COMPUDYNE CORPORATION






                             7249 National Drive
                             Hanover, MD 21076
                             (410) 712-0275



                             June 18, 2001

Dear CompuDyne Shareholders:

The following pages contain the formal notice of the 2001 Annual Meeting
of Shareholders and the Proxy Statement.
Please be sure to complete, date, sign and return the enclosed proxy card
promptly to ensure that your shares will be voted.

Enclosed is CompuDyne's Annual Report for the year ended December 31,
2000.  This report describes in detail the Corporation's operations and
results for the past year.

You are invited to attend CompuDyne's Annual Meeting to be held
Wednesday, July 18, 2001 at 11:00 a.m.(EST) at the Best Western Hotel,
6755 Dorsey Road, Dorsey, Maryland  21075 in the Dorsey Banquet Room.

                             Sincerely,




                             Martin A. Roenigk
                             Chairman
                      COMPUDYNE CORPORATION

          Notice of 2001 Annual Meeting of Shareholders
               to be held Wednesday, July 18, 2001


The 2001 Annual Meeting of Shareholders of CompuDyne Corporation (the
"Corporation") will be held Wednesday, July 18, 2001, at 11:00 A.M.
at the Best Western Hotel, 6755 Dorsey Road, Dorsey, Maryland 21075,
in the Dorsey Banquet Room, for the following purposes:

    1.   To elect a nominee for director to serve until the 2003 Annual
         Meeting of Shareholders and elect two directors to serve until
         the 2004 Annual Meeting of Shareholders.
    2.   To ratify the appointment by the Board of Directors of the firm
         of Deloitte & Touche LLP as independent auditors of the
         Corporation for the fiscal year ending December 31, 2001.
    3.   To amend the Corporation's Articles of Incorporation to allow
         for the redemption of shares, under certain circumstances.
    4.   To vote to amend the CompuDyne Corporation 1996 Stock Incentive
         Plan for Employees.
    5.   To transact any other business as may properly come before the
         meeting or any adjournment or adjournments thereof.

The Board of Directors has fixed the close of business on June 8, 2001
as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting.  The stock transfer books will
not be closed.

The Board of Directors solicits the accompanying proxy of CompuDyne
Corporation.  Reference is made to the following proxy statement for
further information relating to the business to be transacted at the
meeting.  The Board of Directors urges you to execute and return
promptly the enclosed proxy.  You are, of course, cordially invited to
attend the meeting and to personally vote your shares.

                                  By Order of the Board of Directors



                                  W.C. Rock, Secretary
June 18, 2001

________________________________________________________________________
                            IMPORTANT

To assure your representation at the meeting, please date and execute
the enclosed Proxy in accordance with the instructions contained therein
and return immediately.  A return envelope, which requires no postage if
mailed in the United States, is enclosed for that purpose.
________________________________________________________________________



                         COMPUDYNE CORPORATION
                          7249 National Drive
                        Hanover, Maryland 21076

                               -------

                            PROXY STATEMENT

                               -------

                  2001 ANNUAL MEETING OF SHAREHOLDERS

The Board of Directors furnishes this Proxy Statement to shareholders of
CompuDyne Corporation, a Nevada corporation ("CompuDyne" or the
"Corporation"), in connection with the solicitation of proxies for use
at the 2001 Annual Meeting of Shareholders of the Corporation to be held
Wednesday, July 18, 2001 at 11:00 A.M.  at the Best Western Hotel, 6755
Dorsey Road, Dorsey, Maryland, 21075, in the Dorsey Banquet Room.  The
approximate date on which this Proxy Statement and the enclosed form of
proxy are first to be sent to shareholders is June 18, 2001.

                        SOLICITATION OF PROXIES
                        -----------------------

The expenses of the solicitation of the proxies for the meeting,
including the cost of preparing, assembling and mailing the notice and
Proxy Statement, proxy and return envelopes, the handling and tabulation
of proxies received, and charges of brokerage houses and other
institutions, nominees or fiduciaries in forwarding such documents to
beneficial owners, will be paid by the Corporation.  In addition to the
mailing of the proxy material, such solicitation may be made in person
or by telephone by directors, officers or regular employees of the
Corporation.

The enclosed proxy is revocable anytime before it is exercised.  A proxy
may be revoked by filing with the Secretary of the Corporation a revoking
instrument or a duly executed proxy bearing a later date.  The powers of
the proxy holders will be suspended if the person executing the proxy
attends the meeting in person and so requests.

            OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
            -----------------------------------------------

The Board of Directors has fixed June 8, 2001 as the record date (the
"Record Date") for determining shareholders entitled to notice of and
to vote at the meeting.  On the Record Date, there were 5,069,022 shares
of Common Stock, par value $.75 per share ("Common Stock") of the
Corporation outstanding and eligible to vote on all corporate issues.

The presence in person or by proxy of a majority of the issued and
outstanding shares entitled to vote will constitute a quorum for the
purpose of conducting the meeting.  Abstentions and broker nonvotes are
counted as present in determining whether the quorum requirement is
satisfied.

The holders of Common Stock of record at the close of business on
June 8, 2001 will be entitled to vote on all matters presented at the
meeting.  Common Stock shareholders will be entitled to one vote for each
share of Common Stock held.  There will be no cumulative voting for the
election of directors.  A plurality of the votes cast by all shareholders
entitled to vote thereon at a meeting at which a quorum is present is
required to elect directors (Proposal No. 1), to ratify the appointment
by the Board of Directors of the independent auditors (Proposal No. 2).
The affirmative vote of a majority of the votes cast by all shareholders
entitled to vote thereon at a meeting at which a quorum is present is
required to amend the CompuDyne Corporation Articles of Incorporation to
allow for the redemption of shares (Proposal No. 3), and to amend the
CompuDyne Corporation 1996 Stock Incentive Plan for Employees (the"Plan")
(Proposal No. 4) and to act upon any other matter as may properly come
before the meeting or any adjournment thereof (Proposal No. 5).
Abstentions and broker nonvotes will not be included in the vote total in
the election of directors and will not affect the outcome of the vote.
An abstention from voting will have the practical effect of voting
against any of the other matters since it is one less vote for approval.


ELECTION OF DIRECTORS (Proposal No. 1)
- --------------------------------------

Directors and Nominees
- ----------------------

Pursuant to the Bylaws of the Corporation, the Board of Directors has
fixed the number of directorships at seven.  The directors are divided
into three classes, each class serving for a term of three years.  To
the extent practical, one-third of the members of the Board of Directors
are elected by the shareholders annually.  The Board of Directors
nominated Mr. Martin Roenigk and the Corporation's shareholders in 1998
elected him for a term of three years expiring at the 2001 Annual
Meeting.  The Board of Directors nominated Mr. Alan Markowitz and the
Corporation's shareholders in 1998 elected him for a term of three years
expiring at the 2001 Annual Meeting.

The Board of Directors has nominated Mr. Wade B. Houk  to fill the
directorship that became vacant upon the resignation of Miles P.
Jennings, Jr. from the Board of Directors for personal financial
reasons.  Mr. Jennings resignation did not result from any disagreement
with the Corporation's management or other members of its Board of
Directors.  The Board of Directors has nominated Wade B. Houk and
recommends that shareholders elect him for a term of two years expiring
at the 2003 Annual Meeting of Shareholders.

The Board has nominated and recommends that shareholders elect Martin
Roenigk and Alan Markowitz  to serve as directors of the Corporation for
a term of three years until the 2004 Annual Meeting of Shareholders and
until their successors are elected and qualified.

Unless authority to vote is withheld, the enclosed proxy will be voted
FOR the election of Martin Roenigk,  Alan Markowitz and Wade Houk, who
management believes are willing and available to serve the Corporation in
such capacities.  There is no family relationship between Mr. Roenigk,
Mr. Markowitz and Mr. Houk and any director or executive officer of the
Corporation.

Information with respect to each person nominated for election as a
director and each other person who will continue as a director after the
meeting follows.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 1

Age, Principal Occupation or Position,                      Year First
Directorships of Other Publicly Owned Corporations      Elected Director
- --------------------------------------------------      ----------------

NOMINEE FOR TERM OF OFFICE TO EXPIRE IN  2003:

Wade B. Houk, 58

Wade B. Houk is the President of Houk and Associates,
a criminal justice consulting firm. Mr. Houk is the
former Assistant Director and Chief Financial Officer
of the FBI and of the Federal Bureau of Prisons.

NOMINEES FOR TERM OF OFFICE TO EXPIRE IN  2004:

Martin A. Roenigk, 58 (1)

Mr. Roenigk was elected Chairman of the Board of Directors,     1995
President and Chief Executive Officer of CompuDyne in
August 1995.  He has also served as a Director of
Corcap, Inc. (a holding company) since August 1995.
He is the Chairman of CorrLogic, Inc., Fiber SenSys, Inc.,
Norment Security Group, Norshield Corporation,
Quanta Systems Corporation and Sysco Security Systems.







NOMINEES FOR TERM OF OFFICE TO EXPIRE IN  2004:            Year First
(continued)                                             Elected Director
                                                        ----------------

Alan Markowitz, 51  (1)(3)                                    1995

Mr. Markowitz has been a private investor since 1998.
Before that time he served as President of Paragon
Financial Services (financial services) since 1990.


DIRECTORS WHOSE TERM OF OFFICE  EXPIRES  IN 2002:

Age, Principal Occupation or Position,                     Year First
Directorships of Other Publicly Owned Corporations      Elected Director
- --------------------------------------------------      ----------------

David W. Clark, Jr.,  64 (2)(3)                               1985

Mr. Clark is a Managing Director of Pryor & Clark
Company, an investment holding company, and has served
in such capacity since June 1993. He presently serves
as a director of Corcap, Inc. (a holding company),
Checkpoint Systems, Inc. (manufacturing) and
SS&C Technologies Corp. (software development).

Philip M. Blackmon,  53                                       1995

Mr. Blackmon was appointed Executive Vice President
and Director of CompuDyne in January 1995.
Mr. Blackmon has been employed by Quanta Systems
Corporation ("Quanta"), a subsidiary of CompuDyne,
for more than five years, having served as its
President since 1992 and its Vice President since 1987.

David M. Jones, 36  (2) (3)                                   1999

Mr. Jones is a Principal of William Blair
Mezzanine Capital Partners III, the General Partner
of William Blair Mezzanine Capital Fund I,
William Blair Mezzanine Capital Fund II and William
Blair Mezzanine Capital Fund III (an investment firm),
and has served in such capacity since 1993.










DIRECTORS WHOSE TERM OF OFFICE EXPIRES IN 2004:

Millard H. Pryor, Jr., 68 (1)(2)(3)                           1985

Mr. Pryor is a Managing Director of Pryor & Clark
Company, an investment holding company, and has served
in such capacity since June 1993. He presently serves
as a director of Corcap (a holding company). He also
serves as a director of The Hartford Funds (financial
services) and Infodata Systems Inc.(computer software).






































___________________________________
(1) A member of the Executive Committee of the Board of Directors.
(2) A member of the Audit Committee of the Board of Directors.
(3) A member of the Compensation and Stock Option Committee of the
    Board of  Directors.


Since August 1995, Messrs. Pryor, Roenigk and Markowitz have served as
the Executive Committee of the Board of Directors. That Committee, with
certain exceptions, has the powers exercisable by the Board of Directors
when it is not in session.  Messrs. Pryor, Clark, and Jones have served
as the Audit Committee of the Board of Directors. That Committee has the
responsibility to review the overall control systems of the Corporation,
to advise the Board of Directors with respect to the engagement of
independent auditors who are to audit the books and records of the
Corporation and to approve the scope of any audit to be conducted.
Messrs. Pryor, Clark, Jones and Markowitz have served as the
Compensation and Stock Option Committee of the Board of Directors. That
Committee has the authority to decide the compensation of officers of
the Corporation and to grant restricted stock awards, stock options and
stock bonus awards to the employees of the Corporation.  The Board of
Directors does not have a standing nominating committee.

On February 2, 1996, the Board of Directors adopted the 1996 Stock
Option Plan for Non-Employee Directors ("Director Plan"), subject to
shareholder approval granted at the 1996 Annual Meeting of Shareholders.
The Board of Directors approved an amendment to the Director Plan to
increase the number of options granted to each Non-Employee Director
subject to shareholder approval granted at the 1998 Annual Meeting of
Shareholders.  The purpose of the Director Plan is to promote the
interests of CompuDyne and its shareholders by encouraging Non-Employee
Directors of the Corporation to have a direct and personal stake in
the performance of the Corporation's Common Stock.  Under the current
Director Plan, as amended on May 20, 1998, on each date that a
Non-Employee Director of the Corporation is first elected as a director
of the Corporation by the shareholders of the Corporation or appointed
as a director by the Board of Directors in accordance with the Bylaws of
the Corporation and subsequently reelected as a director by the
shareholders of the Corporation, such Non-Employee Director will
automatically be granted a stock option to purchase 1,000 shares of
Common Stock of the Corporation upon the terms and conditions specified
in the Director Plan. In addition, on the date of each meeting of the
Board of Directors each Non-Employee Director of the Corporation
attending such meeting (in person or by telephone) will automatically be
granted a stock option to purchase 500 shares of Common Stock of the
Corporation in the Director Plan.  The maximum number of options that
may be granted in any one calendar year to any one Non-Employee Director
pursuant to the Director Plan will be options for 4,000 shares of Common
Stock.  No options will be granted for action taken by the Board of
Directors by unanimous written consent.  No Non-Employee Director will
be entitled to receive any options if the grant of such options would
exceed the maximum number of shares that may be delivered under the
Director Plan.  In addition to the grant of options, commencing with the
first quarter of 2000, each Non-Employee Director receives a $1,000
retainer per quarter, payable on the first day of the quarter, and
$1,000 for each meeting attended.  The directors will continue to be
reimbursed for reasonable expenses incurred for attending the meeting.




During 2000, the Board of Directors held three regular meetings, and two
telephonic meetings and acted by  unanimous written consent on four
occasions.  The Executive Committee held no meetings and one meeting
was held by the Audit Committee.  The Compensation and Stock Option
Committee held no meetings, but acted by the unanimous written consent
of its members on eight occasions.  All directors of the Corporation
attended at least 80% of the aggregate of the meetings of the Board of
Directors and the number of committee meetings on which he served.

EXECUTIVE OFFICERS
- ------------------

The following table sets forth information with respect to each executive
officer of the Corporation who served during 2000. Mr. Roenigk was
elected Chairman of the Board of Directors, Chief Executive Officer and
President of CompuDyne in August 1995. Mr. Blackmon was appointed
Executive Vice President of the Corporation in January 1995. Mr. Rock
was appointed  Chief Financial Officer of CompuDyne in September of 1996
and Secretary of the Corporation in August of 1998. Prior to that time
Mr. Rock had been the CFO of Quanta SecurSystems, Inc. Mr. Robison was
appointed President of CorrLogic, Inc. in May of 2001 and of Sysco
Security Systems and Fiber SenSys Inc., wholly owned subsidiaries of
CompuDyne, in March 2001  He was appointed Chief Executive Officer of
Norment Security Group, Inc. (formerly Norment Industries, Inc.) in
November 1998 ("Norment"), a wholly owned subsidiary of CompuDyne,
Mr. Robison was the  President of Quanta SecurSystems Inc., (prior to
its merger  into Norment Security Group in December 2000) since July
1996. Prior to being appointed President of Quanta  SecurSystems,
Mr. Robison served as President of Shorrock Electronic Systems, Inc.
(which changed its name to Quanta SecurSystems) since May 1990.
Mr. Lucynski was appointed President of Norment Security Group, Inc.
("Norment"), a wholly owned subsidiary of CompuDyne, in November 1998.
Prior to that time he served as Executive Vice President and Vice
President Construction Operations of Norment since 1996 and 1991,
respectively.

Name                  Age                 Position
- ----                  ----                --------

Martin A. Roenigk      58       Chairman, President, Chief Executive
                                Officer: CompuDyne Corporation,
                                Chairman : Norment Security Group, Inc.,
                                Norshield Corporation, Quanta Systems
                                Corporation,  Sysco Security Systems,
                                CorrLogic, Inc.,Fiber SenSys, Inc.

Philip M. Blackmon     53       Executive Vice President: CompuDyne
                                Corporation
                                President and Chief Executive Officer:
                                Quanta Systems Corporation




W. C. Rock             52       Chief Financial Officer, Secretary:
                                CompuDyne Corporation
                                Secretary, Treasurer: Sysco Security
                                Systems, Fiber SenSys, Inc.
                                Treasurer: Norment Security Group,
                                Norshield Corporation
                                Secretary: CorrLogic, Inc.

J. Kevin Robison       51       Chief Executive Officer: Norment
                                Security Group, Inc.
                                President : CorrLogic, Inc.,
                                Sysco Security Systems,
                                Fiber SenSys, Inc.

Jon R. Lucynski        53       President:  Norment Security
                                Group, Inc.




EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS WITH MANAGEMENT
- -------------------------------------------------------------

The following table sets forth the total annual compensation of the
Corporation's Chairman, President and Chief Executive Officer and
its executive officers whose salary and bonuses exceeded $100,000 in
2000 ("Named Executive Officers"):































                        SUMMARY COMPENSATION TABLE
                        --------------------------
                                                 Long Term Compensation
                                               ------------------------
                   Annual Compensation          Awards               Payout
                   -------------------          ------               ------
                                                    

Name and
Principal Position Year  Salary Bonus   Restricted   Securities    All Other
                           ($)    ($)  Stock Awards  Underlying  Compensation
                                           ($)       Options/SARs    ($) (2)
                                                       (#) (1)
============================================================================

Martin A. Roenigk  2000 215,000 135,000     0             0          21,830
Chairman, President
and CEO
                   1999 200,000 100,000     0             0          19,016

                   1998 153,906  50,000     0             0           4,827


Philip M. Blackmon 2000 130,000  30,000    (3)            0          11,626
 (2)(3)
Executive
Vice President     1999 109,990  35,000    (3)            0          10,745

President:
Quanta Systems     1998 117,790  25,000    (3)            0           2,945



J. Kevin Robison   2000 204,250 120,000     0             0          11,660
 (1)(4)
CEO-Norment Security
Group, Inc.        1999 190,000 100,000     0             0           4,515

President: Sysco,
Fiber SenSys       1998 130,417  40,000     0           35,000        4,246



W.C. Rock (1)(2)   2000 118,250  34,500     0             0           6,823

CFO, Secretary     1999 110,000  30,000     0             0           5,027

                   1998  85,000  21,000     0           10,000        3,789






Jon R. Lucynski    2000 198,000 190,000     0             0          18,231
(1) (2) (4) (5)

President:
Norment Security
Group, Inc.        1999 180,000 115,000     0           30,000        9,481

                   1998 139,809  63,603     0           45,000        3,236



- -----------------------------
(1) In September 1998, Mr. Robison and Mr. Rock were awarded incentive stock
    options to purchase  35,000 and 10,000 shares respectively of the
    Corporation's Common Stock for $2.50 per share in accordance with the
    terms and conditions of the Corporation's 1996 Stock Incentive
    Compensation Plan for Employees.  Such options will be fully exercisable
    in 2003 and will expire on September 22, 2008.  In November 1998,
    Mr. Lucynski was awarded an incentive stock option to purchase 45,000
    shares, of the Corporation's Common Stock for $4.31 per share in
    accordance with the terms and    conditions of the Corporation's 1996
    Stock Incentive Compensation Plan for Employees.  Such options will be
    fully exercisable in 2003 and will expire on November 29, 2008.  In May
    of 1999 Mr. Lucynski was awarded an incentive stock option to purchase
    30,000 shares, of the Corporation's Common Stock for $7.38 per share in
    accordance with the terms and conditions of the Corporation's 1996 Stock
    Incentive Compensation Plan for Employees.  Such options will be fully
    exercisable in 2004 and will expire on May 3, 2009.

(2) Matching contributions made by CompuDyne in CompuDyne's 401(k) Retirement
    Savings Plan and Employee Stock Purchase Plan, may also include
    contributions from the CompuDyne Retirement Plan for Employees of
    Norment,  car allowances and life insurance.

(3) On November 12, 1992, the CompuDyne Board of Directors authorized the
    sale of 100,000 shares of CompuDyne Common Stock to Philip M. Blackmon
    at a price of $.40 per share, the fair market value at such time.  Under
    a Stock Purchase Agreement, dated August 1, 1993, entered into pursuant
    to such authorization, Mr. Blackmon purchased 25% of such shares on each
    of August 1, 1993, 1994, 1995 and 1996 at $.40 per share by giving
    CompuDyne five-year non-recourse promissory notes in the amount of
    $10,000 each, collateralized by the stock and bearing interest at 2% per
    annum over the rate designated by the First National Bank of Maryland as
    its prime commercial rate.  On May 1, 1998, the Board of Directors, by
    unanimous consent, approved an amendment to the Stock Purchase Agreement
    extending the maturity date to seven years from the original agreement
    date.  In addition, the payment provisions of the Agreement were changed
    to allow the obligor to make payment of principal and interest either in
    cash or by the tender to the Company of that number of shares of
    CompuDyne Common Stock equal to the result obtained by dividing the total
    amount of principal and interest due by the fair market value of the
    stock. Mr. Blackmon exercised his right to tender shares of CompuDyne
    Common Stock as payment of the promissory notes. Mr. Blackmon surrendered
    6,483 shares in fulfilment of his obligation. On April 9, 2001, CompuDyne
    repurchased 50,675 shares at fair market value from non-qualified options
    exercised by Philip Blackmon.  The Company agreed to the repurchase of
    the shares in an effort to accommodate Mr. Blackmon's need to generate
    funds for the taxes on the exercise of the non-qualified options.

    As of December 31, 2000, the fair market value of the original 100,000
    shares issued was $700,000 based upon CompuDyne Common Stock as reported
    on the NASDAQ.

    On December 14, 1995, Mr. Blackmon was awarded a Restricted Stock Award
    in accordance with the terms and conditions as set forth in a Restricted
    Stock Award Agreement under the CompuDyne Corporation 1986 Stock
    Incentive Compensation  Plan under which Mr. Blackmon received 10,250
    shares of CompuDyne Common Stock at a fair market value on the date of
    grant of $1.625 per share, or an aggregate fair market value of $16,656
    on date of grant and aggregate fair market value of $71,750 at December
    31, 2000.  Mr. Blackmon, as the holder of shares issued under the
    Stock Purchase Agreement and Restricted Stock Award Agreement, is
    entitled to vote and to receive any dividends paid on the CompuDyne
    Common Stock.

(4) In December 1998, the Board of Directors, in accordance with the
    provisions of the CompuDyne Corporation 1986 Stock Incentive Compensation
    Plan Benefit Plan (the "1986 Plan) and the CompuDyne Corporation 1996
    Stock Incentive Compensation Plan for Employees (the "1996 Plan"),
    granted the Compensation Committee more flexibility to determine the
    disposition of options, including the length of the exercise period and
    the vesting schedule, held by employees after such employees' retirement
    or termination of employment.  In December 1998, the Compensation
    Committee approved the amendment of the Stock Option Agreements under the
    1986 Plan and the 1996 Plan for Mr. Robison and Mr. Lucynski to extend
    the option exercise period and vesting schedule upon a change of control
    in the Corporation or its subsidiaries.  In the event of a change in
    control, the employees' options will be fully exercisable immediately,
    and any unexercised portion of the option will terminate at the close of
    business on the day six months following the date on which the optionee
    ceases to be an employee or upon the expiration of the term of the
    option, whichever shall first occur.

(5) Mr. Lucynski was elected President of Norment in November 1998. Norment
    was acquired by CompuDyne on November 30, 1998.  All compensation
    reported in the table for Mr. Lucynski reflect monies paid by Norment
    and CompuDyne for the 12-month period ended December 1998.  CompuDyne's
    portion in 1998 of the salary paid in December 1998 was $17,239 and the
    401(k) contribution was $310.









      Option Exercises and Year End Option Values in the Last Fiscal Year

                                              

                     Shares Acquired           Value Realized
Name                 On Exercise (#)                ($)
- -----                ---------------           --------------



Martin A. Roenigk


Kevin J. Robison         24,000*                  152,880*


Jon R. Lucynski


William C. Rock





                                                         

               Number of Unexercised                Value of Unexercised
                   Options (#)                   In the Money Options ($)(1)

           Exercisable       Unexercisable  Exercisable        Unexercisable
           -----------       -------------  -----------        -------------

Roenigk     200,000                 0         1,100,000    /          0

Robison      14,000              21,000          63,000    /       94,500
              8,000*              8,000*         43,000*   /       43,000*

Lucynski      9,000              27,000          24,210    /       72,630

Rock          4,000               6,000          18,000    /       27,000
             16,000               4,000          86,000    /       21,500






      (1) The difference between the exercise price of the options ($1.50
          per share for Mr. Roenigk, $1.625 and $2.50 for Mr. Robison
          and Mr. Rock and $4.31 for Mr. Lucynski.  The fair market value of
          CompuDyne Common Stock at December 31, 2000 of $7.00 per share).








BENEFICIAL OWNERSHIP OF COMMON STOCK

As of June 8, 2001, there were 5,069,022 shares of CompuDyne Common Stock
issued and outstanding.

The following table sets forth, as of June 8, 2001, the amount and nature of
the beneficial ownership of CompuDyne Common Stock by each person who is
known by CompuDyne to hold of record or beneficially more than 5% of any
class of voting securities of CompuDyne and by each director, nominee,
executive officer and by all directors, nominees and executive officers as
a group.
                                                           

                            Amount and
                            Nature of            Title
                            Beneficial             of         Percentage of
Name and Address (1)        Ownership            Class         Class Owned
- --------------------        ----------          ------        -------------

William Blair Mezzanine
 Capital Fund II
 222 West Adams  Street
 Chicago, Illinois 60606    1,374,431 (2)        Common Stock       27.1 %

Martin A. Roenigk           1,900,747 (1)(3)     Common Stock       37.5 %

Alan Markowitz                567,715 (1)(4)     Common Stock       11.2 %

J. Kevin Robison               61,908 (1)(4)(5)  Common Stock        1.2 %

Jon R. Lucynski                53,482 (1)(4)(5)  Common Stock        1.0 %

Philip Blackmon                53,092 (1)(6)     Common Stock        1.0 %

William C. Rock                26,392 (1)(4)     Common Stock          *

David W. Clark, Jr.            22,966 (1)(4)     Common Stock          *

Millard H. Pryor, Jr.          20,217 (1)(4)     Common Stock          *

Wade B. Houk                      100            Common Stock          *

David M. Jones                   None (2)

All Directors Nominees
and Executive Officers
as a group (10 persons)     2,706,619            Common Stock       53.4 %

  * less than 1%




______________________________________

(1) The address of each person listed in the table above, excluding William
    Blair Mezzanine Capital Fund II, LLP  and David  Jones, is CompuDyne
    Corporation, 7249 National Drive, Hanover, Maryland 21076.
(2) On December 3, 1998, (effective November 30, 1998) CompuDyne acquired
    Norment and Norshield.  In connection with this purchase, CompuDyne
    issued 1,075,507 shares of unregistered Common Stock, a warrant
    to purchase 297,924 shares of Common Stock immediately exercisable at
    $3.25 per share, and a subordinated note in the principal amount of
    $9,000,000 that matures in 2005 to William Blair Mezzanine Capital Fund
    II (the "Fund").  The Fund is entitled to have one representative
    nominated as a member of CompuDyne's Board of Directors until the Fund's
    $9,000,000 Senior Subordinated Note is repaid in full and the Fund's
    holdings of Common Stock represent less than 10% of CompuDyne's issued
    and outstanding Common Stock.  David M. Jones is the Fund's nominee to
    serve on CompuDyne's Board of Directors.
(3) Assumes exercise of non-qualified stock options granted to Mr. Roenigk
    for 200,000 shares of CompuDyne Common Stock at an exercise price of
    $1.50 per share.  Such options are immediately exercisable and expire on
    August 21, 2005.
(4) Includes CompuDyne Common Stock held by directors and officers or by
    certain members of their families (for which the directors and officers
    have sole or shared voting or investment power) and shares of Common
    Stock that they have the right to acquire within 60 days of June 8, 2001.
(5) See Note 4 to the Summary Compensation Table under "Executive
    Compensation and Other Transactions With Management."
(6) On April 9, 2001, CompuDyne repurchased 50,675 shares at fair market
    value from non-qualified options exercised by Philip Blackmon.  The
    Company agreed to the repurchase of the shares in an effort to
    accommodate Mr. Blackmon's need to generate funds for the taxes on the
    exercise of the non-qualified options.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ----------------------------------------------

On December 3, 1998 (effective November 30, 1998) CompuDyne entered into
and consummated a Stock Purchase Agreement by and between Apogee
Enterprises, Inc., ("Apogee") and CompuDyne, to purchase all of the
capital stock of Norment Security Group, Inc., Inc., ("Norment") and
Norshield Corporation, ("Norshield") from Apogee.  Norment and
Norshield, headquartered in Montgomery, Alabama, operate a number of
separate businesses that collectively are engaged in the design,
manufacture, installation and distribution of locks, bullet resistant
glass, metal window surrounds, electronic control systems and similar
products that are integrated into detention security systems under the
names Norment Security Group, Inc., Norshield, SESCO, EMSS, Airteq and
Trentech.  The consideration paid to Apogee for the stock of Norment and
Norshield was $22.5 million. In connection with this acquisition,
CompuDyne issued to William Blair Mezzanine Capital Fund II (the "Fund")
1,075,507 unregistered shares of Common Stock, a warrant to purchase
297,924 shares of Common Stock immediately exercisable at $3.25 per
share, and a subordinate note in the principal amount of $9,000,000 that
matures in 2005.   In addition, CompuDyne arranged a borrowing facility
with LaSalle National Bank.

In December 1998, the Board of Directors,  in accordance with the
provision of Section 11(a) of the CompuDyne Corporation 1986 Stock
Incentive Compensation Plan  (the "1986 Plan") and Section 11(a) of the
Plan, granted the Compensation Committee more flexibility to determine
the disposition of options, including the length of the exercise period
and the vesting schedule, held by employees after such employees'
retirement or termination of employment. In December 1998, the Committee
approved the amendment of the Stock Option Agreements under the 1986 Plan
and the Plan for Mr. Robison and Mr. Lucynski and certain key employees
of MicroAssembly to extend the option exercise period and vesting
schedule upon a change of control of the Corporation or its
subsidiaries.  See Note 4  under Summary Compensation Table.

Pursuant to a November 30, 1998 Subordinated Loan and Investment
Agreement between CompuDyne and the Fund, and a November 30, 1998
Corporate Governance and Shareholders Agreement between CompuDyne,
Martin A. Roenigk and the Fund, in connection with the acquisition of
Norment, the Fund is entitled to have one representative nominated as a
member of CompuDyne's Board of Directors until the Fund's $9,000,000
Senior Subordinated Note is repaid in full and the Fund's holdings of
Common Stock represent less than 10% of the CompuDyne's issued and
outstanding Common Stock. Mr. Jones is the Fund's nominee.

On November 30, 1998, the Committee granted options for 45,000 shares of
CompuDyne Common Stock to Mr. Lucynski  in connection with the
acquisition of Norment and Norshield.  Such options were issued in
accordance with the terms and conditions of the Plan at a price of $4.31
per share.

In 1998, the Corporation issued options to purchase shares of Common
Stock to its non-employee directors pursuant to the Director Plan (see
"Directors and Nominees" above) at exercise prices ranging from $2.63 to
$2.875 per share. In 1999 the Corporation issued options to purchase
shares of Common Stock to its non-employee directors pursuant to the
Director Plan (see "Directors and Nominees" above) at exercise prices
ranging from $5.19 to $8.25 per share. In 2000 the Corporation issued
options to purchase shares of Common Stock to its non-employee directors
pursuant to the Director Plan (see "Directors and Nominees" above) at
exercise prices ranging from $7.719 to $8.813.

On July 11, 1996 and September 23, 1998, the Committee granted options to
Mr. Robison to purchase 40,000 shares and 35,000 shares, and to Mr. Rock
to
purchase 20,000 and 10,000 respectively, of CompuDyne Common Stock in
accordance with the terms and conditions of the 1996 Stock Incentive
Compensation Plan for Employees (the "Plan") at a price of $1.625 per
share
and $2.56 per share, respectively, (100% of the fair market value of such
shares at the date of grant).

CompuDyne has retained Mr. Wade Houk and Houk Associates as consultants
on behalf of the corporation and expects to continue to do so in the
future.


EXECUTIVE COMPENSATION: REPORT OF THE COMPENSATION
                        AND STOCK OPTION COMMITTEE

The Committee's Responsibilities: The Compensation and Stock Option
Committee of the Board (the "Committee") has responsibility for setting
and administering the policies that govern executive and stock
compensation. The Committee is composed entirely of outside directors.
Reports of the Committee's actions and decisions are presented to the
full Board. The purpose of this report is to summarize the philosophical
principles, specific program objectives and other factors considered by
the Committee in reaching its determinations regarding the executive
compensation of the Named Executive Officers.

Compensation Philosophy:  The Committee has approved principles for the
management compensation program which:

+   Encourage strong financial and operational performance of the
    Company;

+   Emphasize performance-based compensation, which balances rewards for
    short-term and long-term results;

+   Focus executives on "beating the competition" through regular
    comparison of CompuDyne performance relative to peer companies;

+   Link compensation to the interests of shareholders by providing
    stock incentives and encouraging significant share holdings; and

+   Provide a competitive level of total compensation necessary to
    attract and retain talented and experienced executives.

The Committee considers stock ownership by management to be an
important means of linking management's interests directly to those of
shareholders.  The amount of stock encouraged to be owned increases
with the level of responsibility of each executive, with the Chief
Executive Officer expected to own stock with a value at least equal to
two times base salary.

Compensation Methodology: CompuDyne strives to provide a comprehensive
executive compensation program that is competitive and performance-based
in order to attract and retain superior executive talent. Each year the
Committee reviews market data and assesses CompuDyne's competitive
position for three components of executive compensation: (1) base salary,
(2) annual incentives, and (3) long-term incentives. The Company utilizes
publicly available compensation surveys in security industry and general
industry publications to assist in bench marking the competitiveness of
its compensation programs. Because the Committee believes that the
Company's direct competition for executive talent is broader than the
companies that are included in the Performance Peer Group established for
purposes of comparing shareholder returns (see Stock Performance Graph
on page 13 for more information), these surveys may include companies in
the Performance Peer Group as well as others in the security industry
and in general industry groupings of comparable size and profitability.
The compensation survey data typically reflects adjustments for each
company's relative revenue, profitability, asset base, employee
population and capitalization along with the scope of managerial
responsibility and reporting relationships.

Components of Compensation:

    +  BASE SALARY: Annual base salary is designed to compensate
       executives for their level of responsibility and sustained
       individual performance. The Committee approves in advance all
       salary increases for executive officers. The goal is to
       compensate executives within the upper mid-level of the range of
       base salaries paid by companies in the security industry
       and in comparable companies.

    +  ANNUAL INCENTIVES:  Annual incentive awards for the Named
       Executive Officers are provided in order to promote the
       achievement of CompuDyne's business objectives. Each year the
       Committee considers the Company's prior year's performance
       against objectives, as well as its expectations for CompuDyne
       in the upcoming year. Bearing in mind these considerations, the
       Committee sets certain Company performance criteria or goals
       which must be met before payments are made. Additionally,
       individual performance goals may be established for each
       participant. Participants receive no payments unless minimum
       thresholds of performance are achieved. Payments may range
       from 0% to 200% of the guideline annual incentive, with payments
       increasing as performance improves.

The Committee establishes a fixed percentage of annual salary or a
dollar amount as an executive's guideline annual incentive opportunity,
based partly on comparative survey data on annual incentives paid in the
security industry and other companies similar to the executive's
business. The guideline amount increases with the level of responsibility
of the executive. Annual incentive awards for 2000 were based on meeting
objectives for one or more of three principal measurements:

      -     Earnings Before Interest, Taxes and Corporate Allocation
            ("Contribution") at the business unit level;
      -     Earnings Per Share ("EPS") at the corporate level; and
      -     For 2000 and beyond, a setting of objectives for individual
            senior managers and senior  management as a group.

For 2000 CompuDyne achieved the target award level.   As a result, the
annual incentive approved by the Committee for each Named Executive
Officer was 100% of the guideline incentive opportunity. The Bonus
column of the Summary Compensation Table on page 6 contains the annual
incentive earned for 2000 for each of the Named Executive Officers.

+  LONG-TERM INCENTIVE COMPENSATION:  The Committee reviews and approves
all long-term incentive awards.  In 2000 these awards were in the form
of stock options. These awards provide compensation to executives only
if shareholder value increases. In determining the number of stock
options awarded, the Committee reviewed surveys of similar awards made
to individuals in comparable positions at other  companies and the
executive's past performance. They also consider the number of long-term
incentive awards previously granted to the executive.

       -    Stock Options:  Options have an exercise price equal to the
            fair market value of common stock on the date of grant
            and typically vest over a period of five years. They are
            partially exercisable after one year, and extend for ten
            years.

Chief Executive Officer Compensation:  The Committee directors meet
annually, in private, to review Mr. Roenigk's performance. The Committee
uses this performance evaluation in considering Mr. Roenigk's
compensation. The Chief Executive Officer participates in the same
programs and receives compensation based on the same factors as the other
executive officers. However, Mr. Roenigk's overall compensation reflects
a greater degree of policy and decision-making authority and a higher
level of responsibility with respect to the strategic direction and
financial and operational results of the Company. The Chief Executive
Officer's compensation components are:

+  BASE SALARY:  As a result of CompuDyne's growth in size and
   profitability and complexity in 2000,  Mr. Roenigk  received a raise
   of $15,000 in 2001.
+  ANNUAL INCENTIVE: Annual incentive compensation for Mr. Roenigk is
   based upon relative attainment of the annual performance goals for
   the Company, and on Mr. Roenigk's individual objectives as determined
   by the Committee.  Based on these criteria, Mr. Roenigk was awarded
   $135,000 representing 100% of his guideline incentive for performance
   in 2000.
+  LONG-TERM INCENTIVE AWARD: Mr. Roenigk did not receive any stock
   option awards in 2000.

Omnibus Budget Reconciliation Act of 1993: This Act has had no material
impact upon CompuDyne's ability to take a tax deduction for annual
compensation in excess of $1 million paid to any of the Named Executive
Officers since there has been no annual compensation in excess of $1
million. Therefore, the Committee has determined that it is not necessary
to seek shareholder approval to amend any current compensation plan at
this time to comply with this Act.

Compensation Committee Interlocks and Insider Participation:  There
are none.

Respectfully submitted by the members of the Compensation and Stock
Option Committee of the Board of Directors:

   Millard Pryor, Chair             David Jones
   Alan Markowitz                   David Clark







PERFORMANCE GRAPH
- -----------------






































      * $100 INVESTED ON 12/31/95 IN STOCK OR INDEX - INCLUDING
   REINVESTMENT OF DIVIDENDS. FISCAL YEAR END DECEMBER 31.

CompuDyne's Performance Peer Group is composed of five security
companies of various size and represent its competitors. (The Peer Group
changed because BI and Printrak were acquired during 2000)

CompuDyne's New Peer Group Includes:   Old Peer Group Includes:
 1. Armor Holdings (AH)                1. Armor Holdings (AH)
 2. Kroll O'Gara (KROG)                2. BI Incorporated (BIAC)
 3. Magal Security Systems (MAGS)      3. Printrak (AFIS)
 4. Sensormatic Electronics (SRM)      4. Sensormatic Electronics (SRM)
 5. Wackenhut Corporation (WAK/B)      5. Wackenhut Corporation (WAK/B)


REPORT OF AUDIT COMMITTEE AND FEES OF INDEPENDENT AUDITORS

Report of Audit Committee

   The Board of Directors of the Company has adopted a charter for the
Audit Committee, a copy of which is attached as Exhibit B. The charter
charges the Committee with the responsibility for, among other things,
reviewing the Company's audited financial statements and the financial
reporting process.  In carrying out that responsibility, the Committee
has reviewed and discussed the Company's audited financial statements
with management and it has discussed the matters required to be
discussed by Statement of Auditing Standards 61, as amended, with the
independent auditors.  In addition, the Committee has reviewed the
written disclosures required by Independence Standards Board Standard
No. 1, which were received from the Company's independent accountants,
and has discussed the independent accountants' independence with them.
Based on these reviews and discussions, the Committee recommended to the
Board of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the Company's
fiscal year ended December 31, 2000.

Millard H. Pryor, Jr.     David W. Clark, Jr.       David M. Jones

Audit and Audit Related Fees

The aggregate fees billed for professional services rendered by Deloitte
& Touche LLP, for the audit of the Company's annual financial statements
for the most recent fiscal year and the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for
the fiscal year were $171 thousand.  Non-Audit-related fees for the
fiscal year were $27 thousand.

Financial Information Systems Design and Implementation Fees

No professional services were rendered or fees billed by Deloitte &
Touche LLP for financial information systems design and implementation
for the most recent fiscal year.

  COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors and executive officers, and
persons who own more than 10% of the Corporation's Common Stock, to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Corporation
on Forms 3, 4 and 5.  Officers, directors and 10% shareholders are
required by SEC regulations to furnish the Corporation with copies of all
Forms 3, 4, and 5 they file.

Based solely on a review of the copies of such reports furnished to the
Corporation and written representations that no other reports were
required, during the fiscal year ended December 31, 2000, the Corporation
believes all Section 16(a) filing requirements applicable to its
officers, directors and 10% beneficial owners were complied with.


         RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
                           (Proposal No.2)


On March 3, 2001, the Board of Directors approved the appointment of
Deloitte & Touche LLP as independent auditors for the Corporation for
the year ending December 31, 2001 subject to ratification of such
appointment by the shareholders.

Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Deloitte & Touche LLP, independent
certified public accountants, to audit the books and accounts of the
Corporation for year ending December 31, 2001. Representatives of
Deloitte & Touche LLP will be present at the Annual Meeting.  They will
be given an opportunity to make a statement if they want to do so, and
will be available to respond to appropriate questions.


THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 2


             PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
                             ( Proposal No. 3 )

   The Board of Directors of CompuDyne has proposed and recommended to
the stockholders of CompuDyne that the Articles of Incorporation of
CompuDyne be amended to include the following additional article:

      ARTICLE 12th:  DISTRIBUTIONS.  Subject to the terms of these
   Articles of Incorporation and to the fullest extent permitted by
   the Nevada Revised Statutes, the Corporation shall be expressly
   permitted to redeem or repurchase shares of its capital stock, or
   otherwise make distributions, as that term is defined in Section
   78.191 of the Nevada Revised Statutes, with respect to the shares
   of its capital stock in all circumstances other than where doing
   so would cause the Corporation to be unable to pay its debts as
   they become due in the usual course of business.

   The purpose of adopting this new article is to increase the
flexibility of the Board of Directors as to distributions to
stockholders with respect to their shares, including without limitation,
dividends and payments in redemption of shares.

   Under CompuDyne's present Articles of Incorporation and applicable
Nevada statutes, no distribution may be made to stockholders with
respect to their shares if, after giving effect to the distribution
(a) the corporation would not be able to pay its debts as they become
due in the usual course of business; or (b) except as otherwise
specifically allowed by the articles of incorporation, the corporation's
total assets would be less than the sum of its total liabilities plus
the amount, in the event of dissolution, necessary to satisfy the
preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution.
   While the Board of Directors would still be subject to their
overriding fiduciary duties to the stockholders of CompuDyne and the
"business judgment rule," the proposed amendment to the Articles of
Incorporation of CompuDyne would afford to the directors the flexibility
to make distributions to stockholders of CompuDyne with respect to their
shares which they have determined to be in the best interest of CompuDyne
even though the liabilities of CompuDyne may technically exceed its
assets after giving effect to those distributions.  Even if the proposed
amendment is adopted, CompuDyne would be prohibited from making
distributions to stockholders if the effect of the distributions is to
render CompuDyne unable to pay its obligations as they become due in the
ordinary course of business.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 3


                          PROPOSAL TO AMEND THE
         1996 STOCK INCENTIVE COMPENSATION PLAN FOR EMPLOYEES
                           (Proposal No. 4)

The Compensation Committee of the Board of Directors responsible for
administering the CompuDyne Corporation 1996 Stock Incentive Compensation
Plan for Employees (the "Employee Plan") has issued options for 870,770
shares, net of returned options, of CompuDyne Common Stock under the
Plan. The Board of Directors recommends that the shareholders approve an
amendment to the Employee Plan.  The Employee Plan was adopted by the
Board of Directors on February 2, 1996 and approved by the shareholders
of the Corporation at the 1996 Annual Meeting.  The current Employee
Plan limits the number of shares of Common Stock which may be issued or
transferred under the Employee Plan upon exercise of options or other
rights to 900,000 shares.  The proposed amendment to the Plan increases
the number of shares of Common Stock which may be issued or transferred
under the Plan upon exercise of options or other rights to 1,200,000
shares.  In all other respects, the terms and conditions of the Employee
Plan would remain in full force and effect.  On June 8, 2001, the "Fair
Market Value" for CompuDyne (CDCY - NASDAQ) was $8.45 per share, as
quoted on the NASDAQ.

The Board has proposed the amendment because it believes that it is in
the best interests of the Corporation to continue to have the ability to
issue options to its employees under the Employee Plan.  The Board
believes that employee ownership of CompuDyne shares and  options
provides incentive for such employees to further the growth and
prosperity of CompuDyne.

A copy of the Plan as proposed to be amended is included in this Proxy
Statement as Exhibit A.







Vote Required for Approval of the Proposed Amendment


The Employee Plan provides that the approval of a majority of the
holders of the Common Stock is required to increase the aggregate number
of shares which may be issued in connection with the Employee Plan,
Holders of the Corporation's Common Stock are therefore entitled to vote
on the proposal.  The affirmative vote of at least a majority of the
votes that all shareholders are entitled to cast at the meeting is
required for approval of the proposed amendment.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 4



                            OTHER MATTERS
                          (Proposal No. 5)

The Board of Directors does not intend to bring any other matter before
the meeting, and does not know of any other matter which anyone else
proposes to present for action at the meeting.  However, if any other
matters properly come before such meeting, or any adjournment thereof,
the persons named in the accompanying form of proxy or their duly
constituted substitutes acting at the meeting will be deemed authorized
to vote or otherwise act thereon in accordance with their judgment on
such matters.

               SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING

Shareholder proposals for the 2002 Annual Meeting of Shareholders must
be received at the principal executive offices of the Corporation, 7249
National Drive, Hanover, Maryland 21076, no later than December 28, 2001
for inclusion in the 2001 Proxy Statement.

Shareholders are requested by the Board of Directors to execute and
deliver the enclosed proxy.





                                                   EXHIBIT A

                       COMPUDYNE CORPORATION

              1996 STOCK INCENTIVE COMPENSATION PLAN

                          FOR EMPLOYEES



    1.     PURPOSE

    The purpose of the Plan is to further the growth and prosperity
of CompuDyne Corporation and its subsidiaries through payment of
incentive compensation in the form of Common Stock to officers and
key employees and by encouraging investment in the Company's Common
Stock by officers and other key employees who are in a position to
contribute materially to the Company's prosperity.

    2.     DEFINITIONS

    Unless the context clearly indicates otherwise, the following
terms when used in this Plan, shall have the meanings set forth in this
Section 2.

   "Appreciation" means in connection with an Option or Stock
Appreciation Right the amount by which the Fair Market Value of Common
Stock subject to such Option on the day prior to exercise thereof
exceeds the option price for such Common Stock determined as set forth
in Section 7(b) hereof.

   "Award Period" means for each Restricted Stock Award, the period
beginning with the date on which such Award is granted and ending on a
date specified by the Committee at the time of the granting of such
Award.  In no event shall the Award Period be greater than ten (10)
years.

   "Board of Directors" or "Board" means the Board of Directors of the
Company.

   "Code" means the Internal Revenue Code of 1986, as amended.

   "Committee" means the Compensation and Stock Option Committee of the
Board of Directors.

   "Common Stock" means the common stock of the Company with a par value
of $.75 per share.

   "Company" means CompuDyne Corporation.

   "Fair Market Value" means the average of the high and low sale price
for the Common Stock on the date of the Grant, as quoted, on the
National Association of Securities Dealers Automated Quotation.

   "Incentive Award" means an Option, a Stock Appreciation Right, a
Restricted Stock Award or a combination of them.

   "Incentive Stock Option" means an Option which meets the requirements
of Section 422 of the Code.

   "Option" means a regular stock option or Incentive Stock Option
granted under this Plan to purchase shares of Common Stock.

   "Plan" means the CompuDyne Corporation 1996 Stock Incentive
Compensation Plan for Employees as amended from time to time.

   "Restricted Stock Award" means the right to receive a specified
number of shares of Common Stock in annual installments over a
designated Award Period.

   "Stock Appreciation Right" means a right granted by the Committee in
connection with or as an amendment to an Option which entitles the
holder of the Option to receive the appreciation in value of the stock
subject to such Option without payment to the Company.

   "Subsidiary" or "Subsidiaries" means a corporation or other form of
business entity more than 50% of the voting interest of which is owned
or controlled, directly or indirectly, by the Company.

   3.   SHARES OF COMMON STOCK SUBJECT TO THE PLAN

(Capitalized material is the proposed amendment, bracketed material is
 the current language in the Plan)

   (a) SUBJECT TO THE PROVISIONS OF PARAGRAPH (c) OF THIS SECTION 3 AND
SECTION 9, THE TOTAL NUMBER OF SHARES OF COMMON STOCK WHICH MAY BE
ISSUED OR TRANSFERRED UNDER THIS PLAN UPON EXERCISE OF STOCK OPTIONS,
STOCK APPRECIATION RIGHTS AND WHEN AN EMPLOYEE BECOMES ENTITLED TO
RECEIVE SHARES OF STOCK UNDER THE TERMS OF A RESTRICTED STOCK AWARD
SHALL NOT EXCEED 1,200,000 SHARES.

   [(a)  Subject to the provisions of paragraph (c) of this Section 3
and Section 9, the total number of shares of Common Stock which may be
issued or transferred under this Plan upon exercise of stock options,
Stock Appreciation Rights and when an employee becomes entitled to
receive shares of stock under the terms of a Restricted Stock Award
shall not exceed 900,000 shares.]

   (b)  Shares to be transferred to employees will be made available, at
the discretion of the Board of Directors, either from authorized but
unissued shares of Common Stock or previously issued shares of the
Common Stock reacquired by the Company, including shares purchased in the
open market.

   (c)  If any share of Common Stock transferable under an Incentive
Award is not transferred and ceases to be issuable or transferable
because of the lapse, in whole or in part, of such Incentive Award,
or, by reason of the provisions of paragraph (b) of Section 6, and
paragraphs (d) and (e) of Section 7, or as a result of an employee's
election to exercise a Stock Appreciation Right as set forth in
paragraph (f) of Section 8, or for any other reason, the shares not so
issued or transferred shall no longer be charged against the limitation
provided for in paragraph (a) of this Section 3 and may again be used
for Incentive Awards.

   4.   ADMINISTRATION OF THE PLAN

   The Plan shall be administered by the Compensation and Stock Option
Committee which shall consist of three members who are not eligible to
receive Incentive Awards and who have not been eligible, at any time
within one year prior to appointment to the Committee, for selection as
a person to whom stock may be allocated or to whom Options or Restricted
Stock awards may be granted pursuant to the Plan or any other plan of
the Company (exclusive of the 1996 Option Plan for Non-Employee
Directors) or any of its affiliates entitling the participants therein
to acquire stock of the Company or, any of its affiliates.  The
Committee shall have authority, in its discretion and after receiving
the recommendations of the President of the Company, to determine the
employees to whom, and the time or times at which Incentive Awards will
be granted and the number of shares to be subject to each Incentive
Award, and in the case of Options whether or not such Options shall be
accompanied by the grant of Stock Appreciation Rights.  In making such
determinations, the nature of the services rendered by the respective
employees, their present and potential contributions to the Company's
success and such other factors deemed to be relevant will be taken into
account.  Subject to the express provisions of the Plan, the Committee
shall also have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, to determine the terms
and provisions of the respective Incentive Award Agreements (which need
not be identical) including the determination of whether Options granted
will be designated as Incentive Stock Options and to make all other
determinations necessary or advisable for the administration of the
Plan.  The Committee will hold its meetings at such time and place as it
may determine.  A majority of its members will constitute a quorum, and
all determinations of the Committee shall be made by a majority of its
members.


   5.   PARTICIPATION

   (a)  Incentive Awards may be granted only to salaried officers or
key employees of the Company and its Subsidiaries.

   (b)  From time to time the President of the Company will determine
and recommend to the Committee employees of the Company and of its
Subsidiaries who should be granted Incentive Awards, the type of
Incentive Award to be granted, and the number of shares subject to each
Incentive Award.  The Committee shall approve or disapprove such
recommendations.

   (c)  Incentive Awards may be granted in the following forms:

       (i)   A Restricted Stock Award, in accordance with Section 6;

       (ii)  An Option, in accordance with Section 7, which may be
             designated as an Incentive Stock Option as that term is
             defined in Section 422 of the Internal Revenue Code;

       (iii) An Option, accompanied by a Stock Appreciation Right in
             accordance with Section 8; or

       (iv)  A combination of the foregoing.


   6.   RESTRICTED STOCK AWARDS

        An Incentive Award in the form of a Restricted Stock Award shall
be subject to the following provisions:

       (a)     The Restricted Stock Agreement shall specify (i) a number
of shares of Common Stock to be transferred to the recipient over the
Award Period, and (ii) the times at which portions of those shares shall
be transferred to the recipient. Shares may not be transferred before
one year after the date of the Award, or later than ten years from such
date, excepting, however, that the Committee may waive any part of the
one-year period.

       (b)     The Restricted Stock Award shall terminate if the holder,
with or without cause, shall cease to be an employee of the Company or
any of its Subsidiaries and any installments of shares of Common Stock
which have not yet become transferable to such holder shall be forfeited
upon cessation of employment; provided, however, in the event that an
employee's employment shall terminate as a result of death or disability
the foregoing provision of this paragraph (b) shall not apply and all
shares of stock subject to Restricted Stock Awards shall immediately
become vested.

       (c)     At the time an installment of shares of Common Stock is
transferred to the holder of a Restricted Stock award, an additional
payment shall be made to such holder, either in cash or shares of Common
Stock as the Committee shall determine in its sole discretion, in an
amount equal to the cash dividends which may have been payable to the
holder of the Restricted Stock Award in respect to the shares transferred
to the holder at the time the Restricted Stock Award was granted.

       (d)     Each Restricted Stock Award shall be evidenced by a
written instrument containing terms and conditions determined by the
Committee, consistent with the terms of the Plan.

 7.   OPTIONS

      An Incentive Award in the form of an Option shall be subject to
the following provisions:

       (a)     The Option shall specify (i) the number of shares of
Common Stock which may be purchased by the recipient over the term of
the Option, (ii) the times at which portions of such shares may be
purchased by the employee, (iii) whether the Option is accompanied by a
Stock Appreciation Right and, if so, the terms and conditions of such
Stock Appreciation Right as set forth in Section 8 and (iv) whether the
Option is an Incentive Stock Option.  No Option shall be deemed to be
an Incentive Stock Option unless the Committee has so designated such
Option and the Option states that it is an Incentive Stock Option.

       (b)     The purchase price of each share of Common Stock under
each Option will be at least 100% of the Fair Market Value of a share of
the Common Stock at the time of grant.

       (c)     The Option must provide that it is not transferable and
may be exercised solely by the person to whom granted, except as provided
in paragraph (e) of this Section 7 in the event of such person's death.

       (d)     Unless otherwise determined by the Committee, each Option
will be subject to the condition that it may be exercised only if the
optionee remains in the employ of the Company and/or a Subsidiary for at
least one year after the date of the granting of the Option.  An Option
may be exercised at the times and in the amounts determined by the
Committee.  In no event, however, shall an Option or a Stock Appreciation
Right relating to such Option be exercisable after ten years from the
granting of the Option.

       (e)     The Option (and any related Stock Appreciation Right)
shall terminate if and when the optionee shall cease to be an employee of
the Company and its Subsidiaries, except as follows:

              (i)  If an optionee dies while employed by the Company or
                   a Subsidiary, or within thirty (30) days after
                   his/her retirement or the termination of his/her
                   employment where such termination was not for cause,
                   the Option theretofore granted to him/her or any
                   related Stock Appreciation Right may be exercised
                   (for not more than the number of shares for which
                   the optionee might have exercised his/her Option or
                   Stock Appreciation Right at the time of termination
                   of employment) by the beneficiary designated pursuant
                   to paragraph (g) of Section 10 except in the case of
                   an Incentive Stock Option, or in the absence of such
                   designation or if no such beneficiary survives the
                   optionee or if the Option is an Incentive Stock
                   Option, by such person or persons as shall have
                   acquired the optionee's rights under the Option by
                   will or by the laws of descent and distribution, but
                   only within six (6) months from the date of death,
                   and in no event after ten years from the granting of
                   the Option.

              (ii) If an optionee retires or if his/her employment with
                   the Company or a Subsidiary is terminated for any
                   reason (other than by death), such Option or any
                   related Stock Appreciation Right may be exercised
                  (for not more than the number of shares for which the
                  optionee might have exercised his/her Option on the
                  date of his/her retirement or the date on which
                  his/her employment was terminated or such greater
                  number of shares as the Committee may determine) only
                  within thirty (30) days from the date of such
                  retirement or termination of employment or such other
                  period of time as the Committee may determine, but in
                  no event after ten years from the granting of the
                  Option; provided, however, that if an optionee is
                  dismissed for cause, of which the Committee shall be
                  the sole judge, his/her Option and any related Stock
                  Appreciation Right shall expire on the date and time
                  of dismissal.  The Committee may determine that, for
                  the purpose of the Plan, an employee who is on a
                  leave of absence will be considered as still in the
                  employ of the Company, provided that an Option shall
                  be exercisable during a leave of absence only as to
                  the number of shares which were exercisable at the
                  commencement of such leave of absence.

   (f)     A person electing to exercise an Option will give written
notice to the Company of such election and of the number of shares
he/she has elected to purchase and the date on which he/she wishes to
exercise the Option.  Any person exercising an Option shall tender the
full purchase price of the shares he/she has elected to purchase on the
date specified by him/her for completion of such purchase.

   (g)     A person electing to exercise a Stock Appreciation Right in
lieu of exercising all or part of an Option will give written notice to
the Company of such election, the number of shares subject to the Option
which will be taken in the form of Stock Appreciation Rights and whether
the payment of the Appreciation will be entirely in Common Stock or
partially in Common Stock and partially in cash as provided in Section 8
hereof.

   (h)     The Committee shall have the power to add a Stock
Appreciation Right to any outstanding Option.  Such addition shall be
made by amending the outstanding Option to include a Stock Appreciation
Right (with the written approval of the holder thereof).  Any such
amendment shall not be considered the grant of a new Option but shall be
deemed to be a continuation of the Option with respect to which such
Stock Appreciation Right is granted.

   (i)     The Option agreements or Option grants authorized by the Plan
may contain such other provisions, consistent with the terms of the Plan,
as the Committee shall consider advisable.

   (j)     Incentive Stock Options may not be issued to any person who
at the time of grant owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or
any of its subsidiaries.


8.   STOCK APPRECIATION RIGHTS

     A Stock Appreciation Right may be granted to a key employee in
connection with (and only in connection with) any Option granted
pursuant to this Plan subject to the following provisions:

     (a)     Each Stock Appreciation Right shall relate to a specific
Option granted under the Plan and shall be granted to the employee
either concurrently with the grant of the Option or at such later time
as determined by the Committee.

     (b)     The Stock Appreciation Right shall entitle the holder of an
Option to surrender the unexercised Option (or a portion thereof) within
the period specified for the exercise of such Option and receive in
exchange a payment in cash and/or Common Stock of the Company having an
aggregate value equal to the amount by which the Fair Market Value of
the Common Stock subject to the Option (or portion thereof which is
exercised) exceeds the Option price for such Common Stock (referred to
as the Appreciation); provided that the holder of the Option shall be
entitled to receive no more than 50% of the Appreciation in cash.

     (c)     Each Stock Appreciation Right granted hereunder shall be
subject to the same terms and conditions as the related Option.  It
shall be exercisable only to the extent such Option is exercisable and
shall terminate or lapse and cease to be exercisable when the related
Option terminates or lapses.

     (d)     The holder of the Option shall have the sole discretion to
elect in each case whether any payment of a Stock Appreciation Right
shall be entirely in the form of Common Stock of the Company or
partially in Common Stock of the Company and partially in cash provided,
however, the holder cannot elect to receive more than 50% of the
Appreciation in the form of cash.  The number of shares of Common Stock
to be received by a holder upon exercise of a Stock Appreciation Right
will be determined by dividing the portion of the Appreciation in respect
of which he/she has elected to receive Common Stock by the Fair Market
Value of the Common Stock on the day preceding the date of exercise of
the Stock Appreciation Right.  Any remaining Appreciation (not to exceed
50% of the total) will be paid in cash.

     (e)     Payments to be made, in whole or in part, in cash upon
exercise of Stock Appreciation Rights by any officer of the Company shall
be made in accordance with the provisions relating to the exercise of
Stock Appreciation Rights of Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect at
the time of such exercise, or any law, rule, regulation or other
provision that may replace such Rule.

     (f)     Upon the exercise of a Stock Appreciation Right, the total
number of shares subject to the related Option shall automatically be
reduced by the number of shares of Common Stock with respect to which
the Stock Appreciation Right is exercised. Any shares transferred upon
exercise of a Stock Appreciation Right shall be charged against the
maximum limitation upon the grant of shares of Common Stock set forth
in Section 3 of the Plan.  Any shares not transferred which are no
longer subject to Option due to surrender of the Option or a portion
thereof upon exercise of the Stock Appreciation Right shall not be
charged against such maximum limitation and shall again be available
for grant pursuant to Incentive Awards.

9.   ADJUSTMENT PROVISIONS

     Except as otherwise provided herein, the following provisions shall
apply to all Common Stock authorized for issuance, and optioned, granted
or awarded under the Plan:

     (a)     Stock Dividends, Splits, etc.  In the event of a stock
dividend, stock split, or other subdivision or combination of the Common
Stock, the number of shares of Common Stock authorized under the Plan
will be adjusted proportionately.  Similarly, in any such event there
will be a proportionate adjustment in the number of shares of Common
Stock subject to unexercised Options (but without adjustment to the
aggregate option price) and in the number of shares of Common Stock
then subject to Restricted Stock Awards.

     (b)     Merger, Exchange or Reorganization.  In the event that the
outstanding shares of Common Stock are changed or converted into,
exchanged or exchangeable for, a different number or kind of shares or
other securities of the Company or of another corporation, by reason of
a reorganization, merger, consolidation, reclassification or combination,
appropriate adjustment shall be made by the Committee in the number of
shares and kind of Common Stock for which Incentive Awards and Stock
Payments may be or may have been awarded under the Plan, to the end
that the proportionate interests of participants shall be maintained
as before the occurrence of such event. However, in the event of any
contemplated transaction which the Committee determines to be a change
in control of the Company, the Committee, with the approval of a
majority of the members of the Board of Directors who are not then
participants, may modify any and all outstanding Incentive Awards and
Stock Payments so as to accelerate, as a consequence of or in connection
with such transaction, the vesting of any employee's right to exercise
any Incentive Awards or the unqualified ownership of Common Stock
subject to Incentive Awards.

     (c)     Adjustments under this Section 9 shall be made by the Board
of Directors, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive.  No
fractional shares of Common Stock shall be issued under the Plan on
account of any such adjustments.

10.  GENERAL PROVISIONS

     (a)     With respect to any shares of Common Stock issued or
transferred under the provisions of this Plan, such shares may be issued
or transferred subject to such conditions, in addition to those
specifically provided in the Plan, as the Board of Directors or
Committee may direct.

     (b)     Nothing in the Plan or in any instrument executed pursuant
thereto will confer upon any employee any right to continue in the employ
of the Company or a Subsidiary or will affect the right of the Company
or of a Subsidiary to terminate the employment of any employee with or
without cause.

     (c)     No shares of Common Stock will be issued or transferred
pursuant to an Incentive Award unless and until all legal requirements
applicable to the issuance or transfer of such shares have, in the
opinion of counsel to the Company, been complied with.  In connection
with any such issuance or transfer, the person acquiring the shares
will, if requested by the Company, give written assurances satisfactory
to counsel to the Company that the shares are being acquired for
investment and not with a view to resale or distribution thereof and
assurances in respect of such other matters as the Company or a
Subsidiary may consider desirable to assure compliance with all
applicable legal requirements.

     (d)     No employee (individually or as a member of a group), and
no beneficiary or other person claiming under or through him/her, will
have any right, title or interest in any shares of Common Stock
allocated or reserved for the purposes of the Plan or subject to any
Incentive Award except as to such shares of Common Stock, if any, as
shall have been issued or transferred to him/her and except as otherwise
provided in Section 11 (a).

     (e)     In the case of any employee of a Subsidiary, the Committee
may direct the Company to issue or transfer the shares covered by the
Incentive Award to the Subsidiary for such lawful consideration as the
Committee may specify upon the condition that the Subsidiary will
transfer the shares to the employee in accordance with the terms of the
Incentive Award.  Notwithstanding any other provision in this Plan, an
Incentive Award may be issued by and in the name of the Subsidiary and
shall be considered granted on the date it is approved by the Committee,
on the date it is delivered by the Subsidiary, or on such other date
between such two dates, as the Committee shall specify.

     (f)     The Company or a Subsidiary may make such provisions as it
may consider appropriate for the withholding of any taxes which the
Company or Subsidiary determines it is required to withhold in
connection with any Incentive Award.

     (g)     No Incentive Award and no rights under the Plan, contingent
or otherwise, shall be assignable, transferable or subject to any
encumbrance, pledge or charge of any nature; provided that, under such
rules and regulations as the Committee may establish pursuant to the
terms of the Plan, a beneficiary may be designated in respect to an
Incentive Award in the event of the death of the holder of such
Incentive Award and provided, also, that if such beneficiary shall be
the executor or administrator of the estate of the holder of such
Incentive Award, any rights in respect of such Incentive Award may be
transferred to the person or persons or entity (including a trust)
entitled thereto under the will of the holder of such Incentive Award
or, in case of intestacy, under the laws relating to intestacy, and
provided further that an Incentive Award may be transferred pursuant to
a Qualified Domestic Relations Order, as defined in the Code or Title I
of the Employee Retirement Income Security Act or the rules thereunder.

     (h)     Nothing in the Plan is intended to be a substitute for, or
shall preclude or limit the establishment or continuation of, any other
plan, practice or arrangement for the payment of compensation or fringe
benefits to employees generally, or to any class or group of employees,
which the Company or any Subsidiary now has or may hereafter lawfully
put into effect, including, without limitation, any retirement, pension,
insurance, stock purchase, incentive compensation or bonus plan.

     (i)     The place of administration of the Plan will conclusively
be deemed to be within the State of Connecticut and the validity,
construction, interpretation and administration of the Plan and any
rules and regulations or determinations or decisions made thereunder,
will be governed by, and determined exclusively and solely in accordance
with, the laws of the State of Connecticut.  Without limiting the
generality of the foregoing, the period within which any action arising
under or in connection with the Plan, or any payment or Award made or
purportedly made under or in connection therewith, must be commenced and
will be governed by the laws of the State of Connecticut, irrespective
of the place where the act or omission complained of took place and of
the residence of any party to such action and irrespective of the place
where the action may be brought.

     (j)     Any Common Stock granted pursuant to a Restricted Stock
Award must be held for at least two (2) years from the date of grant,
and any Common Stock acquired by exercise of an Option or a Stock
Appreciation Right must be held until at least two (2) years has passed
from the date of grant of such Option or Stock Appreciation Right.

11.  AMENDMENT, SUSPENSION AND TERMINATION OF PLAN

     (a)     The Board of Directors may at any time terminate, suspend
or amend the Plan, provided, however, that no such amendment will,
without approval of the shareholders of the Company, except as provided
in Section 9 hereof, (i) increase the aggregate number of shares which
may be issued in connection with Incentive Awards; (ii) change the
minimum Option exercise price; (iii) increase the maximum period during
which Options may be exercised, or Restricted Stock Awards transferred;
(iv) extend the effective period of this Plan; or (v) materially
modify the requirements as to eligibility for participation in the Plan.
No such amendment will permit the granting of Incentive Awards to
members of the Committee who are not employees.

     (b)     The Committee may, with the consent of the person by whom a
Restricted Stock Award or an Option is held, modify or change the terms
of any Option or Restricted Stock Award in a manner which does not
conflict with the provisions of the Plan.





12.   EFFECTIVE DATE AND DURATION OF PLAN

      The effective date of the Plan is February 2, 1996 (subject to
approval by the shareholders of the Company on or before February 1,
1997), the date on which the Plan was adopted by the Board of Directors.
Any amendment to this Plan will become effective upon approval by the
Board of Directors, unless shareholder approval is deemed necessary in
which case such amendment shall become effective upon approval by the
shareholders. Unless previously terminated by the Board of Directors,
this Plan shall terminate at the close of business on February 1,
2006 and no Restricted Stock Award, Option, or Stock Appreciation Right
may be granted under it thereafter, but such termination shall not
affect any Incentive Award theretofore granted.









             FORM OF AGREEMENT FOR INCENTIVE STOCK OPTIONS

                        STOCK OPTION AGREEMENT
                   (Under the CompuDyne Corporation
         1996 Stock Incentive Compensation Plan for Employees)




    THIS STOCK OPTION AGREEMENT is made and entered into as of the day
of, by and between COMPUDYNE CORPORATION, a Nevada corporation,
("CompuDyne") and, (the "Optionee"), under the provisions of the
CompuDyne 1996 Stock Incentive Compensation Plan for Employees (the
"Plan").  The terms of the Plan are incorporated herein by reference and
terms defined in the Plan, when used herein, shall have the meaning
given to them in the Plan.

1.  GRANT OF STOCK OPTION.  Subject to the terms and conditions set
forth herein, CompuDyne hereby grants to the Optionee, effective as of
the date first above written (the "date of grant"), a regular stock
option (the "Option") to purchase from CompuDyne from time to time, up
to but not exceeding, an aggregate of shares of the Common Stock, par
value $.75 per share, of CompuDyne, to be issued upon the exercise
hereof.  Upon payment of the Option price therefor, such shares shall be
fully paid and nonassessable.  [Alternative 1-for non formula vesting
schedule:  The Option shall be exercisable for a period commencing [one
year after the date of grant] [or insert a specific date] and ending ten
years from the date of grant.]  [Alternative 2-for a formula vesting
schedule:  The option shall be exercisable in accordance with the
following vesting schedule:

       __________ shares are exercisable commencing __________
       __________ shares are exercisable commencing __________
       __________ shares are exercisable commencing __________
       __________ shares are exercisable commencing __________
       __________ shares are exercisable commencing __________


and, in any event, ending ten years from the date of grant.]


     Notwithstanding the foregoing vesting schedule, in the event (i)
any person or entity (other than William Blair Mezzanine Capital Fund II,
L.L.C. ("Blair") and its successors, assigns and transferees of any
rights under a Subordinated Loan and Investment Agreement, dated as of
November 30, 1998, between Blair and CompuDyne) or group of persons or
entities (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934) shall acquire beneficial ownership (within the
meaning of Rule 13d-3 promulgated under such Act) of more than 50% of
the outstanding securities (on a fully diluted basis and taking into
account any securities or contract rights exercisable, exchangeable or
convertible into equity securities) of CompuDyne having voting rights in
the election of directors under normal circumstances, or (ii) Martin
Roenigk shall cease to own and control at least 15% of the outstanding
voting stock of CompuDyne (a "Change of Control"), the Option shall be
exercisable in full immediately upon such Change of Control.

2.  TYPE OF OPTION.  The Option is intended to be a regular stock option
which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

3.  OPTION PRICE.  The purchase price of each share subject to the Option
shall be $   , being 100% of the Fair Market Value of the shares subject
to the Option on the date of grant.

4.  MANNER OF EXERCISE OF OPTION.  The Option shall be exercised by
delivering to CompuDyne at the place provided in the manner set forth in
Article 6 herein for the giving of notice, a signed statement of exercise
specifying (i) the election to exercise the Option, (ii) the number of
shares elected to be purchased, and (iii) the date on which he/she
wishes to exercise the Option.  Such notice shall be accompanied by a
cashier's or certified check payable to the order of "CompuDyne
Corporation" for an amount equal to the full purchase price of the
shares being purchased on the date specified in the notice. Subject to
the provisions hereof, promptly after any such exercise of the Option
in whole or in part, CompuDyne shall deliver to the Optionee, at
CompuDyne's principal office, a certificate or certificates representing
the number of shares purchased upon the then exercise of the option,
issued in the Optionee's name. Options may also be exercised through
E*Trade Securities, Inc. or a personal broker.

5.  TERMS AND CONDITIONS OF THE OPTION.  The following terms and
conditions shall apply to the Option:

    a.  Early Termination of Option.  The Option shall continue until
[date] provided, that if the Optionee shall cease to be a full-time
salaried employee of CompuDyne or a Subsidiary thereof, his/her
employment being terminated for a reason other than death or disability,
any unexercised portion of the Option shall terminate at the close of
business on the thirtieth (30th) day following the date on which the
Optionee ceases to be such an employee or upon the expiration of the
term of the Option, whichever shall first occur, and further provided,
that if the Committee determines that the Optionee's termination of
employment resulted from his/her willful acts, or failure to act, which
were detrimental to CompuDyne, of which the Committee shall be the sole
judge ("termination for cause"), the Option shall terminate upon
termination of the Optionee's employment.

    Notwithstanding anything contained herein to the contrary, in the
event a Change of Control occurs, any unexercised portion of the Option
shall terminate at the close of business on the day six months following
the date on which the Optionee ceases to be such an employee or upon the
expiration of the term of the Option, whichever shall first occur.




    b.  Limitations on Exercise of Option.

        i.  Any obligations of CompuDyne to issue the shares as to which
the Option is being exercised shall be conditioned upon CompuDyne's
ability at nominal expense to issue such shares in compliance with all
applicable statues, rules or regulations of any governmental authority
and with any regulation of any securities exchange upon which the shares
are listed or are to be listed.  Prior to its obligation to perform
hereunder, CompuDyne may require the Optionee to provide any
representations, assurances or agreements which the Committee, in its
sole discretion, shall deem necessary or advisable in order that the
issuance of such shares shall comply with any such statutes, rules or
regulations.

        ii.  If, at any time, CompuDyne's Board of Directors shall
determine, in its discretion, that the listing, registration or
qualifications of the shares subject to the Option upon any securities
exchange or under any State or Federal law, or that the consent or
approval of any government regulatory body, is necessary or desirable as
a condition of, or in connection with, the granting of such Option or
the purchase or issuance of shares thereunder, such Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board of Directors.

    c.  Nontransferability.  The option shall not be transferable by the
Optionee otherwise than by will or by the laws of descent and
distribution, and the option shall be exercisable, during his/her
lifetime, only by him/her.

    d.  Death or Disability of the Optionee.  In the event of the death
of the Optionee while in the employ of CompuDyne or a Subsidiary thereof,
or within thirty days after termination of his/her employment where such
termination is not for cause, as defined in Section 5(a) hereof, his/her
option may be exercised within the period of six months succeeding
his/her death, but in no event later than ten years from the date of
grant, by the person or persons designated in the Optionee's will for
that purpose to the extent that the Optionee would have been entitled to
exercise his option at the time of his death.  If no person or persons
are so designated in the Optionee's will or if the Optionee dies
intestate, then his/her option may be exercised within said period to
the same extent by the legal representative or representatives of the
Optionee's estate.

    In the event that the Optionee terminates his/her employment because
of disability subsequent to one year from the date of grant of his/her
option, such option may be exercised, to the extent it was entitled to
be exercised at the date of such termination, within the period of
thirty (30) days succeeding such disability but in no event after ten
(10) years from date of grant of the Option, either by the Optionee or
by his/her personal representative, as the case may be.  For this
purpose the Optionee shall be deemed to be disabled if he/she is
permanently and totally disabled within the meaning of Section 422(c)(6)
of the Code, which, as of the date hereof, means that he/she is unable
to engage in any substantial gainful activity by reason of any medically
determined physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.  The Optionee shall be considered
disabled only if he/she furnishes such proof of disability as the
Committee may require.

    e.  Shareholder Rights.  The Optionee shall not be entitled to any
rights as a shareholder with respect to any shares subject to the option
prior to the date of issuance to him/her of a stock certificate
representing such shares.

6.  NOTICES.  Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed by certified mail or
delivered to the party for whom it is intended at such address as may
from time to time be designated by such party in a notice mailed or
delivered to the other party as herein provided; provided that unless
and until some other address be so designated, all notices or
communications to CompuDyne shall be mailed or delivered to CompuDyne
Corporation at 7249 National Drive, Hanover, Maryland 21076,
Attention: Secretary and all notices by CompuDyne to the Optionee may be
given to the Optionee personally or may be mailed to his/her home
address.

7.  ADMINISTRATION AND INTERPRETATION.  The administration of this
Agreement shall be subject to such rules and regulations as the
Committee deems necessary or advisable for the administration of the
Plan.  The determination or the interpretation and construction of any
provision of this Agreement by the Committee shall be final and
conclusive upon all concerned.  This Agreement shall at all times be
interpreted and applied in a manner consistent with the provisions of
the Plan.  In the event of any inconsistency between the terms of this
Agreement and the terms of the Plan, the terms of the Plan shall control.

    IN WITNESS WHEREOF, COMPUDYNE CORPORATION, by its officers thereunto
duly authorized, and the Optionee have executed and delivered this Stock
Option Agreement as of the date first written above.


                        COMPUDYNE CORPORATION

                     By:_______________________
                               Chairman

ATTEST:

____________________________      _________________________
   Secretary                        the "Optionee"








                                                   EXHIBIT B


CompuDyne Corporation Audit Committee Charter

Purpose
RESOLVED, that the Audit Committee shall, through regular or special
       meetings with management and the Company's independent auditor,
       provide oversight on matters relating to accounting, financial
       reporting, internal control,  auditing, and regulatory compliance
       activities and other matters as the Board or the Committee
       Chairperson deem appropriate.

Composition
RESOLVED, that the Audit Committee shall be appointed by the Board and
       shall have at least three members. All members of the Audit
       Committee shall meet the independence and experience requirements
       of the Nasdaq Stock Market.

Matters Pertaining to Independent Accountants
RESOLVED, that the Independent Accountants shall have ultimate
       accountability to the Audit Committee and the Board of Directors.

RESOLVED, that the Audit Committee and the Board of Directors shall have
       the ultimate authority and responsibility to select, evaluate
       and, where appropriate, replace the Independent Accountants.

RESOLVED, that the Audit Committee (or authorized spokesperson, when
       appropriate) shall:

       Periodically review information from the Independent Accountants
       pertaining to the Independent Accounts' independence, discuss
       such information with the Independent Accountants and, if so
       determined by the Audit Committee, recommend that the Board take
       appropriate action to satisfy itself of such independence.

       Review quarterly the results with the Independent Accountants
       before filing with the Securities and Exchange Commission or
       authorize the Audit Committee Chairman to conduct such a review.

       Review with the Independent Accountants and management the
       results of the Independent Accountant's year-end audit.

       Review the Independent Accountant's Annual Report on Internal
       Controls with the Independent Accountants and management.

       Receive and review required communications from the Independent
       Accountants.





Matters Pertaining to Filings with Government Agencies:

RESOLVED, that the Audit Committee shall:

       Review with the Independent Accountants and management the
       Corporation's Form 10-K and, if satisfied, recommend its approval
       to the Board for filing with the Securities and Exchange
       Commission.

       Review with management the Corporation's proxy statement and
       related materials, and, if satisfied, recommend their
       approval to the Board for filing with the Securities and Exchange
       Commission.

Controls

RESOLVED, that the Audit Committee shall:

       Review with management the adequacy and effectiveness of the
       Corporation's internal controls.

       Review the Corporation's procedures with respect to
       appropriateness of significant accounting policies and adequacy
       of financial controls.

Compliance and Legal Matters

RESOLVED, that the Audit Committee shall:

       Review and monitor the Corporation's Compliance Program.

       Review with the Corporation's General Counsel material litigation
       and other legal matters as appropriate

Other Matters

RESOLVED, that in order to carry out and effectuate the purposes of the
       foregoing resolutions, the Audit Committee shall have authority
       as it deems necessary to confer with the Corporation's
       Independent Accountants and Officers and to conduct or authorize
       investigations into any matters within the scope of the
       Committee's responsibilities.

Charter Review

RESOLVED, that the Audit Committee shall reassess the adequacy of its
       charter annually and recommend any proposed  changes to the Board
       for approval.








                            REVOCABLE PROXY
                         COMPUDYNE CORPORATION

X  PLEASE MARK VOTES AS IN THIS EXAMPLE

This Proxy is Solicited on Behalf of the Board of Directors.

     The undersigned holder of Common Stock of COMPUDYNE CORPORATION
hereby appoints Millard H. Pryor, Jr. and Philip M. Blackmon, and each
of them, proxies to  represent the undersigned with full power of
substitutionm, as attorneys and proxies for the undersigned to appear
and vote all of the shares of Common Stock of CompuDyne Corporation
(the "Company") standing on the books of the Company in the name of
the undersigned at the 2001 Annual Meeting of Shareholders of CompuDyne
Corporation, to be held at the Best Western Hotel, 6755 Dorsey Road,
Dorsey, Maryland 21705, in the Dorsey Banquet Room on July 18, 2001 at
11:00 a.m. and at any adjournment of said Annual Meeting.  A majority of
said attorneys and proxies as shall be present and voting (or if only
one shall be present and voting, then that one) in person or by
substitute or substitutes at said meeting or any adjournment thereof,
shall have and may exercise all of the powers of said attorneys and
proxies hereunder.  The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting and the Proxy Statement dated June 18, 2001
and instructs its attorneys and proxies to vote as set forth on this
Proxy.


1.  ELECTION OF DIRECTOR                 FOR      WITH-HOLD     EXCEPT

    Nominee for two-year term:
    WADE B. HOUK                         ___         ___         ___

    Nominees for three-year term:
    MARTIN A. ROENIGK and
    ALAN MARKOWITZ                       ___         ___         ___

INSTRUCTION: To withhold authority to vote for any individual nominee,
mark "Except" and write than nominee's name in the space provided below.


_______________________________________________________________________

                                           FOR      AGAINST      ABSTAIN

2.  Proposal to ratify the appointment
of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal
year ending December 31, 2001              ___        ___          ___


3.  Proposal to amend the Corporation's
Articles of Incorporation to allow for
the redemption of shares, under certain
circumstances.                             ___        ___          ___

4.  To vote to amend the CompuDyne
Corporation 1996 Stock Incentive Plan
for Employees.                             ___        ___          ___

5.  In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting and any
adjournment thereof.

    The undersigned shareholder may revoke this proxy at any time before
it is voted by delivering to the Secretary of the Company either a
written revocation of the proxy or a duly executed proxy bearing a later
date, or by appearing at the Annual Meeting or any adjournment thereof
and voting in person.

    The shares represented by this Proxy will be voted as specified.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED IN FAVOR OF THE
SPECIFIED NOMINEE IN PROPOSAL NO. 1, IN FAVOR OF PROPOSALS NO. 2, 3 AND
4, AND IN THE DISCRETION OF THE PROXIES AS TO OTHER MATTERS.  HOWEVER,
THIS PROXY CARD MUST BE PROPERLY COMPLETED, SIGNED, DATED AND
RETURNED TO THE COMPANY IN ORDER TO HAVE YOUR SHARES VOTES, IF YOU DO
NOT RETURN THIS CARD, YOUR SHARES WILL NOT BE REPRESENTED.


Please be sure to sign and date                         Date
this Proxy in the box below                             _____________


______________________________________________________
Shareholder sign above - Co-holder (if any) sign above

- -------------------------------------------------------------------------
                   Detach above card, sign date and mail
                     in postage paid envelope provided.

                           COMPUDYNE CORPORATION

Please sign exactly as your name(s) appear(s) on this Proxy.  Only one
signature is required in the case of a joint account.  When signing as
attorney, executor, administrator, trustee, guardian, custodian, or the
like, give title as such.  If the signer is a corporation, sign in the
corporate name by a duly authorized officer.

                            PLEASE ACT PROMPTLY
                  SIGN, DATE & MAIL YOUR PROXY CARD TODAY

IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE
PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE
PROVIDED.

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