UNIVERSAL SECURITY INSTRUMENTS, INC.
10324 South Dolfield Road
Owings Mills, Maryland 21117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 30, 1997
To the Shareholders of Universal Security Instruments, Inc.:
The Annual Meeting of Shareholders of UNIVERSAL SECURITY INSTRUMENTS, INC.
will be held at Universal Security Instruments, Inc., 10324 South Dolfield
Road, Owings Mills, Maryland 21117, on Thursday, October 30, 1997, 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 18, 1997
will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
HARVEY B. GROSSBLATT
Secretary
DATED: September 24, 1997
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 October 30, 1997 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 18, 1997
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 18, 1997 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 877,076<F2> 24.9%
10324 South Dolfield Road
Owings Mills, Maryland 21117
Stephen C. Knepper 403,493<F2> 11.5%
10324 South Dolfield Road
Owings Mills, Maryland 21117
Bruce Paul 184,000 5.7%
One Hampton Road
Purchase, New York
_________________________________
<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 18, 1997 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 1997 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 53 Director; Chairman of the Board of the 1970
Company 1970 through July 1996;
Vice Chairman of the Board since
August 1996.
Michael Kovens 54 Director; President of the Company 1970 1970
through July 1996; Chairman of the
Board since August 1996.
Harvey Grossblatt 51 Director since September 1996; 1996
President since July 1996;
Chief Financial Officer since
April 1997; Executive Vice
President of the Company from
December 1986 through June 1996;
Secretary and Treasurer of the
Company since September 1988;
Vice President and Chief Financial
Officer of the Company from October
1983 through May 1995.
</TABLE>
In the fiscal year ended March 31, 1997, 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.
- 2 -
<PAGE>
INFORMATION REGARDING STOCK OWNERSHIP OF MANAGEMENT
As of August 18, 1997, 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 877,076<F2> 24.9%
Stephen C. Knepper 403,493<F3> 11.5%
Harvey Grossblatt 125,090<F4> 3.7%
All directors and officers
as a group (5 persons included 1,425,659 36.6%
_________________________________
<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 18, 1997 are deemed to be outstanding.
<F2> Includes 20,178 shares held by Mr. Kovens' adult children and 275,000
shares which Mr. Kovens presently has the right to acquire.
<F3> Includes 275,000 shares which Mr. Knepper presently has the right to
acquire.
<F4> Includes 96,000 shares which Mr. Grossblatt presently has the right to
acquire.
</FN>
</TABLE>
- 3 -
<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 1997 $183,328 - - - 70,000 - $3,200
Vice 1996 $200,000 - - - - - $2,700
Chairman 1995 $237,500 - - - 95,000 - $3,250
of the
the Board
Michael
Kovens 1997 $300,000 - - - 70,000 - $3,200
Chairman 1996 $200,000 - - - - - $3,200
of the 1995 $237,500 - - - 95,000 - $3,200
Board
Harvey
Grossblatt 1997 $142,923 - - - 71,000 - $2,857
President, 1996 $143,675 - - - - - $2,840
Secretary 1995 $143,269 - - - - - $2,840
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 - - 69,500/26,500 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.
In September 1996, Mr. Knepper voluntarily elected a non-reimbursable reduction
of $200,000 in base compensation. 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.
- 4 -
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE CONSIDERED
AT THE 1998 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, 1998, 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 25, 1998.
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, 1997, 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, 1998. 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: September 24, 1997
- 5 -
PROXY
Universal Security Instruments, Inc.
10324 South Dolfield Road, Owings Mills, Maryland 21117
This proxy is solicited on behalf of the Board of Directors. The undersigned
hereby appoints Stephen C. Knepper, Michael Kovens and Harvey B. Grossblatt
and each of them, as proxies, with power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of common stock of Universal Security Instruments, Inc. held of record by the
undersigned on August 18, 1997 at the annual meeting of shareholders to be
held on October 30, 1997.
1. ELECTION OF DIRECTORS FOR ALL nominees listed below
(except as marked to the contrary below) __________
WITHHOLD AUTHORITY
to vote for all nominees listed below __________
(INSTRUCTION: To withhold authority to vote for any individual nominees,
mark line next to the nominee's name below.)
___ Stephen C. Knepper ___ Michael Kovens ___ Harvey B. Grossblatt
The term of all directors will expire at the next annual meeting at which
their successors are elected and qualify.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted for the election as directors of all of the nominees listed in
the Proxy statement.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized persons.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
____________________________
Signature
____________________________
Signature if held jointly
