<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A-1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1999 Commission File Number 0-13617
LIFELINE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2537528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 Lawrence Street, Framingham, Massachusetts 01702-8156
(Address of principal executive offices) (Zip Code)
(508) 988-1000
(Registrant's telephone number, including area code)
----------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock $0.02 par value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (i) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (ii) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
As of March 31, 2000, 5,955,900 shares of the Registrant's Common Stock were
outstanding and the aggregate market value as of such date of such Common Stock
held by non-affiliates of the Registrant was approximately $54,347,588.
This Report on Form 10-K/A filed with the Securities and Exchange Commission
(the "Commission") by Lifeline Systems, Inc., a Massachusetts corporation
(together with its subsidiaries, the "Company") is being filed to amend the
Company's Annual Report on Form 10-K as filed with the Commission on
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March 30, 2000 to include the information required by Part III of Form 10-K in
accordance with General Instruction G-3 of Form 10-K under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
PART III
ITEM 10: Directors, Executive Officers and Other Key Employees of the
Registrant.
The following table sets forth the name of each director, and each such
person's principal occupation and business experience during the past five
years, his or her age and the year in which he or she became a director of the
Company.
<TABLE>
<CAPTION>
Name, Principal Occupation and Business Experience During the First
Past Five Years a
Age Director
------ ---------
The two Class II Directors named below will continue in office
until the Annual Meeting of Stockholders in 2000:
<S> <C> <C>
RONALD FEINSTEIN 54 1985
Mr. Feinstein has been President and Chief Executive Officer of
the Company since January 1, 1993.
JOSEPH E. KASPUTYS, PH.D. 63 1985
Dr. Kasputys has been Chairman, President and Chief Executive
Officer of Primark Corporation, an international company
primarily engaged in the information service business, since June
1987.** ***
The two Class I Directors named below will continue in office
until the Annual Meeting of Stockholders in 2002:
L. DENNIS SHAPIRO 66 1978
Mr. Shapiro has been Chairman of the Board since 1978 and was
Chief Executive Officer and Treasurer of the Company from 1978
through December 1988.* **
EVERETT N. BALDWIN 66 1991
Mr. Baldwin served as President and Chief Executive Officer of
Welch Foods, Inc. from August 1982 to August 1995, and as a
Director of Welch Foods, Inc. from August 1982 to December 1995.
Mr. Baldwin retired from Welch Foods in 1995.*
</TABLE>
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<TABLE>
<CAPTION>
The three Class III Directors named below will continue in office
until the Annual Meeting of Stockholders in 2001:
<S> <C> <C>
SUSAN S. BAILIS 54 1998
Ms. Bailis has been co-chairman and co-chief executive officer of
Solomont Bailis Ventures, a health care company since May 1998.
From October 1997 to May 1998 she was President and Chief
Executive Officer of the A.D.S. Group ("A.D.S."), owned by an
affiliate of Genesis Health Ventures. From December 1996 to
October 1997, Ms. Bailis held the positions of Senior Vice
President of the Multicare Companies and President and Chief
Executive Officer of A.D.S., at which time A.D.S. was a wholly
owned subsidiary of the Multicare Companies. From 1986 to
December 1996 Ms. Bailis was President of A.D.S.*
CAROLYN C. ROBERTS 61 1994
Ms. Roberts has been President and Chief Executive Officer of
Copley Health Systems, Inc. since 1985. From 1982 to 1999,
President and Chief Executive Officer of Copley Hospital, Inc.
Ms. Roberts served on the Board of Trustees of the American
Hospital Association from 1990 to 1997, was Chair of the Board in
1994 and, from 1991 to 1997, was a member of its Executive
Committee. Ms. Roberts is currently a member of the Board of
Commissioners of the Joint Commission for Accreditation of Health
Care Organizations ("JCAHO") and Joint Commission
International.** ***
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
GORDON C. VINEYARD, M.D. 63 1985
Dr. Vineyard is an Associate Clinical Professor of Surgery at the
Harvard Medical School. From May 24, 1999 through June 17, 1999
he was an interim CEO of Harvard Vanguard Medical Associates.
From 1991 through 1999 he was Director of Surgerical Specialities
and Radiology and Surgeon-in-Chief of the Harvard Vanguard
Medical Associates. From 1980 to 1991 he was its Chief of
Surgery. Dr. Vineyard was a surgeon at Boston's Brigham and
Women's Hospital from January 1972 through August 1995. *
* Member of Audit Committee
** Member of Compensation Committee
*** Member of Stock Option Plans Committee
</TABLE>
During the fiscal year ended December 31, 1999, the Board of Directors of
the Company held nine meetings. All directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and of the committees of
the Board on which they respectively served.
Directors' Compensation
Each director who is not an executive officer received an annual retainer
fee of $5,000 plus $750 for each Board meeting attended and $500 for each
Committee meeting attended ($750 for each day during which a director attended
both a Board and a Committee meeting). The Chairmen of the Audit Committee and
the Compensation Committee each received an annual fee of $2,500 for their
services in this capacity in addition to their regular annual retainer fee.
Executive officers do not receive any additional remuneration for their services
as directors. The Chairman of the Board, Mr. Shapiro, received an annual fee of
$10,000 for his services as Chairman in addition to his regular annual retainer
fee. Effective April 2000, members of the Board of Directors will receive $250
for each telephonic committee meeting attended by them.
The Company's 1991 Stock Option Plan (the "1991 Plan") provides that non-
employee directors receive, on the sixth business day of each calendar year,
options to purchase 3,000 shares of common stock at an exercise price equal to
the fair market value of such shares on the date of grant, vesting one-third on
the date of grant and one-third on each of the next two anniversary dates. The
Company's proposed 2000 Stock Incentive Plan, which is subject to the approval
of stockholders, contains a similar provision. Pursuant to the terms of the
Merger Agreement between Lifeline and Protection One, Inc., no options were
granted to the non-employee directors in 1999.
Compensation Committee Interlocks and Insider Participation
Messrs. Kasputys, Shapiro and Ms. Roberts served as members of the
Compensation Committee during the Company's most recent fiscal year. Mr.
Shapiro is the Chairman of the Board of Directors and previously served at
various times as the Company's President, Chief Executive Officer and Treasurer.
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Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on its review of copies of reports filed by reporting persons
of the Company pursuant to Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or written representations from certain
Reporting Persons that no Form 5 filing was required for such person, the
Company believes that during fiscal 1999 all filings required to be made by its
Reporting Persons were timely made in accordance with the requirements of the
Exchange Act.
ITEM 11: Executive Compensation
Summary Compensation
The following table sets forth certain information concerning the
compensation for each of the last three fiscal years of the Company's Chief
Executive Officer and the Company's four other most highly compensated executive
officers during the fiscal year ended December 31, 1999 who were serving as
executive officers at December 31, 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
------------------------------------------------------------ --------------------------------------------
Securities
Other Underlying
Name and Annual Options All Other
Principal Position Year Salary ($) Bonus ($) Compensation Granted (#)(1) Compensation ($)(2)
- ------------------- ----- ----------- ---------- -------------- --------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald Feinstein 1999 $267,712 - 25,000 $2,700
President and Chief 1998 254,992 $172,293 (5) 20,000 2,980
Executive Officer 1997 242,826 - (3) 34,810 (4) 2,657
Richard M. Reich 1999 160,292 8,450 (5) 11,000 2,380
Vice President, 1998 153,833 65,906 (5) 5,000 2,703
Chief Information
Officer 1997 146,750 - (3) 12,411 (4) 2,331
Thomas E. Loper 1999 157,800 7,950 (5) $ 4,800 (6) 7,000 2,370
Vice President,
Customer Care 1998 150,833 64,545 (5) 28,800 (6) 5,000 2,691
1997 145,333 - (3) 24,000 (6) 12,052 (4) 2,278
Dennis M. Hurley 1999 149,416 7,525 (5) 7,000 2,351
Vice President, 1998 143,000 61,229 (5) 5,000 2,680
Finance and
Chief Financial
Officer 1997 136,917 - (3) 11,978 (4) 2,302
Donald G. Strange 1999 142,417 8,610 (5) 7,000 2,332
Vice President, 1998 135,833 56,822 (5) 5,000 2,662
Sales
and Marketing 1997 130,000 - (3) 11,631 (4) 2,287
</TABLE>
(1) Reflects the grant of options to purchase common stock.
(2) Represents Company contributions to the Company's 401(k) Plan and Group
Term Life Insurance Plan.
(3) For the year ended December 31, 1997, Mr. Feinstein, Mr. Reich, Mr. Loper,
Mr. Hurley and Mr. Strange each elected to take stock options in lieu of a
cash bonus. See column entitled "Securities Underlying Options Granted."
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(4) Includes options to purchase 14,810, 6,411, 6,052, 5,978, and 5,631 shares
under the 1994 Stock Option Plan in lieu of cash bonus for the year ended
December 31, 1997 to each of Mr. Feinstein, Mr. Reich, Mr. Loper, Mr.
Hurley, and Mr. Strange, respectively. The amount of cash bonus foregone
in exchange for these options by Mr. Feinstein, Mr. Reich, Mr. Loper, Mr.
Hurley and Mr. Strange was $79,181, $34,277, $32,354, $31,961 and $30,108,
respectively. The number of options granted in lieu of bonus was
determined using the Black-Scholes option pricing model, which accounts for
certain variables such as fair market value of the option on the date of
grant, stock price volatility, life of the option, and interest rates. The
exercise price of these options was $24.00 per share, representing the fair
market value of the underlying shares on the date of grant, February 13,
1998. These options became exercisable one-third immediately upon grant,
with an additional one-third becoming exercisable on each of the next two
anniversary dates.
(5) Represents amounts paid under the Company's Executive Bonus Plan.
(6) Represents an annual living allowance paid to Mr. Loper.
Option Grants
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended December 31, 1999 to each of the
Named Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed
Annual Rates of Stock Price Apprecaiton
Individual Grants for Option Term (1)
---------------------------------------------------------------------- ---------------------------------------
Securities Percent of Total
Underlying Options Granted
Options To Employees in Exercise or Base
Name Granted (#) Fiscal Year Price ($/Share) Expiration Date 5% ($) 10% ($)
- --------- ------------- ---------------- ---------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald Feinstein 25,000 (2) 18.7% $18.50 6/7/2009 $290,864 $737,106
Richard M. Reich 7,000 (3) 5.2% 18.50 6/7/2009 81,442 206,390
4,000 (2) 3.0% 14.63 12/2/2009 36,790 93,234
Thomas E. Loper 7,000 (3) 5.2% 18.50 6/7/2009 81,442 206,390
Dennis M. Hurley 7,000 (3) 5.2% 18.50 6/7/2009 81,442 206,390
Donald G. Strange 7,000 (3) 5.2% 18.50 6/7/2009 81,442 206,390
</TABLE>
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options wer e granted to their
expiration date. Actual gains, if any, on stock option exercises will
depend on the future performance of the common stock and the date on which
the options are exercised.
(2) Exercisable in installments beginning 12 months after the date of grant,
with one-third of the shares covered thereby becoming exercisable at that
time and an additional one-third of the shares covered thereby becoming
exercisable on each of the next two anniversary dates. Under the terms of
the Company's 1991 and 1994 Stock Option Plans, the Stock Option Plans
Committee retains discretion, subject to limits set forth in the plan, to
modify the terms of outstanding options. The options were granted for a
term of ten years, subject to earlier termination in certain events related
to termination of employment.
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(3) Exercisable in installments beginning 12 months after the date of grant,
with 20% of the shares covered thereby becoming exercisable at that time
and an additional 20% of the shares covered becoming exercisable on each
successive anniversary date. Under the terms of the Company's 1991 and 1994
Stock Option Plans, the Stock Option Plans Committee retains discretion,
subject to limits set forth in the plan, to modify the terms of outstanding
options. The options were granted for a term of ten years, subject to
earlier termination in certain events related to termination of employment.
Option Exercises and Year-End Values
The following table sets forth certain information concerning each exercise
of stock options during the fiscal year ended December 31, 1999 by each of the
Named Executive Officers and the number and value of unexercised options held by
each of the Named Executive Officers on December 31, 1999:
AGGREGATED OPTION EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at the-Money Options at
Shares Acquired Value Fiscal Year-End (#) Fiscal Year-End ($)(1)
------------------------- -------------------------
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----- ----------------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald Feinstein 70,459 (2) 1,512,500 166,672 49,938 $1,466,084 $ -
Richard M. Reich - - 31,629 29,282 169,340 64,809
Thomas E. Loper - - 49,535 29,017 147,088 41,753
Dennis M. Hurley - - 40,885 35,593 259,367 14,473
Donald G. Strange - - 34,820 23,811 256,303 46,362
</TABLE>
(1) Based on the fair market value of the common stock on December 31, 1999
(approximately $14.78), less the option exercise price.
(2) Excludes 29,541 shares withheld by the Company for the payment of taxes
associated with the exercise of such options
Other Arrangements
Feinstein Employment Agreement
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 employment agreement, 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 Board
of Directors and a bonus of greater than 40% of his base salary if the
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<PAGE>
Company exceeds such goals. 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 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. On June 14, 1996, Mr. Feinstein's employment agreement was amended to
provide for full vesting of this option in any event on August 27, 1998. The
original expiration date of this option was six years from the date of grant,
but on June 14, 1996 the Compensation Committee extended the exercise period of
the option to seven years from the date of grant, so that the option was to
expire on August 27, 1999. Mr. Feinstein exercised this option on August 23,
1999. See "Loans to Related Parties."
Upon a change in control of the Company, the stock options described in the
preceding paragraphs would be accelerated and deemed to be vested. 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).
Change of Control Agreements
Each of the Company's executive officers, other than Mr. Feinstein, has
entered into an agreement with the Company which provides that, if within 12
months of a change of control of the Company, such officer's employment is
terminated without cause or the officer terminates his or her employment with
the Company due to a significant change in responsibilities or condition of
employment, then such officer would be entitled to receive a payment equal to
one year's base salary then being paid to him or her.
-8-
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Loans to Related Parties
On September 11, 1995, the Company sold to Mr. Thomas E. Loper, Vice
President, Customer Care, 8,939 shares of the Company's common stock at a price
of $11.188 per share (which represented the fair market value of the common
stock on the date of issuance) for an aggregate price of $100,000. The Company
loaned $100,000 to Mr. Loper for seven years at an annual interest rate of 6.3%
pursuant to the terms of a promissory note (the "Loper Note"), which is secured
by the common stock that Mr. Loper purchased. The Loper Note will accelerate and
become immediately due and payable within 90 days of termination of Mr. Loper's
employment for any reason. As of March 31, 2000, $100,000 was outstanding on the
Loper Note.
In August 1999, the Company loaned $300,000 to Mr. Ronald Feinstein
pursuant to a secured promissory note for the exercise of a stock option which
was to expire. The note, which bears interest at a rate of 6.77% per annum,
payable annually in arrears, is due August 23, 2004 and is secured by a pledge
of 16,552 shares of Common Stock of the Company. Mr. Feinstein has the right to
put 70,459 shares (representing the net number of shares issued to Mr. Feinstein
with the proceeds of the loan, after withholding for taxes) back to the Company
at a price equal to $16.3125 per share at any time during the 18-month period
following April 30, 2001.
ITEM 12: Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of December 31, 1999
unless otherwise indicated, with respect to the beneficial ownership of the
Company's common stock by (i) each person known by the Company to beneficially
own more than 5% of the outstanding shares of Common Stock, (ii) each director
of the Company, (iii) each executive officer of the Company named in the Summary
Compensation Table set forth under the caption "Executive Compensation," above,
and (iv) all directors and executive officers of the Company as a group. The
inclusion herein of any shares of common stock deemed beneficially owned does
not constitute an admission that the named stockholders are direct or indirect
beneficial owners of such shares. Unless otherwise indicated, each person has
sole voting and investment power with respect to the shares listed. The share
amounts include those shares as to which the following persons had a right to
acquire beneficial ownership by exercising stock options as of December 31,
1999, or within 60 days following that date: Mr. Feinstein, 184,943 shares, Mr.
Reich, 38,777 shares, Mr. Loper, 55,252 shares, Mr. Hurley, 46,578 shares, Mr.
Strange, 43,064 shares, Ms. Bailis, 3,000 shares, Mr. Baldwin, 14,500 shares,
Mr. Kasputys, 26,500 shares, Ms. Roberts, 15,000 shares, Mr. Shapiro, 2,000
shares and Dr. Vineyard, 26,500 shares. The share amounts also include shares
beneficially owned by certain executive officers through participation in the
Company's 401(k) Plan, as to which shares include sole investment and voting
power.
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<PAGE>
Name of Beneficially Common Stock
Beneficial Owner Owned Outstanding (1)
- ---------------- ------- ---------------
SAFECO Corporation (2) 807,650 13.6%
4333 Brooklyn Ave. N.E.
Seattle, WA 98185
L. Dennis Shapiro (3) 710,833 12.0%
24 Essex Road
Chestnut Hill, MA 02467
Pequot Capital Management, Inc. (4) 490,000 8.3%
500 Nyala Farm Road
Westport, CT 06880
Ronald Feinstein (5) 451,019 7.4%
c/o Lifeline Systems, Inc.
111 Lawrence St.
Framingham, MA 01702
T. Rowe Price Associates, Inc. (6) 425,200 7.2%
100 E. Pratt Street
Baltimore, MD 21202
Goldman, Sachs Asset Management (7) 413,200 7.0%
85 Broad St.
New York, NY 10004
Richard M. Reich (8) 76,738 1.3%
Thomas E. Loper (9) 64,391 1.1%
Dennis M. Hurley (10) 55,973 *
Donald G. Strange 48,077 *
Susan S. Bailis 3,000 *
Everett N. Baldwin (11) 33,500 *
Joseph E. Kasputys, Ph.D. 38,650 *
Gordon C. Vineyard, M.D. 27,501 *
Carolyn C. Roberts 16,000 *
All directors and officers as a group 1,558,159 24.2%
(12 persons) (12)
*Less than 1% of the outstanding stock
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<PAGE>
(1) Number of shares deemed outstanding includes 5,942,568 shares outstanding
as of December 31, 1999, plus any shares subject to options held by the
named person or entity that are currently exercisable or exercisable within
60 days after December 31, 1999.
(2) Represents holdings as of December 31, 1999 based on a Schedule 13G filed
with the Securities and Exchange Commission on February 11, 2000 by SAFECO
Corporation. Includes the following shares, as to all of which SAFECO
corporation disclaims beneficial ownership: 560,550 shares held by SAFECO
Common Stock Trust, an investment company for which SAFECO Asset Management
Company, a wholly owned subsidiary of SAFECO Corporation, acts as the
investment advisor.
(3) Includes the following shares as to all of which Mr. Shapiro disclaims
beneficial ownership: 4,124 shares held by Mr. Shapiro as custodian for
three children, over which he has sole voting and investment power; 35,312
shares held by Mr. Shapiro's wife; 12,360 shares held by Mr. Shapiro's wife
as custodian for three children; 66,000 shares held by Mr. Shapiro's wife
as co-trustee of three trusts for his children; and 17,062 shares held by
Mr. Shapiro's children, over which he has shared voting and investment
power.
(4) Represents holdings as of December 31, 1999 based on a Schedule 13G filed
with the Securities and Exchange Commission on February 10, 2000 by Pequot
Capital Management, Inc.
(5) Includes 16,000 shares held by Mr. Feinstein's children. Also includes
16,552 shares pledged to the Company to secure a $300,000 loan by the
Company to Mr. Feinstein. See "Other Arrangements-Loans to Related
Parties."
(6) Represents holdings as of December 31, 1999 based on Schedule 13G filed
with the Securities and Exchange Commission on February 14, 2000 by T. Rowe
Price Associates, Inc.
(7) Represents holdings as of December 31, 1999 based on a Schedule 13G filed
with the Securities and Exchange Commission on February 14, 2000 by Goldman
Sachs Asset Management, a separate operating division of Goldman, Sachs &
Co. Includes 298,200 shares as to which Goldman Sachs Asset Management has
sole voting power and 413,200 as to which Goldman Sachs Asset Management
has sole dispositive power.
(8) Includes 32,500 shares owned by Mr. Reich jointly with his wife.
(9) Includes 8,939 shares pledged to the Company to secure a $100,000 loan by
the Company to Mr. Loper. See "Other Arrangements - Loans to Related
Parties."
(10) Includes 1,700 shares beneficially owned by Mr. Hurley through an
individual retirement account ("IRA"). Also includes 7,123 shares owned by
Mr. Hurley jointly with his wife.
(11) Includes 7,000 shares held by the Everett N. Baldwin Revocable Trust of
1997.
(12) Includes an aggregate of 488,146 shares subject to stock options that are
currently exercisable or exercisable within 60 days after December 31,
1999. Also includes 15,117 shares beneficially owned by such persons
through the 401(k) Plan as to which such persons possess sole investment
and voting power.
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ITEM 13: Certain Relationships and Related Transactions
On September 11, 1995, the Company sold to Mr. Thomas E. Loper, Vice
President, Customer Care, 8,939 shares of the Company's common stock at a price
of $11.188 per share (which represented the fair market value of the common
stock on the date of issuance) for an aggregate price of $100,000. The Company
loaned $100,000 to Mr. Loper for seven years at an annual interest rate of 6.3%
pursuant to the terms of a promissory note (the "Loper Note"), which is secured
by the common stock that Mr. Loper purchased. The Loper Note will accelerate and
become immediately due and payable within 90 days of termination of Mr. Loper's
employment for any reason. As of March 31, 2000, $100,000 was outstanding on the
Loper Note.
In August 1999, the Company loaned $300,000 to Mr. Ronald Feinstein
pursuant to a secured promissory note for the exercise of a stock option which
was to expire. The note, which bears interest at a rate of 6.77% per annum,
payable annually in arrears, is due August 23, 2004 and is secured by a pledge
of 16,552 shares of Common Stock of the Company. Mr. Feinstein has the right to
put 70,459 shares (representing the net number of shares issued to Mr. Feinstein
with the proceeds of the loan, after withholding for taxes) back to the Company
at a price equal to $16.3125 per share at any time during the 18-month period
following April 30, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LIFELINE SYSTEMS, INC.
April 28, 2000 By: /s/Ronald Feinstein
- -------------- -------------------
Date Ronald Feinstein
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
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Signature Capacity Date
- --------- -------- ----
/s/ L. Dennis Shapiro Chairman of the Board April 28, 2000
- ------------------------ --------------
L. Dennis Shapiro
/s/ Ronald Feinstein Chief Executive Officer, April 28, 2000
- ------------------------ --------------
Ronald Feinstein President and Director
(Principal Executive Officer)
/s/ Dennis M. Hurley Vice President of Finance April 28, 2000
- ------------------------ --------------
Dennis M. Hurley (Principal Financial and
Accounting Officer)
/s/ Susan S. Bailis Director April 28, 2000
- ------------------------ --------------
Susan S. Bailis
/s/ Everett N. Baldwin Director April 28, 2000
- ------------------------ --------------
Everett N. Baldwin
/s/ Joseph E. Kasputys Director April 28, 2000
- ------------------------ --------------
Joseph E. Kasputys
/s/ Carolyn C. Roberts Director April 28, 2000
- ------------------------ --------------
Carolyn C. Roberts
/s/ Gordon C. Vineyard Director April 28, 2000
- ------------------------ --------------
Gordon C. Vineyard
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