Exhibit 10.7

                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

      THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of July 18,  2005,  by and between  UNIVERSAL  SECURITY
INSTRUMENTS,  INC.,  a  Maryland  corporation  (the  "Company"),  and  HARVEY B.
GROSSBLATT (the "Executive").

                                    RECITALS

      WHEREAS,   the  Company  is  engaged  in  the   business   of   designing,
manufacturing and marketing security products (the "Business"); and

      WHEREAS,  the Executive  has served as the  President and Chief  Operating
Officer of the  Company  and, in August 2004  assumed the  additional  duties of
Chief Executive Officer of the Company; and

      WHEREAS,  the  Company  desires to  continue  to employ the  Executive  to
perform  services as the President and Chief  Executive  Officer of the Company,
and to perform other duties which may be assigned from time to time by the Board
of Directors of the Company (the "Board") from time to time at its discretion;

      WHEREAS,  the Company and  Executive  entered into an Amended and Restated
Employment Agreement dated as of April 1, 2003 (the "Original Agreement");

      WHEREAS,  the parties  desire to amend  certain  other  provisions  of the
Original  Agreement  to be  effective  from and  after the date  hereof,  and in
furtherance  thereof,  the parties have agreed to amend and restate the Original
Agreement.

      NOW,  THEREFORE,  in consideration  of the foregoing,  the mutual promises
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,  the parties hereby agree that the
Original Agreement is hereby amended and restated in its entirety as follows:

      1. Employment.

            (a)  Agreement  to  Employ.  Upon  the  terms  and  subject  to  the
conditions of this Agreement,  the Company shall hereby employ the Executive and
the Executive hereby agrees to be employed by Company.

            (b) Term of  Employment.  Subject to Section  7, the  Company  shall
employ the Executive  pursuant to the terms hereof for the period  commencing as
of the date  hereof and ending on July 31,  2008.  The period  during  which the
Executive is employed pursuant to this Agreement,  including any renewal thereof
shall be referred to as the "Employment Period."

      2. Position and Duties.  During the Employment Period, the Executive shall
serve as, and have  responsibilities  and authority consistent with the position
of, President and Chief Executive Officer of the Company, which shall be subject
to the discretion of the Board. At the request of the Board, the Executive shall
serve as a director, officer or consultant of any subsidiary of the Company, the
Company's  50% owned  Hong Kong  Joint  Venture  or its  successor  (the  "Joint
Venture") or of any other entity in which the Company has an interest,  provided
that the Executive is  indemnified  for such service to the same extent as he is
indemnified  for  serving  in his  capacities  on  behalf  of the  Company.  The
Executive  shall  diligently and  conscientiously  devote his full and exclusive
business time and attention and best efforts in discharging his duties.  Nothing
herein shall  restrict  the  Executive  from  devoting  reasonable  time and his
expertise  to  charitable  or communal  activities.  The Company  shall  provide
appropriate  office space and services to allow the  Executive to discharge  his
duties, consistent with policies established by the Board from time to time.

      3. Compensation.

            (a) Salary.  The Company  shall pay the  Executive at the  following
minimum  rates of annual base salary  ("Annual  Base  Salary") for the following
periods:

            The date hereof through July 31, 2006       -        $300,000
            August 1, 2006 through July 31, 2007        -        $325,000
            August 1, 2007 through July 31, 2008        -        $350,000


<PAGE>

The Annual  Base  Salary for  periods  subsequent  to July 31,  2008 shall be an
amount determined by the Compensation Committee of the Board and approved by the
Board.  The Annual  Base  Salary  shall be payable  according  to the  Company's
regular payroll practices and shall be subject to all applicable federal,  state
and local withholding taxes.

            (b) Bonus.

                  (i) In addition to the Annual Base Salary, the Executive shall
receive an annual  bonus  equal to the amount  determined  pursuant to Exhibit A
attached hereto and incorporated herein by reference  ("Bonus"),  which shall be
paid by the Company  within 30 days  following the filing with the United States
Securities and Exchange  Commission of the Company's  Annual Report on Form 10-K
for the fiscal year with  respect to which the Bonus is earned.  The Bonus shall
be deemed fully earned by the  Executive  with respect to any fiscal year of the
Company during which the Executive has been employed by the Company for at least
60 days. The Bonus shall be subject to all applicable  federal,  state and local
withholding taxes.

                  (ii) To the extent the  Company  reports  income from both its
domestic  operations  (currently  shown  on the  Company's  annual  consolidated
statements  of  operations  as  "Operating  income") and Hong Kong Joint Venture
(currently shown on the Company's annual  consolidated  statements of operations
as "Equity in earnings of Hong Kong joint venture"),  the Bonus expense shall be
allocated  between such two  components in the  respective  proportions  as such
components bear to the consolidated Net Income (currently shown on the Company's
annual audited consolidated statements of operations).

            (c) Stock  Options.  In  addition  to the Annual Base Salary and any
Bonus,  the Executive  shall be eligible to receive grants of options to acquire
shares of the Company's Common Stock, as may be granted from time to time by the
Board or a committee thereof.

            (d) Compensation for Other Services. The Executive shall be entitled
to retain all cash, stock,  options or other  compensation paid for his services
as a  director  or officer of the Joint  Venture to the same  extent  such cash,
stock,  options or other compensation is paid to all similarly situated officers
or directors (as the case may be) of the Joint Venture.

      4. Benefits.  During the Employment  Period, the Company shall provide the
Executive with the following benefits:

            (a)  Participation  by the  Executive,  and his wife  and  dependant
children in any group health plans  sponsored or arranged by the Company for its
employees.  The full amount of all premiums for such  insurance  will be paid by
the Company. In the event the Executive declines or is ineligible to participate
in such group health  plans,  the Company  shall pay to the  Executive,  no less
frequently than  quarterly,  the amount of such premiums which the Company would
have paid for such period had the  Executive  accepted  such  participation  for
himself,  his wife and dependant  children.  Nothing  herein shall  obligate the
Company to continue any health plan currently offered to employees or offered to
employees in the future.  The Executive agrees to cooperate with the Company and
to take all steps  reasonably  necessary to assist the Company in obtaining such
insurance.

            (b)  Participation  in  any  retirement  plans,   disability  income
insurance and term life insurance  policies sponsored or arranged by the Company
for its employees  from time to time.  Nothing herein shall obligate the Company
to continue  any plan or policy  currently  offered to  employees  or offered to
employees in the future.

            (c) For each calendar year during the Employment Period, the Company
shall contribute the maximum amount permitted by applicable law on behalf of the
Executive to the Company's  401(k) Plan. The Executive  shall be entitled to the
full amount of this benefit  with respect to any calendar  year during which the
Executive has been employed by the Company for at least 60 days.

            (d) Three weeks per year of paid  vacation  time plus sick leave and
personal leave in accordance  with the Company's  policies for senior  executive
officers.  The  Executive  shall be entitled to the full amount of this  benefit
with respect to any fiscal year of the Company  during which the  Executive  has
been employed by the Company for 60 days.


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<PAGE>

            (e)  Use  of a  Company  owned  or  leased  automobile  or,  at  the
Executive's  option,  an automobile  payment  allowance of $1,000 per month.  In
addition,  the Company  shall pay for the  insurance,  fuel and service for such
automobile.

            (f) All costs and expenses of a mobile phone for the Executive's use
in connection with the  performance of his duties,  in accordance with the terms
and conditions that the Board shall determine from time to time.

            (g)  In  addition  to  the  benefit  provided  under  Section  4(a),
reimbursement up to a maximum of $30,000 per annum for expenses  incurred by the
Executive,  his wife and  dependant  children for medical,  dental,  optical and
long-term care and prescription  drugs, or third-party payor coverage  therefor,
which are not reimbursable under any medical coverage for which the premiums are
paid by the Company.  This amount shall be increased annually by an amount equal
to the then-current medical expense  reimbursement  benefit multiplied by the in
the Consumer  Price Index for the Greater  Baltimore  Area (as determined by the
U.S. Bureau of Labor  Statistics)  for the  immediately  preceding four calendar
quarters.  All  requests  by the  Executive  for such  reimbursement  must be in
writing accompanied by receipts for such amounts.

            (h) Participation in the Company's Cafeteria  Plan/Flexible Spending
Plan.

            (i) Any other group employee benefit plans or programs to the extent
that he is qualified under the  requirements  relating to  participation  in any
such plan or program.

            (j) All reasonable  legal,  accounting and financial  planning costs
and  expenses  in  connection   with  estate  planning  and  annual  tax  return
preparation  for the Executive and his wife,  not to exceed $10,000 in any three
year period.

      5. Business Expenses. The Company shall pay or reimburse the Executive for
business  expenses  incurred by the Executive  during the  Employment  Period in
connection with his employment.

      6. Termination of Employment. Executive's employment will be terminated in
accordance  with Sections 6(a) and 6(d), or may be terminated in accordance with
Sections 6(b), (b), (c) and (f), as follows:

            (a) The Executive's  employment will be terminated upon the last day
of the Employment Period without a renewal.

            (b) The Company may terminate the Executive's  employment  hereunder
for Cause.  For purposes of this  Agreement,  the Company  shall have "Cause" to
terminate  the  Executive's  employment  hereunder  upon  (i)  the  willful  and
continued failure by the Executive to substantially perform his duties hereunder
(other than any such failure  resulting from the  Executive's  incapacity due to
physical  or mental  illness or any such  actual or  anticipated  failure  after
notice of termination  given by the Executive  pursuant to Section 6(c)),  after
written  demand for  substantial  performance  is  delivered by the Company that
specifically  identifies the manner in which the Company  believes the Executive
has not  substantially  performed his duties,  which is not cured within 30 days
after notice of such failure has been given to the Executive by the Company,  or
(ii) the willful  engaging by the  Executive in  misconduct  which is materially
injurious  to the  Company,  monetarily  or  otherwise  (including  conduct that
constitutes  competitive activity pursuant to Section 9 hereof). For purposes of
this  paragraph,  no act,  or failure to act, on the  Executive's  part shall be
considered  "willful"  unless  done,  or omitted to be done,  by him not in good
faith and without  reasonable belief that his action or omission was in the best
interest of the Company.

            (c) The Executive may  terminate his  employment  hereunder for Good
Reason for purposes of this Agreement, "Good Reason" shall mean:

                  (i) A  failure  by the  Company  to comply  with any  material
provision of this  Agreement  which his not been cured within  fifteen (15) days
after written  notice of such  noncompliance  has been given by the Executive to
the Company;

                  (ii)  Any  purported   termination   by  the  Company  of  the
Executive's  employment  other than as permitted  under this  Agreement (and for
purposes of this Agreement no such purported termination shall be effective);


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<PAGE>

                  (iii) The assignment to the Executive of any duties materially
inconsistent  with his status as the Chief Executive Officer of the Company or a
material adverse alteration in the nature or status of his  responsibilities  in
connection with such offices. For purposes of this Agreement, such alteration of
the  Executive's  duties shall be deemed to have occurred in connection with any
reorganization, merger, acquisition or other business combination of the Company
unless, in each such instance, the Executive will be the Chief Executive Officer
of (A) the Company if it is the surviving entity in any merger,  reorganization,
acquisition or other business combination with the Company, or (B) the successor
entity to the Company in any merger,  acquisition or other business  combination
with the Company.

                  (iv)  Relocation of the  Executive to a location  which is not
within  Baltimore  County or the Baltimore City  Metropolitan  area,  except for
required travel on the Company's business to an extent substantially  consistent
with the Executive's duties;

                  (v) The  failure  by the  Company  to  continue  in effect any
compensation or benefit plan in which the Executive  participated as of the date
hereof and which is  material  to the  Executive's  aggregate  compensation  and
benefits  hereunder,  unless an equitable  arrangement  (embodied in an on-going
substitute  or  alternative  plan) has been made with  respect to such plan,  or
failure by the Company to continue the Executive's  participation therein (or in
such  substitute or alternative  plan) on a basis not materially less favorable,
both  in  terms  of the  amount  of  benefits  provided  and  the  level  of the
Executive's participation relative to other participants, as existed on the date
hereof.

            (d) The  employment of the Executive  hereunder  will terminate upon
his death.

            (e) The Company may terminate the Executive's  employment  hereunder
if the Executive is Permanently Disabled (as hereafter defined). For purposes of
this Agreement,  the term "Permanently Disabled" or "Permanent Disability" shall
mean (i) becoming  permanently  disabled as provided in any permanent disability
income  policy  provided  by the  Company  under  this  Agreement  insuring  the
Executive  or (ii) in the  absence of any such  disability  income  policy,  the
inability for a period of six consecutive months, with reasonable accommodation,
due to a mental or physical injury, illness or disorder, of Executive to provide
substantially  all of the  services  required  pursuant to this  Agreement to be
provided by Executive.  Whether or not Executive is  Permanently  Disabled under
subsection (ii) shall be determined by a medical doctor agreed to by Company and
Executive.  If Company and the Executive  cannot agree on such a medical doctor,
they shall each, at their own expense, designate an unrelated medical doctor and
such medical doctors shall in turn designate a third  unrelated  medical doctor,
whose fee  shall be shared  equally  by  Company  and  Executive.  Such  medical
doctor(s) shall determine  whether  Executive is Permanently  Disabled and shall
also determine the date of the  commencement  and  termination,  if any, of such
Permanent Disability. Such determinations (whether made by unanimous or majority
vote of the  medical  doctors)  shall be binding on the parties  hereto.  If any
party (the "Second  Party")  fails to select its medical  doctor  within 30 days
after written notice from the other party (the "First Party") of the appointment
of the First Party's medical doctor, then the First Party's medical doctor shall
determine whether Executive is Permanently Disabled and shall also determine the
date of the commencement and termination, if any, of such Permanent Disability.

            (f) The Executive may terminate his employment  hereunder on 30 days
advance  written  notice  at any time  within 24  months  following  a Change of
Control,  as defined in Exhibit B  attached  hereto and  incorporated  herein by
reference (a "Change of Control").

            (g) The  Executive may  terminate  his  employment  hereunder on six
months' advance written notice at any time.

            (h) Any termination of the Executive's  employment  hereunder by the
Company or the Executive  (other than  termination by reason of the  Executive's
death) shall be  communicated by written notice to the other party in accordance
with Section  10(f).  Each such notice shall  indicate the specific  termination
provision of this Agreement relied upon and shall set forth in reasonable detail
the facts and  circumstances  claimed to provide a basis for  termination of the
Executive's employment under the provision so indicated.  If, within thirty (30)
days following any written notice of termination, the party receiving the notice
notifies  the other  party in  writing  that a  dispute  exists  concerning  the
termination,  which  notice sets forth in  reasonable  detail the basis for such
dispute,  the termination  will not be effective until the date when the dispute
is finally  determined,  either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent  jurisdiction  (the time for appeal  therefrom having expired
and no appeal having been perfected).


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<PAGE>

      7. Effect of Termination.

            (a) In the event that  Executive's  employment is terminated for any
reason,  Executive  shall be paid on the payroll date next following the date of
termination,  all  compensation,  and  reimbursement  of all  expenses,  for the
Employment  Period  accruing  through  the  effective  date  of  termination  of
employment.

            (b) In the event  the  Company  elects to not renew the  Executive's
employment  hereunder at the end of the  Employment  Period and the  Executive's
employment hereunder is terminated pursuant to Section 6(a), the Executive shall
be entitled to receive (A) a lump sum  severance  payment in an amount  equal to
the previous 12 months' Annual Base Salary and last Bonus,  and (B) for a period
of three years  following  the  termination,  the benefits set forth in Sections
4(a) and 4(g) and an amount in cash,  payable  on the  first,  second  and third
anniversaries  of the  termination,  equal to the benefit  which would have been
payable under Section 4(c) had such benefit continued.

            (c) In the event the Executive's  employment hereunder is terminated
pursuant to Section 6(c), the Executive shall be entitled to receive in addition
to the payment under Section 7(a), (A) a lump sum severance payment in an amount
equal to the previous 12 months' Annual Base Salary and last Bonus,  and (B) for
a period of three years  following  the  termination,  the benefits set forth in
Sections 4(a) and 4(g) and an amount in cash,  payable on the first,  second and
third  anniversaries of the  termination,  equal to the benefit which would have
been payable under Section 4(c) had such benefit continued.

            (d) In the event the  Executive's  employment  is  terminated by the
Company or its successor following or in anticipation of a Change of Control, or
in the event the Executive's  employment is terminated by the Executive pursuant
to Section 6(f), the Executive shall be entitled to receive,  in addition to the
payment  under  Section  7(a),  a lump sum payment in an amount equal to (A) the
Annual Base Salary for the balance of the Employment  Period, and (B) the amount
of the  last  Bonus.  For a  period  of  three  years  following  the end of the
Employment  Period,  the Executive  shall also receive the benefits set forth in
Sections 4(a) and 4(g) and an amount in cash,  payable on the anniversary of the
termination,  equal to the benefit  which would have been payable  under Section
4(c) had such benefit continued. In addition, the Executive shall be entitled to
receive  three times the previous 12 months'  Annual Base Salary and last Bonus,
provided, however, the aggregate present value of severance payments pursuant to
this Section 7(d) (plus any payments under any other plan of the Company and its
affiliates  which  are  contingent  on  a  change  of  control),  determined  in
accordance with ss.280G of the Internal Revenue Code of 1986, as amended, or any
corresponding  provision  of any  succeeding  law, may not exceed 2.99 times the
Executive's  average  annual  taxable  compensation  from  the  Company  or  its
affiliates  which is  included  in the  Executive's  gross  income  for the five
taxable  years of the  Company  ending  before  the date on which the  change of
control  occurs.  All amounts to be paid  pursuant to this Section 7(d) shall be
payable  concurrently  with the delivery by the Company or its  successor to the
Executive  of the  written  notice of  termination  or within 30 days  following
termination by the Executive, as the case may be.

            (e) In the event the Executive's  employment is terminated  pursuant
to Section 6(d), the Executive's estate shall be entitled to receive:

                  (i) A lump sum  payment  in an amount  equal to the sum of (i)
                  the  Executive's  then  current  Annual  Base  Salary  for the
                  greater of (A) the balance of the Employment Period or (B) one
                  year, in either case reduced by any individual  life insurance
                  benefits  the  premiums for which are paid for by the Company,
                  (ii) the amount of the last Bonus, and (iii) an amount in cash
                  equal to the benefit under Section 4(c) for the last completed
                  fiscal year of the Company,  payable  within 15 days following
                  receipt by the  Company of  insurance  proceeds on the life of
                  the  Executive  or, if there is no such  insurance,  within 30
                  days  following  the date of death.  The Company will exercise
                  its best  efforts  to  promptly  collect  any  such  insurance
                  proceeds.

                  (ii) The  continuation  of the  benefits set forth in Sections
                  4(a) and 4(g) for the  longer of (A) the  balance of the Term,
                  or (B)  three  years  following  the  date of the  Executive's
                  death;  provided,  however,  that if the  terms  of the  group
                  health  plans  sponsored  or  arranged  by the Company for its
                  employees  limit the length of time  during  which the benefit
                  set forth in Section 4(a) may be provided,  the Company  shall
                  pay to the  Executive's  estate  with  respect  to any  period
                  during  which  such  benefit  may  not be  provided,  no  less
                  frequently  than  quarterly,  a sum equal to the amount of the
                  premiums which the Company would have paid for such period had
                  the benefit set forth in Section 4(a) continued.


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<PAGE>

In the event the Executive's  employment is terminated pursuant to Sections 6(a)
or (c) and  thereafter  the Executive  dies,  the provisions of Sections 7(b) or
7(c), as the case may be, shall control.

            (f) In the event the Executive's  employment is terminated  pursuant
to Section 6(e), the Executive shall be entitled to receive:

                  (i) The  continuation of the payment of the  Executive's  then
                  current  Annual Base Salary for the balance of the  Employment
                  Period,  reduced by any group or individual  disability income
                  insurance  benefits the premiums for which are paid for by the
                  Company and Social  Security  disability  benefits paid to the
                  Executive.  The net  amount  payable  hereunder  shall be paid
                  according to the Company's regular payroll practices; and

                  (ii) The  continuation  of the  benefits set forth in Sections
                  4(a)  and  4(g),  and  an  amount  in  cash,  payable  on  the
                  anniversary  of the  termination,  equal to the benefit  which
                  would have been  payable  under  Section 4(c) had such benefit
                  continued, for the longer of (A) the balance of the Employment
                  Period,   or  (B)  three  years  following  the  date  of  the
                  Executive's Permanent Disability;  provided,  however, that if
                  the terms of the group health  plans  sponsored or arranged by
                  the Company for its employees  limit the length of time during
                  which the benefit set forth in Section  4(a) may be  provided,
                  the Company  shall pay to the  Executive  with  respect to any
                  period during which such benefit may not be provided,  no less
                  frequently  than  quarterly,  a sum equal to the amount of the
                  premiums which the Company would have paid for such period had
                  the benefit set forth in Section 4(a) continued.

            (g) All amounts paid under  Sections  7(c) or (d) shall be increased
by an amount so that when the total  amount paid is reduced by  federal,  state,
and local income taxes computed at the highest  marginal rates  applicable to an
individual  residing in the state in which the Executive  resided at the time of
termination, the net amount is equal to the amount contemplated by Sections 7(c)
or (d), as the case may be.

            (h) As a  condition,  and in  consideration,  of the  payment of any
amounts under Sections 7(b) - (g), the Executive or his estate,  as the case may
be,  shall  execute  a release  which  shall  fully,  forever,  irrevocably  and
unconditionally  release, remise and discharge the Company, its subsidiaries and
successors-in-interest, and its officers, directors, stockholders, predecessors,
corporate  affiliates,  agents  and  employees  (each  in their  individual  and
corporate  capacities)  (hereinafter,  the "Released  Parties") from any and all
claims, charges, complaints,  demands, actions, causes of action, suits, rights,
debts,  sums  of  money,  costs,  accounts,  reckonings,  covenants,  contracts,
agreements,  promises,  doings,  omissions,  damages,  executions,  obligations,
liabilities,  and expenses (including  reasonable attorneys' fees and costs), of
every kind and nature  which the  Executive  or his estate,  as the case may be,
ever had or then has against the Released Parties arising out of the Executive's
employment  with the  Company,  including,  but not limited  to, all  employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss.2000e, et seq., the Age Discrimination in Employment Act, 29 U.S.C. ss.621 et
seq., the Americans With Disabilities Act of 1990, 42 U.S.C.,  ss.12101 et seq.,
the  Rehabilitation  Act of 1973, 29 U.S.C.  ss.701 et seq., the Fair Employment
Practices  Act, and the Human Rights Act, all as amended and all claims  arising
out of the Fair  Credit  Reporting  Act,  15  U.S.C.  ss.1681  et seq.,  and the
Employee Retirement Income Security Act of 1974, 29 U.S.C. ss.1001.

      8. Company  Obligations.  The amounts payable to the Executive pursuant to
Section 7 following  termination of his  employment  shall be in addition to any
rights the Executive  may have with respect to previously  granted stock options
and any rights the  Executive  may have  arising  from claims of breaches by the
Company of the terms of this Agreement.

      9. Restrictive Covenants.

            (a) Non-competition. During the Employment Period and any additional
period  during  which  the  Executive  receives  compensation  from the  Company
pursuant to Section 7, the Executive will not directly or indirectly,  either as
principal,  agent,  employee, or in any other capacity,  enter into or engage in
any business in which the Company is engaged during the Employment Period.


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<PAGE>

            (b)  CONFIDENTIALITY.  DURING THE EMPLOYMENT PERIOD AND AT ALL TIMES
AFTER THE  TERMINATION  OF THIS  AGREEMENT FOR ANY REASON,  PROVIDED THE COMPANY
FULFILLS ITS POST TERMINATION  OBLIGATIONS TO THE EXECUTIVE AS SET FORTH HEREIN,
THE EXECUTIVE WILL NOT DISCLOSE TO ANY THIRD PARTY ANY TRADE  SECRETS,  CUSTOMER
LISTS  OR OTHER  CONFIDENTIAL  INFORMATION  PERTAINING  TO THE  BUSINESS  OF THE
COMPANY.

            (c) Company Property. Promptly following the Executive's termination
of  employment  for any reason,  the  Executive  shall return to the Company all
property of such entity, and originals and any copies thereof in the Executive's
possession or under his control,  including  all  confidential  information  and
trade secrets, in whatever media or in whatever form.

            (d) Non-solicitation of Employees.  During the Employment Period and
any additional period during which the Executive receives  compensation from the
Company  pursuant to Section 7, the  Executive  shall not directly or indirectly
induce any management or supervisor-level  employee of the Company or any of its
affiliates to terminate  employment  with such entity,  and will not directly or
indirectly,  either  individually or as owner,  agent,  employee,  consultant or
otherwise,  employ or offer  employment  to any person who is or was employed by
the Company or a subsidiary thereof as a management or supervisor-level employee
unless such person  shall have ceased to be employed by such entity for a period
of at least three months.

            (e)  INJUNCTIVE  RELIEF WITH  RESPECT TO  COVENANTS.  THE  EXECUTIVE
ACKNOWLEDGES AND AGREES THAT THE COVENANTS AND OBLIGATIONS OF THE EXECUTIVE WITH
RESPECT  TO  NON-COMPETITION,   NON-SOLICITATION,  CONFIDENTIALITY  AND  COMPANY
PROPERTY  RELATE  TO  SPECIAL,  UNIQUE  AND  EXTRAORDINARY  MATTERS  AND  THAT A
VIOLATION OF ANY OF THE TERMS OF SUCH COVENANTS AND  OBLIGATIONS  WILL CAUSE THE
COMPANY AND ITS SUBSIDIARIES  IRREPARABLE INJURY FOR WHICH ADEQUATE REMEDIES ARE
NOT AVAILABLE AT LAW.  THEREFORE,  THE EXECUTIVE AGREES THAT THE COMPANY AND ITS
SUBSIDIARIES SHALL BE ENTITLED TO AN INJUNCTION, RESTRAINING ORDER OR SUCH OTHER
EQUITABLE  RELIEF AS A COURT OF  COMPETENT  JURISDICTION  MAY DEEM  NECESSARY OR
APPROPRIATE  TO RESTRAIN THE  EXECUTIVE  FROM  COMMITTING  ANY  VIOLATION OF THE
COVENANTS AND OBLIGATIONS  CONTAINED IN THIS SECTION.  THESE INJUNCTIVE REMEDIES
ARE  CUMULATIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES THE COMPANY
OR ITS  SUBSIDIARIES  MAY  HAVE  AT LAW OR IN  EQUITY.  IN  THE  EVENT  (I)  THE
ENFORCEABILITY  OF ANY OF THE COVENANTS  CONTAINED IN THIS SECTION IS CHALLENGED
BY EXECUTIVE IN ANY JUDICIAL PROCEEDING,  (II) EXECUTIVE IS NOT ENJOINED IN SUCH
PROCEEDING  FROM  BREACHING  SUCH COVENANT,  AND (III)  EXECUTIVE  DOES, IN FACT
BREACH SUCH COVENANT, THEN, IF A COURT OF COMPETENT JURISDICTION DETERMINES THAT
THE  CHALLENGED  COVENANT  IS  ENFORCEABLE,  THE TIME  PERIOD  SET FORTH IN SUCH
COVENANT SHALL BE DEEMED TOLLED UPON THE INITIATION OF SUCH PROCEEDING UNTIL THE
DISPUTE IS FINALLY RESOLVED AND ALL PERIODS OF APPEAL HAVE EXPIRED.

      10.  Arbitration.  Any  dispute to be  submitted  to  binding  arbitration
pursuant  to  the  terms  of  this  Agreement  shall  be  submitted  to  binding
arbitration in Baltimore,  Maryland, in accordance with the rules and procedures
of the American Arbitration Association. The arbitrator's decision will be final
and may be  enforced  through any court  having  jurisdiction.  All  proceedings
before the  arbitrator(s)  shall be confidential and neither  arbitrating  party
shall  comment to any third party on the  arbitration  or subject  matter of the
arbitration  except as required to permit the  conduct of the  arbitration.  The
arbitrator(s)  shall award to a prevailing  party in the arbitration the cost of
such prevailing party's  reasonable  attorneys' fees,  arbitration  expenses and
other expenses  reasonably  incurred in connection  with the dispute or disputes
being reviewed by the  arbitrator(s).  Furthermore,  if a party files a judicial
action alleging claims subject to arbitration under this Agreement,  and another
arbitrating  party   successfully  stays  the  judicial  action  and/or  compels
arbitration  of the claims,  the party bringing the claims in court will pay the
other party's costs and expenses,  including attorneys' fees. THE PARTIES HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY  ACTION OR OTHER  PROCEEDING  BROUGHT TO
ENFORCE OR OTHERWISE RELATING TO THIS AGREEMENT.

      11. Miscellaneous.

            (a) Binding  Effect.  This Agreement shall be binding on the Company
and  any  person  or  entity  which  succeeds  to the  interest  of the  Company
(regardless of whether such succession  occurs by operation of law, by reason of
the sale of all or a  portion  of the  Company's  stock or  assets  or a merger,
consolidation  or  reorganization  involving the Company).  This Agreement shall
also inure to the benefit of the Executive's  heirs,  executors,  administrators
and legal representatives.


                                       7
<PAGE>

            (b)  Assignment.  Neither  this  Agreement  nor any of the rights or
obligations  hereunder  shall be assigned or  delegated  by either  party hereto
without the prior written consent of the other party.

            (c) Entire  Agreement.  This Agreement  supersedes any and all prior
agreements  between the parties hereto,  and  constitutes  the entire  agreement
between the parties hereto with respect to the matters  referred to herein,  and
no other  agreement,  oral or  otherwise,  shall be binding  between the parties
unless it is in writing  and signed by the party  against  whom  enforcement  is
sought.  There  are no  promises,  representations,  inducements  or  statements
between the parties other than those that are expressly  contained  herein.  THE
EXECUTIVE  ACKNOWLEDGES  THAT HE IS ENTERING INTO THIS AGREEMENT OF HIS OWN FREE
WILL AND ACCORD, AND WITH NO DURESS, THAT HE HAS READ THIS AGREEMENT AND THAT HE
UNDERSTANDS  IT AND ITS LEGAL  CONSEQUENCES.  No parol or other  evidence may be
admitted to alter, modify or construe this Agreement,  which may be changed only
by a writing signed by the parties hereto.

            (d) Severability;  Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid,  illegal or  unenforceable in
any  respect,  the  validity,  legality  and  enforceability  of  the  remaining
provisions  contained herein shall not be affected thereby.  In the event any of
Section 9(a),  (b), (c), (d) or (e) is not  enforceable  in accordance  with its
terms, the Executive and the Company agree that such Section, or such portion of
such  Section,  shall be  reformed  to make it  enforceable  in a  manner  which
provides the Company the maximum rights permitted under applicable law.

            (e) Waiver.  Waiver by either  party hereto of any breach or default
by the other party of any of the terms of this Agreement  shall not operate as a
waiver of any other breach or default,  whether similar to or different from the
breach or default waived.  No waiver of any provision of this Agreement shall be
implied  from any  course of  dealing  between  the  parties  hereto or from any
failure by either  party  hereto to assert its or his  rights  hereunder  on any
occasion or series of occasions.

            (f) Notices.  Any notice  required or desired to be delivered  under
this Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested,  or by telecopy and shall
be effective  upon  dispatch to the party to whom such notice shall be directed,
and  shall be  addressed  as  follows  (or to such  other  address  as the party
entitled  to notice  shall  hereafter  designate  in  accordance  with the terms
hereof):

      If to the Company:     Universal Security Instruments, Inc.
                             7-A Gwynns Mill Court
                             Owings Mills, Maryland  21117
                             Fax (410) 363-2218
                             Attention:  Chairman of the Compensation Committee

      If to the Executive:   Harvey B. Grossblatt
                             28 Westspring Way
                             Lutherville, Maryland   21093

            (g)  Amendments.  This  Agreement  may not be  altered,  modified or
amended except by a written instrument signed by each of the parties hereto.

            (h)  Headings.  Headings to sections in this  Agreement  are for the
convenience  of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.

            (i)  Counterparts.  This Agreement may be executed in  counterparts,
each of which  shall be  deemed an  original  but both of which  together  shall
constitute one and the same Agreement.

            (j) Withholding.  Any payments  provided for herein shall be reduced
by any amounts  required  to be withheld by the Company  from time to time under
applicable  federal,  state or local  income or  employment  tax laws or similar
statutes or other provisions of law then in effect.


                                       8
<PAGE>

            (k) Governing Law. This  Agreement  shall be governed by the laws of
the State of Maryland, without reference to principles of conflicts or choice of
law under which the law of any other jurisdiction would apply.

            (l) Context.  Unless the context of this Agreement  clearly requires
otherwise,  references  to the plural  include  the  singular,  to the  singular
include the plural,  to the part include the whole, and to the male gender shall
also  pertain  to the  female  and  neuter  genders  and  vice  versa.  The term
"including"  is not  limiting,  and the  term  "or"  has the  inclusive  meaning
represented by the phrase  "and/or".  The words  "hereof,"  "herein,"  "hereby",
"hereto",  "hereunder"  and  similar  terms  in  this  Agreement  refer  to this
Agreement  as a whole and not to any  particular  provision  of this  Agreement.
Section and Exhibit and clause references are to this Agreement unless otherwise
specified.

      IN WITNESS  WHEREOF,  the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has hereunto set his hand as of
the day and year first above written.

WITNESS:                                    THE COMPANY:
                                            UNIVERSAL SECURITY INSTRUMENTS, INC.

____________________________                By: /s/ James B. Huff
                                               ---------------------------------
                                                James B. Huff
                                                Vice President

                                            THE EXECUTIVE:

____________________________                /s/ Harvey B. Grossblatt
                                            ------------------------------------
                                            HARVEY B. GROSSBLATT


                                       9
<PAGE>

                                    EXHIBIT A

                                  BONUS FORMULA

      For purposes of the Bonus calculation,  the Company's "Pre-Tax Net Income"
with  respect to any fiscal  year means the amount of net income  before  income
taxes and before Bonus  calculation which will be reported by the Company in its
annual audited  consolidated  financial  statements  with respect to such fiscal
year, as determined pursuant to Generally Accepted  Accounting  Principles as in
effect of the date of this Agreement.

      With  respect to any fiscal  year of the  Company in which the Company has
achieved  Pre-Tax  Net Income,  the amount of Pre-Tax Net Income  equal to 8% of
shareholders'  equity as of the start of the fiscal year shall be excluded  from
the Bonus calculation (the "Bonus Threshold").  Thereafter,  the Executive shall
be  entitled  to  receive  as a Bonus an amount  equal to the  aggregate  of the
percentages  of such  Pre-Tax  Net Income in excess of the Bonus  Threshold,  as
specified below:

      On Pre-Tax Net Income up to and including $1 million                    3%

      On all portions of Pre-Tax Net Income from over $1 million
         up to and including $2 million                                       4%

      On all portions of Pre-Tax Net Income from over $2 million
         up to and including $3 million                                       5%

      On all portions of Pre-Tax Net Income from over $3 million
         up to and including $4 million                                       6%

      On all portions of Pre-Tax Net Income over $4 million                   7%


                                       10
<PAGE>

                                    EXHIBIT B

                                CHANGE OF CONTROL

      For the  purposes  of this  Agreement,  a "Change  of  Control"  means the
occurrence of any one or more of the following events:

            (i) The direct or  indirect  acquisition  of  ownership,  holding or
power to vote more than 25% of the Company's voting stock.

            (ii) The  acquisition  of the ability to control  the  election of a
majority of the Company's directors.

            (iii) The acquisition of a controlling influence over the management
or  policies  of the  Company by any  person or by  persons  acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934).

            (iv) During any period of two consecutive  years,  individuals  (the
"Continuing Directors") who at the beginning of such period constitute the Board
of  Directors  of the Company  (the  "Existing  Board")  cease for any reason to
constitute  at least  two-thirds  thereof,  provided that any  individual  whose
election  or  nomination  for  election  as a member of the  Existing  Board was
approved by a vote of at least  two-thirds of the  Continuing  Directors then in
office shall be considered a Continuing Director. The decision of the Continuing
Directors  as to  whether  or not a Change  in  Control  has  occurred  shall be
conclusive and binding on all parties.

            (v) The sale or other disposition of all or substantially all of the
assets of the Company in one transaction or a series of transactions (other than
financing arrangements).

            (vi) A merger, consolidation or share exchange involving the Company
and any other  person or entity,  including  any of the equity  owners as of the
date  hereof,  in  which  the  Company  or one of its  subsidiaries  is not  the
surviving entity.

            (vii)  Any other  "business  combination"  (as  defined  in  Section
3-601(e) of the Maryland General  Corporation Law) involving the Company and any
person or  entity,  including  any of the equity  owners as of the date  hereof,
whether or not such person or entity is an "interested  stockholder"  under that
statute.


                                       11