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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
RESPONSE USA, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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</TABLE>
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RESPONSE USA, INC.
3 EXECUTIVE CAMPUS, 2ND FLOOR SOUTH
CHERRY HILL, NJ 08002
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 2000
---------------------
To the Stockholders of
RESPONSE USA, INC.:
You are hereby notified that the annual meeting of stockholders of Response
USA, Inc., a Delaware corporation (the "Company"), will be held at the offices
Friedman, Rosenwasser & Goldbaum, P.A., The Plaza, Suite 801, 5355 Town Center
Road, Boca Raton, FL 33486, on Friday, December 8, 2000, at 10:00 a.m. local
time, for the following purposes:
1. To elect five members to the Board of Directors of the Company to serve
until their respective successors are elected and qualified;
2. To approve the selection by the Company of Deloitte & Touche LLP,
independent public accountants, to audit the financial statements of the
Company for the current fiscal year; and
3. To transact such other matters as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on October 12, 2000 are
entitled to notice of and to vote at the meeting.
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to any of the Proposals set forth herein.
A proxy statement and proxy are enclosed herewith. If you are unable to
attend the meeting in person you are urged to sign, date and return the enclosed
proxy promptly in the enclosed addressed envelope which requires no postage if
mailed within the United States. If you attend the meeting in person, you may
withdraw your proxy and vote your shares. Also enclosed herewith is the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000
and a letter from Jeffrey Queen, Chief Executive Officer of the Company. These
materials are being distributed to stockholders beginning on or about
October 31, 2000.
By Order of the Board of Directors,
Gerard Christopher, SECRETARY
Cherry Hill, New Jersey
October 30, 2000
<PAGE>
RESPONSE USA, INC.
3 EXECUTIVE CAMPUS, 2ND FLOOR SOUTH
CHERRY HILL, NJ 08002
------------------------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies for use at the annual meeting (the "Annual Meeting") of stockholders of
Response USA, Inc. (the "Company"), to be held on Friday, December 8, 2000 and
at any adjournments thereof. The accompanying proxy is solicited by the Board of
Directors of the Company and is revocable by the stockholder by notifying the
Company's Secretary at any time before it is voted, or by voting in person at
the Annual Meeting. This proxy statement and accompanying proxy will be
distributed to stockholders beginning on or about October 31, 2000. The
principal executive offices of the Company are located at 3 Executive Campus,
2nd Floor South, Cherry Hill, NJ 08002 ((856) 661-0700).
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on October 12, 2000
(the "Record Date") are entitled to receive notice of, and vote at the Annual
Meeting. As of October 12, 2000, the number and class of stock outstanding and
entitled to vote at the meeting was 11,107,052 shares of common stock, par value
$.008 per share (the "Common Stock"). Each share of Common Stock is entitled to
one vote on all matters. No other class of securities will be entitled to vote
at the Annual Meeting. There are no cumulative voting rights.
The holders of a majority of the outstanding shares of Common Stock present
in person or represented by proxy shall constitute a quorum at the Annual
Meeting. The approval of a plurality of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required for
the election of nominees as directors. In all matters other than election of
directors, the affirmative vote of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the Annual Meeting is
required for the adoption of such matters.
2
<PAGE>
PROPOSALS TO STOCKHOLDERS
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Each nominee to the Board of Directors will serve until the next Annual
Meeting of stockholders, or until his earlier resignation, removal from office,
death or incapacity.
Unless otherwise specified, the enclosed proxy will be voted in favor of the
election of Jeffrey Queen, Andrew Queen, Richard M. Brooks, Daniel H. Abramowitz
and Ronald N. Rosenwasser. Information is furnished below with respect to all
nominees.
The following information with respect to the principal occupation or
employment of the nominees, the name and principal business of the corporation
or other organization in which such occupation or employment is carried on, and
other affiliations and business experience during the past five years has been
furnished to the Company by the respective nominees:
JEFFREY QUEEN has been a Director and Chief Executive Officer of the
Company since July 2000 and served as the Company's President from January 2000
until July 2000. Prior to that, Mr. Queen was President of Health Watch, Inc.
("Health Watch"), a subsidiary of the Company since October 1998. Prior to the
acquisition of Health Watch by the Company, Mr. Queen was the President and a
director of Health Watch since 1990. Mr. Queen is also a member of the Young
Presidents Organization, an international organization of young corporate
executives. Mr. Queen received his Bachelor of Science Degree in Sales
Management from Ithaca College in 1983.
ANDREW QUEEN has been a Director of the Company since January 2000 and the
President of the Company since July 2000 and served as the Company's Chief
Operating Officer and Executive Vice President from January 2000 until
July 2000. Since the Company's acquisition of Health Watch in October 1998,
Mr. Queen was the Chief Operating Officer, Treasurer and a director of Health
Watch. Prior to that, Mr. Queen was the Chief Operating Officer and Treasurer of
Health Watch since 1990. Mr. Queen received his Bachelor of Science Degree in
Economics from the University of Massachusetts at Amherst in 1987.
RICHARD M. BROOKS has been a Director of the Company since August 1990 and
its Chairman since 1994. Mr. Brooks served the Company as its President and
Chief Executive Officer from July 1994 until July 2000 and as its Chief
Financial Officer from February 1990 until October 1999. From August 1986 to
February 1990, Mr. Brooks was general counsel to Response Ability
Systems, Inc., a subsidiary of the Company. Mr. Brooks served as Regional
Counsel Mid-Atlantic Region for the Interstate Commerce Commission from
May 1979 to March 1983 and was a senior attorney for the United States Treasury
Department from March 1974 to April 1979. Mr. Brooks received his Bachelor of
Science Degree in Business Administration in June 1970 from Temple University,
and graduated from Temple University School of Law in 1973.
RONALD N. ROSENWASSER has been a Director of the Company since July 2000.
Since 1996, Mr. Rosenwasser has been a partner at the law firm of Friedman,
Rosenwasser & Goldbaum, P.A., specializing in corporate and intellectual
property law. Prior to joining such firm, Mr. Rosenwasser was a partner in the
law firm of Ronald N. Rosenwasser, P.A. Mr. Rosenwasser received his Bachelor of
Science Degree in Accounting in 1979 from the University of Florida and
graduated from the University of Florida School of Law in 1983.
DANIEL H. ABRAMOWITZ has been a Director of the Company since July 2000.
Mr. Abramowitz is the founder of Hillson Financial Management Company, a private
investment management company and has served as its President since 1990.
Mr. Abramowitz also serves as a director of Transtechnology
3
<PAGE>
Corp., a publicly traded company engaged in the design and manufacture of highly
engineered industrial and aerospace products.
INFORMATION CONCERNING BOARD MEETINGS
The Company's Board of Directors met eight (8) times during the fiscal year
ended June 30, 2000. All of the incumbent Directors attended at least 85% of
such meetings, following their respective elections to the Board.
INFORMATION CONCERNING COMMITTEES OF THE BOARD
The Company maintains an Audit Committee (responsible for reviewing policy
matters and other issues with the Company's independent public accountants),
which consists of Ronald N. Rosenwasser and Daniel H. Abramowitz; and a Stock
Option and Compensation Committee (responsible for the granting of stock
options), consisting of Messrs. Abramowitz and Rosenwasser. The Audit Committee
met once and the Stock Option and Compensation Committee met three times during
the fiscal year ended June 30, 2000. All members of both Committees attended
100% of such meetings following their respective elections to the Board.
On June 5, 2000, the Board of Directors adopted an Audit Committee Charter
which is attached as Appendix A hereto. The Audit Committee members, consisting
of Messrs. Rosenwasser and Abramowitz, are "independent" directors as such term
is defined by the National Association of Securities Dealers.
MANAGEMENT
The current directors and executive officers of the Company are set forth
below:
<TABLE>
<CAPTION>
YEAR FIRST
NAME OF DIRECTOR AGE ELECTED DIRECTOR POSITION
---------------- -------- ---------------- --------
<S> <C> <C> <C>
Jeffrey Queen(1).................... 40 2000 Chief Executive Officer and Director
Andrew Queen(1)..................... 36 2000 President and Director
Richard M. Brooks................... 51 1990 Chairman of the Board and Director
Ronald N. Rosenwasser(2)(3)......... 39 2000 Director
Daniel H. Abramowitz(2)(3).......... 36 2000 Director
NAME OF OFFICER
------------------------------------
Donna M. Dorris(4).................. 32 Chief Financial Officer
Gerard Christopher(5)............... 41 Treasurer and Secretary
</TABLE>
------------------------
(1) Jeffrey Queen and Andrew Queen are brothers.
(2) Member of Audit Committee
(3) Member of Stock Option and Compensation Committee
(4) Ms. Dorris has been the Chief Financial Officer of the Company since
October 1999. Ms. Dorris has been employed with the Company since 1991,
serving as Controller from January 1998 to October 1999, as Assistant
Controller from December 1997 to January 1998, as Accounting Manager from
September 1996 to December 1997, as Accounting Supervisor from March 1994 to
September 1996 and as Accounting Clerk from December 1991 to March 1994.
(5) Mr. Christopher has been the Treasurer and Secretary of the Company since
September 2000 and its Vice President of Operations from February 2000 until
September 2000. From September 1993 to February 2000, Mr. Christopher served
as Vice President of Finance and Administration for J.F. Jelenko & Co., a
manufacturer and distributor of dental health products.
4
<PAGE>
Directors are elected to serve until the next annual meeting of stockholders
and until their successors have been elected and have qualified. In
November 2000, former non-employee Directors A. Clinton Allen, Richard B.
DeWolfe and Stuart R. Chalfin received bonuses in the amount of $50,000 each
relating to the Company's sale of its security division to Vector Security
Systems, Inc. Other than the foregoing, the automatic grant of options pursuant
to the Company's 1999 Stock Option Plan and payment of a quarterly Board fee
described below, Directors do not receive remuneration for their services as
such, but may be reimbursed for expenses incurred in connection therewith, such
as the cost of travel to Board meetings. Officers serve at the pleasure of the
Board of Directors until their successors have been elected and qualified.
Directors had received a $4,000 per quarter Board fee from July 1999 to
September 2000, but such amount was reduced to $2,000 per quarter as of
October 2000. Pursuant to the Company's 1999 Stock Option Plan, the Company has
granted options to purchase shares of the Company's Common Stock to former
Directors Chalfin, Allen and DeWolfe as well as Messrs. Rosenwasser and
Abramowitz, the Company's current non-employee Directors. See "Executive
Compensation."
The following table sets forth the annual and long-term compensation for
services in all capacities paid by the Company to its Chief Executive Officer
and each executive officer whose annual compensation exceeded $100,000 (the
"Named Executive Officers") during fiscal 1998, 1999 and 2000:
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ------------------------- -----------
SECURITIES LONG-TERM
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/ PLAN COMPENSATION
POSITION YEAR ($) ($) ($)(1) AWARD(S) ($) SARS (#) PAYOUTS ($) ($)
------------------------ -------- -------- -------- ------------ ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeffrey Queen,.......... 2000 $166,927(2) -- -- -- -- -- --
Chief Executive
Officer 1999 $108,749(2) -- -- -- -- -- --
1998 -- -- -- -- -- -- --
Andrew Queen,........... 2000 $166,927(2) -- -- -- -- -- --
President 1999 $108,749(2) -- -- -- -- -- --
1998 -- -- -- -- -- -- --
Richard M. Brooks,...... 2000 $390,384(3) $350,000(4) -- -- 300,000 -- --
Chairman of the Board 1999 $316,442 -- -- -- 236,111 -- --
and former President 1998 $231,731 -- -- -- 87,500 -- --
and Chief Executive
Officer
Ronald F. Feldman,...... 2000 $202,885 $250,000(4) -- -- -- -- $850,640(5)
Former Executive Vice 1999 $201,135 -- -- -- -- -- --
President, Secretary
and 1998 $159,096 -- -- -- 37,500 -- --
Treasurer
Donna M. Dorris,........ 2000 $ 86,192 $ 35,000(4) -- -- 35,000 -- --
Chief Financial
Officer 1999 $ 68,500 -- -- -- 1,000 -- --
1998 $ 47,739 -- -- -- -- -- --
Robert L. May,.......... 2000 $ 77,292 $383,750(4) -- -- -- -- $967,735(6)
Former Executive Vice 1999 $226,154 -- -- -- -- -- --
President and Chief 1998 $ 51,903 -- -- -- 175,000 -- --
Operating Officer
</TABLE>
--------------------------
(1) Excludes perquisites and other personal benefits, securities and properties
otherwise categorized as salary or bonuses which in the aggregate, for each
of the Named Executive Officers listed above, did not exceed the lesser of
either $50,000 or 10% of the annual salary reported for such person.
(2) Named Executive Officers Jeffrey Queen and Andrew Queen are compensated
pursuant to employment contracts with the Company's subsidiary, Health
Watch, Inc. The salary amounts set forth for Fiscal 1999 represent salary
paid from October 1998, when Health Watch was acquired by the Company,
through June 30, 1999. The salary amounts set forth for Fiscal 2000 reflect,
in part, a mid-year salary increase for each such Named Executive Officer
from a base salary of $140,000 per annum to $185,000 per annum. See
"Employment Contracts."
(3) In addition to the compensation disclosed above, from July 2000 through
October 20, 2000, Mr. Brooks has received a total of $551,503 as payment of
accrued vacation and severance pursuant to the terms of a Severance,
Noncompetition and Nondisclosure Agreement with the Company dated July 19,
2000. See "Employment Agreements."
(4) Such bonuses were paid in connection with such Named Executive Officers'
efforts with respect to the Company's sale of its security division in
October 1999 to Vector Security, Inc. ("Vector").
(5) Mr. Feldman received this amount as payment of accrued vacation and
severance pursuant to the terms of a Severance, Noncompetition and
Nondisclosure Agreement with the Company dated January 18, 2000 as amended
by Amendment dated February 21, 2000. See "Employment Agreements."
(6) Mr. May received this amount as payment of accrued vacation and severance in
connection with the sale of the Company's security division to Vector.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
individual grants of stock options made by the Company and its subsidiaries to
the Named Executive Officers during fiscal year 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS GRANTED
UNDERLYING OPTIONS/SARS TO EMPLOYEES EXERCISE OR
NAME GRANTED (#)(1) IN FISCAL YEAR BASE PRICE ($/SH) EXPIRATION DATE
---- ----------------------- -------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Richard M. Brooks............ 300,000 67% $1.125 02/01/10(2)
Donna M. Dorris.............. 35,000 8% $1.125 02/01/10
</TABLE>
------------------------
(1) Fully vested options granted to Mr. Brooks and Ms. Dorris on February 1,
2000.
(2) The options expire on the earlier of (i) February 1, 2010; or (ii) ninety
(90) days following the date on which the holder ceases to be the Chairman
of the Board of the Company.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
The following table sets forth certain information regarding stock options
exercised by the Named Executive Officers during the fiscal year ended June 30,
2000, as well as the number of exercisable and unexercisable in-the-money stock
options and their values at fiscal year end. An option is in-the-money if the
fair market value for the underlying securities exceeds the exercise price of
the option.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FY-END (#) AT FY-END ($)
SHARES --------------- -----------------
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE (2)
---- ----------- -------- --------------- -----------------
<S> <C> <C> <C> <C>
Jeffrey Queen,
Chief Executive Officer....................... -- -- -- --
Andrew Queen,
President..................................... -- -- -- --
Richard M. Brooks,
Former Chief Executive Officer................ -- -- 387,500/0 --
Ronald Feldman, Former
Executive Vice President, Treasurer and
Secretary................................... -- -- -- --
Donna M. Dorris,
Chief Financial Officer....................... -- -- 36,000/0 --
</TABLE>
------------------------
(1) None of the Named Executive Officers exercised Company stock options in
Fiscal Year 2000.
(2) The exercise price of the options was greater than the closing price of the
Common Stock on June 30, 2000.
7
<PAGE>
EMPLOYMENT AGREEMENTS
In connection with the Company's acquisition of Health Watch, Inc. ("Health
Watch") in October 1998, the Company entered into Employment Agreements with
Jeffrey Queen, as President of Health Watch, and Andrew Queen, as Chief
Operating Officer of Health Watch, (collectively, the "Queen Employment
Agreements"). In January 2000, Jeffrey Queen and Andrew Queen became executive
officers of the Company (see "Change of Control"). The Company has not yet
entered into new employment agreements with Messrs. Queen, and the Queen
Employment Agreements continue to govern the terms of their employment.
The Queen Employment Agreements provide for three (3) year terms and annual
base salaries of $140,000, subject to annual adjustments. Under the Queen
Employment Agreements, Jeffrey and Andrew Queen are entitled to receive life
insurance, disability, hospitalization, vacation and other employee benefits,
reimbursement of reasonable business expenses incurred on behalf of the Company
and automobile expense reimbursement. The Queen Employment Agreements are
terminable only upon certain circumstances, such as for cause, disability and
death, and if terminated for any other reason, Messrs. Queen shall be entitled
to receive (1) the present value (based on a 6% discount factor) of the
individual's salary and benefits computed from termination through the end of
employment agreement term, plus (2) any benefits due the employee unpaid as of
the termination date, and (3) any such other benefits due the employee under law
(the "Severance Benefit"). In addition, such individuals are entitled to the
Severance Benefit in the event Health Watch or its affiliate transfers certain
accounts to third parties or in the event that any person acquires 40% or more
of Health Watch or Company subsidiary, Response Acquisition Corp. The Severance
Benefit was waived in connection with the Vector sale.
Effective October 1, 1998, the Company's former President and Chief
Executive Officer, Richard M. Brooks, its former Executive Vice President,
Treasurer and Secretary, Ronald F. Feldman, and its former Executive Vice
President and Chief Operating Officer, Robert L. May, entered into three-year
employment agreements (the "Brooks Employment Agreement," the "Feldman
Employment Agreement" and the "May Employment Agreement" respectively). These
Employment Agreements provided for certain severance payments in the event the
executives were terminated without cause or in the event of a change of control
of the Company.
On September 30, 1999, the Company sold its electronic security division
though the sale of two of its wholly-owned subsidiaries, United Security
Systems, Inc. and The Jupiter Group, Inc., to Vector Security Systems, Inc. (the
"Sale"). In connection with the Sale: (1) the Company has paid Mr. May a total
severance benefit of $967,735 pursuant to the terms of the May Employment
Agreement; (2) the Company redeemed a total of 611,680 shares of Common Stock
owned by Mr. May and certain transferees of Mr. May at a price of $6.50 per
share pursuant to the terms of a Stock Redemption Agreement dated as of
August 10, 1999 between the Company and Mr. May; and (3) Mr. May resigned as an
officer and Director of the Company as of September 30, 1999.
On January 18, 2000, the Company entered into a Severance, Noncompetition
and Nondisclosure Agreement with Mr. Feldman, as amended by Amendment dated
February 21, 2000 (the "Feldman Severance Agreement"). Pursuant to the Feldman
Severance Agreement, Mr. Feldman's employment with the Company was terminated
without cause, Mr. Feldman resigned as an officer of the Company and the Company
paid Mr. Feldman a lump sum amount of $734,232 and agreed to make nine
(9) additional monthly payments of $29,102 each and one final monthly payment of
$23,555 payable on January 1, 2001 (the "Deferred Severance Payments"), in
satisfaction of the Company's severance obligations under the Feldman Employment
Agreement. These severance payments total Mr. Feldman's prior base salary of
$250,000 plus the dollar value of certain benefits multiplied by 2.99. The
Feldman Severance Agreement also contains noncompetition and nondisclosure
provisions and provides for the acceleration of the Deferred Severance Payments
under certain circumstances.
8
<PAGE>
In February 2000, the Company and its subsidiary, Health Watch, entered into
a three-year Employment Agreement with Gerard Christopher to act as Vice
President of Operations for Health Watch and to perform certain services with
respect to the Company (the "Christopher Employment Agreement"). The Christopher
Employment Agreement automatically renews for additional one year periods
following February 23, 2003 unless terminated by Health Watch on not less than
ninety (90) days notice to Mr. Christopher and provides for an annual base
salary of $160,000. The Christopher Employment Agreement also provides for an
annual bonus of not less than $15,000, the grant of options to purchase up to
100,000 shares of the Company's Common Stock at an exercise price of $1.563 per
share, a car allowance, relocation expense reimbursement and such other employee
benefits as are available to other employees of Health Watch holding similar
positions. The Christopher Agreement also contains confidentiality and
noncompetition provisions.
On July 19, 2000, the Company entered into a Severance, Noncompetition and
Nondisclosure Agreement with Mr. Brooks (the "Brooks Severance Agreement").
Pursuant to the Brooks Severance Agreement, Mr. Brooks terminated his employment
with the Company for cause due to a change in control of the Company (see
"Change of Control"), Mr. Brooks resigned as an officer of the Company but
retained his status as a Director and assumed the position of Chairman of the
Board. Pursuant to the severance provisions of the Brooks Employment Agreement,
the Company paid Mr. Brooks a lump sum amount of $441,203 and agreed to make
twenty-four (24) additional monthly payments of $36,766 each (the "Deferred
Severance Payments") in satisfaction of the Company's severance obligations
under the Brooks Employment Agreement. These severance payments total
Mr. Brooks' prior salary of $350,000 plus the dollar value of certain benefits
multiplied by 2.99. In addition, the Brooks Severance Agreement provided for the
acceleration of vesting of certain of Mr. Brooks' stock options, the performance
by Mr. Brooks of certain management transition services, noncompetition and
nondisclosure obligations and for the acceleration of the Deferred Severance
Payments under certain circumstances.
1999 STOCK OPTION PLAN
On February 11, 1999, the Board of Directors of the Company adopted the 1999
Stock Option Plan (the "1999 Plan") which was subsequently approved by the
Company's stockholders on March 30, 1999.
ADMINISTRATION OF THE PLAN
The 1999 Plan is administered by the Stock Option and Compensation Committee
of the Board of Directors (the "Administrator"), which determines who among
those eligible will be granted options, the time or times at which options will
be granted, the number of shares to be subject to options, the duration of
options, any conditions to the exercise of options and the manner in and price
at which options may be exercised. The Administrator is authorized to amend,
suspend or terminate the 1999 Plan, except that it is not authorized without
stockholder approval (except with regard to adjustments resulting from changes
in capitalization) to (i) increase the maximum number of shares that may be
issued pursuant to the exercise of options granted under the 1999 Plan;
(ii) permit the grant of a stock option under the 1999 Plan with an option price
less than 85% of the fair market value of the shares at the time such option is
granted (or 110% for greater than 10% stockholders); (iii) change the
eligibility requirements for participation in the 1999 Plan; (iv) extend the
term of any option or the period during which any option may be granted under
the 1999 Plan; or (v) decrease an option exercise price (although an option may
be canceled and a new option granted at a lower exercise price).
SHARES SUBJECT TO THE 1999 PLAN
The 1999 Plan provides that options may be granted with respect to a total
of 750,000 shares of Common Stock, subject to adjustment upon certain changes in
capitalization without receipt of
9
<PAGE>
consideration by the Company. In addition, if the Company is involved in a
merger, consolidation, dissolution or liquidation, the options granted under the
1999 Plan will be adjusted or, under certain conditions, will terminate, subject
to the right of the option holder to exercise his option or a comparable option
substituted at the discretion of the Company prior to such event. If any option
expires or terminates for any reason, without having been exercised in full, the
unpurchased shares subject to such option will be available again for the
purposes of the 1999 Plan.
PARTICIPATION
Any employee, officer, director, agent, consultant or independent contractor
of the Company is eligible to receive incentive stock options or non-qualified
stock options granted under the 1999 Plan.
NON-EMPLOYEE DIRECTORS
Upon approval of the 1999 Plan by the stockholders at the Annual Meeting of
Stockholders in March, 1999, each non-employee director of the Company was
granted a non-qualified stock option to purchase 35,000 shares of Common Stock
at the fair market value of the Common Stock on the date of such grant. Upon
first election or appointment to the Board of Directors, each non-employee
director shall be granted a non-qualified stock option to purchase 20,000 shares
of Common Stock at the fair market value of the Common Stock as of the date of
such grant. Thereafter, each non-employee director shall be annually granted a
non-qualified stock option to purchase 20,000 shares of Common Stock at the fair
market value on the date of such grant.
OPTION PRICE
The exercise price of each option will be determined by the Administrator,
but incentive stock options may not be priced less than 85% of the fair market
value of the shares of Common Stock covered by the option on the date the option
is granted. If an incentive stock option is to be granted to an employee who
owns over 10% of the total combined voting power of all classes of the Company's
stock, then the exercise price may not be less than 110% of the fair market
value of the Common Stock covered by the option on the date the option is
granted.
TERMS OF OPTIONS
The Administrator, in its discretion, establishes the term of each option,
provided that the maximum term of each option is 10 years. Options granted to an
employee who owns over 10% of the total combined voting power of all classes of
stock of the Company expire not more than five years after the date of grant.
The 1999 Plan provides for the earlier expiration of options of a participant in
the event of certain terminations of employment.
OPTION GRANTS
Options to purchase 640,000 shares of Common Stock have been granted
pursuant to the 1999 Plan as follows: (i) 35,000 shares of Common Stock to
Mr. Allen, a former Director, at an exercise price of $2.062 per share and
20,000 shares at $0.969 per share; (ii) 35,000 shares of Common Stock to
Mr. Chalfin, a former Director, at an exercise price of $2.062 per share and
20,000 shares at $0.969 per share; (iii) 20,000 shares of Common Stock to
Mr. DeWolfe, a former Director, at an exercise price of $2.063 per share and
20,000 shares at $0.969 per share; (iv) 300,000 shares of Common Stock to
Mr. Brooks, the Chairman of the Board, at $1.125 per share; (v) 100,000 shares
of Common Stock to Mr. Christopher, Treasurer and Secretary of the Company, at
$1.563 per share; (vi) 35,000 shares of Common Stock to Ms. Dorris, the Chief
Financial Officer of the Company at $1.125 per share; (vii) 20,000 shares of
Common Stock to Mr. Rosenwasser, a Director, at an exercise price of $0.375 per
share; (viii) 20,000 shares of Common Stock to Mr. Abramowitz, a Director, at an
exercise price of
10
<PAGE>
$0.375 per share; and (ix) 15,000 shares of Common Stock to a Company employee
(the "Employee") at an exercise price of $1.125 per share. The options were
granted on March 30, 1999 and December 17, 2000 with respect to Messrs. Allen
and Chalfin, on May 6, 1999 and December 17, 2000 with respect to Mr. DeWolfe,
on February 1, 2000 with respect to Mr. Brooks, Ms. Dorris and the Employee, on
February 23, 2000 with respect to Mr. Christopher and on July 19, 2000 with
respect to Messrs. Rosenwasser and Abramowitz.
1997 STOCK OPTION PLAN
In October 1997, the Board of Directors of the Company adopted the 1997
Stock Option Plan (the "1997 Plan"), which was subsequently approved by the
Company's stockholders on January 6, 1998.
The 1997 Plan provides for the grant of options to purchase up to, but not
in excess of, 600,000 shares of Common Stock to key employees, including but not
limited to officers, directors, agents, consultants and independent contractors
of the Company or any parent or subsidiary of the Company (excluding members of
the Administrator (as defined in the 1997 Plan)), 452,150 of which have been
granted and 147,850 of which are available for grant. Options may be either
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or non-qualified options.
Incentive stock options may be granted only to employees of the Company or a
subsidiary of the Company, while non-qualified options may be issued to
non-employee directors, as well as to employees of the Company or its
subsidiaries.
The 1997 Plan is administered by the Stock Option and Compensation Committee
of the Board of Directors (the "Administrator"), which determines, among other
things, those individuals who receive options, the time period during which the
options may be exercised, the number of shares of Common Stock issuable upon the
exercise of each option and the option exercise price.
The exercise price per share of Common Stock subject to an incentive option
may not be less than the fair market value per share of Common Stock on the date
the option is granted. The per share exercise price of the Common Stock subject
to a non-qualified option may be established by the Administrator. If the
aggregate fair market value (determined as of the date the option is granted) of
Common Stock for which any person may be granted incentive stock options which
first become exercisable in any calendar year exceeds $100,000, such stock
option shall be treated, to the extent of such excess, as an option which does
not qualify as an incentive stock option. No person who owns, directly or
indirectly, at the time of the granting of an incentive stock option to such
person, 10% or more of the total combined voting power of all classes of stock
of the Company (a "10% Shareholder") shall be eligible to receive any incentive
stock options under the 1997 Plan unless the exercise price is at least 110% of
the fair market value of the shares of Common Stock subject to the option,
determined on the date of grant. Non-qualified options are not subject to such
limitation.
No stock option may be transferred by an optionee other than by will or the
laws of descent and distribution, and, during the lifetime of an optionee, the
option will be exercisable only by the optionee. In the event of termination of
an optionee's employment other than by death, retirement, permanent and total
disability, unless extended by the Administrator on or before such employee's
date of termination of employment, the optionee will have no more than three
months after such termination during which the optionee shall be entitled to
exercise all or any part of such employee's option, unless otherwise determined
by the Administrator. Upon termination of employment of an optionee by reason of
death, retirement, permanent or total disability, such optionee's options remain
exercisable for one year thereafter to the extent such options were exercisable
on the date of such termination.
Options under the 1997 Plan must be issued within 10 years from the
effective date of the Plan. The effective date of the 1997 Plan was
September 1997. Incentive stock options granted under the 1997 Plan cannot be
exercised more than 10 years from the date of grant. Incentive stock options
issued to a 10% Shareholder are limited to five-year terms. All options granted
under the 1997 Plan
11
<PAGE>
provide for the payment of the exercise price in cash or check or by delivery to
the Company of shares of Common Stock already owned by the optionee having a
fair market value equal to the exercise price of the options being exercised, or
by a combination of such methods, or by such other methods approved by the
Administrator pursuant to the 1997 Plan. Therefore, an optionee may be able to
tender shares of Common Stock to purchase additional shares of Common Stock and
may theoretically exercise all of such optionee's stock options with no
additional investment other than the purchase of the original shares.
Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the 1997 Plan.
As of the date hereof, options to purchase 452,150 shares of Common Stock
have been granted pursuant to the 1997 Plan as follows: (i) 75,000 shares of
Common Stock to Mr. Allen, a former Director; (ii) 175,000 shares of Common
Stock to Mr. May, a former officer and a Director; (iii) 75,000 shares of Common
Stock to Mr. Rubin, a former director; (iv) 25,000 shares of Common Stock to
Mr. Chalfin, a former Director; and (v) 87,500 shares of Common Stock to
Mr. Brooks, a former officer and a Director. All such options were granted in
February 1998 at an exercise price equal to $6.03 per share and are fully
vested. Additionally, in January 1999, options to purchase 14,650 shares of
Common Stock were granted to certain employees of the Company at $4.063 per
share, all of which have fully vested.
INCENTIVE STOCK OPTION PLAN
In March 1992, the Company's Board of Directors and stockholders adopted and
approved an Incentive Stock Option Plan ("ISO Plan"). The ISO Plan provides for
the grant to key employees of the Company of stock options intended to qualify
as "incentive stock options" under the provisions of the Code. A total of 13,334
shares of Common Stock have been reserved for issuance under the ISO Plan, all
of which have been granted as of June 30, 1999.
NON-QUALIFIED STOCK OPTIONS
In August 1990, the Company's Board of Directors approved a Nonqualified
Stock Option Plan (the "NQO Plan") pursuant to which the Company may grant stock
options to directors, officers, key employees and consultants. A total of 3,453
shares of Common Stock were reserved for issuance under the NQO Plan, all of
which have been granted as of June 30, 1999.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 26, 2000, the record and
beneficial ownership of Common Stock of the Company by each officer and
director, all officers and directors as a group, and each person known to the
Company to own beneficially or of record five percent or more of the outstanding
shares of Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER(2) OWNERSHIP (1) STOCK OWNED (3)
---------------------- ----------------- ---------------
<S> <C> <C>
Linda Queen and Lorence Queen, as Trustees of
the Jeffrey and Andrew Queen Irrevocable
Trust, U/A January 2, 1998.................... 1,716,768(4) 15.5%
Jeffrey Queen................................... 1,717,877(5) 15.5%
Andrew Queen.................................... 1,712,644(6) 15.4%
Richard M. Brooks............................... 387,500(7) 3.4%
Donna M. Dorris................................. 36,000(8) *%
Gerard Christopher.............................. 0(9) 0.0%
Ronald N. Rosenwasser........................... 20,000(10) *%
Daniel H. Abramowitz............................ 20,000(11) *%
Executive Officers and Directors as a Group..... 3,894,021(12) 33.7%
</TABLE>
------------------------
* Less than one percent.
(1) For purposes of the above table, a person or group of persons is deemed to
have "beneficial ownership" of any shares that such person or group has the
right to acquire within 60 days after such date; and for purposes of
computing the percentage of outstanding shares held by each person or group
on a given date, such shares are deemed to be outstanding, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
Beneficial ownership is determined in accordance with Rule 13d-3 under the
Exchange Act, and is generally determined by voting power and/or investment
power with respect to securities. Except as indicated by footnote, and
subject to community property laws where applicable, the Company believes
that the persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them.
(2) The address for the above referenced directors and officers of the Company
and the Jeffrey Queen and Andrew Queen Irrevocable Trust U/A January 2,
1998 is c/o Response USA, Inc., 3 Executive Campus, 2nd Floor South, Cherry
Hill, New Jersey, 08002.
(3) Individual percentages have been rounded to the nearest 0.1%. The
percentage of outstanding stock owned is based upon 11,107,052 shares of
Common Stock outstanding on October 26, 2000.
(4) The principal beneficial interest in the Trust is held by the present and
future children of Jeffrey Queen and Andrew Queen. The trustees have voting
and dispositive power with respect to the subject shares.
(5) Represents 409,323 shares of which Mr. Queen has direct beneficial
ownership and 1,308,554 shares owned by Zenex J1, L.L.C., a limited
liability company of which Mr. Queen is a managing member.
(6) Represents 409,324 shares of which Mr. Queen has sole direct beneficial
ownership and 1,303,320 shares owned by Zenex A1, L.L.C., a limited
liability company of which Mr. Queen is a managing member.
(7) Represents 387,500 shares issuable upon exercise of currently exercisable
options.
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<PAGE>
(8) Represents 36,000 shares issuable upon exercise of currently exercisable
options.
(9) Does not include 100,000 shares issuable upon exercise of unvested options
granted in February 2000.
(10) Represents 20,000 shares issuable upon exercise of currently exercisable
options.
(11) Represents 20,000 shares issuable upon exercise of currently exercisable
options.
(12) Represents 463,500 shares issuable upon the exercise of currently
exercisable options referred to in Notes (7)(8)(10) and (11).
CHANGE OF CONTROL
On January 11, 2000, the Company, Jeffrey Queen, Andrew Queen and the
Jeffrey Queen and Andrew Queen Irrevocable Trust U/A January 2, 1998
(collectively, the "Queens") entered into a Settlement Agreement as amended by
Amendment No. 1 thereto dated as of July 19, 2000 (the "Settlement Agreement")
to settle a dispute among the parties in connection with the Deferred Purchase
Price provisions under a Stock Purchase Agreement between the Company and the
Queens dated September 16, 1998 relating to the Company's acquisition of Health
Watch.
Pursuant to the Settlement Agreement, the Company issued the Queens
1,277,969 shares of the Company's Common Stock at the price of $1.00 per share
in February 2000 and an additional 3,705,382 shares of the Company's Common
Stock at the price of $.50 per share in July 2000 and paid the Queens an
aggregate of $2,522,031 in cash. As a result of the aforementioned stock
issuances, the Queens and their affiliates beneficially own 46.35% of the
outstanding Common Stock of the Company.
In addition to the foregoing payments, the Queens were given the right to
elect three (3) nominees to the Company's Board of Directors and one sitting
member of the Board was asked to resign. In July 2000, Jeffrey Queen, Ronald N.
Rosenwasser and Daniel H. Abramowitz were elected to the Board as nominees of
the Queens and former Director Stuart R. Chaflin resigned from the Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as described below or under "Directors and Executive Officers of the
Registrant" and "Executive Compensation," the Company has not engaged in any
transactions with individuals who, at the time of such transaction, were
officers, directors, principal stockholders or affiliates thereof during the two
fiscal years ended June 30, 1999 and 2000.
In connection with the appointment of A. Clinton Allen as a Director of the
Company, the Company entered into a consulting agreement with A.C. Allen & Co.,
a company owned by Mr. Allen, commencing February 1998, pursuant to which A.C.
Allen & Co. received $4,000 per month in consideration for Mr. Allen providing
certain consulting services to the Company. Such consulting agreement was
terminated in October 2000.
Robert L. May, a former Director and executive officer of the Company, was
the landlord for the Company's leased properties located in Wilkes Barre and
Hamlin, Pennsylvania. During the fiscal year ended June 30, 2000, the Company
made rental payments to Mr. May in the amount of $36,000. Mr. May also received
payments from the Company in connection with the September 30, 1999 sale of two
of its wholly-owned subsidiaries, United Security Systems, Inc. and The Jupiter
Group, Inc., to Vector Security Systems, Inc. These payments to Mr. May are
detailed above. See "Employment Agreements."
Pursuant to the terms of the Settlement Agreement, the Company made certain
cash payments and stock issuances to the Queens in February and July, 2000
totalling $2,522,031 in cash and 4,983,351 shares of Company Common Stock. See
"Change of Control."
14
<PAGE>
Pursuant to the Feldman Severance Agreement, the Company paid Mr. Feldman a
total of $937,946 through October 2000 for severance due Mr. Feldman under the
Feldman Employment Agreement. See "Employment Agreements."
Pursuant to the Brooks Severance Agreement, the Company paid Mr. Brooks a
total of $551,501 through October 2000 for severance due Mr. Brooks under the
Brooks Employment Agreement. See "Employment Agreements."
The Company intends that all future material affiliated transactions and
loans will be made or entered into on terms that are no less favorable to the
Company than those that can be obtained from unaffiliated third parties and that
all future material affiliated transactions and loans, and any forgiveness of
loans, must be approved by a majority of the Company's independent Directors who
do not have an interest in the transactions and who had access, at the Company's
expense, to the Company's or independent legal counsel. In addition, the Company
has agreed to maintain at least two independent Directors on its Board of
Directors.
PROPOSAL NO. 2
APPROVAL OF SELECTION OF AUDITORS
The accounting firm of Deloitte & Touche LLP ("Deloitte") has been selected
by the Board of Directors to audit the books, records and accounts of the
Company for the current fiscal year, and the stockholders will be asked at the
Annual Meeting to approve this selection.
It is anticipated that a member of Deloitte will be present at the Annual
Meeting to respond to appropriate questions and will have the opportunity, if
desired, to make a statement.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
STOCKHOLDERS' PROPOSALS
It is anticipated that the next Annual Meeting of Stockholders will be held
in December 2001. Stockholders who seek to present proposals at the Company's
next Annual Meeting of Stockholders must submit their proposals to the Secretary
of the Company on or before June 15, 2001.
In the event the Company receives notice of a stockholder proposal to take
action at next year's Annual Meeting of Stockholders that is not submitted for
inclusion in the Company's proxy materials, or is submitted for inclusion but is
properly excluded from the proxy material, the persons named in the proxy sent
by the Company to its stockholders intend to exercise their discretion to vote
on the stockholder proposal in accordance with their best judgment if notice of
the proposal is not received at the Company's main office prior to the date of
the next Annual Meeting of Stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors and executive officers, and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, Directors and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities are required by regulations of the SEC to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
during the fiscal year ended June 30, 2000, all Section 16(a) filing
requirements applicable to its officers, Directors and greater than ten percent
beneficial owners were complied with.
15
<PAGE>
INCORPORATION OF FINANCIAL INFORMATION
The Company's audited financial statements for the year ended June 30, 2000
and related disclosures are incorporated by reference herein from the Company's
2000 Annual Report on Form 10-KSB which accompanies this Proxy Statement.
GENERAL
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telefax, by directors, officers and regular employees
of the Company, without extra remuneration therefor. The Company will bear the
cost of solicitation of proxies. The Company expects to reimburse banks, brokers
and other persons for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners of the Company's Common Stock.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to each matter to be acted upon at the Annual Meeting. Shares of
Common Stock represented by the proxy will be voted, except as to matters with
respect to which authority to vote is specifically withheld. Where the solicited
stockholder indicates a choice on the form of proxy with respect to any matter
to be acted upon, the shares will be voted as specified. Abstentions and broker
non-votes will not have the effect of votes in opposition to a director or
"against" any other proposal to be considered at the Annual Meeting.
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR Proposal No. 2 and FOR
the election of all directors nominated.
The Board of Directors knows of no business other than that set forth above
to be transacted at the Annual Meeting, but if other matters requiring a vote of
the stockholders arise, the persons designated as proxies will vote the shares
of Common Stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of Common Stock will be voted in accordance with the specification so
made.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED,
NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By Order of the Board of Directors,
Gerard Christopher, SECRETARY
Cherry Hill, New Jersey
October 30, 2000
16
<PAGE>
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF RESPONSE USA, INC.
The Audit Committee is appointed by the Board of Directors (the "Board") of
Response USA, Inc. (the "Company") to assist the Board in its oversight
responsibilities. The Audit Committee shall, through regular reports to the
Board, (1) monitor the integrity of the Company's financial statements,
(2) monitor the Company's compliance with legal and regulatory requirements,
(3) monitor the independence and performance of the Company's internal and
independent auditors.
The Audit Committee shall have the authority to retain any special legal,
accounting, or other consultants or experts it deems necessary in the
performance of its duties. The Audit Committee may conduct any investigation
necessary to fulfilling its responsibilities and may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to meet with any members of, or consultants to, the Committee.
The Audit Committee shall meet at least once each fiscal year and more
frequently if circumstances dictate.
MEMBERSHIP OF THE COMMITTEE
The members of the Audit Committee shall be appointed by the Board. The
Audit Committee shall be comprised of not less than two members of the Board,
each of whom shall meet the independence, experience and all other requirements
of the Nasdaq National Market. If the Audit Committee shall be comprised of
three or more members of the Board, then at least a majority of such committee
members must meet the independence requirements as stated in NASD
Rule 4310(c)(26)(B).
RESPONSIBILITIES AND DUTIES
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter at least annually and
submit the charter to the Board with any recommended changes to the
Board for approval.
2. Recommend to the Board the appointment of the independent auditor,
evaluate with the Board the performance of the independent auditor, and
approve any discharge of any independent auditors when circumstances
warrant.
3. Approve the fees and any other significant compensation to be paid to
the independent auditor, who is ultimately accountable to the Audit
Committee and the Board.
4. Review and discuss with the independent auditor the auditor's
independence consistent with Independence Standards Board Standard 1,
and, if it so determines, recommend that the full Board take
appropriate action to oversee the independence of the auditor.
5. Review the independent auditor's audit plan regarding the planning,
scope and staffing of the audit.
6. Review with management, independent auditor, and internal auditors the
Company's financial reporting processes and controls, including
significant financial risk exposures and the steps management has taken
to monitor and control such exposures.
7. Review with management, independent auditor, and internal auditors
significant financial reporting findings and judgments made during, or
in connection with, preparation of the Company's financial statements.
A-1
<PAGE>
8. Review the Company's annual audited financial statements to be included
in the Company's Annual Report on Form 10-KSB with management and
independent auditor prior to filing or distribution. Review shall
include any significant issues regarding accounting and auditing
principles, practices, and judgments as well as the adequacy of
internal controls that could significantly affect the Company's
financial statements.
9. Review with management and independent auditor the Company's quarterly
financial results prior to the release of earnings and filing and
distribution of its Form 10-QSB.
10. Review significant recommended changes to the Company's auditing and
accounting principles and practices by management, independent auditor,
or internal auditors.
11. Obtain from the independent auditor verification that Section 10A of
the Securities Exchange Act of 1934 has not been implicated.
12. Prepare an annual report to shareholders to be included in the
Company's proxy statement as required by the Securities and Exchange
Commission
13. Discuss with the independent auditor matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
14. Review the organizational structure, plan, and budget of the internal
audit department.
15. Review the appointment, performance, and replacement of the senior
internal auditing executive.
16. Review the internal auditing committee's significant reports to
management and the management's responses.
17. Review with Company counsel any legal matters that may have a
significant impact on the Company's financial statements, the Company's
compliance with applicable laws, and any significant reports or
inquiries received from governmental and regulatory agencies.
18. Obtain reports from management, the Company's senior internal auditing
executive, and the independent auditor that the Company's subsidiary
and foreign affiliated entities are in compliance with any applicable
legal requirements.
19. Review self-assessment of audit committee performance and report to the
Board on significant results of foregoing activities.
20. Meet during annual and separate executive meetings with the independent
auditor, senior internal auditing executive, and chief financial
officer.
21. Perform any other activities deemed appropriate by the Board and
consistent with this Charter, the Company's by-laws, and governing
laws.
The Audit Committee has the responsibilities established in this Charter and
is not responsible 1) to plan or conduct audits, 2) to verify that the Company's
financial statements are complete, accurate, and in accordance with generally
accepted accounting principles, 3) to resolve disagreements between management,
internal auditors, and the independent auditor, or 4) to assure compliance with
laws and regulations.
A-2
<PAGE>
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RESPONSE USA, INC.
ANNUAL MEETING OF STOCKHOLDERS, FRIDAY, DECEMBER 8, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JEFFREY QUEEN and ANDREW QUEEN and each
of them, with power of substitution, as proxies to represent the undersigned
at the Annual Meeting of Stockholders of Response USA, Inc. (the "Company")
to be held at the offices of Friedman, Rosenwasser & Goldbaum, P.A., The
Plaza, Suite 801, 5355 Town Center Road, Boca Raton, FL 33486 on Friday,
December 8, 2000 at 10:00 a.m. local time and at any adjournments thereof,
and to vote the shares of stock the undersigned would be entitled to vote if
personally present, as indicated on the reverse side hereof.
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED AS DIRECTED. IF NO
CONTRARY INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR PROPOSAL NO. 2
AND FOR THE ELECTION OF JEFFREY QUEEN, ANDREW QUEEN, RICHARD M. BROOKS,
DANIEL H. ABRAMOWITZ AND RONALD N. ROSENWASSER, AS DIRECTORS.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
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<PAGE>
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Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
RESPONSE USA, INC.
December 8, 2000
Please Detach and Mail in the Envelope Provided
A /X/ Please mark your votes as in this example.
1. Proposal No. 1
Election of Directors.
AUTHORITY WITHHELD
FOR ALL NOMINEES AS TO ALL NOMINEES
/ / / /
For, except authority withheld as to the following nominee(s):
--------------------------------------------------------------
NOMINEES:
Jeffrey Queen
Andrew Queen
Richard M. Brooks
Daniel H. Abramowitz
Ronald N. Rosenwasser
2. Proposal No. 2
Approval of the selection of Deloitte & Touche LLP as the independent
auditors of the Company.
FOR AGAINST ABSTAIN
/ / / / / /
3. The undersigned hereby confers upon the proxies, and each of them,
discretionary authority to vote upon such other business as may properly
come before the meeting.
SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
----------------------------------------------
(Signature)
----------------------------------------------
(Print Name)
Dated:
---------------------------------, 2000
NOTE: (Please date, sign as name appears above, and return promptly. If the
stock is registered in the name of two or more persons, each should
sign. When signing as Corporate Officer, Partner, Executor,
Administrator, Trustee, or Guardian, please give full title. Please
note any change in your address alongside the address as it appears
in the Proxy.)
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