PART-TIME EMPLOYMENT, NON-COMPETITION, DISABILITY, AND RETIREMENT AGREEMENT


      AGREEMENT  made as of the  23rd  day of  October,  1998  between  David B.
Lederer  ("Executive")  and  Detection  Systems,  Inc.,  a New York  corporation
("Company").   It  is  the  intent  that  this   Agreement  will  supersede  the
Part-Time  Employment  Agreement,  dated August 15, 1997, which became effective
April 2, 1998.
                                  WITNESSETH:
      In  consideration of the mutual covenants  contained  herein,  the parties
agree as follows:

            1.    Effectiveness  and Terms.  This Agreement  shall be binding on
the parties as of its date set forth  above (the  "Commencement  Date"  herein).
"Term of  Employment"  as used herein  shall mean the period  commencing  on the
Commencement Date and continuing  thereafter  through December 31 of the year in
which  Executive's 68th birthday occurs,  unless the Company and Executive agree
in  writing  to  extend  the  Term of  Employment,  in  which  case  the Term of
Employment  shall  have  the  meaning  as  determined  at that  time;  provided,
however,  that  Executive's  employment  services may be earlier  terminated  as
hereinafter  expressly set forth or as may be agreed  between  Executive and the
Company,  in which event the Term of  Employment  shall mean the period from the
Commencement  Date  through  the date of such  earlier  termination  (but such a
termination  shall  not  affect   Executive's   obligation  to  provide  minimum
consulting services as provided in Section 5 below).
<PAGE>

      2.    Non-Competition.  During  any  period  (a)  in  which  Executive  is
being paid  currently  for  employment  services as provided in Section 4 below,
(b) in which  Executive is being paid currently the  compensation  called for by
Section 3 below,  (c) in which  Executive is being paid currently for disability
benefits  as  provided  under  Section 11 below,  or (d) in which  Executive  is
being paid currently for  retirement  benefits as provided under Section 9 or 10
below,  Executive  shall not,  without the prior written consent of the Board of
Directors  of  the  Company,  engage,  as  an  employee,  partner,   consultant,
venturer,  entrepreneur,  or  otherwise,  in  the  development  or  sale  of any
product or service  which is  competitive  with any  product or service  sold or
under active development by the Company during the Term of Employment.

      3.    Compensation  for  Non-Competition.  After  the  Term of  Employment
has ended,  in  consideration  for  Executive's  non-competition  as provided in
Section 2 above,  the Company  shall pay and provide to Executive  the following
compensation  and benefits  through  December 31 of the year in which  Executive
attains the age of 68:
      (a)   An annual  non-competition  fee equal to or greater  than  $120,000,
that  fee to be  increased  each  year if and to the  extent  the  CPI  (defined
below)  has  increased  during  the  preceding  year  (and any fees  earned as a
director  of the  Company  shall be  credited  to that fee),  which fee shall be
paid in full on January 2 of each year;
      (b)   The  Executive  will  not   participate  in  any  of  the  Company's
executive  incentive  compensation plans except for any such plan or plans which
expressly refer to this Agreement;
      (c)   Grants of options  under any Company  stock option plan that permits
such  options,  in such amounts as are  determined  by the Board of Directors or
the Committee of the Board administering the plan;
      (d)   Participation   in   Company   pension,    deferred    compensation,
insurance,  health and welfare and other  benefit plans in effect on the date of
this Agreement; and
      (e)   Continuation  of all  plans in  which  the  Executive  participates,
including   existing  fringe   benefits  and  executive   perquisites  to  which
Executive  is  entitled  as of the date  immediately  prior to the  Commencement
Date under this Agreement.
      Beginning on the January 1 after the year in which  Executive  attains the
age of 68, the  retirement  benefits  set forth in Sections 9 and 10 below shall
be the full consideration to be paid to Executive for his non-competition.
<PAGE>

      4.    Employment.  The Company  hereby  employs  Executive in the capacity
of Vice President,  Business  Development for the Term of Employment  commencing
on the  Commencement  Date.  The Company  agrees to provide  Executive with such
offices and such  operational and  administrative  support as is consistent with
his position and  responsibilities  under this Agreement.  The  compensation and
benefits which the Company shall provide  Executive for his services  during the
Term of Employment  shall include,  but not be limited to, (a) base salary equal
to or greater than $130,286  (including  directors  fees, if applicable) and (b)
the  benefits  listed in  clauses  (b),  (c),  (d),  and (e) of Section 3 above.
Executive  agrees  that he will  devote  approximately  half  time  and his best
efforts  during  reasonable  business  hours to  performance  of the  duties and
responsibilities  of his office during the Term of  Employment.  Executive  also
agrees not to disclose  trade secrets of the Company,  or to engage in any other
activity which is  detrimental to the interests of the Company,  during the Term
of Employment.
      Notwithstanding  any of the other  provisions of this Agreement,  the Term
of  Employment  will   automatically   terminate  upon  Executive's   death  and
thereupon  all payments and  non-vested  benefits  payable  hereunder  and under
Section 3 above shall  cease,  except for any death  benefits  and any  survivor
benefits for his spouse which are provided  under the Company's  employee  plans
and  except  for  the  retirement  benefits  set  forth  in  Section  9 for  any
surviving  spouse.  Those retirement  benefits shall be paid pursuant to Section
9 commencing after  Executive's  68th birthday would have occurred,  except that
the  surviving  spouse  may  elect,  by written  notice  given to the  Company's
President or  Secretary,  to receive  early  retirement  benefits as provided in
Section 10 below,  in which case the  provisions of Section 9 below shall apply,
except  that  the  initial  retirement  wage  benefit  shall  be  calculated  as
provided in Section 10.
      The  Company  may  terminate   Executive's  services  due  to  Executive's
permanent  disability,  as  determined  by the Board of  Directors in good faith
based on the  certification  of an independent  M.D., and thereupon all payments
and  non-vested  benefits  under this Section 4 and under  Section 3 shall cease
except that the disability  and retirement  benefits shall be paid in accordance
with the provisions of Sections 9, 10, and 11 below.

      5.    Minimum  Consulting  Services.  After a termination  of  Executive's
services  pursuant to Section 7, 8, or 9 below,  the Company shall  nevertheless
have the right to call upon  Executive,  so long as Executive is able, for up to
8 days of  consulting  services  per  year  to  provide  information  concerning
matters that occurred,  were developed,  or were determined  while Executive was
a full-time  or  part-time  employee of the Company.  Unless  otherwise  agreed,
these  consulting  services  shall be  rendered  at a place  and  time  mutually
agreed (but within 25 miles of  Executive's  residence at the time) and shall be
paid at the rate of $1,200  per day (or up to 100 hours of  consulting  services
per year at an hourly rate to be agreed  upon).  Any other  consulting  services
shall be provided if, as, and when the parties may agree.
<PAGE>

      6.    Executive's   Acceptance.    Executive   agrees   to   provide   the
employment and the consulting services described in this Agreement.

      7.    Termination  for  Cause.  The  Company  may  terminate   Executive's
services  immediately  and  without  prior  notice to  Executive  for "Cause" as
defined  below.  The  existence of Cause shall be  determined  by the  Company's
Board of  Directors  (other than  Executive)  acting in good  faith.  "Cause" is
defined,  and shall be limited  to, a good faith  determination  by the Board of
Directors that any of the following has occurred:
      (a)   Executive has knowingly  misappropriated  for his benefit a material
amount of funds or property of the Company;
      (b)   Executive has obtained a material  personal  profit from any illegal
Company transaction with a third party;
      (c)   Executive  has obtained a material  personal  profit from the use of
the Company's trade secrets other than on its behalf; or
      (d)   The Company has  suffered  material  financial  harm from  knowingly
illegal  action  by  Executive  other  than on the  Company's  behalf or for its
benefit.
      If  Executive's  services  are  terminated  by the Company  for Cause,  he
shall continue to be paid compensation and benefits for his  non-competition  in
accordance  with the provisions of Section 3 above,  for any minimum  consulting
services  provided  pursuant  to Section 5 above,  and  retirement  benefits  in
accordance with Section 9 and, if elected,  Section 10 below,  provided that his
cash compensation  (including  retirement  benefit payments to be provided under
this  Agreement)  shall be reduced by the amount of any monetary damage suffered
by the  Company  due  to the  Cause,  as  determined  by a  court  of  competent
jurisdiction,  prorated  over  the  actuarially  determined  term  of  all  such
payments beginning on such determination.

      8.    Resignation.  If, at any time  prior to  Executive's  retirement  as
provided  in Section 9 below,  Karl H.  Kostusiak  is no longer  employed as the
full time senior  executive  officer of the  Company,  Executive  shall have the
option of resigning  from his  employment  obligations  under  Section 4 of this
Agreement  by giving  written  notice  thereof  to the  Company's  President  or
Secretary,  but no resignation  shall affect  Executive's  obligation to provide
the minimum consulting services provided for in Section 5 above.
<PAGE>

      9.    Retirement.  The Company  hereby  agrees that,  if not ended sooner,
the Term of  Employment  as used in this  Agreement  shall  end at the  close of
business on December  31 of the year in which  Executive  attains the age of 68,
and  beginning  on the  opening of  business  on January 1 of the next year (and
regardless  whether the Term of  Employment  ended prior to that  December  31),
the Company  will pay  Executive  retirement  benefits  for his lifetime and for
his spouse's lifetime, if his spouse survives him, as follows:
      (a)   a  retirement  wage  benefit  initially  equal  to 20%  of the  base
salary  rate  being  paid to  Executive  at the end of his full time  employment
with  the  Company,  increased  for each  year  after  the end of his full  time
employment  by any  increase  in the CPI (as  defined  below),  except  that the
retirement  wage  benefit  shall be equal to 60% of that base salary rate at the
end of Executive's  full time employment  with the Company,  plus CPI increases,
effective  for any  retirement  year  after a Change  in  Control  and after the
conditions  described  in Section  20(b)(ii)  below have  occurred  which  would
allow  Executive  to  give  the  notice   described  there   (disregarding   his
retirement,  if any),  and  except  that the  retirement  wage  benefit  for his
spouse shall be 75% of the amount thus  calculated  for each year after the year
of Executive's death;
      (b)   continuation  of  Executive's  participation  (for  himself  and his
spouse)  in  the  health  program  in  effect  on the  date  of  this  Agreement
(including for dental and eye care  coverage,  an annual  physical  examination,
and similar benefits); and
      (c)   continuation  of all other benefits  provided at time of retirement,
such  continuation  limited in  individual  benefit  cost to 60% of the  maximum
annual  cost  of  such  benefit  in any  year  prior  to  retirement,  plus  CPI
increases,

      For these purposes:
            (1)   unless  otherwise  agreed  or  directed  by  law  or a  court,
"spouse"  shall  mean the  person to whom  Executive  is married at the time any
benefit  is to be  paid,  or,  after  Executive's  death,  the  person  to  whom
Executive was married at the time of his death;
            (2)   "CPI"  shall mean the  Consumer  Price  Index,  all Urban Wage
Earners  as  determined  by the United  States  Department  of Labor,  Bureau of
Labor  Statistics,  or any successor  governmental  agency or,  lacking any such
successor,  any  other  authoritative  source  designated  in good  faith by the
Board of  Directors;  and the wage  benefit  shall be  increased as of January 1
each year by  multiplying  the wage benefit paid during the previous year by any
fraction  greater  than  one  calculated  by  dividing  the  CPI  most  recently
computed  and  available  at the end of  that  previous  year  by the  CPI  most
recently  computed and  available at the end of the year  previous to that;  the
CPI shall not be used to decrease the wage benefit.
      The parties  agree:  (x) that the  foregoing  retirement  benefits  are in
addition to any other  retirement  benefits  that may be  available to Executive
(such  as the  Company's  401(k)  savings  plan),  (y)  that  payment  of  these
retirement  benefits  may  be  terminated  if a  court  of law  determines  that
Executive  has  violated  the  provisions  of Section 2 above,  and (z) that the
Company  will  purchase  and  maintain  life  insurance  sufficient  to fund the
estimated  benefits for Executive's  spouse (estimated no later than Executive's
retirement  date;  any excess  policy  proceeds to be available,  if agreed,  to
purchase  shares of the Company's  Common Stock held in Executive's  estate) and
the policy or policies of such insurance  shall be held in trust  designated for
this purpose.
<PAGE>
      (d)   The  retirement  benefits  provided  under this  Section 9 (and,  if
applicable,  Section 10) shall be paid as  provided  herein  regardless  whether
the Company has any claims  against  Executive for default under this  Agreement
or for  any  other  breach  of duty  or  otherwise,  and,  except  as  otherwise
provided in Section 7 above,  the Company  shall pay those  retirement  benefits
as provided  and must pursue  remedies  for any such  default or other breach of
duty or other claim separately and independently.

      10.  Early   Retirement   Benefits.   The  parties   agree  that,  in  the
circumstances   expressly   provided  in  this   Agreement,   Executive   and/or
Executive's  spouse shall be paid early  retirement  benefits in accordance with
the following:
      (a) The  provisions  of  Section  9 shall  apply  to  Executive's  and the
spouse's retirement  benefits as provided therein,  except as expressly modified
by this  Section  10,  and shall be paid  beginning  at the time  payment of the
early retirement benefits actually commences as provided in this Agreement;
      (b) The  initial  retirement  wage  benefit  shall not be the  amount  set
forth in Section 9(a) above,  but shall be calculated  as follows:  multiply the
initial  retirement  wage benefit  (calculated  in accordance  with Section 9(a)
above) by the  actuarially  determined  number of years it would be paid  during
Executive's then  actuarially  determined  remaining  lifespan as if Executive's
68th birthday had just occurred;  then divide that amount by the number of years
then  actuarially   determined  to  be  Executive's  actual  expected  remaining
lifespan  based on his  actual  age at that time.  The  amount  thus  calculated
shall be the initial  annual  retirement  wage  benefit for  purposes of Section
9(a) above.

      11.  Disability.  If Executive is  determined to be  permanently  disabled
in accordance  with the provisions of Section 4 above,  Executive  shall be paid
disability  benefits  from that date  through  December  31 of the year in which
Executive  attains the age of 68, which  disability  benefits  shall be equal to
the  non-competition  compensation  and  benefits and the salary that would have
been paid to  Executive  pursuant to Sections 3 and 4 above if he had not become
disabled,  provided  that,  to the extent the  disability  wage benefits are not
taxable  income to Executive  under the U.S.  Internal  Revenue Code of 1986, as
amended,  the disability  benefit amount shall equal 60% of the compensation and
salary that would have been paid pursuant to Sections 3 and 4 above.

      12. Stock  Transfers by Executive  and  Executive's  Estate and Heirs.  So
long as this  Agreement  is in  effect,  Executive  shall not sell any shares of
Company  Common  Stock  except (a) in  transactions  approved  in advance by the
Company's  Board of Directors or (b) pursuant to all the  conditions of Rule 144
promulgated by the Securities and Exchange  Commission  under the Securities Act
of 1933, as amended (or any rule thus  promulgated  which is a successor to Rule
144);  provided,  however,  that no such sales  shall be made in any block trade
or when there is any plan,  program,  or tender  offer  announced  by any person
other than the  Company  to acquire  shares of the  Company's  Common  Stock and
that person was  required to file a  statement,  schedule,  or other report with
respect thereto with the U.S.  Securities and Exchange  Commission under Section
13 or 14 of the  Securities  Exchange Act of 1934, as amended,  or the rules and
regulations  thereunder.  Executive  agrees that restrictive  legends  referring
to the  provisions  of this  Section  12 shall be placed  upon all  certificates
representing  shares to which this Section 12 applies.  The  provisions  of this
Section 12 shall  terminate  upon any Change in  Control or  Executive's  death,
whichever may first occur and shall not apply thereafter.
<PAGE>
      13.   Expenses  and  Interest.  If the  Company  is  found  by a court  of
competent  jurisdiction to have breached this  Agreement,  the Company shall pay
the costs  and  expenses  (including  reasonable  attorneys  fees)  incurred  by
Executive  in any  litigation  seeking  damages in respect of such  breach or to
enforce the  performance  of this  Agreement by Company,  together with interest
on each  installment  of wages or benefits  paid late by the Company  calculated
to the date of actual  payment at an annual  rate  equal to 3% over the  highest
rate then paid by the Company under its short term borrowing  arrangements  with
an  independent  institutional  lender (and if there is no such lender,  then 4%
above the prevailing prime rate as reported in the Wall Street Journal).

      14.   Notices.  Any notice  required or  permitted  to be given  hereunder
shall be in  writing  and may be  delivered  personally  or  given  by  prepaid,
certified, return receipt requested, first class mail addressed:
      (a)   if to  the  Company,  to at  least  two  members  of  the  Board  of
Directors,  c/o  the  Company's  Secretary  at  the  address  of  the  Company's
principal office;
      (b)   if to  Executive,  at his  home  mailing  address  on file  with the
Company; and
      (c)   to such other  address  as the party to which  such  notice is to be
given shall have  notified (in  accordance  with the  provisions of this Section
14) as its substitute address for the purpose of this Agreement.
      Any notice given as aforesaid  shall be deemed  conclusively  to have been
received on the fifth business day after such mailing.

      15.   Amendment.  It is  agreed  that no change  or  modification  of this
Agreement shall be made except in a writing signed by both parties.

      16.   Severability.  In the event  that any one or more of the  provisions
of this Agreement shall be or become invalid,  illegal,  or unenforceable in any
respect,   the  validity,   legality,   and   enforceability  of  the  remaining
provisions shall not be affected thereby.

      17.   Law  Governing.  The  validity,  interpretation,  and effect of this
Agreement shall be governed by the laws of the State of New York.
<PAGE>

      18.   Entire    Agreement.    This    Agreement    contains   the   entire
understanding  of the parties  with  respect to the  employment  of Executive by
the Company during the Term of Employment  and with respect to  non-competition,
minimum  consulting,  and  disability  and  retirement  benefits  (but  does not
affect  pension and other  benefit  plans and  arrangements  in which  Executive
participates).  There are no  restrictions,  agreements,  promises,  warranties,
covenants,  or  undertakings  other than those  expressly  set forth herein with
respect to the Term of Employment.  As of the  Commencement  Date this Agreement
supersedes all prior agreements,  arrangements,  and understandings  between the
parties,  whether oral or written,  with  respect to  employment  or  consulting
services of Executive on and after the Commencement Date.

      19.   [Intentionally left blank]

      20.   Change in Control.
      (a) A "Change in Control" of the Company  shall be deemed to have occurred
          if:
                  (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") (other than the Company or any  corporation  owned,
            directly  or  indirectly,  by the  shareholders  of the  Company  in
            substantially  the same  proportions as their  ownership of stock of
            the Company),  is or becomes the  "beneficial  owner" (as defined in
            Rule 13d-3  under the  Exchange  Act),  directly or  indirectly,  of
            securities of the Company  representing  25% or more of the combined
            voting power of the Company's then outstanding securities;
                  (2)   there  is  elected  35% or  more of the  members  of the
            Board of  Directors  of the  Company  without  the  approval  of the
            nomination  of such  members  by a  majority  of the  Board  serving
            prior to such election;
                  (3)   the  shareholders  of the  Company  approve  a merger or
            consolidation  of the  Company  with any  other  corporation,  other
            than  (i) a  merger  or  consolidation  which  would  result  in the
            voting  securities  of the  Company  outstanding  immediately  prior
            thereto  continuing  to  represent  more  than  75% of the  combined
            voting  power  of the  voting  securities  of the  Company,  or such
            surviving  entity,  outstanding  immediately  after  such  merger or
            consolidation;  or  (ii)  a  merger  or  consolidation  effected  to
            implement   a   recapitalization   of  the   Company   (or   similar
            transaction)  in which no "person" (as defined above)  acquires more
            than  25%  of  the   combined   voting   power   of  the   Company's
            then-outstanding securities; or
                  (4)   The  shareholders  of the Company  approve an  agreement
            for  the   sale  or   disposition   by  the   Company   and  all  or
            substantially all of the Company's assets.
<PAGE>
      (b)   If:

          (i)  any Change in Control of the Company  occurs while this Agreement
               is effective, and

          (ii) Executive gives notice to the Company or the Company (acting upon
               a  determination  of its  Board of  Directors)  gives  notice  to
               Executive, in either case to the effect that the six month period
               called for by this subsection  20(b) shall begin to run (provided
               that  Executive  shall  not have the  right to give  that  notice
               unless Karl H.  Kostusiak is no longer  employed as the full time
               senior executive  officer of the Company at the time or he either
               has  consented  in writing  to the  giving of that  notice or has
               given a similar  such  notice for  himself  under his  applicable
               agreement with the Company), and

          (iii)Executive's  employment  is  terminated  by  Executive  or by the
               Company (other than for Executive's  death or disability)  within
               six months  after the date the notice  provided for in (ii) above
               is received (in Executive's  case the termination  being effected
               by  Executive   giving  notice  within  that  six  month  period,
               effective  within  30 days  after the  notice is given,  that his
               employment is terminated to the extent  permitted under Section 8
               above), regardless the reason, if any, and regardless which party
               gave the notice  provided  for in (ii)  above,  

then the Company  shall pay,  transfer,  and provide to Executive  the following
amounts, benefits, and assets:

                  (1)   The  Company   shall  pay  to   Executive   the  sum  of
            Executive's  full  non-competition  compensation  and salary through
            the effective  date of  termination of his employment at the rate in
            effect  at the time of  termination  or at the time  the  Change  in
            Control  occurs,  whichever  is higher,  and an amount  equal to the
            amount  of any bonus  which has been  earned by him but not yet paid
            to him.  These  two  amounts  shall be paid to  Executive  in a lump
            sum within five days  following the effective  date of  termination,
            or in the case of a bonus  which is not readily  calculable  at that
            time, within five days after the bonus can be calculated.
                  (2)   The Company  shall pay to  Executive  an amount equal to
            three  times the  highest  total cash  compensation  (including  any
            base salary,  non-competition compensation,  bonuses, and consulting
            fees) paid  Executive  in any of the  Company's  last  three  fiscal
            years  completed  prior to such  termination.  This amount  shall be
            paid to  Executive  as provided in the last  sentence of  subsection
            (1) above.

<PAGE>
                  (3)   The Company  shall pay to  Executive  an amount equal to
            the total  amounts  that would be  expended  for the  benefits to be
            provided  Executive  under  Section 3 above on the  assumption  that
            Executive will continue to be compensated  for  non-competition  for
            three years  after the  termination.  This  amount  shall be paid to
            Executive as provided in the last sentence of  subsection  (1) above
            either in cash or in the form of an  annuity  contract  issued by an
            independent  insurance  company  licensed to do business in New York
            that will provide payment of all such total amounts.
                  (4)   All options and other  rights  that  Executive  may hold
            to purchase or otherwise  acquire  Common Stock of the Company shall
            immediately  become  exercisable  in full for the  total  number  of
            shares  that are or might  become  purchasable  thereunder,  in each
            case without  further  condition or limitation  except the giving of
            notice  of  exercise   and  the  payment  of  the   purchase   price
            thereunder  (but  without  amendment  of the plan  under  which they
            were issued).  At his  discretion,  Executive may elect to surrender
            to the  Company  his rights in any such  options  and rights held by
            him and,  upon that  surrender,  the Company shall pay him an amount
            in cash equal to the aggregate  spread  between the exercise  prices
            of all those  options  and rights and the value of the Common  Stock
            purchasable  thereunder  (or of any other  security  into  which the
            Common  Stock has been  exchanged  or  converted)  as of the date of
            the  termination  of  employment,  the value to be determined by the
            reported  last  sale  price  of  the  Common  Stock  or  that  other
            security  (or the mean  between  the  reported  last  bid and  asked
            prices)  on  that  date  on  NASDAQ  (or,  if it is not  NASDAQ,  on
            whatever may then be the principal  exchange or quotation  system on
            which the  Company's  Common Stock or that other  security is traded
            at that time).
                  (5)   The  Company  shall  repay any policy  loans  previously
            taken  on the  Company's  life  insurance  policies  on  Executive's
            life  (provided  that  the  directors  of  the  Company  were  given
            written  notice  promptly  after the making of any such loans  which
            were made while  Executive was an officer of the Company),  and then
            shall  transfer to Executive  any and all of its right,  title,  and
            interest  in  and  to  all  Company  life   insurance   policies  on
            Executive's life (and upon that transfer,  Executive shall be deemed
            to have  released the Company from any and all  obligations  it then
            owes to him to  maintain  and pay  premiums on those  policies,  all
            other  provisions of any agreements  under which those policies were
            agreed to be maintained, however, to remain in effect).
<PAGE>
                  (6)   In  addition  to the  amounts  specified  in clauses (1)
            through  (5)  of  this  paragraph  (b),  the  Company  shall  pay to
            Executive,   at  the  same  time  as  those  amounts  are  paid,  an
            additional  amount  which,  after  taking into  account all federal,
            state,   and  local  income  and  excise  taxes  that  Executive  is
            required  to pay with  respect to receipt of the  additional  amount
            under this clause  (6),  will  render the net  after-tax  payment to
            Executive under this clause (6) equal to the sum of:
                        (A)   all  federal,  state,  and local excise taxes that
                  Executive  is  required  to pay with  respect to the  payments
                  made pursuant to clauses (1) through (5) above; and
                        (B)   all  federal,  state,  and local income and excise
                  taxes that  Executive  is required to pay with  respect to the
                  payment made pursuant to this clause (6).

            The  foregoing  amounts  of  federal,  state,  and local  income and
            excise  taxes  shall  be   determined   initially  by  a  nationally
            recognized  firm  of  independent  public  accountants  retained  by
            Executive at his expense or, at Executive's  option,  by independent
            public   accountants   at   the   Company's   expense,    and   such
            determination  and the basis  therefor shall be furnished in writing
            to  Executive  and  the  Company.  Payment  shall  be  made  by  the
            Company in  accordance  with that initial  determination  regardless
            whether  there is a dispute  over the  accuracy  thereof.  If either
            party   disputes  that  initial   determination   the  matter  shall
            promptly   be   referred  to  a   nationally   recognized   firm  of
            independent  public  accountants  selected by the  Executive  (which
            firm shall not have been  involved  in the  initial  determination),
            and Executive and the Company  shall  promptly  furnish to that firm
            such  information  as it  reasonably  requests.  The  Company  shall
            make  such  additional  payment  to  Executive  or  Executive  shall
            refund to the Company,  as the case may be, in  accordance  with the
            latter  firm's  determination.  The fees and  expenses  of that firm
            shall be borne by the Company.

            (c)   The Company may  withhold  from any  payments due to Executive
under  paragraph  (b) such amounts as its  independent  public  accountants  may
determine  are required to be withheld  under  applicable  federal,  state,  and
local tax laws.

            (d)   If  applicable,  the  provisions  of  this  Section  20  shall
control  over  the  provisions  of  Section  7. In the  event  that  Executive's
employment  is not  terminated  by the Company or the  Executive  within the six
month  period  specified  in Section  20(b),  the  provisions  of Section 7 once
again shall be applicable thereafter.

            (e) In  addition,  if any Change in Control  of the  Company  occurs
while this  Agreement is  effective,  the Company  shall  purchase and fully pay
for an annuity policy  sufficient to pay the retirement  benefits  called for by
Section 9 of this  Agreement and shall transfer  ownership  thereof to a "rabbi"
trust for the  benefit  of  Executive  (but  subject  to the  claims of  Company
creditors  to the  extent  required  under  applicable  tax  laws  so  that  the
transfer  to the  trust  will  not  itself  be an  event  upon  which  Executive
recognizes  income  for  federal  or  state  income  tax  purposes).  In lieu of
purchasing  the annuity  policy,  the Company may deposit cash into such a trust
sufficient to provide,  based on assumptions  believed reasonable in the written
opinion  of  a  nationally  recognized  employee  benefits   organization,   for
assuring payment of those retirement benefits to Executive and his spouse.
<PAGE>
            (f)   Payment of the  amounts  called  for by this  Section 20 shall
not affect the Company's  obligation  to pay  non-competition  compensation  and
benefits  under Section 3 above or retirement  benefits  under Section 9 and, if
elected by Executive, Section 10 above.

      21.   Successors and Assigns.  This  Agreement  shall inure to the benefit
of and be binding  upon the heirs,  legatees,  administrators,  successors,  and
assigns of the respective parties.

      IN WITNESS WHEREOF,  Executive for himself,  and the undersigned  director
of the  Company,  acting on behalf of the Company by  authority  of its Board of
Directors,  have  executed  this  Agreement  as of the day and year first  above
written.

       October 23, 1998                /s/David B. Lederer, Executive
 


                                       DETECTION SYSTEMS, INC.


       October 23, 1998                By:/s/Donald R. Adair, Chairman of the
                                       Compensation Committee of the Board of 
                                       Directors