EMPLOYMENT
      AGREEMENT

     

    THIS
      AGREEMENT is
      made
      the 7th day of December 2005

     

    B
      E T W E E N :

     

    
      	(A)	
              MEASUREMENT
                SPECIALTIES INC. (hereinafter
                the "Company"), a
                Virginia corporation; and

            


    

     

    
      	(B)	
              STEVE
                SMITH
                (hereinafter the "Employee"),
                an individual to be lawfully retained or employed by the Company
                in the
                People's Republic of China.

            


    

     

    IT
      IS AGREED
      that the
      Company has agreed to employ the Employee and the Employee has agreed to accept
      such employment on the following terms and conditions:

     

    
      	1.	
              DEFINITIONS
                AND INTERPRETATION

            


    

     

    
      	1.1	
              In
                this Agreement where the context so admits the following words and
                expressions shall have the following
                meanings:

            


    

     

    “Board”
means
      the board of directors of the Company from time to time;

     

    “MSI
      Sensors” means
      MSI
      Sensors (China) Limited, a company incorporated under the laws of the People's
      Republic of China whose principal place of business is at Block 5A, Tian Fa
      Building, Tian An Cyber Park, Fu Tian District, Shenzhen, PRC 518048;
      and

     

    “Hong
      Kong” means
      the
      Hong Kong Special Administrative Region of the People's Republic of
      China;

     

    “PRC”
means
      the People's Republic of China;

     

    “US$”
means
      the United States of America dollars.

     

    
      	1.2	
              All
                references in this Agreement to the Company shall include its successors
                in title or assigns.

            


    

     

    
      	1.3	
              References
                herein to Clauses are references to the clauses of this Agreement
                which
                shall be deemed to form part of this Agreement. The headings in this
                Agreement are inserted for convenience of reference only and do not
                affect
                the interpretation hereof.

            


    

     

    
      	2.	
              
                EMPLOYMENT

              

            


    

     

    
      	
              2.1

            	
              The
                Employee shall at all times be an employee of the Company based in
                the
                United States but on a daily basis he shall serve the Company’s subsidiary
                MSI Sensors in the PRC in the capacity of Vice President/General
                Manager -
                Asia or
                such other capacity as the Chief Executive Officer (“CEO”) of the Company
                may determine from time to time and shall at all times comply with
                the
                lawful and reasonable directions of the
                CEO.

            


    

     

    
      	
              2.2

            	
              The
                Employee shall devote full time, attention and energies to the business
                of
                the Company and MSI Sensors. During this employment, the Employee
                shall
                not engage in any other business activity, regardless of whether
                such
                activity is pursued for profit, gain or other pecuniary
                advantage.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	3.	
              
                MANNER
                  OF
                  PERFORMANCE

              

            


    

     

    
      	3.1	
              The
                Employee shall at all times faithfully, diligently and to the best
                of his
                ability, experience and talent, perform all duties that may be required
                of
                him or her pursuant to the express and implicit terms hereof, to
                the
                reasonable satisfaction of the Company. Such duties shall be rendered
                at
                the MSI Sensors’ principal place of business and at such other place as
                the Company shall in good faith require or as the interests, needs,
                businesses and opportunities of the Company shall require or make
                advisable. 

            


    

     

    
      	3.2	
              Subject
                to any written regulations issued by the Company which are applicable
                to
                the Employee, neither the Employee nor any member of his family,
                nor any
                company or business entity in which he or they are interested, shall
                be
                entitled to receive or obtain directly or indirectly any discount,
                rebate,
                commission or other benefit in respect of any business transacted
                (whether
                or not by the Employee) by or on behalf of the Company, and if the
                Employee, any member of his family or any company or business entity
                in
                which he is or they are interested, shall directly or indirectly
                obtain
                any such discount, rebate, commission or other benefit the Employee
                shall
                forthwith account to the Company for the amount received or value
                of the
                benefit so obtained.

            


    

     

    
      	3.3	
              The
                Employee confirms that he has disclosed fully to the Company all
                circumstances in respect of which there is, or there might be, a
                conflict
                of interest between the Company, and the Employee or any member of
                his
                family, and he agrees to disclose fully to the Company any such
                circumstances which may arise during the
                employment.

            


    

     

    
      	4.	
              
                COMPENSATION
                  AND
                  REIMBURSEMENT

              

            


    

     

    
      	4.1	
              The
                Company shall pay the Employee and the Employee agrees to accept
                from the
                Company for the Employee's services hereunder remuneration at the
                rate of
                US$190,000.00 (“Base Salary”) per annum payable semi-monthly. During the
                Employment Term, the Employee may also be eligible for an annual
                bonus of
                up to 25% of his Base Salary based on minimum performance standards
                to be
                determined on an annual basis by the
                Board.

            


    

     

    
      	4.2	
              In
                addition to the foregoing remuneration, the Employee shall be entitled
                to
                the following benefits:

            


    

     

    
      	 	
              4.2.1

            	
              a
                yearly vacation of 3 weeks at full pay, subject to limitations on
                carry-forward of accrued, unused vacation days per MSI
                policy;

            


    

     

    
      	 	
              4.2.2

            	
              moving
                allowance/sign on bonus of
                US$30,000.00;

            


    

     

    
      	 	
              4.2.3

            	
              100,000
                stock options of the Company with a strike price based on the closing
                price as of 11/30/05, or $24.88, which shall vest and become exercisable
                over a five (5) year period with 1/5 of the stock options vesting
                each
                year of employment after the grant date. In the event of a Change
                in
                Control while Employee is still employed by the Company, all of the
                stock
                options shall vest and become exercisable as of the effective date
                of the
                Change in Control. For purposes of this Agreement, a “Change
                in Control”
                shall be deemed to have occurred
                if:

            


    

     

    
      	
            	4.2.3.1	
              any
                “person” (as such term is used in Sections 13(d) and 14(d) of the
                Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes
                the “beneficial owner” (as defined in Rule 13d-3 promulgated under the
                Exchange Act), directly or indirectly, of securities of the Company
                representing 50% or more of (a) the outstanding shares of common
                stock of
                the Company; or (b) the combined voting power of the Company’s
                then-outstanding securities entitled to vote generally in the election
                of
                directors; or

            


    

     

    
      
         

      

      
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          2 -

        
          

        

      

      
         

      

    

     

    
      	
            	4.2.3.2	
              the
                Company (a) is party to a merger, consolidation or exchange of securities
                (excluding, without limitation, a public offering of the Company’s
                securities) which results in the holders of voting securities of
                the
                Company outstanding immediately prior thereto failing to continue
                to hold,
                directly or indirectly, more than 50% of the combined voting power
                of the
                voting securities of the Company, the surviving entity or a parent
                of the
                Company or surviving entity outstanding immediately after such merger,
                consolidation or exchange; or (b) sells or disposes of all or
                substantially all of the Company’s assets (or any transaction having
                similar effect is consummated);

            


    

     

    
      	 	
              4.2.4

            	
              housing
                allowance for reasonable living expense (apartment or
                equivalent);

            


    

     

    
      	 	
              4.2.5

            	
              reimbursement
                for return airfare from Shenzhen to any US city for four (4) trips
                per
                annum;

            


    

     

    
      	 	
              4.2.6

            	
              benefits
                equivalent to those received by other Company employees in the United
                States, including health insurance under the health insurance plan
                for
                employees based in the United States, pending approval by the Company’s
                health care provider; and

            


    

     

    
      	
            	4.2.7	
              the
                Company shall provide a“gross-up”
                payment to Employee for any tax and tax preparation obligations that
                Employee incurs as a result of his assignment to MSI Sensors in the
                PRC
                that are less favourable to Employee than the tax obligations had
                he
                worked at the Company’s headquarters in
                Virginia.

            


    

     

    
      	4.3	
              The
                Employee may incur reasonable expenses for furthering the Company's
                business, including expenses for entertainment, travel and similar
                items.
                The Company shall reimburse the Employee for all business expenses
                after
                the Employee has pursuant to the Company's policies presented an
                itemized
                account of expenses.

            


    

     

    
      	5.	
              
                CONFIDENTIALITY

              

            


    

     

    
      	5.1	
              The
                Employee acknowledges that in the course of employment he may become
                aware
                of certain information about the Company's operations or clients.
                The
                Employee agrees not to disclose such information or use the information
                in
                any manner that might be harmful to the Company's business. The Employee
                agrees that the restrictions contained or referred to in this Clause
                5 are
                reasonable and necessary to protect the legitimate business interests
                of
                the Company both during and after the termination of his
                employment.

            


    

     

    
      	5.2	
              During
                the term of this Agreement and for a period of ten (10) years from
                the
                date of termination or expiration of this Agreement for any reason
                whatsoever, the Employee receiving any trade secrets or information
                which
                is confidential to Company, shall:

            


    

     

    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

     

    
      	 	
              (1)

            	
              keep
                confidential such confidential
                information;

            


    

     

    
      	 	
              (2)

            	
              not
                disclose the confidential information to any person, company, business
                entity or other organization other than with the prior written consent
                of
                the Company; and

            


    

     

    
      	 	
              (3)

            	
              not
                use the confidential information for any purpose other than the
                performance of his or her obligations under this
                Agreement.

            


    

     

    
      	5.3	
              The
                Employee shall not at any time during the continuance of his employment
                with the Company make any notes or memoranda relating to any matter
                within
                the scope of the Company’s business, dealings or affairs otherwise than
                for the benefit of the Company.

            


    

     

    
      	5.4	
              The
                obligations contained in Clause 5.2 shall cease to apply to any
                information or knowledge which may subsequently come into the public
                domain after the termination of employment other than by way of
                unauthorised disclosure.

            


    

     

    
      	5.5	
              The
                Employee shall not make or communicate any statement (whether written
                or
                oral) to any representative of the press, television, radio, or other
                media and shall not write any article for the press or otherwise
                for
                publication on any matter connected with or relating to the business
                of
                the Company without obtaining the prior written approval of the
                CEO.

            


    

     

    
      	6.	
              NON-COMPETITION

            


    

     

    
      	6.1	
              The
                Employee hereby agrees that he shall not for a period of [three years]
                immediately following the termination of his employment within [Hong
                Kong
                and PRC] and whether on his own behalf or in conjunction with or
                on behalf
                of any other person, firm, company or other organization, (and whether
                as
                an employee, director, principal, agent, consultant or in any other
                capacity whatsoever,) in competition with the Company directly or
                indirectly (i) be employed or engaged in, or (ii) perform services
                in
                respect of, or (iii) be otherwise concerned with any business similar
                to
                that conducted by the Company, either by soliciting any of its accounts
                or
                by operating within the Company's general business
                area.

            


    

     

    
      	6.2	
              The
                Employee hereby agrees that he shall not for a period of [three years]
                immediately following the termination of his employment whether on
                his own
                behalf or in conjunction with or on behalf of any person, company,
                business entity or other organization (and whether as an employee,
                director, principal, agent, consultant or in any other capacity
                whatsoever), directly or indirectly (i) solicit or, (ii) assist in
                soliciting, or (iii) accept, or (iv) facilitate the acceptance of,
                or (v)
                deal with, in competition with the Company, the custom or business
                of any
                customer or prospective customer :-

            


    

     

    
      	 	
              6.2.1

            	
              with
                whom the Employee has had material contact or dealings on behalf
                of the
                Company during the [12 months] immediately preceding the date upon
                which
                his employment with the Company terminates;
                or

            


    

     

    
      	 	
              6.2.2

            	
              for
                whom the Employee was, in a client management capacity on behalf
                of the
                Company, directly responsible during the [12 months] immediately
                preceding
                the date upon which his employment with the Company
                terminates.

            


    

     

    
      	6.3	
              The
                Employee hereby agrees that he will not for a period of [three years]
                immediately following the date of his termination either on his own
                behalf
                or in conjunction with or on behalf of any other person, company,
                business
                entity, or other organisation (and whether as an employee, principal,
                agent, consultant or in any other capacity whatsoever), directly
                or
                indirectly:-

            


    

     

    
      
         

      

      
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          4 -

        
          

        

      

      
         

      

    

     

    
      	 	
              6.3.1

            	
              (i)
                induce, or (ii) solicit, or (iii) entice or (iv) procure, any person
                who
                is an employee of the Company to leave the Company’s employment (as
                applicable) where that person is an employee of the Company on the
                date
                upon which his employment with the Company
                terminates;

            


    

     

    
      	 	
              6.3.2

            	
              be
                personally involved to a material extent in (i) accepting into employment
                or (ii) otherwise engaging or using the services of, any person who
                is an
                employee of the Company on the date upon which his employment with
                the
                Company terminates.

            


    

     

    
      	7.	
              
                TERM
                  AND TERMINATION OF THIS
                  AGREEMENT

              

            


    

     

    
      	7.1	
              Provided
                that any necessary visa and work permit is obtained, the employment
                of the
                Employee hereunder will commence on January 2, 2006 and will continue
                thereafter until terminated in accordance with the provisions below.
                

            


    

     

    
      	7.2	
              Subject
                to applicable law, either party may terminate this Agreement by giving
                the
                other three calendar months' advance notice in writing.
                

            


    

     

    
      	7.3	
              The
                Company may by notice in writing immediately terminate this Agreement
                if
                the Employee is in breach of any of the terms of this Agreement which
                in
                the case of a breach capable of remedy is not remedied by the Employee
                within 30 days of receipt by the Employee of a notice from Company
                specifying the breach and requiring its remedy.


            


    

     

    
      	7.4	
              Subject
                to applicable law, the Company may immediately terminate this Agreement
                in
                the event of: (i) the death of the Employee; (ii) the unwillingness
                or
                inability of the Employee to perform his duties; (iii) any criminal
                conviction of the Employee; or (iv) acts of dishonesty, fraud or
                gross
                negligence by the Employee in connection with the performance of
                his
                duties to the Company after those acts have been disclosed to the
                Employee
                and the Employee accorded an opportunity to respond in writing or
                in
                person at the Employee's option to the Company, provided that the
                Employee
                shall receive no further compensation beyond the termination date
                other
                than benefits accrued or required by
                law.

            


    

     

    
      	7.5	
              In
                the event that the Company terminates this Agreement other than pursuant
                to Clause 7.3 or 7.4, the Employee shall be entitled to a severance
                payment equivalent to an amount up to one year of his Base Salary
                (payable
                semi-monthly) and also an allowance for repatriation and relocation
                of up
                to a maximum of US$10,000.00.

            


    

     

    
      	7.6	
              In
                the event of the termination of this Agreement by the Employee, the
                Employee shall reimburse any training costs, expenses and charges
                reasonably incurred by the Company for the
                Employee.

            


    

     

    
      	7.7	
              Should
                the Company waive breach of any provision of this Agreement by the
                Employee, that waiver will not operate or to be construed as a waiver
                of
                any further breach by the Employee.

            


    

     

    
      	7.8	
              Forthwith
                upon the termination of the employment of the Employee hereunder,
                and/or
                at any other time if the Company shall so request, the Employee shall
                deliver to the Company all documents (including correspondence, lists
                of
                customers, notes, memoranda, plans, drawings and other documents
                of
                whatsoever nature), models or samples made or compiled by or delivered
                to
                the Employee during his employment hereunder and concerning the business,
                finances or affairs of the Company. For the avoidance of doubt it
                is
                hereby declared that the property in all such documents as aforesaid
                shall
                at all times be vested in the
                Company.

            


    

     

    
      
         

      

      
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          5 -

        
          

        

      

      
         

      

    

     

    
      	7.9	
              The
                Employee agrees that he will not at any time after the termination
                of the
                employment represent himself as still having any connection with
                the
                Company, save as a former employee for the purpose of communicating
                with
                prospective employers or complying with any applicable statutory
                requirements.

            


    

     

    
      	8.	
              NOTICES

            


    

     

    
      	8.1	
              Each
                notice, demand or other communication given or made under this Agreement
                shall be in writing and delivered or sent to the relevant party at
                its
                address or fax number set out below (or such other address or fax
                number
                as the addressee has by five days’ prior written notice specified to the
                other party):

            


    

     

    
      	
              To
                the Company:

            	
              Frank
                Guidone

            
	 	
              Measurement
                Specialties Inc.

            
	 	
              1000
                Lucas Way

            
	 	
              Hampton,
                VA 23666

            
	 	 
	 	
              Fax
                number:

            	
              [•]

            
	 	 
	 	
              Attention:

            	
              [•]

            
	 	 
	
              To
                the Executive:

            	
              Steve
                Smith

            
	 	
              1900
                Alaskan Way #116

            
	 	
              Seattle,
                WA 98101

            
	 	 
	 	
              Fax number:

            	
              [•]

            


    

     

    
      	8.2	
              Any
                notice, demand or other communication so addressed to the relevant
                party
                shall be deemed to have been delivered (a) if given or made by letter,
                when actually delivered to the relevant address; and (b) if given
                or made
                by fax, when despatched subject to receipt of machine-printed confirmation
                of error-free despatch.

            


    

     

    
      	8.3	
              Any
                notice to be given hereunder may be delivered (a) in the case of
                the
                Company by first class post addressed to its registered office for
                the
                time being and (b) in the case of the Employee, either to him personally
                or by first class post to his last known
                address.

            


    

     

    
      	9.	
              
                ENTIRE
                  AGREEMENT

              

            


    

     

    
      	9.1	
              This
                Agreement contains the entire understanding between the parties and
                supersedes all (if any) subsisting agreements arrangements and
                understandings (written or oral) relating to the employment of the
                Employee and all such agreements arrangements and understandings
                shall be
                deemed to have been terminated by mutual
                consent.

            


    

     

    
      
         

      

      
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          6 -

        
          

        

      

      
         

      

    

     

    
      	10.	
              
                APPLICABLE
                  LAW

              

            


    

     

    
      	10.1	
              This
                Agreement and any matters arising from or connected with it are governed
                by the laws of the Commonwealth of Virginia. Should any disagreement
                arise
                between the parties as it relates to employment, each party shall
                be
                responsible for its/his own attorneys' fees and court costs, unless
                the
                law or the court specifies
                otherwise.

            


    

     

    
      	10.2	
              Any
                subsequent amendments to laws and regulations valid at the time of
                execution of this Agreement
                shall not affect the performance of this Agreement unless it is
                specifically provided otherwise therein.


            


    

     

    
      	10.3	
              If,
                for any reason, any provision of this Agreement is held invalid,
                all other
                provisions of this Agreement shall remain in effect.
                

            


    

     

    
      	10.4	
              The
                rights and remedies conferred by this Agreement are in addition to
                and
                without derogation from any other rights and remedies that either
                the
                Employee or the Company may have at
                law.

            


    

     

    
      	11.	
              
                
                  SETTLEMENT
                    OF DISPUTES
                    

                

              

            


    

     

    
      	11.1	
              Without
                in any manner limiting the provisions of this Agreement, any action
                or
                proceeding seeking to enforce any provision of, or based on any right
                arising out of, this Agreement may be brought exclusively in the
                courts of
                the Commonwealth of Virginia, or, if it has or can acquire jurisdiction,
                in the United States District Court for the district of Virginia
                in which
                the Company’s headquarters are located, and each of the parties consents
                to the exclusive jurisdiction of such courts (and of the appropriate
                appellate courts) in any such action or proceeding and waives any
                objection to venue laid therein. Process in any action or proceeding
                referred to in the preceding sentence may be served on any party
                anywhere
                in the world. The foregoing shall not limit the rights of any party
                to
                bring the legal action or proceeding or to obtain execution of judgment
                in
                any appropriate jurisdiction. Each of the parties hereto further
                agrees
                that final judgment against it in any such action or proceeding shall
                be
                conclusive and may be enforced by any other jurisdiction within or
                outside
                the United States of America by suit on the judgment, a certified
                or
                exemplified copy of which shall be conclusive evidence
                thereof.

            


    

     

    
      	12.	
              
                MISCELLANEOUS

              

            


    

     

    
      	12.1	
              No
                waiver or modification of this Agreement, or of any covenant, condition
                or
                limitation herein contained shall be valid unless in writing and
                duly
                executed by the party to be charged therewith.


            


    

     

    
      	12.2	
              This
                Agreement is drawn up in the English language. If this Agreement
                is
                translated into another language, the English language text
                prevails.

            


    

     

    
      
         

      

      
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          7 -

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF this Agreement has been executed and hereby delivered by the
      parties or their authorized representatives on the date first set forth above.
      

     

    
      	    
	 	    

	
              WITNESS

            	 	
              STEVE
                SMITH

            
	 	 	 
	 	 	
              Dated:
                ________________________, 2005

            
	 	 	 
	 	 	
              MEASUREMENT
                SPECIALTIES, INC.

            
	 	 	 
	 	 	   

	 	 	
              FRANK
                GUIDONE

            
	 	 	
              CHIEF
                EXECUTIVE OFFICER

            
	 	 	 
	 	 	
              Dated:
                ________________________, 2005

            


    

     

    
      
         

      

      
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          8 -