          becomes the Beneficial Owner of more than 19.9% of the Common Stock
          then outstanding, in which case such Person shall cease to be an
          Exempted Person, and

               (ii) the entities known as of the date hereof as (a) ValueAct
          Capital Partners, L.P. ("ValueAct Partners"), (b) ValueAct Capital
          Partners II, L.P. ("ValueAct Partners II"), (c) ValueAct Capital
          International, Ltd. ("ValueAct International"), (d) VA Partners,
          L.L.C. ("VA Partners"), (e) Jeffrey W. Ubben, (f) George F. Hamel, Jr.
          and (g) Peter H. Kamin (collectively and individually, "ValueAct"),
          unless and until such time as (1) ValueAct, together with its
          Affiliates and Associates, directly or indirectly, becomes the
          Beneficial Owner of more than the lesser of (X) 19.9% of the Common
          Stock then outstanding, or (Y) the lowest number of shares of Common
          Stock collectively beneficially owned by

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          such Persons on or after November 30, 2002, or (2) ValueAct breaches,
          and the board of directors of the Company determines that ValueAct has
          breached, any terms and conditions of that certain Agreement dated as
          of the date hereof among the Company and ValueAct, in which case
          ValueAct shall cease to be an Exempted Person.

     2. Effectiveness. This Amendment shall be deemed effective as of June 30,
2002 as if executed by both parties hereto on such date. Except as amended
hereby, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.

     3. Miscellaneous. This Amendment shall be deemed to be a contract made
under the laws of the Commonwealth of Massachusetts and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
This Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any
term, provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, illegal, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. Capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the Rights
Agreement.

     4. Certification. The undersigned officer of the Company certifies by
execution hereof that this Amendment is in compliance with the terms of Section
27 of the Rights Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date set forth above.

                                       LIFELINE SYSTEMS, INC.

                                       By: /s/ Ronald Feinstein
                                           ----------------------------------
                                           Name:  Ronald Feinstein
                                           Title:  President

                                       STATE STREET BANK AND TRUST COMPANY

                                       By: /s/ Stephen Cesso
                                           ----------------------------------
                                           Name:  Stephen Cesso
                                           Title:  Authorized Signer

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                                                                    Exhibit 10.1

                                    AGREEMENT

     Agreement, dated as of June 30, 2002 (the "Agreement"), among Lifeline
Systems, Inc., a Massachusetts corporation (the "Company"), and (a) ValueAct
Capital Partners, L.P. ("ValueAct Partners"), (b) ValueAct Capital Partners II,
L.P. ("ValueAct Partners II"), (c) ValueAct Capital International, Ltd.
("ValueAct International"), (d) VA Partners, L.L.C. ("VA Partners"), (e) Jeffrey
W. Ubben, (f) George F. Hamel, Jr. and (g) Peter H. Kamin (collectively and
individually, "ValueAct"). Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Rights Agreement defined below.

     WHEREAS, ValueAct is as of the date hereof the beneficial owner of 901,100
shares of the Common Stock, $.02 par value per share, of the Company (the
"Common Stock"), constituting 14% of the shares of Common Stock outstanding as
of April 30, 2002;

     WHEREAS, the Company and State Street Bank and Trust Company, a
Massachusetts trust company, as rights agent (the "Rights Agent"), are parties
to a Rights Agreement dated as of July 24, 1998 (the "Rights Agreement"), under
which certain events would occur if a Person, alone or together with its
Affiliates and Associates, other than an Exempted Person, becomes the beneficial
owner of 15% or more of the shares of Common Stock then outstanding (the "Share
Limit");

     WHEREAS, ValueAct desires to purchase additional shares of Common Stock
which may exceed from time to time 14.9% of the then outstanding shares of
Common Stock of the Company (any such shares in excess of 14.9% of the then
outstanding shares of Common Stock of the Company being referred to as the
"Additional Shares", and the time period commencing on the first date on which
ValueAct has beneficial ownership of any Additional Shares and ending on the
date on which ValueAct files an amended Schedule 13D with the Securities and
Exchange Commission showing that it no longer beneficially owns any Additional
Shares being referred to as the "Exemption Period") and the Board of Directors
of the Company has determined that it is in the best interests of the Company to
amend the Rights Agreement to permit ValueAct to do so, subject to the
limitations, terms and conditions of this Agreement;

     NOW, THEREFORE, in consideration of the foregoing and the premises and the
covenants hereinafter contained, it is agreed as follows:

     1. Amendment to Rights Agreement. Upon the execution and delivery of this
Agreement, the Company shall enter into Amendment No. 2 to Rights Agreement in
the form of Exhibit A attached hereto (the "Rights Amendment").

     2. Voting of Additional Shares. In any and all matters requiring the vote
or consent of the stockholders of the Company for which the record date with
respect to such vote or consent is within the Exemption Period, ValueAct shall
vote, or cause to be voted, all of the

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Additional Shares in the manner that a majority of the shares of the Common
Stock of the Company voting on such matter (other than the Additional Shares)
have been so voted.

     3. Irrevocable Proxy. Concurrently with the execution of this Agreement,
each of the Persons comprising ValueAct, and each other Person which is an
Affiliate or Associate of ValueAct which owns shares of the Common Stock of the
Company, agrees to deliver to the Company a proxy in the form attached hereto as
Exhibit B (the "Proxy"), which shall be irrevocable to the extent provided
therein, with the total number of Additional Shares subject to the Proxies set
forth therein. Each Affiliate and Associate of ValueAct which acquires shares of
the Common Stock of the Company from time to time during the Exemption Period
shall enter into such a Proxy and shall deliver the same to the Company. The
Company shall return each Proxy to the grantor thereof following the last vote
for which the record date occurs within the Exemption Period.

     4. No intent to effect change of control, etc. ValueAct represents and
warrants that (i) its reports on file with the Securities and Exchange
Commission were correct and complete in all material respects on the date when
filed, and that no new reports or amendments are required to be filed and (ii)
the shares of Common Stock which it beneficially owns or shall beneficially own
are being held by it for investment purposes only, and not with the purpose of
changing or influencing the control of the issuer. Accordingly, ValueAct agrees
that, during the Exemption Period, it will not and will cause its Affiliates and
Associates not to in any manner, directly or indirectly: (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek to
effect, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any tender or exchange offer, merger or other business
combination involving the Company, (ii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company, or (iii) any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) or consents to vote any
voting securities of the Company, (b) form, join or in any way participate in a
"group" (as defined under the Exchange Act) with respect to any securities of
the Company, (c) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of the
Company, (d) make, or take any action which might force the Company to make, a
public announcement regarding any of the matters set forth in (a) above, or (e)
enter into any discussions or arrangements with any third party with respect to
any of the foregoing.

     5. Fees and Expenses. ValueAct shall promptly reimburse the Company for its
costs and expenses, including reasonable legal fees and expenses, that are
incurred by the Company in connection with the negotiation, execution and
delivery of this Agreement and the Rights Amendment, not to exceed $7,500. In
addition, ValueAct shall promptly reimburse the Company for its costs and
expenses, including reasonable legal fees and expenses, that are incurred by the
Company in connection with any actions taken by the Company to enforce its
rights under this Agreement and the Rights Amendment.

     6. Disclosure. The Company and ValueAct confirm that neither the Company
nor any other Person acting on its behalf has provided ValueAct or its agents or
counsel with any information that constitutes or might constitute material,
non-public information. The Company understands and confirms that ValueAct will
rely on the foregoing representation in effecting

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transactions in securities of the Company. ValueAct agrees not to seek
information from the Company or any other Person acting on its behalf that may
constitute material nonpublic information regarding the Company or its
securities unless prior thereto it has entered into a non-disclosure agreement
satisfactory to the Company.

     7. General.

          (a) Severability. The invalidity or unenforceability of any provision
     of this Agreement shall not affect the validity or enforceability of any
     other provision of this Agreement.

          (b) Specific Performance. In addition to any and all other remedies
     that may be available at law in the event of any breach of this Agreement,
     the Company shall be entitled to specific performance of the agreements and
     obligations of ValueAct hereunder and to such other injunctive or other
     equitable relief as may be granted by a court of competent jurisdiction.

          (c) Governing Law. This Agreement shall be governed by and construed
     in accordance with the internal laws of the Commonwealth of Massachusetts
     (without reference to the conflicts of law provisions thereof).

          (d) Notices. All notices, requests, consents, and other communications
     under this Agreement shall be in writing and shall be deemed delivered (i)
     three business days after being send by registered or certified mail,
     return receipt requested, postage prepaid or (ii) one business day after
     being sent via a reputable nationwide overnight courier service
     guaranteeing next business day delivery, in each case to the intended
     recipient as set forth below:

     If to the Company, at 111 Lawrence Street, Framingham, Massachusetts
01702-8156, Attention: President, or at such other address as may have been
furnished in writing by the Company to the other parties hereto, with a copy to
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attention:
Jeffrey A. Stein, Esq.; or

     If to ValueAct, at One Maritime Plaza, 14th Floor, San Francisco,
California 94111, Attention: George F. Hamel, or at such other address as may
have been furnished in writing by ValueAct to the Company, with a copy to
Dechert, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania
19103, Attention: Christopher G. Karras, Esq.

     Any party may give any notice, request, consent or other communication
under this Agreement using any other tangible means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail,
but not including electronic mail), but no such notice, request, consent or
other communication shall be deemed to have been duly given unless and until it
is actually received by the party for whom it is intended. Any party may change
the address to which notices, requests, consents or other communications
hereunder are to be delivered by giving the other parties notice in the manner
set forth in this Section.

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          (e) Complete Agreement. This Agreement and the Rights Amendment
     constitute the entire agreement and understanding of the parties hereto
     with respect to the subject matter hereof, and supersede all prior
     agreements and understandings relating to such subject matter.

          (f) Amendments and Waivers. This Agreement may be amended or
     terminated and the observance of any term of this Agreement may be waived
     with respect to all parties to this Agreement (either generally or in a
     particular instance and either retroactively or prospectively), solely with
     the written consent of the Company and ValueAct. No waivers of or
     exceptions to any term, condition or provision of this Agreement, in any
     one or more instances, shall be deemed to be, or construed as, a further or
     continuing waiver of any such term, condition or provision.

          (g) Counterparts; Facsimile Signatures. This Agreement may be executed
     in any number of counterparts, each of which shall be deemed to be an
     original, and all of which together shall constitute one and the same
     document. This Agreement may be executed by facsimile signatures.

          (h) Section Headings and References. The section headings are for the
     convenience of the parties and in no way alter, modify, amend, limit or
     restrict the contractual obligations of the parties. Any reference in this
     agreement to a particular section or subsection shall refer to a section or
     subsection of this Agreement, unless specified otherwise.

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     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.

                                LIFELINE SYSTEMS, INC.

                                By: /s/ Ronald Feinstein
                                    ------------------------------------------
                                    Name:  Ronald Feinstein
                                    Title:  President

                                VALUEACT CAPITAL PARTNERS L.P.,
                                By VA PARTNERS, L.L.C., its General Partner

                                By: /s/ George F. Hamel, Jr.
                                    ------------------------------------------
                                    George F. Hamel, Jr., Managing Member

                                VALUEACT CAPITAL PARTNERS II L.P.,
                                By VA PARTNERS, L.L.C., its General Partner

                                By: /s/ George F. Hamel, Jr.
                                    ------------------------------------------
                                    George F. Hamel, Jr., Managing Member

                                VALUEACT CAPITAL INTERNATIONAL, LTD.,
                                by VA PARTNERS, L.L.C., its investment manager

                                By: /s/ George F. Hamel, Jr.
                                    ------------------------------------------
                                    George F. Hamel, Jr., Managing Member

                                VA PARTNERS, L.L.C.

                                By: /s/ George F. Hamel, Jr.
                                    ------------------------------------------
                                    George F. Hamel, Jr., Managing Member

                                /s/ Jeffrey W. Ubben
                                ------------------------------------------
                                Jeffrey W. Ubben

                                /s/ George F. Hamel, Jr.
                                ------------------------------------------
                                George F. Hamel, Jr.

                                /s/ Peter H. Kamin
                                ------------------------------------------
                                Peter H. Kamin

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