EMPLOYMENT AGREEMENT

      AGREEMENT, made as of the 14th day of July, 1998 between Karl H.
Kostusiak ("Executive") and Detection Systems, Inc., a New York
corporation ("Company").
WITNESSETH:
      In consideration of the mutual covenants contained herein, the
parties agree as follows:
      1.    Offer of Employment and Term.  The Company agrees to employ
Executive in the capacities of Chairman, President, and Chief Executive
Officer for the Term of Employment commencing as of the date of this
Agreement (the "Commencement Date").  The Company agrees to provide
Executive with such office and such operational and administrative
support as is consistent with his position.  Executive's employment
under this Agreement will be in the vicinity of Rochester, New York.
"Term of Employment" as used herein shall mean the period commencing on
the Commencement Date and continuing thereafter for a period of five
years, 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 may be earlier terminated as hereinafter set forth, in which
event the Term of Employment shall mean the period from the Commencement
Date through the date of such earlier termination.  Except as provided
in Section 4 below, upon the end of the Term of Employment hereunder,
the Non-Competition, Disability, and Retirement Agreement attached as
Exhibit A (hereinafter the "N-CDR Agreement") shall become effective as
provided in Sections 1 and 19 thereof.  Whenever the N-CDR Agreement
becomes effective, this Agreement shall terminate, except for any
accrued liabilities hereunder.
      Notwithstanding any of the other provisions of this Agreement,
however, this Agreement will automatically terminate upon Executive's
death and thereupon all payments and non-vested benefits payable
hereunder shall cease, except for any death benefits and survivor
benefits for his spouse which are provided under the Company's employee
plans or the N-CDR Agreement, which shall upon the death become
effective pursuant to Sections 1 and 19 thereof.
The Company may terminate this Agreement 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 in any such case the
N-CDR Agreement shall thereupon become effective pursuant to Sections 1
and 19 thereof.
      2.    Executive's Acceptance.  Executive hereby accepts the
executive employment described in this Agreement.  Executive further
agrees that he will devote himself 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.
      3.    Compensation and Benefits.  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 $325,714 per year.
      (b)   Participation in all Company executive incentive
compensation plans.  Such incentive compensation plans shall include an
annual cash bonus equal to an amount not less than 5% of the amount by
which the Company's pre-tax profits exceed 4% of net sales.  If
Executive is employed by the Company for only part of a year or his
employment is terminated before year end, the bonus for that year will
be pro rated based on the portion of the year Executive was employed by
the Company (except as otherwise provided in Section 4 below).
      (c)   Grants of options under any Company employee stock option
plan, where permitted by the Plan, in such amounts as are determined by
the Board of Directors or the Committee of the Board administering such
plan;
      (d)   Participation in all Company pension, deferred compensation,
insurance, health and welfare or other benefit plans in which the
Company's senior executives are entitled to participate; 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 of this
Agreement.
      4.    Termination Without Cause.  The Company may terminate
Executive's employment without Cause as hereinafter defined and for any
reason.  If Executive is terminated without Cause, Company will continue
to compensate and provide benefits to Executive as if he had continued
in the Company's employment under this Agreement for the then remaining
balance of the Term of Employment or for a period of three (3) years
from the date of termination, whichever is longer.  So long as Executive
is being paid currently under this Section 4, Executive shall comply
with Section 2 of the N-CDR Agreement.  At the end of the period set
forth above in this Section 4 (during which the Company shall continue
to compensate Executive pursuant to this Agreement), the N-CDR Agreement
shall become effective in accordance with Sections 1 and 19 thereof.
      5.    Termination for Cause.  The Company may terminate
Executive's employment immediately and without prior notice to the
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;
(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; or
      (e)   Willful and prolonged absence from work by Executive or
willful refusal by Executive to perform his duties and responsibilities
under circumstances which, in either case, constitute a substantial
abdication of Executive's duties and responsibilities of his office,
provided that Executive has been given written notice of that absence or
refusal and Executive has not substantially cured the stated Cause
within 60 days thereafter (but action taken by Executive in reliance
upon Section 7 below shall not be deemed an absence or refusal for
purposes of this Section 5).
      If Executive's employment is terminated by the Company for Cause,
he shall continue to be paid compensation and provided benefits in
accordance with the provisions of Section 4 above and the N-CDR
Agreement, provided that his cash compensation 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 such payments and based on a final court
determination; and at the end of the period specified in Section 4, the
N-CDR Agreement shall become effective in accordance with Sections 1 and
19 thereof.
      6.    Resignation.  Executive may voluntarily resign from full
time employment with the Company, effective no earlier than 90 days
after the Executive has given written notice thereof to the Company's
Secretary or the Chairman of the Compensation Committee of the Board of
Directors and the Term of Employment shall terminate on the effective
date set forth in the notice.  If Executive resigns or otherwise
voluntarily leaves the Company's employment prior to a Change in
Control, he shall forfeit all compensation and non-vested benefits, from
and after the effective date of such resignation, except that upon that
effective date the N-CDR Agreement shall become effective in accordance
with Sections 1 and 19 thereof.
      7.    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 of all or substantially all of the
Company's assets.
      (b)   If any Change in Control of the Company occurs and
Executive's employment is terminated by Executive or by the Company
(other than for Executive's death or disability) at that time or within
six months after the date of the Change in Control (in Executive's case
by Executive giving notice within that six month period, effective
within 30 days after the notice is given), regardless the reason, if
any, 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
base 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 base salary and
bonuses) 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.
      (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 if Executive had continued to be an
employee of the Company for three (3) years after the termination (such
as, but not limited to, the life, accident, disability, health and
travel insurance, and other benefits in effect for Executive at the time
notice of termination is given or at the time the Change in Control
occurs, whichever may be higher in the case of each benefit).  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 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 the chief
executive 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).
(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 Section 7(b) shall control over
the provisions of Sections 4 and/or 5.  In the event that Executive's
employment is not terminated by the Company or the Executive within the
six month period specified in Section 7(b), the provisions of Sections 4
and 5 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 the N-CDR 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.
      (f)   In addition to payment of the amounts set forth in Section
7(b) above and the funding of the "rabbi" trust as provided in Section
7(e) above, beginning on the effectiveness of any termination of
employment to which Section 7(b) applies, the Company shall compensate
and pay benefits to and may retain the consulting services of Executive
in accordance with the N-CDR Agreement, which shall become effective in
accordance with Sections 1 and 19 thereof.
      8.    Retirement.  The Company and Executive hereby agree that
Executive shall retire from full-time employment with the Company
effective with the close of business on December 31 of the year in which
Executive attains the age of 68, and beginning on January 1 of the next
year, the Company will pay Executive retirement benefits for his
lifetime and for his spouse's lifetime, if his spouse survives him, in
accordance with the applicable provisions of the N-CDR Agreement, which
shall become effective in accordance with Sections 1 and 19 thereof.

      9.    Change in Employment Status.  If approved by the Executive
and the Board of Directors during the Term of Employment, Executive may
become an independent consultant with terms and conditions of that
relationship substantially equal in all respects to those set forth in
the N-CDR Agreement, which in that event shall become effective in
accordance with Sections 1 and 19 thereof.
 .
      10.   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).
 .
      11.   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 at the addresses to which the Company then sends
correspondence to them;
      (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 11) 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.

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

      13.   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.

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

      15.   Entire Agreement.  This Agreement, including the N-CDR
Agreement, which is being executed simultaneously herewith, contains the
entire understanding of the parties with respect to the employment of
Executive by the Company.  There are no restrictions, agreements,
promises, warranties, covenants, or undertakings other than those
expressly set forth herein.  This Agreement supersedes all prior
agreements, arrangements, and understandings between the parties,
whether oral or written, with respect to the employment of Executive.

      16.   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.

July 14, 1998                                   /s/ Karl H. Kostusiak
Date                                      Karl H. Kostusiak, Executive


                                          DETECTION SYSTEMS, INC.

July 14, 1998                             By: /s/ Donald R. Adair
Date                                                Donald R. Adair,
Chairman of the
                                              Compensation Committee of
the
                                                     Board of Directors
Attachment:

EXHIBIT A

NON-COMPETITION, DISABILITY, AND RETIREMENT AGREEMENT


      AGREEMENT made as of the 14th day of July, 1998 between Karl H.
Kostusiak ("Executive") and Detection Systems, Inc., a New York
corporation ("Company").  It is the intent that this Agreement will
supersede the Employment Agreement, dated concurrently herewith, upon
the occurrence of one of the contingencies set forth in Section 19 below.
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 upon its execution, which is concurrent with execution of an
Employment Agreement between the parties bearing the same date as this
Agreement (the "Employment Agreement"), and this Agreement shall become
effective when any one of the contingencies set forth in Section 19
occurs (the "Commencement Date" herein).  "Term of Consulting Service"
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 Consulting Service, in which case the
Term of Consulting Service shall have the meaning as determined at that
time; provided, however, that Executive's consulting services may be
earlier terminated as hereinafter expressly set forth, in which event
the Term of Consulting Service shall mean the period from the
Commencement Date through the date of such earlier termination.  Except
as expressly provided in this Agreement, terms defined in that
Employment Agreement are used herein with the same meanings.

      2.    Non-Competition.  During any period (a) in which Executive
is being paid currently the compensation called for by Section 3 below,
(b) in which Executive is being paid currently for disability benefits
as provided under Section 11 below, or (c) 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 Consulting Service.

      3.    Compensation for Non-Competition.  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
$150,000, 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.

4.    Consulting Services.  If this Agreement becomes effective upon the
occurrence of any contingency set forth in subsection (a), (d), (e),
(f), (g) or (i) of Section 19, beginning upon the date of that
occurrence Executive shall hold himself available to the Company for
providing consulting services to it as an independent contractor at
mutually agreeable times and places (which if not otherwise agreed shall
be in the Rochester, New York area).  The Company shall have the right
to call upon Executive for as much as 12 days of consultation per year
and shall pay Executive $1,500 per day (including travel time) for all
such services (or on an hourly basis to be agreed upon, up to 100 hours
per year).  Any other consulting services shall be provided if, as, and
when the parties may agree.  In addition, the Company shall reimburse
Executive for all reasonable expenses incurred by Executive in providing
those consulting services, upon submission by Executive of the usual
documentation substantiating the expenses.  If the Company anticipates
calling upon Executive to provide more than 700 hours of consulting
services in any 12 month period, the Company shall provide Executive
with such offices and such operational and administrative support as is
consistent with his anticipated services.
      Notwithstanding any of the other provisions of this Agreement, the
Term of Consulting Services 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 consulting 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.    Executive's Acceptance.  Executive agrees to provide the
consulting services described in this Agreement.  Executive further
agrees that he will devote his reasonable efforts during reasonable
business hours to performance of the consulting services set forth
herein during the Term of Consulting Service.

      6.    [Intentionally left blank]

      7.    Termination for Cause.  The Company may terminate
Executive's consulting 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 consulting 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
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.  Executive may voluntarily resign from his
consulting services with the Company 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 the second sentence of Section 4 above.

      9.    Retirement.  The Company hereby agrees that, if not ended
sooner, the Term of Consulting Service as used in this Agreement and the
Term of Service as used in the Employment 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 respective Term of Consulting
Service or Term of Service 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
Executive's base salary for the last year of full time employment with
the Company, increased for each year after that last year of full time
employment by any increase in the CPI (as defined below), except that
the retirement wage benefit shall be equal to 60% of Executive's base
salary for the last year of full time employment with the Company, plus
CPI increases, effective for any retirement year after a Change in
Control, 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, 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.

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 or the provisions
of Section 1 of the Employment Agreement, 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
minimum consulting fees 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 fees
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
tender offer pending with respect to any securities issued by the
Company or there is any program announced by any person other than the
Company to acquire shares of the Company's Common Stock.  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.

      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.

      18.   Entire Agreement.  This Agreement contains the entire
understanding of the parties with respect to the consulting services of
Executive by the Company during the Term of Consulting Service and with
respect to non-competition 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 Consulting
Service.  Upon the occurrence of one of the contingencies set forth in
Section 19 below, 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.
Thus, whenever this Agreement becomes effective, the provisions of the
Employment Agreement shall no longer be effective except for any claims
that may have accrued thereunder.

      19.   Contingencies.  (a) This Agreement shall be effective
immediately upon the occurrence of any one of the following:
      (a)   Upon the end of the five year Term of Service as provided in
Section 1 of the Employment Agreement;
      (b)   Upon Executive's death as provided in Section 1 of the
Employment Agreement;
      (c)   Upon Executive's permanent disability as provided in Section
1 of the Employment Agreement;
      (d)   At the end of the period specified in Section 4 of the
Employment Agreement after termination of Executive's employment without
Cause;
      (e)   At the end of the period specified in Section 5 of the
Employment Agreement after termination of Executive's employment for
Cause;
      (f)   Upon any voluntary resignation by Executive from full time
employment with the Company prior to a Change in Control as provided in
Section 6 of the Employment Agreement;
      (g)   Upon the effectiveness of any termination of Executive's
employment after a Change in Control as provided in Section 7 of the
Employment Agreement;
      (h)   Upon Executive's retirement as provided in Section 8 of the
Employment Agreement; or
      (i)   Upon any change of Executive's employment status to that of
independent consultant as provided in Section 9 of the Employment
Agreement.

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.
            (b)   If any Change in Control of the Company occurs while
this Agreement is effective and Executive's consulting services are
terminated by Executive or by the Company (other than for Executive's
death or disability) at that time or within six months after the date of
the Change in Control (in Executive's case by Executive giving notice
within that six month period, effective within 30 days after the notice
is given, that his consulting services are terminated to the extent
permitted under Section 8 above), regardless the reason, if any, 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 minimum consulting fees through the
effective date of termination of his consulting services 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.
(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 consulting services, 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 life insurance policies on Executive's life listed on Exhibit A
attached to the Employment Agreement (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 the chief executive officer of
the Company), and then shall transfer to Executive any and all of its
right, title, and interest in and to those policies (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).
(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
consulting services are 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.
            (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.

            July 14, 1998                       /s/ Karl H. Kostusiak
                                          Karl H. Kostusiak, Executive
 


                                          DETECTION SYSTEMS, INC.


            July 14, 1998                       By: /s/ Donald R. Adair
                                          Donald R. Adair, Chairman of
the
                                          Compensation Committee of the
                                          Board of Directors

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