SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement |_|Confidential, for Use of the,
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|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Universal Security Instruments, Inc.
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(Name of Registrant as Specified in Its Charter)
N/A
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UNIVERSAL SECURITY INSTRUMENTS, INC.
7-A GWYNNS MILL COURT
OWINGS MILLS, MARYLAND 21117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
OCTOBER 5, 2004
To the Shareholders of Universal Security Instruments, Inc.:
The Annual Meeting of Shareholders of Universal Security Instruments, Inc.,
a Maryland corporation (the "Company") will be held at Marriott's Hunt Valley
Inn, 245 Shawan Road, Hunt Valley, Maryland, on Tuesday, October 5, 2004 at 9:00
a.m., local time, for the following purposes:
1. To elect two directors to serve for until the Annual Meeting of
Shareholders to be held in 2007 and until their successors are duly
elected and qualify;
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed August 6, 2004 as the record date for the
determination of shareholders entitled to notice of, and to vote at, the
meeting.
By Order of the Board of Directors
Harvey B. Grossblatt
Secretary
Owings Mills, Maryland
August 30, 2004
IMPORTANT - YOUR PROXY IS ENCLOSED
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN, AND MAIL THE ACCOMPANYING FORM OF PROXY TO THE COMPANY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE
UNITED STATES.
UNIVERSAL SECURITY INSTRUMENTS, INC.
7-A GWYNNS MILL COURT
OWINGS MILLS, MARYLAND 21117
(410) 363-3000
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Universal
Security Instruments, Inc., a Maryland corporation (the "Company"), in
connection with the Annual Meeting of Shareholders to be held on Tuesday,
October 5, 2004, or at any adjournments or postponements thereof, for the
purposes set forth in the accompanying notice of the meeting. The Board of
Directors has fixed the close of business on August 6, 2004 as the record date
(the "Record Date") for the determination of shareholders entitled to notice of,
and to vote at, the meeting. On that date, there were outstanding 1,580,729
shares of the Company's Common Stock par value $.01 per share (the "Shares").
Each record holder of Shares on the Record Date is entitled to one vote for
each Share held on all matters to come before the meeting, including the
election of directors. Shares may be voted in person or by proxy. The
accompanying proxy may be revoked by the person giving it at any time prior to
its being voted by filing a written notice of such revocation with the Secretary
of the Company, by executing a proxy bearing a later date or by attending the
meeting and voting in person.
BENEFICIAL OWNERSHIP
The following table reflects the names and addresses of the only persons
known to the Company to be the beneficial owners of 5% or more of the Shares
outstanding as of the Record Date. For purposes of calculating beneficial
ownership, Rule 13d-3 of the Securities Exchange Act of 1934, as amended
("Exchange Act") requires inclusion of Shares that may be acquired within sixty
days of the Record Date. Unless otherwise indicated in the footnotes to this
table, beneficial ownership of shares represents sole voting and investment
power with respect to those Shares.
Name and Address Shares Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ------------------- --------
Stephen Knepper 174,398(1) 10.7%
7-A Gwynns Mill Court
Owings Mills, MD 21117
Ronald S. Lazarus 156,999(2) 9.5%
7-A Gwynns Mill Court
Owings Mills, MD 21117
Harvey B. Grossblatt 110,610(3) 6.6%
7-A Gwynns Mill Court
Owings Mills, MD 21117
Michael Kovens 339,930 21.5%
6 Regency Court
Baltimore, MD 21208
----------------------------
(1) Includes 46,666 shares which Mr. Knepper presently has the right to acquire
through the exercise of stock options and 2,170 shares held by a trust in
which Mr. Knepper has voting control.
(2) Includes 8,750 shares owned jointly by Mr. Lazarus and his wife, and 65,332
shares which Mr. Lazarus presently has the right to acquire through the
exercise of stock options.
(3) Includes 92,581 shares which Mr. Grossblatt presently has the right to
acquire through the exercise of stock options.
3
ELECTION OF DIRECTORS
The Board of Directors currently consists of five directors. The Company's
directors are divided into three classes and elected for terms of three years
each and until their successors are elected and qualify. The Board has nominated
Cary Luskin and Howard Silverman, Ph.D. for election as directors at the 2004
Annual Meeting to serve for terms of three years each and until their successors
are elected and qualify. A quorum for the Annual Meeting consists of a majority
of the issued and outstanding Shares present in person or by proxy and entitled
to vote. Under Maryland law, unless a corporation's charter or bylaws provide
otherwise, directors are elected by a plurality of all votes cast at a meeting
at which a quorum is present. The Company's Bylaws provide that the affirmative
vote of a majority of the Shares issued and outstanding and entitled to vote is
necessary for the election of directors. If no nominee receives the requisite
vote, Mr. Luskin and Dr. Silverman will continue to serve as directors until
their successors are duly elected and qualify. Consequently, withholding of
votes, abstentions and broker non-votes with respect to Shares otherwise present
at the Annual Meeting in person or by proxy will have the effect of a vote
withheld.
Unless contrary instruction is given, the persons named in the proxies
solicited by the Board of Directors will vote each such proxy for the election
of the named nominee. If the nominee is unable to serve, the shares represented
by all properly executed proxies which have not been revoked will be voted for
the election of such substitute as the Board of Directors may recommend or the
Board of Directors may reduce the size of the Board to eliminate the vacancy. At
this time, the Board does not anticipate that the nominee will be unavailable to
serve.
The following table sets forth, for the nominees and each continuing
director, his name, age as of the Record Date, the year he first became a
director of the Company, the expiration of his current term, and whether such
individual has been determined by the Board to be "independent" as defined in
Section 121A of the American Stock Exchange (Amex) Company Guide. There are no
known arrangements or understandings between any director or nominee for
director of the Company and any other person pursuant to which such director or
nominee has been selected as a director or nominee.
Director Current Term
Name Age Since to Expire Independent
---- --- -------- ------------ -----------
Board Nominees for Term to Expire in 2007
Cary Luskin 47 2002 2004 Yes
Howard Silverman, Ph.D. 62 2002 2004 Yes
Directors Continuing in Office
Stephen C. Knepper 60 1970 2005 No
Harvey B. Grossblatt 57 1996 2005 No
Ronald A. Seff, M.D. 56 2002 2006 Yes
Presented below is certain information concerning the nominees and directors
continuing in office. Unless otherwise stated, all directors and nominees have
held the positions indicated for at least the past five years.
Cary Luskin has been in the retail electronic business since 1978. Since
1998, Mr. Luskin has been President of The Big Screen Store, Inc., a chain of
large-screen television retail stores.
Howard Silverman, Ph.D. has been in the mental health field for over 30
years. From 1990 to 2001, Dr. Silverman was Vice President of Magellan Health
Service, and since 2001 he has served as a consultant in the field.
Stephen C. Knepper served as Chairman of the Board of the Company from 1970
to 1996, and as Vice Chairman of the Board from 1996 to October 2001. Since
October 2001, Mr. Knepper has served, once again, as Chairman of the Board of
the Company.
Harvey B. Grossblatt has been Chief Financial Officer of the Company since
1983, Secretary and Treasurer of the Company since 1988, President of the
Company since 1996, and Chief Operating Officer of the Company since April 2003.
Ronald A. Seff, M.D. has been in the private practice of ophthalmology
since 1977. From 1977 until 1998, Dr. Seff practiced with, and was a senior
executive of, a large medical practice with four offices in Maryland.
4
CORPORATE GOVERNANCE
The Board of Directors periodically reviews its corporate governance
policies and procedures to ensure that the Company meets the highest standards
of ethical conduct, reports results with accuracy and transparency, and
maintains full compliance with the laws, rules and regulations which govern the
Company's operations.
Meetings and Committees of the Board of Directors
Board of Directors. The Board of Directors consists of five members. During
the fiscal year ended March 31, 2004, the Board met five times. No incumbent
director attended fewer than 75% of the total number of meetings of the Board of
Directors of the Company held during the year and the total number of meetings
held by all committees on which the director served during such year. Board
members are expected to attend the Annual Meeting of Shareholders, and all
incumbent directors attended the 2003 Annual Meeting of Shareholders.
Audit Committee. The Audit Committee operates under a written charter
adopted in July 2003. The Audit Committee is appointed by the Board to assist
the Board in its duty to oversee the Company's accounting, financial reporting
and internal control functions and the audit of the Company's financial
statements. The Committee's responsibilities include, among others, direct
responsibility for hiring, firing, overseeing the work of and determining the
compensation for the Company's independent auditors, who report directly to the
Audit Committee. The members of the Audit Committee are Mr. Luskin (Chairman),
Dr. Seff and Dr. Silverman., none of whom is an employee of the Company and each
of whom is independent under existing Amex and Securities and Exchange
Commission (SEC) requirements. The Board has examined the SEC's definition of
"audit committee financial expert" and determined that Mr. Luskin satisfies this
definition. Accordingly, Mr. Luskin has been designated by the Board as the
Company's audit committee financial expert. During the fiscal year ended March
31, 2004, the Audit Committee met four times.
Nominations. The Company's full Board of Directors acts as a nominating
committee for the annual selection of its nominees for election as directors.
The Board of Directors held one meeting during the 2004 fiscal year in order to
make nominations for directors. The Board of Directors believes that the
interests of the Company's shareholders are served by relegating the nominations
process to the full Board, the majority of which are independent from
management. While the Board of Directors will consider nominees recommended by
shareholders, it has not actively solicited recommendations from the Company's
shareholders for nominees, nor established any procedures for this purpose. In
considering prospective nominees, the Board of Directors will consider the
prospect's relevant financial and business experience, the integrity and
dedication of the prospect, his independence and other factors the Board deems
relevant. The Board of Directors will apply the same criteria to nominees
recommended by shareholders as those recommended by the full Board. Nominations
for director may be made by shareholders, provided such nominations comply with
certain timing and informational requirements set forth in the Company's Bylaws.
See "Other Matters" elsewhere in this Proxy Statement.
Compensation Committee. In the fiscal year ended March 31, 2004, the
Company did not have any standing compensation committee of the Board of
Directors, or committee performing similar functions. Effective April 1, 2004,
the Board created a Compensation Committee, the membership of which consists of
Mr. Luskin (Chairman), Dr. Seff and Dr. Silverman., none of whom is an employee
of the Company and each of whom is independent under existing Amex and SEC
requirements. The Compensation Committee is charged with reviewing and
determining the compensation of the Chief Executive Officer and the other
executive officers of the Company.
Director Compensation
During the Company's fiscal year ended March 31, 2004, those directors who
were employed by the Company received no additional compensation for serving as
a director. Directors are eligible to participate in the Company's Non-Qualified
Stock Option Plan. During the Company's fiscal year ended March 31, 2004, the
Company paid to each of Mr. Luskin, Dr. Silverman, and Dr. Seff a $10,000 fee
for annual service as a director, payable in cash or Shares (computed at the
closing price as reported by the Amex on the date of the payment).
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that is
designed to promote the highest standards of ethical conduct by the Company's
directors, executive officers and employees.
5
Communications with the Board
Any shareholder desiring to contact the Board, or any specific director(s),
may send written communications to: Board of Directors (Attention: (Name(s) of
director(s), as applicable)), c/o the Company's Secretary, 7-A Gwynns Mill
Court, Owings Mills, Maryland 21117. Any proper communication so received will
be processed by the Secretary. If it is unclear from the communication received
whether it was intended or appropriate for the Board, the Secretary will
(subject to any applicable regulatory requirements) use his judgment to
determine whether such communication should be conveyed to the Board or, as
appropriate, to the member(s) of the Board named in the communication.
INFORMATION REGARDING SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Shares as of the Record Date by (i) each executive officer of
the Company named in the Summary Compensation Table included elsewhere in this
Proxy Statement, (ii) each current director and each nominee for election as a
director and (iii) all directors and executive officers of the Company as a
group. For purposes of calculating beneficial ownership, Rule 13d-3 of the
Exchange Act requires inclusion of Shares that may be acquired within sixty days
of the Record Date. Unless otherwise indicated in the footnotes to this table,
beneficial ownership of shares represents sole voting and investment power with
respect to those Shares.
Name of Beneficial Owner Shares Beneficially Owned Percent of Class
----------------------------------- ------------------------- -----------------
Stephen C. Knepper (1) 174,398 10.7%
Harvey B. Grossblatt (2) 110,610 6.6%
Cary Luskin (3) 44,312 2.8%
Ronald A. Seff, M.D. (3) 59,352 3.7%
Howard Silverman, Ph.D. (4) 11,555 0.7%
All directors and executive officers
as a group (5 persons) (5) 400,227 23.1%
--------------------
(1) See footnote 1 under "Beneficial Ownership".
(2) See footnote 3 under "Beneficial Ownership".
(3) Includes 3,333 shares which each of Mr. Luskin and Dr. Seff has the
right to acquire through the exercise of stock options.
(4) Includes 6,666 shares which Dr. Silverman presently has the right to
acquire through the exercise of stock options.
(5) See footnote 1-3 under "Beneficial Ownership".
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires that the Company's directors and
executive officers and each person who owns more than 10% of the Company's
Shares, file with the SEC an initial report of beneficial ownership and
subsequent reports of changes in beneficial ownership of the Shares. To the
Company's knowledge, based solely upon the review of the copies of such reports
furnished to us, all of these reporting persons complied with the Section 16(a)
filing requirements applicable to them with respect to transactions during the
fiscal year ended March 31, 2004.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table reflects, with respect to the Chief Executive Officer
and each executive officer of the Company whose annual compensation exceeded
$100,000 in the fiscal year ended March 31, 2004, the aggregate amounts paid to
or accrued for such officers as compensation for their services in all
capacities during the fiscal years ended March 31, 2004, 2003 and 2002:
6
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Options Compensation
------------------ ---- ------ ----- ------------ ------- ------------
Stephen C. Knepper(1) 2004 $ 99,937 $ 84,000 0 0 $16,406(3)
Chairman and Chief 2003 $ 97,832 $110,219 $22,271(2) 35,000 $15,024(3)
Executive Officer 2002 $ 87,676 $ 13,081 $17,503(2) 42,500 $12,762(3)
Harvey B. Grossblatt 2004 $180,752 $ 84,000 0 0 $17,592(4)
President and Chief 2003 $123,928 $120,219 0 20,000 $15,655(4)
Financial Officer 2002 $128,849 $ 13,081 0 47,750 $15,261(4)
----------------------------------
(1) On October 23, 2001, Mr. Knepper was elected Chairman and Chief Executive
Officer.
(2) Includes an automobile allowance of $12,000 for the fiscal year ended March
31, 2003 reimbursement of medical expenses in the amount of $11,292 for the
fiscal year ended March 31, 2002.
(3) Represents: payment of term life insurance premiums in the amount of $726,
$1,624 and $1,012 for the fiscal years ended March 31, 2004, 2003 and 2002,
respectively; and Company contributions on behalf of the named officer to
the Company's 401(k) Plan in the amount of $14,295 and $12,650 for the
fiscal years ended March 31, 2004 and 2003, respectively.
(4) Represents: payment of term life insurance premiums in the amount of
$1,153, $2,255 and $2,761for the fiscal years ended March 31, 2004, 2003
and 2002, respectively; and Company contributions on behalf of the named
officer to the Company's 401(k) Plan in the amount of $14,295 and $12,650
for the fiscal years ended March 31, 2004 and 2003, respectively.
Option Grants in Last Fiscal Year
No stock options were granted during the Company's fiscal year ended March
31, 2004 to the executive officers named in the Summary Compensation Table.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table, information with respect to the exercise of
stock options during the Company's fiscal year ended March 31, 2004 and holdings
of unexercised options at the end of the fiscal year:
Shares
Acquired Number of Unexercised Value of Unexercised
in Value Options/SARs in-the-Money Options/SARs
Name Exercise Realized at Fiscal Year End at Fiscal Year End ($)(1)
---- -------- -------- --------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Stephen C. Knepper(1) -- -- 46,666 -- $ 451,927 --
Harvey B. Grossblatt -- -- 95,581 4,417 $1,186,888 $56,626
---------------------------
(1) Based on the excess of (i) the aggregate market value (closing price on the
American Stock Exchange) of the underlying shares on March 31, 2004 over
(ii) the aggregate exercise price of the options.
Executive Employment Agreements
Harvey Grossblatt entered into an employment agreement with the Company
effective April 1, 2002. The employment agreement provides that Mr. Grossblatt
is employed for a term ending June 30, 2005 at an initial base annual salary of
$122,500, subject to automatic annual cost of living increases and further
subject to increases in the Board's discretion. Additionally, Mr. Grossblatt is
entitled to bonus compensation for each fiscal year of the Company in which the
Company earned pre-tax net income of at least $100,000, in an amount equal to 5%
of pre-tax net income up to $1,000,000, 4% of pre-tax net income over $1,000,000
up to $2,000,000, 3% of pre-tax net income over $2,000,000 up to $3,000,000, and
1% of pre-tax net income over $3,000,000.
Effective April 1, 2003, Mr. Grossblatt's Employment Agreement was amended
to: (i) extend the term until July 31, 2008; (ii) increase the annual base
salary to $180,000 subject to automatic annual cost of living increases up to 4%
and further subject to increases in the Board's discretion; and (iii) revising
the annual bonus compensation to provide that the bonus is paid on pre-tax net
income in excess of an amount equal to 8% of shareholders' equity as of the
start of the fiscal year, as follows: 3% of all (after the 8% threshold) pre-tax
7
net income up to $1 million, 4% of pre-tax net income from $1-$2 million, 5% of
pre-tax net income from $2-$3 million, 6% of pre-tax net income from $3-$4
million, 7% of pre-tax net income over $4 million.
Under the Employment Agreement, Mr. Grossblatt has been granted an option
to purchase 20,000 shares of common stock at an exercise price of $4.50 per
share pursuant to the Company's Non-Qualified Stock Option Plan, and is also
entitled to life, health and disability insurance benefits, medical
reimbursement, automobile allowance, and Company paid retirement plan
contributions.
If the employment agreement is terminated by the Company other than for
cause or Mr. Grossblatt's death or disability, Mr. Grossblatt is entitled to
receive a lump sum payment equal to Mr. Grossblatt's base salary for the balance
of the employment agreement's term plus the amount of Mr. Grossblatt's last
bonus and an additional lump sum payment payable on the date the term of the
employment agreement would have expired equal to two times Mr. Grossblatt's base
salary for the last 12 months plus the amount of Mr. Grossblatt's last bonus. In
addition, Mr. Grossblatt would be entitled to receive the health insurance and
medical reimbursement benefits for the balance of the term and a period of three
years thereafter.
If Mr. Grossblatt's employment is terminated following or in anticipation
of a "change of control" of the Company, Mr. Grossblatt will be entitled to
receive a lump sum payment equal to Mr. Grossblatt's base salary for the balance
of the employment agreement's term and the amount of Mr. Grossblatt's last
bonus, plus an amount equal to three times Mr. Grossblatt's base salary for the
last 12 months and the amount of Mr. Grossblatt's last bonus, limited to 2.99
times Mr. Grossblatt's average annual taxable compensation from the Company
which is included in his gross income for the five taxable years of the Company
ending before the date on which the change of control occurs.
If the employment agreement is terminated by the Company due to Mr.
Grossblatt's death or disability, Mr. Grossblatt (or his estate) is entitled to
the continuation of the payment of his base salary for the balance of the term,
reduced, in the event of death, by any individual life insurance benefits the
premiums for which are paid for by the Company, and in the event of disability,
by any group or individual disability income insurance benefits the premiums for
which are paid for by the Company. In addition, Mr. Grossblatt (or his estate)
is entitled to the health insurance and medical reimbursement benefits for the
longer of the balance of the term or three years following the date of death or
disability.
The employment agreement generally prohibits Mr. Grossblatt from competing
with the Company during the term and during any subsequent period during which
he receives compensation from the Company.
Equity Compensation Plan Information
The following table provides information, as of March 31, 2004, with
respect to all compensation arrangements maintained by the Company under which
Shares may be issued:
----------------------------------------------------------------------------------------------------------------------
Plan Category Number of securities Weighted-average exercise Number of securities
to be issued upon price of outstanding remaining available for
exercise of options, warrants and future issuance under
outstanding options, rights equity compensation plans
warrants and rights (excluding securities
reflected in column (a))
----------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 280,112 $2.64 122,232
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders 0 0 0
----------------------------------------------------------------------------------------------------------------------
Total 280,112 $2.64 122,232
----------------------------------------------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with management the annual
audited financial statements of the Company and its subsidiaries.
The Audit Committee has discussed with Grant Thornton LLP, the independent
auditors for the Company for the fiscal year ended March 31, 2004, the matters
required to be discussed by Statement on Auditing Standards 61. The Board of
8
Directors has received the written disclosures and the letter from the
independent auditors required by Independent Standards Board Standard No. 1 and
has discussed with the independent auditors the independent auditors'
independence.
Based on the foregoing review and discussions, the Board of Directors
approved the inclusion of the audited financial statements in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2004 for filing
with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Cary Luskin
Howard Silverman, Ph.D.
Ronald A. Seff, M.D.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected the firm of Grant Thornton LLP as the
Company's independent public accountants for the current fiscal year. Grant
Thornton LLP has served as the Company's independent public accountants since
1999. Representatives of Grant Thornton LLP are expected to be present at the
meeting, and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions.
The following is a description of the fees billed to the Company by Grant
Thornton LLP (the "Auditor") during the fiscal years ended March 31, 2004 and
2003:
Audit Fees
Audit fees include fees paid by the Company to the Auditor in connection
with the annual audit of the Company's consolidated financial statements, and
review of the Company's interim financial statements. Audit fees also include
fees for services performed by the Auditor that are closely related to the audit
and in many cases could only be provided by the Auditor. Such services include
consents related to Securities and Exchange Commission and other regulatory
filings. The aggregate fees billed to the Company by the Auditor for audit
services rendered to the Company for the years ended March 31, 2004 and 2003
totaled $78,000 and $69,500, respectively.
Audit Related Fees
Audit related services include due diligence services related to accounting
consultations, internal control reviews and employee benefit plan audits. There
were no audit related services provided in either year.
Tax Fees
Tax fees include corporate tax compliance, counsel and advisory services.
The aggregate fees billed to the Company by the Auditor for the tax related
services rendered to the Company for the years ended March 31, 2004 and 2003
totaled $5,500 and $5,500, respectively.
All Other Fees
For the year ended March 31, 2004, the Auditor billed the Company $6,395
for research in connection with a proposed initial public offering by the
Company's 50%-owned Hong Kong Joint Venture.
Approval of Independent Auditor Services and Fees
The Company's Audit Committee reviews all fees charged by the Company's
independent auditors, and actively monitors the relationship between audit and
non-audit services provided. The Audit Committee must pre-approve all audit and
non-audit services provided by the Company's independent auditors and fees
charged.
OTHER MATTERS
The Board of Directors is not aware of any other matter which may be
presented for action at the 2004 Annual Meeting of Shareholders, but should any
other matter requiring a vote of the shareholders arise at the 2004 Annual
9
Meeting, it is intended that the proxies will be voted with respect thereto in
accordance with the best judgment of the person or persons voting the proxies,
discretionary authority to do so being included in the proxy.
The cost of soliciting proxies will be borne by the Company. Arrangements
will be made with brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation materials to the beneficial owners of the Shares held of
record by such persons, and the Company will reimburse them for their reasonable
out-of-pocket expenses. Officers and directors may also solicit proxies.
The nominees for directors who receive a majority of the votes entitled to
be cast for the election of directors at the Annual Meeting will be elected. In
respect of any other matter, the affirmative vote of the holders of a majority
of the Shares entitled to vote on the issue, in person or by proxy, is necessary
to approve the matter.
As a matter of policy, the Company will accord confidentiality to the votes
of individual shareholders, whether submitted by proxy or ballot, except in
limited circumstances, including any contested election, or as may be necessary
to meet legal requirements. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the Company and will determine whether or not a
quorum is present. Abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
Any shareholder desiring to present a proposal at the 2005 Annual Meeting
of Shareholders and wishing to have that proposal included in the proxy
statement for that meeting must submit the same in writing to the Secretary of
the Company at 7-A Gwynns Mill Court, Owings Mills, Maryland 21117, in time to
be received by May 3, 2005. In addition, if a shareholder desires to bring
business (including director nominations) before the 2005 Annual Meeting of
Shareholders that is not the subject of a proposal timely submitted for
inclusion in the Company's Proxy Statement, written notice of such business, as
currently prescribed in the Company's Bylaws, must be received by the Company's
Secretary between April 3, 2005 and May 3, 2005. For additional requirements, a
shareholder should refer to Article I, Section 8 of the Company's Bylaws,
"Advance Notice of Stockholder Nominees for Director and Other Stockholder
Proposals," a copy of which may be obtained from the Company's Secretary or from
the Company's SEC filings. If the Company does not receive timely notice
pursuant to the Bylaws, the nomination or proposal will be excluded from
consideration at the meeting.
The persons designated by the Company to vote proxies given by shareholders
in connection with the Company's 2005 Annual Meeting of Shareholders will not
exercise any discretionary voting authority granted in such proxies on any
matter not disclosed in the Company's 2005 proxy statement with respect to which
the Company has received written notice no later than July 16, 2005 that a
shareholder (i) intends to present such matter at the 2005 Annual Meeting, and
(ii) intends to and does distribute a proxy statement and proxy card to holders
of such percentage of the Shares required to approve the matter. If a
shareholder fails to provide evidence that the necessary steps have been taken
to complete a proxy solicitation on such matter, the Company may exercise its
discretionary voting authority if it discloses in its 2005 proxy statement the
nature of the proposal and how it intends to exercise its discretionary voting
authority.
10
Shareholders who do not plan to attend the Annual Meeting are urged to
complete, date, sign and return the enclosed proxy in the enclosed envelope, to
which no postage need be affixed if mailed in the United States. Prompt response
is helpful and your cooperation will be appreciated.
By Order of the Board of Directors,
HARVEY B. GROSSBLATT
Secretary
Owings Mills, Maryland
August 30, 2004
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED MARCH 31, 2004, TO EACH SHAREHOLDER WHO FORWARDS A
WRITTEN REQUEST TO THE SECRETARY, UNIVERSAL SECURITY INSTRUMENTS, INC., 7-A
GWYNNS MILL COURT, OWINGS MILLS, MARYLAND 21117.
To the extent the rules and regulations adopted by the SEC state that
certain information included in this Proxy Statement is not deemed "soliciting
material" or "filed" with the SEC or subject to Regulation 14A promulgated by
the SEC or to the liabilities of Section 18 of the Exchange Act, such
information shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the Exchange Act.
11
PROXY
UNIVERSAL SECURITY INSTRUMENTS, INC.
7-A Gwynns Mill Court
Owings Mills, Maryland 21117
This Proxy is Solicited on Behalf of the Board of Directors of Universal
Security Instruments, Inc. The undersigned hereby appoints Stephen C. Knepper
and Harvey B. Grossblatt, and each of them, as proxies, each with the power of
substitution, to vote as designated below all of the shares the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at Marriott's
Hunt Valley Inn, 245 Shawan Road, Hunt Valley, Maryland, on October 5, 2004 at
9:00 a.m., prevailing local time, and any adjournments or postponements thereof,
and otherwise to represent the undersigned at the meeting, with all powers
possessed by the undersigned if personally present at the meeting.
1. ELECTION OF DIRECTORS: FOR all nominees listed below []
(except as set forth to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below []
Cary Luskin
Howard Silverman, Ph.D.
The terms of the elected Directors expire at the 2007 annual meeting and when
their successors are elected and qualify.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
-------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon any other
business which properly comes before the meeting and any adjournments or
postponements thereof.
[REVERSE SIDE OF PROXY CARD]
This proxy, when properly executed, will be voted in the manner directed hereby
by the undersigned shareholders. If no direction is made, this proxy will be
voted in favor of all nominees and in the discretion of the proxies upon any
other business which properly comes before the meeting.
Please sign exactly as your name appears on your proxy card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL
THE CARD IN THE ENCLOSED ENVELOPE.
DATED: __________________________, 2004
Signature______________________________
DATED: __________________________, 2004
Signature______________________________