UNIVERSAL SECURITY INSTRUMENTS, INC.
                         NON-QUALIFIED STOCK OPTION PLAN
                         -------------------------------


         1.  Purpose - The purpose of this Plan is to further the  interests  of
UNIVERSAL  SECURITY  INSTRUMENTS,  INC.  (hereinafter  called the  "Company") by
providing  incentives for  employees,  officers and directors of the Company and
its subsidiaries, who may be designated for participation therein and to provide
additional means of attracting and retaining competent personnel.

         2.  Administration  - The Plan  shall be  administered  by a  committee
consisting  of the Board of  Directors  of the Company or such lesser  number of
such Board (but not less than three persons) as is designated by the Board. Such
committee shall  hereinafter be referred to as the  "Non-Qualified  Stock Option
Committee"  or the  "Committee".  Subject  to the  provisions  of the  Plan  and
applicable  law,  the  Committee  is  authorized  to  interpret  the Plan and to
prescribe,  amend and rescind rules and regulations  relating to the Plan and to
any options granted thereunder, and to make al other determinations necessary or
advisable for the administration of the Plan.

         3.  Participants  and  Allotments - The Committee  shall  determine and
designate from time to time those employees and directors of the Company to whom
options are to be granted and who thereby become  participants  in the Plan. The
Committee  shall allot to such  participants  options to purchase shares in such
amounts as the Committee shall from time to time determine.  Employees, officers
and  directors  of  the  Company  or  its  subsidiaries  shall  be  eligible  to
participate in the Plan. No member of the Committee shall have any right to vote
or  decide  upon any  matter  relating  solely  to  himself  or a member  of his
immediate  family or  solely to any of his  rights  or  benefits  (or  rights or
benefits of a member of his immediate  family) under the Plan.  Participation in
the Plan shall not confer any right of  continuation  of service as an employee,
officer or a director of the Company or its subsidiary.

         4. Shares Subject to the Plan - Under this Plan, the Committee may from
time to time grant options to  employees,  officers and directors of the Company
and its  subsidiaries,  entitling the holders  thereof to purchase shares of the
Company's  authorized and unissued  common stock,  par value $.01 per share (the
"Common  Stock"),  or  shares  of the  Company's  treasury  Common  Stock,  or a
combination  of both,  up to an  aggregate  of 493,750  shares of Common  Stock.
Notwithstanding  anything  herein to the  contrary,  no member of the  Committee
shall be  eligible to vote on the  granting of any option  under the Plan if the
option is to be granted to such  member of the  Committee  or to a member of his
immediate family. If any option granted under the Plan shall terminate or expire
unexercised, in whole or in part, the shares so released from option may be made
the subject of  additional  options  granted  under the Plan.  The Company shall
reserve and keep  available  such number of shares of stock as will  satisfy the
requirements  of all  outstanding  options  granted under the Plan. In the event
there is any change in the Company's shares of Common Stock, as by stock splits,
reverse stock splits, stock dividends or recapitalization,  the number of shares
available  for option and the shares  subject to option  shall be  appropriately
adjusted by the Committee.

         5. Option Price - The option price or prices shall be as established by
the  Committee  when such option is granted on the date or dates the options are
granted.  In the event there is any change in the  Company's  shares as by stock
splits, reverse stock splits, stock dividends or recapitalization,  the purchase
price of  shares  subject  to  option  shall be  appropriately  adjusted  by the
Committee.

<PAGE>

         6. Other Provisions - Each option shall be subject to all provisions of
this Plan and to the following terms and conditions:

         (a) Options  will be granted  under the Plan which will be  exercisable
for a period of five  years  from the date of grant.  The  Committee  may in its
discretion  impose  additional  restrictions  as to the time of exercise  and/or
number of shares that may be purchased upon any exercise of options.

         (b) No option shall be transferable  by the optionee  otherwise than by
will or the laws of descent and distribution and shall be exercisable during his
lifetime only by the optionee.

         (c) All unexercised option swill terminate, be forfeited and will lapse
immediately  if  (i)  the  optionee's   employment   with  the  Company  or  its
subsidiaries  is terminated  because the optionee is discharged for  dishonesty,
commission  of a felony  or the  intentional  committing  of an act  which has a
material adverse effect or impact upon the Company or its subsidiaries,  such as
his  disclosing  Company  confidential   information  or  trade  secrets  to  an
unauthorized person or persons, or (ii) the optionee agrees to accept employment
with a competitor of the Company or its subsidiaries  without the consent of the
Company.

         (d) If the optionee's  employment with the Company or its  subsidiaries
is terminated for any reason other than as set forth in subparagraph  (c) above,
or if the optionee  ceases to be a director of the Company or its  subsidiaries,
the Optionee may exercise, subject to the provisions of subparagraph (a) and (c)
above, any option which has accrued hereunder as of the date his employment with
the Company or its  subsidiaries  terminated or as of the date he ceases to be a
director (as may be the case) for a period of ninety (90) days after the date of
the termination of his employment with, or his termination as a director of, the
Company  or  its  subsidiaries;   provided,  however,  that  if  the  optionee's
employment  (or being a  director,  as may be the case) with the  Company or its
subsidiaries  is  terminated  by reason of his death,  the  optionee's  personal
representatives,  estate or heirs (as the case may be) may exercise,  subject to
the provisions of subparagraph (a) above, any option which has accrued hereunder
as of the date of the optionee's  death for a period of one hundred eighty (180)
days after the date of the optionee's death.

         (e)  Except as  otherwise  provided  in  subparagraph  (d)  above,  all
unexercised  options  will  terminate,  be  forfeited  and will  lapse  upon the
termination of the optionee's  employment  with the Company or its  subsidiaries
(or  upon  the  termination  of his  being  a  director  of the  Company  or its
subsidiaries, as the case may be).

         7.  Exercise of Options - To exercise  the option,  the optionee or his
successor shall give written notice to the Company's Chief Financial  Officer at
the Company's  principal  office in  Baltimore,  Maryland,  accompanied  by full
payment for the shares being  purchased and a written  statement that the shares
are purchased for investment and not with a view to distribution.  However, this
statement will not be required in the event the shares subject to the option are
registered  with the  Securities  and  Exchange  Commission.  If the  option  is
exercised by the successor of the optionee,  following his death, proof shall be
submitted,  satisfactory  to the  Committee,  of the right of the  successor  to
exercise the option.

         Shares  of stock  issued  pursuant  to this  Plan  which  have not been
registered with the Securities and Exchange  Commission shall bear the following
legend:

                                      -2-
<PAGE>

                           "The shares  represented by this certificate have not
                  been  registered  under the  Securities Act of 1933 and may be
                  offered or sold only if  registered  under the  provisions  of
                  that Act or if an exemption from registration is available.

The Company  shall not be required  to  transfer or deliver any  certificate  or
certificates  for shares  purchased  upon any such exercise of said option:  (a)
until after  compliance  with all then  applicable  requirements of law; and (b)
prior to admission of such shares to listing on any stock  exchange on which the
stock may then be listed.  In no event  shall the  Company be  required to issue
fractional shares to the employee, officer or director.

         8.  Registration  - If the Company shall be advised by its counsel that
shares of stock  deliverable  upon any  exercise of an option are required to be
registered  under the  Securities  Act of 1933, or that the consent of any other
authority  is  required  for the  issuance  of  same,  the  Company  may  effect
registration  or obtain  consent,  and  delivery of shares by the Company may be
deferred  until  registration  is effected  or consent  obtained.  However,  the
Company  reserves the right to revoke the option if it  determines  that, in the
best  interest  of the  Company,  the shares  should not be  registered  or that
consent should not be obtained.

         9.  Issuance of Stock - No stock will be issued  until full payment for
such stock has been made.  The  Optionee  shall have no rights as a  shareholder
with  respect  to  optioned  shares  until the date of the  issuance  of a stock
certificate  to him for such shares.  No adjustment  shall be made for dividends
(ordinary or  extraordinary,  whether in cash,  securities or other property) or
distributions  or other  rights for which the  record  date is prior to the date
such certificate is issued, except as provided in Paragraphs 4 and 5.

         10.  Amendments  and  Termination  - The Board of Directors  may amend,
suspend,  discontinue or terminate the Plan, but no such action may, without the
consent of the  holder of any option  granted  hereunder,  alter or impair  such
option, except as provided in Paragraphs 4 and 5.

         11. Option  Agreement - The granting of an option shall take place only
when a  written  option  agreement  substantially  in  the  form  of the  Option
Agreement  which is  attached  hereto and marked  Exhibit I is executed by or on
behalf of the Company and the  employee,  officer or director to whom the option
is granted and such executed agreement is delivered to the Company.

         12.  Period of Plan - The Plan,  which  initially  became  effective on
April 5, 1978,  has been extended by the Board of Directors and will continue in
effect until and will expire on March 31, 2003.

                                      -3-

<PAGE>


                                    Exhibit I

                      UNIVERSAL SECURITY INSTRUMENTS, INC.
                      NON-QUALIFIED STOCK OPTION AGREEMENT

         THIS  AGREEMENT,  Made as of this ____ day of __________,  20__, by and
between   UNIVERSAL   SECURITY   INSTRUMENTS,   INC.,  a  Maryland   corporation
(hereinafter called the "Company"), and (hereinafter called the "Optionee").

         WHEREAS, the Board of Directors of the Company considers it
desirable and in the company's best interest that the Optionee be given an
opportunity to purchase shares of its Common Stock to provide an incentive for
the Optionee and to promote the success of the Company.

         NOW,  THEREFORE,  in  consideration  of the  premises,  it is agreed as
follows:

         1. Grant of Option.  The Company  hereby  grants to optionee the right,
privilege   and   option  to   purchase   from  the   Company _________________
(__________) shares of the Common Stock of the Company     at     a     purchase
price    of  _____________________________ ($__________) per share in the manner
and subject to the conditions hereinafter provided.

         2. Period of Exercise of Option.

         (a) The option will be exercisable  for a period of years from the date
of grant,  except as  provided  in  subparagraphs  (b),  (c) and (d)  below,  in
accordance with the following schedule:

                           [INSERT EXERCISE SCHEDULE]

         (b) All unexercised options will terminate, be forfeited and will lapse
immediately if (i) the Optionee's  employment with the Company or its subsidiary
is terminated because the Optionee is discharged for dishonesty, commission of a
felony or the  intentional  committing  of an act which has a  material  adverse
effect or impact  upon the  Company or its  subsidiary,  such as his  disclosing
Company  confidential  information or trade secrets to an unauthorized person or
persons,  or (ii) the  Optionee  accepts  employment  with a  competitor  of the
Company or its subsidiary, without the consent of the Company.

         (c) If the Optionee's  employment with the Company or its subsidiary is
terminated for any reason other than as set forth in subparagraph (b) above, the
Optionee may exercise,  subject to the provisions of  subparagraphs  (a) and (b)
above,  any option which has accrued  hereunder as of the date of his employment
with the Company or its  subsidiary  terminated for a period of ninety (90) days
after the date of the  termination  of his  employment  with the  Company or its
subsidiary;  provided,  however,  that if the  Optionee's  employment  with  the
Company or its  subsidiary is terminated by reason of his death,  the Optionee's
personal  representatives,  estate or heirs  (as the case may be) may  exercise,
subject  to the  provisions  of  subparagraph  (a) above,  any option  which has
accrued  hereunder  as of the date of the  Optionee's  death for a period of one
hundred eighty (180) days after the date of the Optionee's death.

<PAGE>

         (d)  Except as  otherwise  provided  in  subparagraph  (c)  above,  all
unexercised  options  will  terminate,  be  forfeited  and will  lapse  upon the
termination of the Optionee's employment with the Company or its subsidiary.

         3.  Method of  Exercise.  In order to  exercise  the  option the holder
thereof must give written notice to the Chief  Financial  Officer of the Company
at  Baltimore,  Maryland,  accompanies  by  full  payment  of the  shares  being
purchased and a written  statement  that the shares are purchased for investment
and not with a view to distribution. If the option is exercised by the successor
of the Optionee  following  his death,  proof shall be submitted of the right of
the  successor to exercise the option.  shares of stock issued  pursuant to this
Plan which have not been registered with the Securities and Exchange  Commission
shall bear the following legend:

                           "The shares represented by this Certificate have not
                  been registered under the Securities Act of 1933 and may be
                  offered or sole only if registered under the provisions of
                  that Act or if an exemption from registration is available."

         The  Company   shall  not  be  required  to  transfer  or  deliver  any
certificate or certificates  for shares purchased upon any such exercise of said
option: (a) until after compliance with all then applicable requirements of law;
and (b) prior to  admission  of such shares to listing on any stock  exchange on
which the stock may then be listed. In no event shall the Company be required to
issue fractional shares to the Optionee.

         4. Limitation upon Transfer.  Except as otherwise provided in paragraph
2 hereof,  the option and all rights granted  hereunder shall not be transferred
by the Optionee,  other than by will or by the laws of descent and distribution,
and may not be  assigned,  pledged or  hypothecated  in any way and shall not be
subject  to  execution,  attachment  or  similar  process.  Upon any  attempt to
transfer  the  options,  other  than  by  will or by the  laws  of  descent  and
distribution,  or to assign,  pledge,  hypothecate or otherwise  dispose of such
option or of any rights granted hereunder, contrary to the provisions hereof, or
upon the levy of any  attachment  or similar  process  upon such  option or such
rights, such option and such rights shall immediately become null and void.

         5. Stock Adjustment.  In the event there is any change in the number of
issued  shares of the Company by reason of stock  splits,  reverse stock splits,
stock dividends,  recapitalizations or other transactions,  the number of shares
remaining  subject  to the  option  and  the  option  price  per  share  shall e
proportionately adjusted.

         6.   Corporate   Reorganization.   If  there   shall  be  any   capital
reorganization   or   consolidation  or  merger  of  the  Company  with  another
corporation  or  corporations,  or any sale of all or  substantially  all of the
Company's  properties and assets to any other  corporation or corporations,  the
Company shall take such action as may be necessary to enable Optionee to receive
upon any  subsequent  exercise of such option,  in whole or in part,  in lieu of
shares of Common  Stock,  securities or other assets as were issuable or payable
upon such  reorganization,  consolidation,  merger or sale in respect  of, or in
exchange for such shares of Common Stock.

         7. Rights of Stockholder.  Neither Optionee, his legal representatives,
nor any other person  entitled to exercise  such option shall have any rights or
be a stockholder in the Company in respect of the shares  issuable upon exercise
of the option granted hereunder, unless and until certificates representing such
shares shall have been delivered pursuant to the terms hereof.

                                      -2-
<PAGE>

         8. Stock  Reserved.  The Company  shall at all times during the term of
this  Agreement  reserve and keep  available such number of shares of its Common
Stock as will be sufficient to satisfy the terms of this Agreement.

         9. Binding  Effect.  This Agreement  shall be binding upon and inure to
the benefit of any successor or successors of the Company.

         IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed the day and year first above written.

ATTEST:                                     UNIVERSAL SECURITY INSTRUMENTS, INC.
                                                     (Company)


                                            By:                           (SEAL)
-----------------------------------------       --------------------------

WITNESS:                                    (Optionee)


                                            By:                           (SEAL)
-----------------------------------------       --------------------------

                                      -3-

<PAGE>