Exhibit 10.8

                        SETTLEMENT AGREEMENT AND RELEASES

      This Settlement Agreement and Releases ("Settlement Agreement") is made as
of June 30, 2005, by and among Michael L. Kovens, on the one side, and Universal
Security  Instruments,  Inc., a Maryland  corporation,  the Estate of Stephen C.
Knepper,  Harvey B. Grossblatt,  Ronald A. Seff, M.D., Howard Silverman,  Ph.D.,
and Cary Luskin, on the other side. The parties to this Settlement Agreement are
sometimes  referred to herein as the "Parties," and separately from time to time
as a "Party."

      For good and valuable consideration, the receipt and adequacy of which are
hereby  acknowledged  by each Party,  the aforesaid  Parties hereby covenant and
agree as follows:

      1.    The "Effective Date of Release" shall be June 30, 2005.

      2.    For purposes of this Settlement Agreement, the following definitions
            shall apply:

            (a)   "Kovens" shall mean Michael L. Kovens.

                  (i)   "Kovens   Group"   shall  mean  Kovens  and  his  heirs,
executors,     administrators,     trustees,     attorneys-in-fact,     personal
representatives,  successors,  assigns  and  any  and all  persons  or  entities
claiming by, through or on behalf of Kovens.

            (b)   "USI"  shall mean  Universal  Security  Instruments,  Inc.,  a
Maryland corporation.

                  (i)   "USI  Group"  shall mean USI and its past,  present  and
future parents, subsidiaries,  divisions, affiliates, predecessors,  successors,
trustees  and assigns,  and the past,  present and future  officers,  directors,
stockholders,  agents,  attorneys,  representatives  and employees  (for matters
relating in any way to their  capacities as officers,  directors,  stockholders,
agents,   attorneys,   representatives  or  employees)  of  USI  and  the  other
before-mentioned  entities, and the heirs, executors,  personal representatives,
administrators, successors and assigns of the before-mentioned individuals.

            (c)   "Knepper  Estate" shall mean the Estate of Stephen C. Knepper,
which is presently being probated in Baltimore County, Case No. 131444.

                  (i)   "Knepper Estate Group" shall mean the Knepper Estate and
Stephen   C.   Knepper's    heirs,    executors,    administrators,    trustees,
attorneys-in-fact, personal representatives, successors and assigns.

            (d)   "Grossblatt" shall mean Harvey B. Grossblatt.

                  (i)   "Grossblatt  Group" shall mean Grossblatt and his heirs,
            executors,  administrators,  trustees,  attorneys-in-fact,  personal
            representatives, successors and assigns.

            (e)   "Seff" shall mean Ronald A. Seff, M.D.

                  (i)   "Seff Group"  shall mean Seff and his heirs,  executors,
administrators,    trustees,   attorneys-in-fact,    personal   representatives,
successors and assigns.

            (f)   "Silverman" shall mean Howard Silverman, Ph.D.


<PAGE>

                  (i)   "Silverman  Group" shall mean  Silverman  and his heirs,
executors,     administrators,     trustees,     attorneys-in-fact,     personal
representatives, successors and assigns.

            (g)   "Luskin" shall mean Cary Luskin.

                  (i)   "Luskin   Group"   shall  mean  Luskin  and  his  heirs,
executors,     administrators,     trustees,     attorneys-in-fact,     personal
representatives, successors and assigns.

                  (h)   As used in this Settlement Agreement,  all references to
any "Group" as defined above shall include, individually,  separately,  jointly,
collectively and otherwise, the "Group" and each and every one of its members.

                  (i)   "SEC"  shall  mean  the  United  States  Securities  and
Exchange Commission.

                  (j)   "Securities  Act" shall mean the Securities Act of 1933,
15 U.S.C. ss.ss. 77a, et seq.

                  (k)   "Registration  Statement"  shall  have the  meaning  set
forth in paragraph 5 below.

                  (l)   "Common  Stock"  shall mean the common stock of USI with
par value of $0.01 per share.

                  (m)   "Registered  Shares"  shall mean  those  shares of USI's
Common Stock owned by Kovens, directly or indirectly, and registered pursuant to
the Registration Statement.

                  (n)   The "Closing" of the  transactions  as set forth in this
Settlement  Agreement  shall take place at the offices of Venable LLP in Towson,
Maryland, on July 12, 2005, at 10:00 a.m. or at such other time or in such other
way as the Parties may agree.

                  (o)   "Lawsuit"  shall  mean  the  litigation  pending  in the
Circuit  Court for Baltimore  County,  Maryland,  entitled  Michael L. Kovens v.
Universal Security Instruments, Inc., Case No. 03-C-03-009639.

                  (p)   "Claim" or "Claims" shall mean and include all and every
manner of action and actions, cause and causes of action, or any and all claims,
demands  and  liabilities  whatsoever  of every  name  and  nature,  whether  in
contract, tort or otherwise or by statute,  whether known or unknown,  suspected
or unsuspected,  accrued or unaccrued, in law, equity or otherwise.  "Claim" and
"Claims" shall  include,  but not be limited to, any and all claims or causes of
action (i)  asserted in or that could have been  asserted in the  Lawsuit,  (ii)
arising out of or relating  in any way to the facts,  circumstances,  damages or
occurrences  alleged in and/or giving rise to the Lawsuit,  or (iii) arising out
of or relating in any way to any stock or other  interest in USI,  including any
affiliates,  subsidiaries  or divisions of USI,  owned directly or indirectly by
Kovens or the Kovens Group.

      3.    USI shall pay to Kovens at the Closing the sum of One Hundred  Fifty
Thousand  Dollars  ($150,000.00),  by check made  payable to "Escrow  Account of
Cooter, Mangold, Tompert & Karas, L.L.P."

      4.    At the  Closing,  and  pursuant  to Kovens'  letter of June 6, 2002,
exercising the option under that certain  Non-Qualified  Stock Option  Agreement
dated June 11, 1997 between USI and Kovens, Kovens shall deliver to USI a check,
made  payable  to  "Universal  Security  Instruments,  Inc.,"  in the  amount of
Forty-Five  Thousand Dollars ($45,000),  and USI shall deliver to Kovens a stock


                                        2
<PAGE>
certificate  representing  Twenty Thousand  (20,000)  registered shares of USI's
Common Stock.  As directed by Kovens,  USI shall issue to Kovens a Form 1099 for
calendar year 2005 based on the adjusted  post-stock split value of the stock as
of June 6, 2002 of $2.40 per share,  the date on which Kovens gave notice of his
exercise of the said  option.  Kovens  shall be solely  responsible  for any tax
consequences or liability  arising out of or as a result of the exercise of this
option as provided in this paragraph 4, and he shall  indemnify and hold USI and
the USI Group harmless from any tax consequences or liability.

      5.    Within  seventeen  (17) days after the Closing,  and  provided  that
Kovens has supplied  the  information  described  in  paragraph 7, below,  on or
before July 8, 2005,  USI shall file with the SEC a  registration  statement  on
Form  S-3  (the  "Registration  Statement")  under  and in  accordance  with the
provisions of the  Securities  Act, with respect to the offer and sale by Kovens
of all of the 332,719  shares,  which amount includes all of the shares acquired
by Kovens  under  paragraph  4 above,  of USI's  Common  Stock  owned by Kovens,
directly or indirectly.  USI shall exercise its reasonable  efforts to cause the
Registration  Statement to be declared effective as soon as practically possible
following the filing.

      6.    USI will  use its  reasonable  efforts  to  cause  the  Registration
Statement to become and remain  continuously  effective until the earlier of (a)
all of the Registered  Shares covered by the Registration  Statement having been
sold in accordance with Kovens' intended method of disposition set forth in such
Registration  Statement,  or (b) one year after the  Registration  Statement has
been  declared  effective;  provided,  that if, at any time during such one-year
period, the closing price of the Common Stock, as reported by the American Stock
Exchange (or such other stock  exchange or listing on which Common Shares of USI
may be listed at the time), is under Ten Dollars ($10.00) per share (as adjusted
for stock splits, stock dividends or similar corporate actions subsequent to the
date  hereof)  for  ten  (10)  consecutive  trading  days,  then  such  one-year
requirement for  maintaining the  effectiveness  of the  Registration  Statement
shall be extended an additional year for a total of two years.  Kovens shall use
all  reasonable  efforts to sell all of his shares of USI's  Common Stock during
the effective period of the Registration Statement.

      7.    In connection with the filing by USI of the Registration  Statement,
USI is required to provide the information set forth on Exhibit 1 with regard to
Kovens.  Kovens  hereby  warrants  and  represents  to  USI,  with  the  express
understanding that USI will rely on such  representations  and warranties,  that
(i) all  information  required  to be  provided  pursuant  to  Exhibit 1 will be
provided  in writing by July 8, 2005,  and all  information  set forth on and/or
provided pursuant to Exhibit 1 is accurate and complete in all material respects
and does not contain any untrue  statement  of material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading;  (ii) he is not a  broker-dealer  or any affiliate of a
broker-dealer;  and (iii) at the time Kovens acquired the Registered  Shares, he
did not have any agreements or understandings,  directly or indirectly, with any
person or entity to distribute those Registered Shares. Kovens shall immediately
notify  USI of any  change or  supplement  to any of the  information  set forth
herein or on Exhibit 1.

      8.    In  connection  with  the  Registration  Statement,   USI  shall  be
responsible  only for the SEC  registration  fees and USI's accounting and legal
fees  and  expenses.  USI  shall  not  be  liable  for  any  legal,  accounting,
commission, transfer or any other fees or expenses of Kovens.

      9.    At  the  Closing,  Kovens  shall  deliver  to  USI a  signed  letter
withdrawing  his  nomination  for  election  as a Director  at USI's 2005 Annual
Meeting in the form attached  hereto as Exhibit 2. Within five (5) business days
of the Closing,  Kovens shall file with the SEC an amendment to his Schedule 13D
filing  reporting that he has withdrawn his nomination/  candidacy for the Board
of  Directors.  Kovens shall not in the future seek to be elected as a member of
USI's Board of Directors or to have any role in the  management  of USI.  Kovens
shall not permit  himself or  consent to be  nominated,  nor shall he accept any
nomination, to be a member of USI's Board of Directors.

      10.   Kovens hereby expressly acknowledges that Seff, Silverman and Luskin
are  qualified  and  competent  to be Directors of USI, and that they qualify as
"independent" Directors.


                                       3
<PAGE>

      11.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the USI Group, individually, separately, jointly, collectively and otherwise, of
and  from any and all  Claim or  Claims  which  Kovens  ever  had,  now has,  or
hereafter  can,  shall  or  may  have  against  the  USI  Group,   individually,
separately,  jointly, collectively and otherwise, for, upon, or by reason of any
matter,  cause  or thing  whatsoever,  from the  beginning  of the  world to the
Effective  Date of Release;  provided,  however,  that nothing in this paragraph
shall affect any right that Kovens may have in the future under USI's Charter or
Bylaws to indemnity for any  subsequent  proceeding  brought  against  Kovens by
reason of his  service  as an  officer  or  director  of USI.  Kovens  expressly
represents and warrants  that, as of the Effective  Date, he has no knowledge or
information about any claim or proceeding that would cause him to seek indemnity
from USI.

      12.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the Knepper Estate Group, individually,  separately,  jointly,  collectively and
otherwise,  of and from any and all Claim or Claims  which  Kovens ever had, now
has, or  hereafter  can,  shall or may have  against the Knepper  Estate  Group,
individually,  separately, jointly, collectively and otherwise, for, upon, or by
reason of any matter, cause or thing whatsoever, from the beginning of the world
to the Effective Date of Release.  In addition to the foregoing release,  Kovens
shall deliver at the Closing an appropriate  document  dismissing with prejudice
and  withdrawing  any and all claims made by or on behalf of the Kovens Group in
the administration or probate of the Knepper Estate.

      13.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the  Grossblatt  Group,  individually,  separately,  jointly,  collectively  and
otherwise,  of and from any and all Claim or Claims  which  Kovens ever had, now
has,  or  hereafter  can,  shall  or may  have  against  the  Grossblatt  Group,
individually,  separately, jointly, collectively and otherwise, for, upon, or by
reason of any matter, cause or thing whatsoever, from the beginning of the world
to the Effective Date of Release.

      14.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the Seff Group, individually,  separately,  jointly, collectively and otherwise,
of and from any and all Claim or Claims  which  Kovens  ever  had,  now has,  or
hereafter  can,  shall  or  may  have  against  the  Seff  Group,  individually,
separately,  jointly, collectively and otherwise, for, upon, or by reason of any
matter,  cause  or thing  whatsoever,  from the  beginning  of the  world to the
Effective Date of Release.

      15.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the  Silverman  Group,  individually,   separately,  jointly,  collectively  and
otherwise,  of and from any and all Claim or Claims  which  Kovens ever had, now
has,  or  hereafter  can,  shall  or  may  have  against  the  Silverman  Group,
individually,  separately, jointly, collectively and otherwise, for, upon, or by
reason of any matter, cause or thing whatsoever, from the beginning of the world
to the Effective Date of Release.

      16.   Kovens,   for  himself  and  for  the  Kovens  Group,   does  hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the Luskin Group, individually, separately, jointly, collectively and otherwise,
of and from any and all Claim or Claims  which  Kovens  ever  had,  now has,  or
hereafter  can,  shall or may  have  against  the  Luskin  Group,  individually,
separately,  jointly, collectively and otherwise, for, upon, or by reason of any
matter,  cause  or thing  whatsoever,  from the  beginning  of the  world to the
Effective Date of Release.

      17.   Kovens,  for  himself and the Kovens  Group,  hereby  covenants  and
agrees that except with respect to the  enforcement of this  Agreement,  he will
not file,  bring,  continue,  or initiate  any  lawsuit,  claim,  complaint,  or
judicial,  administrative or other proceeding,  against any member of any of the
Groups,  namely,  the USI Group, the Knepper Estate Group, the Grossblatt Group,


                                       4
<PAGE>

the  Seff  Group,  the  Silverman  Group  or  the  Luskin  Group,  individually,
separately,  jointly,  collectively, in any capacity, including as an officer or
director of USI, making claims for either monetary  damages or equitable  relief
based upon any future actions of any member of any of the Groups alleging breach
of fiduciary duty, fraud, breach of contract, negligence or claims for dilution.

      18.   USI, for itself and for the USI Group,  does hereby  irrevocably and
unconditionally  release,  acquit,  exonerate  and forever  discharge the Kovens
Group,  individually,  separately,  jointly,  collectively and otherwise, of and
from any and all Claim or Claims which USI ever had, now has, or hereafter  can,
shall or may have against the Kovens Group, individually,  separately,  jointly,
collectively  and  otherwise,  for,  upon, or by reason of any matter,  cause or
thing  whatsoever,  from the  beginning  of the world to the  Effective  Date of
Release.

      19.   Grossblatt,  for himself and for the Grossblatt  Group,  does hereby
irrevocably and unconditionally release, acquit, exonerate and forever discharge
the Kovens Group, individually, separately, jointly, collectively and otherwise,
of and from any and all Claim or Claims which  Grossblatt  ever had, now has, or
hereafter  can,  shall or may  have  against  the  Kovens  Group,  individually,
separately,  jointly, collectively and otherwise, for, upon, or by reason of any
matter,  cause  or thing  whatsoever,  from the  beginning  of the  world to the
Effective Date of Release.

      20.   At the  Closing,  Kovens  shall  deliver  to USI for  filing  in the
Lawsuit the original of a Stipulation  of Dismissal  with  Prejudice in the form
attached hereto as Exhibit 3 signed on his behalf by his attorney of record.

      21.   At the Closing,  Kovens shall also deliver to USI all  originals and
copies of lists of shareholders of USI. Kovens expressly represents and confirms
that he has not retained in any form any copy of a USI  shareholder  list or any
part  thereof,  has not given a copy of a shareholder  list to anyone else,  and
agrees not to request in the future lists of USI shareholders.

      22.   The Parties enter into this Settlement Agreement as a settlement and
compromise  of  disputed  Claims.  It is  expressly  understood  and agreed that
neither execution of this Settlement Agreement, nor the tender or receipt of any
payment,  nor the performance of any  obligations  recited herein is intended or
shall  be  understood  as an  acknowledgment  of  responsibility,  admission  of
liability,  or other  expression  reflecting  upon the merits of any  dispute or
Claim among the Parties.

      23.   The Parties agree that the  existence  and terms of this  Settlement
Agreement  are  strictly  confidential  and shall not be  disclosed to any other
person or  entity,  except to the  extent  necessary  to carry out the terms and
conditions of this Settlement  Agreement or as may be required by law,  process,
stock exchange  rules or financial  reporting  obligations,  which shall include
disclosure to USI's outside professional advisors.

      24.   The terms of this  Settlement  Agreement are  contractual  and not a
mere recital,  and the Parties  hereto  expressly  represent and warrant to each
other that each possesses the full and complete  authority to covenant and agree
as herein  provided,  and further  represent and warrant to each other that each
has the full and complete authority to execute this Settlement Agreement.

      25.   This Settlement  Agreement shall in all respects be governed by, and
be construed in  accordance  with,  the internal  laws of the State of Maryland,
including,  without  limitation,  in  relation  to  all  matters  of  formation,
interpretation,   construction,  validity,  performance,  and  enforcement.  The
drafting of this  Settlement  Agreement was the product of  negotiations  by all
Parties,  and the language of all parts of the Settlement Agreement shall in all
cases be construed as a whole,  according to its fair meaning,  and not strictly
for or against  any of the  Parties.  The use herein of the words  "and" or "or"
shall mean "and/or" and the use herein of the singular  shall include the plural
and vice versa.

                                       5
<PAGE>

      26.   This Settlement  Agreement shall be construed  without regard to any
presumption or other rule requiring construction against the Party who caused it
to have  been  drafted.  No  Party  shall  be  considered  the  drafter  of this
Settlement Agreement.

      27.   This Settlement Agreement  constitutes the sole and entire agreement
between the Parties in relation to the subject  matter,  and shall supersede and
extinguish any and all prior agreements, whether in writing or oral, in relation
to the subject matter of this Settlement Agreement. No term or provision of this
Settlement  Agreement may be varied,  changed,  modified,  waived, or terminated
orally but only by an instrument in writing signed by the Party against whom the
enforcement of the variation,  change,  modification,  waiver, or termination is
sought.  The waiver by any Party  hereto of any breach of any  provision of this
Settlement  Agreement  shall not  constitute or operate as a waiver of any other
breach of any such  provision or of any other  provision  hereof,  nor shall any
failure to enforce any provision  hereof  operate as a waiver at such time or at
any future time of such provision or of any other provision hereof.

      28.   Each Party  represents,  agrees and acknowledges that such Party has
been  advised of and has  discussed  all  aspects of this  Settlement  Agreement
thoroughly  with such  Party's  attorneys,  that such Party has had a reasonable
amount of time in which to review and consider this Settlement  Agreement,  that
such Party has read and  understands  all of the  provisions  herein,  that such
Party is competent to enter into this Settlement Agreement,  and that such Party
is entering into this  Settlement  Agreement  knowingly and  voluntarily of such
Party's own free will.  Each Party  further  represents  that in executing  this
Settlement  Agreement,  such Party  does not rely on  inducements,  promises  or
representations  made by anyone  other than those  embodied  in this  Settlement
Agreement.

      28.   No determination by any court,  governmental or administrative  body
or otherwise  that any provision of this  Settlement  Agreement or any amendment
hereof is illegal,  invalid or  unenforceable  in any instance  shall affect the
validity  or  enforceability  of (i)  such  provision  in any  circumstance  not
controlled by such  determination or (ii) any other provision of this Settlement
Agreement.  Each provision  shall be valid and enforceable to the fullest extent
allowed by, and shall be construed  whenever  possible as being consistent with,
applicable  law. In the event that any  provision  hereof is  declared  illegal,
invalid or  unenforceable,  such provision  shall be deleted from the Settlement
Agreement,  the remainder of the  Settlement  Agreement  shall  continue in full
force and  effect,  and the Parties  hereto  shall  promptly  agree to a similar
provision  having,  to the extent allowed by law, an effect as close as possible
to the provision rendered illegal, invalid or unenforceable.

      30.   The  Parties  agree that any  dispute  arising out of or relating to
this Settlement  Agreement,  or the breach thereof, or any other dispute between
or among  any  member  of the USI  Group  and any  member  of the  Kovens  Group
regarding  any matter  involving or relating in any way to USI or its  business,
shall  be  settled  by  arbitration  administered  by the  American  Arbitration
Association  under its Commercial  Arbitration  Rules, with any hearing(s) to be
conducted in Baltimore,  Maryland.  Notwithstanding  the Commercial  Arbitration
Rules,  the  Parties  agree that  discovery  will be  conducted  pursuant to the
Federal  Rules of Civil  Procedure.  In the event that  either  party  submits a
dispute to  arbitration,  the losing  party will be  responsible  for paying the
prevailing party's attorneys' fees and costs.  Judgment on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.

      31.   This Agreement may be signed in any number of counterparts,  each of
which shall be an original,  with the same effect as if the  signatures  thereto
and hereto were upon the same instrument.  This Agreement shall become effective
when each party hereto shall have  received  counterparts  hereof  signed by all
Parties  hereto.  Delivery of the fully  executed  Settlement  Agreement  to all
Parties shall be made at the Closing.


                                       6
<PAGE>
      IN WITNESS WHEREOF,  Michael L. Kovens,  Harvey B.  Grossblatt,  Ronald A.
Seff,  M.D.,  Howard  Silverman,  Ph.D,  and Cary Luskin have each executed this
Settlement  Agreement  under  seal,  and the Estate of Stephen  C.  Knepper  and
Universal Security Instruments,  Inc. have each caused this Settlement Agreement
to be executed under seal by its duly authorized representative.

             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                 Michael L. Kovens
                                        Date:  June 30, 2005


             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                 Harvey B. Grossblatt
                                        Date:  June 30, 2005


             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                 Ronald A. Seff, M.D.
                                        Date:  July ___, 2005


             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                 Howard Silverman, Ph.D.
                                        Date:  July ___, 2005


             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                 Cary Luskin
                                        Date:  July ___, 2005


                                        ESTATE OF STEPHEN C. KNEPPER

             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
Witness                                   Title: Personal Representative
                                          Date:  July ___, 2005


ATTEST:                                 UNIVERSAL SECURITY INSTRUMENTS, INC.

             /s/                                   /s/
---------------------------             ---------------------------(SEAL)
                                          Harvey B. Grossblatt
                                          Title: President
                                          Date:  June 30, 2005


                                       7
<PAGE>

                                    EXHIBIT 1

            Information   with   respect  to  Kovens  to  be   included  in  the
Registration Statement pursuant to paragraph 7 of the Settlement Agreement:

      Name                              Michael L. Kovens

      Nature of any position,           Director until September 2003;
      office, or other material         Stockholder; Transactions described
      relationship which Kovens has     in this Agreement
      had within the past three
      years with USI or any of its
      predecessors or affiliates

      Nature of acquisitions of         All Registered Shares were acquired
      Registered Shares                 by Kovens directly from USI by
                                        original subscriptions, by gifts
                                        from his father prior to 1988,
                                        pursuant to the exercise of options
                                        under USI's Stock Option Plan,
                                        through stock dividends, or open
                                        market purchases. Kovens shall
                                        provide the Company with details,
                                        including dates of purchase and
                                        amounts, of all open market stock
                                        purchases.

      Number of shares of USI's         332,719
      Common Stock owned by Kovens
      prior to the offering

      Number of shares of USI's         332,719
      Common Stock to be offered
      for Kovens' account

      Number of shares of USI's         0
      Common Stock to be owned by
      Kovens after the completion
      of the offering

If the securities are to be offered through the selling efforts of brokers or
dealers, Kovens shall also provide the following information: description of the
plan of distribution and the terms of any agreement, arrangement, or
understanding entered into with broker(s) or dealer(s) prior to the effective
date of the registration statement, including volume limitations on sales,
parties to the agreement and the conditions under which the agreement may be
terminated. If known, identify the broker(s) or dealer(s) which will participate
in the offering and state the amount to be offered through each. Kovens shall
also describe any other planned distribution.

<PAGE>

                                    EXHIBIT 2

                                Michael L. Kovens
                                 6 Regency Court
                            Baltimore, Maryland 21208
                               Dated: July 1, 2005


Universal Security Instruments, Inc.
7-A Gwynns Mill Court
Owings Mills, Maryland 21117
Attention: Harvey B. Grossblatt

Dear Mr. Grossblatt:

      I hereby withdraw my nomination for election as a Director of Universal
Security Instruments, Inc. ("USI") at USI's 2005 annual meeting.

                                        Sincerely,
                                        Michael L. Kovens

<PAGE>

                                     EXHIBIT 3

MICHAEL L. KOVENS,                     :        IN THE
            Plaintiff,                 :        CIRCUIT COURT
            v.                         :        FOR
UNIVERSAL SECURITY                     :        BALTIMORE COUNTY
INSTRUMENTS, INC., et al.,             :
            Defendants.                :        Case No: 03-C-03-009639
                                       :

                     STIPULATION OF DISMISSAL WITH PREJUDICE

      Plaintiff Michael L. Kovens and Defendants Universal Security Instruments,
Inc., Estate of Stephen C. Knepper, and Harvey B. Grossblatt, by and through
their undersigned attorneys, hereby stipulate and agree that the above-captioned
civil action and all claims asserted or that could have been asserted herein,
including all claims asserted against any party in the Complaint, the Amended
Complaint, the First Amended Complaint, the Second Amended Complaint or the
Third Amended Complaint, shall be, and are hereby, dismissed with prejudice,
with each party to bear his/its own costs.

                             Respectfully submitted,


----------------------------------           -----------------------------------
Dale A. Cooter                               C. Carey Deeley, Jr.
James E. Tompert                             VENABLE LLP
COOTER,  MANGOLD,  TOMPERT  &  KARAS,        210 Allegheny Avenue, P.O. Box 5517
L.L.P.                                       Towson, MD  21204
5301 Wisconsin Avenue, N.W.                  (410) 494-6200
Suite 500
Washington, D.C.  20015                      G. Stewart Webb, Jr.
(202) 537-0700                               Christopher R. Mellott
                                             VENABLE LLP
Attorneys for Plaintiff                      2 Hopkins Plaza, Suite 1800
                                             Baltimore, MD  21201
                                             (410) 244-7400

                                             Attorneys for Defendants

SO ORDERED this___ day of _______, 2005.

---------------------------------------
Judge Susan Souder