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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Lifeline Systems, Inc.
(Name of Issuer)
Common Stock, $.02 Par Value
(Title of Class of Securities)
532192 10 1
(CUSIP Number)
Ms. Sheryl B. Sigrist,
Lifeline Systems, Inc.,
640 Memorial Drive, Cambridge, MA 02139
(617) 679-1000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
August 27, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [_]
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act
(however, see the Notes).
(Continued on following pages)
(Page 1 of 7 Pages)
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SCHEDULE 13D
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CUSIP NO. 532192 10 1 PAGE 2 OF 7 PAGES
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- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ronald Feinstein
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [x]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
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SOLE VOTING POWER
7
NUMBER OF 443,451 (beneficial interest disclaimed in 16,000)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 443,451 (beneficial interest disclaimed in 16,000)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
427,451
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
7.3
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TYPE OF REPORTING PERSON*
14
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 7 pages
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Page 3 of 7 pages
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the common stock, $.02 par value per share
(the "Common Stock") of Lifeline Systems, Inc. a Massachusetts corporation (the
"Company"). The principal executive offices of the Company are located at 640
Memorial Drive, Cambridge, MA 02139.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Ronald Feinstein
(b) c/o Lifeline Systems, Inc., 640 Memorial Drive, Cambridge,
Massachusetts 02139
(c) President and Chief Executive Officer of the Company, 640 Memorial
Drive, Cambridge, Massachusetts 02139
(d) None
(e) None
(f) U.S.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Not applicable.
ITEM 4. PURPOSE OF THE TRANSACTION.
This Schedule 13D Amendment relates to the vesting of certain options to
buy shares of the Company's Common Stock.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of August 27, 1998, Mr. Feinstein had sole voting and investment
power as to 443,451 shares of Common Stock (except as this amount may
be limited by the explanations contained in the following paragraphs):
1. 170,534 shares are owned directly by Mr. Feinstein. 248,404
shares are subject to stock options held by Mr. Feinstein that
are exercisable as of August 27, 1998. 8,513 shares are
beneficially owned by Mr. Feinstein through his interest in the
Company's Employees Savings and Investment Plan (the "401(k)
Plan"). Mr. Feinstein possesses sole voting and dispositive
power with respect to these shares, which represent 7.3% of the
Common Stock outstanding, based on the 5,825,781 shares of
Common Stock issued and outstanding on July 31, 1998 as set
forth in the Company's Report on Form 10-Q for the period ended
June 30, 1998.
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Page 4 of 7 pages
2. 16,000 shares are held by Mr. Feinstein's children. Mr.
Feinstein has sole voting and dispositive power over such
shares, but he disclaims any beneficial interest with respect to
such shares.
(b) See Item 5(a) above.
(c) Not applicable.
(d) Mr. Feinstein's children own 16,000 shares of Common Stock and have
the right to receive any dividends that may be declared and any
proceeds from the sale of such shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to the terms of an employment agreement, as amended, effective as
of August 27, 1992, Ronald Feinstein became the Executive Vice President and
Chief Operating Officer of the Company on October 1, 1992, and the President and
Chief Executive Officer on January 1, 1993. Mr. Feinstein receives a base salary
of not less than $200,000 annually. Pursuant to the terms of Mr. Feinstein's
agreement, on September 1, 1992, the Company sold to Mr. Feinstein 83,333 shares
of the Company's Common Stock at a price of $3.00 per share (which represented
the fair market value of the Common Stock on August 27, 1992) for an aggregate
price of $250,000. The Company loaned $250,000 to Mr. Feinstein for seven years
at an annual interest rate of 5.98% pursuant to the terms of a promissory note
(the "Feinstein Note") which was secured by the Common Stock that Mr. Feinstein
purchased. On February 24, 1997, Mr. Feinstein repaid the Feinstein Note in
full, in part by exercising stock options and selling 10,700 shares of Common
Stock back to the Company at their fair market value on such date ($17.00), the
proceeds of which were used to repay the Feinstein Note.
Pursuant to the terms of Mr. Feinstein's employment agreement, until the
Feinstein Note was paid in full, the Company agreed to pay Mr. Feinstein a bonus
equal to the lesser of (x) the annual interest due on the Feinstein note and (y)
1% of the Company's pre-tax profit (a) in the first year that the Company
achieves a specified level of after-tax net profit, and (b) in subsequent years,
in the event that the Company achieves certain percent increases in net profit
from the previous year. In addition, Mr. Feinstein is eligible to receive a
bonus equal to 40% of his base salary if the Company achieves the annual profit
performance plan goals adopted by the
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Page 5 of 7 pages
Board of Directors and a bonus of greater than 40% of his base salary if the
Company exceeds such goals. For the year ended December 31, 1997, Mr. Feinstein
elected to take options to purchase 14,810 shares in lieu of cash bonus.
Pursuant to his employment agreement, Mr. Feinstein will continue to serve as a
member of the Board of Directors during the period of his employment.
Pursuant to his employment agreement, on August 27, 1992, Mr. Feinstein
also received a nonstatutory stock option to purchase up to 150,000 shares of
Common Stock at an exercise price of $3.00 per share (which represented the fair
market value on the date of grant), vesting one-fifth on the date of grant and
one-fifth on each of the next four anniversary dates. The original expiration
date of this stock option was the fifth anniversary of the date of grant. On
December 6, 1995, the Stock Option Plans Committee extended the exercise period
of the option for an additional five years, so that the option will expire on
August 27, 2002. Pursuant to his employment agreement, Mr. Feinstein was also
granted a stock option to purchase up to 100,000 shares of Common Stock at $3.00
per share (which represented the fair market value on the date of the grant),
subject to a vesting schedule that originally provided for vesting in three
equal annual installments commencing April 15 in the year following the
achievement of certain financial goals. On September 27, 1995, the Stock Option
Plans Committee amended this option to provide for vesting on the earlier of the
six-year anniversary of the date of grant or in three equal annual installments
commencing April 15 in the year following the achievement of certain financial
goals. These options will expire on August 27, 1999. As of August 27, 1998, both
stock options described in this paragraph have vested in full.
Upon termination by the Company of his employment as Chief Executive
Officer and his membership on the Board of Directors, other than for cause, Mr.
Feinstein will continue to receive his salary for 12 months. On June 14, 1996,
Mr. Feinstein's employment agreement was amended to provide that in the event of
a change in control of the Company following which Mr. Feinstein no longer
serves as the Chief Executive Officer of the Company within the Boston,
Massachusetts metropolitan area or as a director of the Company, Mr. Feinstein
may terminate the employment agreement and be paid three times his salary and
bonus for the preceding fiscal year (subject to downward adjustment for any
excess parachute payment as defined in Section 280G of the Internal Revenue Code
of 1986, as amended).
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Page 6 of 7 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following is a list of exhibits to this Amendment No. 2 to Schedule
13D. The following exhibits have, as indicated below, previously been filed by
and on behalf of the Company with the Securities and Exchange Commission under
the Securities and Exchange Act of 1934 and are referred to and incorporated
herein by reference to such filings.
Exhibit 1. Amended Employment and Noncompetition Agreement between Mr.
- ---------- Feinstein and the Company, dated August 27, 1992.
(Filed as exhibit 10.36 to the Company's 10-K for the year
ended December 31, 1992)
Exhibit 2. Secured Promissory Note between Mr. Feinstein and the
- ---------- Company, dated September 1, 1992.
(Filed as exhibit 10.37 to the Company's 10-K for the year
ended December 31, 1992)
Exhibit 3. Security and Pledge Agreement between Mr. Feinstein and the
- ---------- Company, dated September 1, 1992.
(Filed as exhibit 10.38 to the Company's 10-K for the year
ended December 31, 1992)
Exhibit 4. Nonstatutory Stock Option Agreement, as amended,
- ---------- between Mr. Feinstein and the Company, dated
August 27, 1992.
(Filed as exhibit 10.39 to the Company's 10-K for the year
ended December 31, 1992)
Exhibit 5. Special Non-Statutory Stock Option Agreement, as amended,
- ---------- between Mr. Feinstein and the Company, dated
August 27, 1992.
(Filed as exhibit 10.40 to the Company's 10-K for the year
ended December 31, 1992)
Exhibit 6. Non-Statutory Stock Option Agreement between Mr. Feinstein
- ---------- and the Company, dated February 11, 1994.
(Filed as exhibit 10.46 to the Company's 10-K for the year
ended December 31, 1993)
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Page 7 of 7 Pages
Exhibit 7. Amended Employment Agreement between Mr. Feinstein and the
- ---------- Company, dated June 14, 1996.
(Filed as exhibit 10.60 to the Company's 10-Q for the
quarter ended June 30, 1996)
Exhibit 8. Letter Agreement between Mr. Feinstein and the Company,
- ---------- dated March 4, 1994.
(Filed as exhibit 10.45 to the Company's 10-K for the year
ended December 31, 1993)
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 27, 1998 /s/ Ronald Feinstein
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Ronald Feinstein
