UNIVERSAL SECURITY INSTRUMENTS, INC.
10324 South Dolfield Road
Owings Mills, Maryland 21117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on September 26, 1996
To the Shareholders of Universal Security Instruments, Inc.:
The Annual Meeting of Shareholders of UNIVERSAL SECURITY INSTRUMENTS,
INC. will be held at Marriott's Hunt Valley Inn, 245 Shawan Road, Hunt
Valley, Maryland, on Thursday, September 26, 1996 at 10:30 a.m. for the
following purposes:
1. To elect a Board of three directors to serve until the next
annual meeting and until their successors have been elected and qualify.
2. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on August 1, 1996
will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
HARVEY B. GROSSBLATT
Secretary
DATED: August 30, 1996
IMPORTANT - YOUR PROXY IS ENCLOSED. Shareholders who do not plan to attend
the meeting are requested to complete, date, sign and return promptly the
enclosed proxy in the enclosed envelope. No postage is required for mailing
in the United States.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Universal
Security Instruments, Inc. (the "Company") in connection with the Annual
Meeting of the Shareholders of the Company to be held on September 26, 1996
or any adjournments thereof. The proxy is revocable at any time before
exercise by written notice to the Chief Financial Officer of the Company,
10324 South Dolfield Road, Owings Mills, Maryland 21117.
Only shareholders of record at the close of business on August 1, 1996
will be entitled to notice of and to vote at the meeting. The number of
shares of Common Stock, $.01 par value, of the Company (the "Common Stock")
outstanding on August 1, 1996 and entitled to vote at the meeting is
3,241,603 shares, each having one vote.
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 Common
Stock outstanding as of the Record Date:
<TABLE>
Name and Address Shares beneficially Percent
of beneficial owner owned of class<F1>
<S> <C> <C>
Michael Kovens 745,408<F2> 23.0%
10324 South Dolfield Road
Owings Mills, Maryland 21117
Stephen C. Knepper 343,493<F2> 10.6%
10324 South Dolfield Road
Owings Mills, Maryland 21117
_________________________________
<FN>
<F1> For the purpose of determining the percentages of stock beneficially
owned, shares of stock subject to options or rights exercisable within 60
days of August 1, 1996 are deemed to be outstanding.
<F2> For information regarding the nature of beneficial ownership of stock
owned by Messrs. Kovens and Knepper, please see footnotes 2 and 3,
respectively, under "INFORMATION REGARDING STOCK OWNERSHIP OF MANAGEMENT."
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
At the 1996 Annual Meeting, three directors will be elected to hold
office for the ensuing year and until their successors are elected and
qualify.
Unless otherwise specified in the proxy, it is the present intention
of the persons named in the accompanying form of proxy to vote such proxy
for the election as directors of the three nominees listed below. Pursuant
to the Company's By-laws, the three nominees were nominated by the Board of
Directors. If, due to unforeseen contingencies, any of the nominees
designated below shall not be available for election, the persons named in
the accompanying form of proxy reserve the right to vote such proxy for such
other person or persons as may be nominated for director by the management of
the Company so as to provide a full Board. Management has no reason to
believe that any nominee will be unable to serve if elected.
<TABLE>
Principal occupation Director
Name Age for past five years since
<S> <C> <C> <C>
Stephen C. Knepper 52 Director; Chairman of the Board of the 1970
Company 1970 through July 1996;
Vice Chairman of the Board since
August 1996.
Michael Kovens 53 Director; President of the Company 1970 1970
through July 1996; Chairman of the
Board since August 1996.
Mark Boyar 53 Director; President, Boyar Asset 1983
Management, Inc., New York, a registered
investment adviser; President, Mark Boyar
& Company, Inc., New York, a registered
broker-dealer; and Publisher and Director
of Asset Analysis Focus, New York, a
monthly research analysis report.
</TABLE>
In the fiscal year ended March 31, 1996, the Company did not have any
standing audit, nominating or compensation committees of the Board of
Directors, or committees performing similar functions. During the last
fiscal year of the Company, the Board of Directors held four regular and
special meetings, and each incumbent director attended all of such meetings.
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<PAGE>
INFORMATION REGARDING STOCK OWNERSHIP OF MANAGEMENT
As of August 1, 1996, the shares of the Company's Common Stock owned
beneficially by each director, by each executive officer and by all directors
and officers as a group were as follows:
<TABLE>
Amount and nature of Percent of
Name of beneficial owner beneficial ownership class<F1>
<S> <C> <C>
Michael Kovens 745,408<F2> 23.0%
Stephen C. Knepper 343,493<F3> 10.6%
Mark Boyar 30,000<F4> 0.9%
Harvey Grossblatt 81,390<F5> 2.5%
All directors and officers
as a group (5 persons
included) 1,202,241 37.1%
_________________________________
<FN>
<F1> For the purpose of determining the percentages of stock beneficially
owned, shares of stock subject to options or rights exercisable within 60
days of August 1, 1996 are deemed to be outstanding.
<F2> Includes 20,178 shares held by Mr. Kovens' adult children and 215,000
shares which Mr. Kovens presently has the right to acquire.
<F3> Includes 215,000 shares which Mr. Knepper presently has the right to
acquire.
<F4> Consists of 5,000 shares owned by Mark Boyar & Company, Inc., of which
Mr. Boyar is the President, and 25,000 shares which Mr. Boyar presently has
the right to acquire.
<F5> Includes 52,000 shares which Mr. Grossblatt presently has the right to
acquire.
</FN>
</TABLE>
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<PAGE>
EXECUTIVE COMPENSATION
Table I. Summary Compensation Table
The following table reflects the aggregate amount paid or accrued by the
Company in its three most recent fiscal years, for each executive officer
whose compensation exceeded $100,000 in that year.
<TABLE>
Long Term Compensation
Name and Awards Payouts
Principal Annual Compensation Stock LTIP All Other
Position Year Salary Bonus Other Awards Options Payouts Compensation<F1>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen C.
Knepper 1996 $250,000 - - - - - $2,700
Chairman 1995 $237,500 - - - 95,000 - $3,250
1994 $250,000 - - - 50,000 - $5,014
Michael
Kovens 1996 $250,000 - - - - - $3,200
President 1995 $237,500 - - - 95,000 - $3,200
1994 $250,000 - - - 50,000 - $4,619
Harvey
Grossblatt 1996 $143,675 - - - - - $3,918
Executive 1995 $143,269 - - - - - $2,840
Vice 1994 $136,738 - - - 25,000 - $3,771
President,
Secretary
and
Treasurer
_________________________________
<FN>
<F1> Consists of Company contributions to the Company's 401(k) plan.
</FN>
</TABLE>
Table II. Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values
The following table sets forth information concerning the number and
value of unexercised options held as of March 31, 1996 by each executive
officer whose compensation exceeded $100,000 in the year then ended:
<TABLE>
Value of
Number Unexercised
of Unexercised In-the-Money
Shares Options Options
Acquired at FY-End at FY-End
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable/cisable cisable/cisable
<S> <C> <C> <C> <C> <C> <C>
Stephen C. Knepper - - 215,000 0 0 0
Michael Kovens - - 215,000 0 0 0
Harvey Grossblatt - - 43,000 0 0 0
</TABLE>
Employment Contracts
Stephen C. Knepper and Michael Kovens each have employment agreements
with the Company which expire on March 31, 1998. Both agreements prohibit
competition with the Company during their term and for one year thereafter.
Each employee is entitled to Base Compensation of $250,000 a year plus
Incentive Compensation equal to specified percentages of the amount by which
the Company's consolidated annual pre-tax profits in each fiscal year exceed
the amount the Company would have received if the shareholders' equity (as
defined in the agreements) in the Company were invested in United States
Treasury Bills. The specified percentage is 5% of the first $1,000,000,
3-3/4% of the second $1,000,000, 2-1/2% of the third $1,000,000 and 1% of
everything over $3,000,000. The employment agreements further provide that
each employee is entitled to (i) certain life insurance and medical
reimbursement benefits, (ii) upon death or disability, 75% of the Base
Compensation for a period of 60 months (including Incentive Compensation for
that year if death or disability occurs after the first three months of the
fiscal year), (iii) deferred compensation upon termination of their
employment in the amount of three times the annual Base Compensation,
payable within 30 days after termination, and (iv) the continuation of
certain life insurance and medical reimbursement benefits for a period of
three years after termination.
Director Compensation
In the fiscal year ended March 31, 1996, the Company paid a director's
fee of $10,000 to Mark Boyar, the Company's non-management director.
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<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE CONSIDERED
AT THE 1997 ANNUAL MEETING
Any shareholder desiring to present a proposal to be considered by the
shareholders at the Annual Meeting of Shareholders scheduled to be held in
September, 1997, and desiring that information concerning such proposal be
included in the proxy statement and form of proxy furnished to shareholders
by the Board of Directors, should submit the proposal in writing, including
all supporting materials, to the Company at its principal executive offices
no later than May 24, 1997.
OTHER MATTERS
The solicitation of proxies will be made by mail, at the expense of the
Company, including the charges and expenses of brokerage firms and others
for forwarding solicitation material to beneficial owners of stock.
Subsequent solicitations may be made by mail, telegraph, telephone or any
other appropriate means.
The Board of Directors of the Company is not aware of any other matter
which may be presented for action at the Annual Meeting, but should any such
matter requiring a vote of the shareholders arise, 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, and discretionary
authority to do so is provided for in the proxy.
Deloitte & Touche LLP is the firm of certified public accountants
selected by the Board of Directors of the Company to audit the books and
accounts of the Company for the fiscal year ended March 31, 1996, and the
Board of Directors anticipates that it will select Deloitte & Touche LLP to
serve in that capacity for the fiscal year ending March 31, 1997.
It is anticipated that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting to respond to appropriate questions.
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
Dated: August 30, 1996
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