SC 14D9

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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                                 SCHEDULE 14D-9
          SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(D)(4)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

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                             DETECTION SYSTEMS, INC.
                            (Name of Subject Company)

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                             DETECTION SYSTEMS, INC.
                      (Name of Person(s) Filing Statement)


                     COMMON STOCK, PAR VALUE $.05 PER SHARE
                         (Title of Class of Securities)


                                   250644 10 1
                     (CUSIP Number of Class of Securities)


                                FRANK J. RYAN,
                   VICE PRESIDENT, SECRETARY AND TREASURER
                           DETECTION SYSTEMS, INC.
                             130 PERINTON PARKWAY
                           FAIRPORT, NEW YORK 14450

     (Name, Address and Telephone number of person authorized to Receive
    notice and communications on behalf of the person(s) filing statement)


                               WITH A COPY TO:
                           Stephen M. Banker, Esq.
                   Skadden, Arps, Slate, Meagher & Flom LLP
                              Four Times Square
                           New York, NY 10036-6522
                          Telephone: (212) 735-3000
                          Facsimile: (212) 735-2000

   [ ]    Check the box if the filing relates solely to preliminary
          communications made before
          the commencement of a tender offer.


ITEM 1. SUBJECT COMPANY INFORMATION.

 NAME AND ADDRESS.

   The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is Detection
Systems, Inc., a New York corporation (the "Company"). The address of the
principal executive offices of the Company is 130 Perinton Parkway, Fairport,
New York 14450. The telephone number of the principal executive offices of
the Company is (716) 223-4060.

 SECURITIES.

   The title of the class of equity securities to which this statement
relates is the common stock, par value $.05 per share (the "Shares"), of the
Company. As of December 18, 2000 there were 6,729,015 Shares outstanding.

ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.

 NAME AND ADDRESS.

   The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.

 TENDER OFFER.

   This Schedule 14D-9 relates to the tender offer (the "Offer") by Bosch
Security Systems Corporation, a New York corporation ("Purchaser"), to
purchase all of the outstanding Shares at a price of $18.00 per Share, net to
the selling shareholders in cash (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December
20, 2000 (the "Offer to Purchase") and the related Letter of Transmittal (the
"Letter of Transmittal"). Purchaser is a wholly owned subsidiary of Robert
Bosch GmbH, a limited liability company organized under the laws of Germany
("Bosch" or "Parent"). The Offer is described in a Tender Offer Statement on
Schedule TO, dated December 20, 2000 (the "Schedule TO"), which was filed
with the Securities and Exchange Commission (the "SEC") on December 20, 2000.

   The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 10, 2000 (as such agreement may be amended and supplemented
from time to time, the "Merger Agreement"), between Parent and the Company,
to which Purchaser subsequently became a party. The Merger Agreement
provides, among other things, that no later than two days after the
satisfaction or waiver of the conditions set forth in the Merger Agreement,
in accordance with the relevant provisions of the New York Business
Corporation Law, as amended (the "NYBCL"), Purchaser will be merged with and
into the Company (the "Merger"). Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving
Corporation"). At the effective time of the Merger (the "Effective Time"),
each Share then outstanding (other than treasury Shares and Shares owned by
Parent, Purchaser or any subsidiary thereof and shareholders of the Company
who properly exercise their appraisal rights, if any, in accordance with the
NYBCL) will be converted into the right to receive the Offer Price, without
interest (the "Merger Consideration"). A copy of the Merger Agreement is
filed as Exhibit 1 to this Schedule 14D-9 and is incorporated herein by
reference.

   Information contained in this Schedule 14D-9 or incorporated herein by
reference concerning Purchaser, Parent or their respective officers,
directors, representatives of affiliates, or actions or events with respect
to them, was provided by Purchaser or Parent and the Company takes no
responsibility for such information.

ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

   Except as described herein, or incorporated herein by reference, there are
no material contracts, agreements, arrangements or understandings or any
actual or potential conflicts of interest between the Company or its
affiliates and either (a) the Company, its executive officers, directors or
affiliates or (b) Parent, Purchaser or any of their respective executive
officers, directors or affiliates.

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   1. CERTAIN ARRANGEMENTS BETWEEN THE COMPANY AND ITS EXECUTIVE OFFICERS,
DIRECTORS AND AFFILIATES.

   Certain such agreements, arrangements and understandings and actual or
potential conflicts of interest are disclosed under the captions "Board of
Directors and Committees," "Management Security Ownership," "Executive
Compensation," "Compensation Committee Report on Executive Compensation,"
"Executive Agreements" and "Retirement Benefits" in the Company's definitive
proxy statement filed with the SEC on November 20, 2000 (the "Proxy
Statement"), a copy of which is filed herewith as Exhibit 5 and is
incorporated herein by reference.

   2. THE MERGER AGREEMENT.

   The following is a summary of the material provisions of the Merger
Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement and the amendment thereto, filed herewith as Exhibits 1 and
2, respectively. Capitalized terms used in this Schedule 14D-9 and not
otherwise defined have the meanings ascribed to them in the Merger Agreement.

   The Offer. The Merger Agreement provides for the making of the Offer.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred
to above, the payment for, any tendered Shares, and may amend the Offer
consistent with the terms of the Merger Agreement or terminate the Offer and
not accept for payment any tendered Shares, if (i) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer such
number of Shares which, when added to the Shares, if any, beneficially owned
by Parent or Purchaser, would constitute at least two-thirds of the Shares
outstanding on a fully diluted basis (the "Minimum Condition"), (ii) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), has not expired or been terminated,
or (iii) at any time on or after the date of the Merger Agreement and prior
to the expiration of the Offer, any of the following events shall occur:

        (a) there shall be threatened by a governmental entity or pending any
    suit, action or proceeding (i) seeking to prohibit or impose any material
    limitations on Parent's or Purchaser's ownership or operation (or that of
    any of their respective subsidiaries or affiliates) of all or a material
    portion of their or the Company's businesses or assets, (ii) seeking to
    compel Parent or Purchaser or their respective subsidiaries and affiliates
    to dispose of or hold separate any material portion of the business or
    assets of the Company or Parent and their respective subsidiaries, in each
    case taken as a whole, (iii) challenging the acquisition by Parent or
    Purchaser of any Shares pursuant to the Offer, (iv) seeking to restrain or
    prohibit the making or consummation of the Offer or the Merger or the
    performance of any of the other Transactions, (v) seeking to impose material
    limitations on the ability of Purchaser, or rendering Purchaser unable, to
    accept for payment, pay for or purchase some or all of the Shares pursuant
    to the Offer and the Merger, or (vi) seeking to impose material limitations
    on the ability of Purchaser or Parent effectively to exercise full rights of
    ownership of the Shares, including, without limitation, the right to vote
    the Shares purchased by it on all matters properly presented to the
    Company's shareholders;

        (b) there shall be any statute, rule, regulation, judgment, order or
    injunction enacted, entered, enforced, promulgated or deemed applicable to
    the Offer or the Merger, or any other action shall be taken by any
    governmental entity, other than the application to the Offer or the Merger
    of applicable waiting periods under the HSR Act, that is reasonably likely
    to result, directly or indirectly, in any of the consequences referred to in
    clauses (i) through (vi) of paragraph (a) above;

        (c) there shall have occurred and be continuing (i) any general
    suspension of trading in, or limitation on prices for, securities on the
    Nasdaq National Market System, for a period in excess of three hours
    (excluding suspensions or limitations resulting solely from physical damage
    or interference with such exchanges not related to market conditions), (ii)
    a declaration of a banking moratorium or any suspension of payments in
    respect of banks in the United States (whether or not mandatory), (iii) the
    commencement of a war, armed hostilities or other international or national

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    calamity directly or indirectly involving the United States, (iv) any
    limitation or proposed limitation (whether or not mandatory) by any United
    States governmental authority or agency that has a material adverse effect
    generally on the extension of credit by banks or other financial
    institutions, (v) any decline in the Dow Jones Industrial Average, the
    Standard & Poor's Index of 500 Industrial Companies or the Nasdaq Composite
    Index by an amount in excess of 20% measured from the close of business on
    the date of the Merger Agreement or (vi) in the case of any of the
    situations in clauses (i) through (v) inclusive, existing at the time of the
    commencement of the Offer, a material acceleration or worsening thereof;

        (d) the representations and warranties of the Company set forth in the
    Merger Agreement shall not be true and accurate as of the date of
    consummation of the Offer as though made on or as of such date (except for
    those representations and warranties that address matters only as of a
    particular date or only with respect to a specific period of time which need
    only be true and accurate as of such date or with respect to such period) or
    the Company shall have breached or failed to perform or comply with any
    obligation, agreement or covenant required by the Merger Agreement to be
    performed or complied with by it except, in each case where the failure of
    such representations and warranties to be true and accurate (without giving
    effect to any limitation as to "knowledge," "materiality" or "material
    adverse effect" set forth therein), or the failure to perform or comply with
    such obligations, agreements or covenants, do not, individually or in the
    aggregate, have a Material Adverse Effect on the Company or a materially
    adverse effect on the ability to consummate the Offer or the Merger;

        (e) the Board (i) shall have withdrawn, or modified or changed in a
    manner adverse to Parent or Purchaser (including by amendment of the
    Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or
    the Merger, (ii) shall have recommended a Takeover Proposal, or (iii) shall
    have adopted any resolution to effect any of the foregoing;

        (f) the Merger Agreement shall have been terminated in accordance with
    its terms; or

        (g) there shall have occurred any event or any development of a state of
    facts or circumstances that constitutes a Material Adverse Change or has a
    Material Adverse Effect on the Company;

which, in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payments for
Shares.

   The conditions (a) through (g) set forth above are for the sole benefit of
Parent and Purchaser and may be waived by Parent or Purchaser, in whole or in
part, at any time and from time to time, in the sole discretion of Parent or
Purchaser. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.

   Directors. The Merger Agreement provides that Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on
the Board as is equal to the product of

     o       the total number of directors on the Company's Board of Directors
             (giving effect to the increase in the size of such Board pursuant
             to the Merger Agreement), and

     o       the percentage that the number of Shares beneficially owned by
             Purchaser (including Shares so accepted for payment) bears to the
             total number of Shares then outstanding.

   The Company has agreed, upon a request of the Parent, promptly either (at
the election of the Company) to increase the size of the Board or use its
best efforts to secure the resignations of such number of incumbent
directors, or both, as is necessary to enable such designees of Parent to be
so elected or appointed to the Board and, subject to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14f-1 promulgated thereunder, to cause Parent's designees to be so elected or
appointed; and at such time, the Company shall also take all action necessary
to cause persons designated by Parent to constitute at least the same
percentage (rounded up to the next whole number) as is on the Board of (i)
each committee of the Board, (ii) each board of directors (or similar body)
of each subsidiary of the Company and (iii) each committee (or similar body)
of each such

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subsidiary board; provided, however, that until the Effective Time, neither
Parent nor Purchaser will take any action that would cause the Board to
include fewer than two members of any of the following (the "Continuing
Directors") (i) any member of the Board as of December 10, 2000; (ii) Jerald
D. Bidlak, from and after his election to the Board; or (iii) any successor
of any Continuing Director who is (A) unaffiliated with, and not a designee
or nominee of, Parent or Purchaser, and (B) recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on the
Board.

   Following the election of Parent's designees to the Board (a) any
amendment or modification of the Merger Agreement by the Company, (b) any
amendment to the Company's Certificate of Incorporation or Bylaws
inconsistent with the Merger Agreement, (c) any termination of the Merger
Agreement by the Company, (d) any extension or waiver by the Company of the
time for the performance of any of the obligations of Parent or the Purchaser
under the Merger Agreement or (e) any waiver of any of the Company's rights
under the Merger Agreement, may be effected only by the action of a majority
of such Continuing Directors.

   The Merger. The Merger Agreement provides that no later than two business
days after the satisfaction or waiver of each of the conditions to the Merger
set forth in the Merger Agreement, the Purchaser will be merged with and into
the Company. Following the Merger, the separate existence of the Purchaser
will cease, and the Company will continue as the Surviving Corporation,
wholly owned by Parent.

   If required by the NYBCL, the Company will call and hold a meeting of its
shareholders following consummation of the Offer for the purpose of voting
upon the approval of the Merger Agreement. At any such meeting all Shares
then owned by Parent or the Purchaser or any other subsidiary of Parent will
be voted in favor of approval of the Merger Agreement. Under the NYBCL,
Parent may cause Purchaser to merge with and into the Company without a vote
of the Company's remaining shareholders if the Purchaser owns at least 90% of
the outstanding Shares. Consequently, if the number of Shares in the Offer,
together with the number of Shares owned by Parent and the Purchaser,
constitutes 90% or more of the outstanding Shares, on a fully diluted basis,
Parent intends to immediately effect the Merger. Pursuant to the Merger
Agreement, each Share outstanding at the Effective Time (other than Shares
owned by Parent or any of its subsidiaries or by the Company or any of its
subsidiaries, all of which will be cancelled, and shareholders who properly
exercise their appraisal rights, if any, in accordance with the NYBCL -- See
Item 8 hereof) will be converted into the right to receive the Merger
Consideration.

   Conditions to the Merger. The Merger Agreement provides that the
obligations of Parent, Purchaser and the Company to effect the Merger are
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions any and all of which may be waived in whole or in part
by the Company, Parent or Purchaser as the case may be, to the extent
permitted by applicable law:

        (a) the Merger Agreement shall have been approved and adopted by the
    requisite vote of the holders of Shares, if required by applicable law and
    the Company's Certificate of Incorporation;

        (b) any waiting period applicable to the consummation of the Merger
    under the HSR Act shall have expired or been terminated, and no statute,
    rule, regulation, order, decree or injunction shall have been enacted,
    promulgated or issued by any governmental entity precluding, restraining,
    enjoining or prohibiting consummation of the Merger; and

        (c) Parent, Purchaser or their affiliates shall have purchased Shares
    pursuant to the Offer.

   Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser, including but not limited to representations relating to corporate
existence and power; capital structure; corporate authorizations;
subsidiaries; SEC filings; financial statements; absence of certain changes
(including any material adverse effect on the business, results of
operations, or financial condition of the Company); employee benefit plans;
ERISA; government authorizations; litigation; compliance with laws; labor
matters; environmental matters; taxes; intellectual property; accuracy of
certain disclosures to be made in connection with preparation of the Offer
documents; the opinion of the Company's financial advisor; and brokers.

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   Certain representations and warranties in the Merger Agreement made by the
Company and Parent are qualified as to "materiality" or "Material Adverse
Effect." For purposes of the Merger Agreement and this Schedule 14D-9, the
term "Material Adverse Effect" generally means any change or effect (or any
development that, in so far as can be reasonably foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, prospects, financial condition or results of operations
of such party and its subsidiaries taken as a whole.

   Pursuant to the Merger Agreement, Parent and the Purchaser have made
customary representations and warranties to the Company, including
representations relating to their corporate existence and power; good
standing; corporate authority; corporate authorizations; the accuracy of
certain disclosures to be made in connection with preparation of the Offer
documents; their ability to finance the Offer and the Merger; and brokers.

   Covenants. The Merger Agreement contains various covenants of the parties
thereto. A description of certain of these covenants follows.

   The Merger Agreement provides that, prior to the time the designees of
Parent have been elected or appointed to, and shall constitute a majority of,
the Board, or the Merger Agreement is terminated, the Company:

     o       will, and will cause each of its subsidiaries to, (A) carry on
             their respective businesses in the ordinary course; (B) confer at
             such times as Parent may reasonably request with one or more
             representatives of Parent to report material operational matters
             and the general status of ongoing operations;

     o       will not, and will not permit any of its subsidiaries to,
             directly or indirectly, amend its certificate of incorporation or
             by-laws or similar organizational documents;

     o       will not, and will not permit any of its subsidiaries to, (A)(i)
             declare, set aside or pay any dividend or other distribution
             payable in cash, stock or property with respect to the Company's
             capital stock or that of its subsidiaries, except that a
             wholly-owned subsidiary of the Company may declare and pay a
             dividend or make advances to its parent or the Company or (ii)
             redeem, purchase or otherwise acquire directly or indirectly any
             of the Company's capital stock or that of its subsidiaries; (B)
             issue, sell, pledge, dispose of or encumber any additional shares
             of, or securities convertible into or exchangeable for, or
             options, warrants, calls, commitments or rights of any kind to
             acquire, any shares of capital stock of any class of the Company
             or its subsidiaries, other than Shares issued upon the exercise
             of options outstanding on the date of the Merger Agreement in
             accordance with the option plans as in effect on the date of the
             Merger Agreement; or (C) split, combine or reclassify the
             outstanding capital stock of the Company or of any of the
             subsidiaries of the Company;

     o       will not, and will not permit it subsidiaries to, except as
             permitted by the Merger Agreement, acquire or agree to acquire
             (A) by merging or consolidating with, or by purchasing a
             substantial portion of the assets of, or by any other manner, any
             business or any corporation, partnership, joint venture,
             association or other business organization or division thereof
             (including entities which are subsidiaries of the Company or any
             of the Company's subsidiaries) or (B) any assets, including real
             estate, except purchases in the ordinary course of business
             consistent with past practice;

     o       will not, and will not permit its subsidiaries to, except in the
             ordinary course of business and except as otherwise permitted by
             the Merger Agreement, amend or terminate any material contract
             where such amendment or termination would have a Material Adverse
             Effect on the Company, or waive, release or assign any material
             rights or claims;

     o       will not, and will not permit its subsidiaries to, transfer,
             lease, license, sell, mortgage, pledge, dispose of or encumber
             any property or assets other than in the ordinary course of
             business and consistent with past practice;

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     o       will not, and will not permit its subsidiaries to, (A) enter into
             any employment or severance agreement with or grant any severance
             or termination pay to any officer, director or key employee of
             the Company or any of its subsidiaries; or (B) hire or agree to
             hire any new or additional executives or senior officers;

     o       will not, and will not permit its subsidiaries to, except in the
             ordinary course of business and except as required to comply with
             applicable law or contracts disclosed in the documents filed by
             the Company with the SEC since April 1, 1999 or otherwise
             disclosed to Parent or expressly provided in the Merger
             Agreement, (A) adopt, enter into, terminate, amend or increase
             the amount or accelerate the payment or vesting of any benefit or
             award or amount payable under any benefit plan or other
             arrangement for the current or future benefit or welfare of any
             director, officer or current or former employee, except to the
             extent necessary to coordinate any such benefit plans with the
             terms of the Merger Agreement, (B) increase in any manner the
             compensation or fringe benefits of, or pay any bonus to, any
             director, officer or employee, (C) pay any benefit not provided
             for under any benefit plan, (D) grant any awards under any bonus,
             incentive, performance or other compensation plan or arrangement
             or benefit plan (including the grant of stock options, stock
             appreciation rights, stock based or stock related awards,
             performance units or restricted stock, or the removal of existing
             restrictions in any Benefit Plans or agreements or awards made
             thereunder);

     o       will not, and will not permit any of its subsidiaries to, (A)
             incur or assume any long-term debt, or except in the ordinary
             course of business, incur or assume any short-term indebtedness
             in amounts not consistent with past practice; (B) materially
             increase its bank debt; (C) assume, guarantee, endorse or
             otherwise become liable or responsible (whether directly,
             contingently or otherwise) for the obligations of any other
             person, except in the ordinary course of business and consistent
             with past practice; (D) make any loans, advances or capital
             contributions to, or investments in, any other person (other than
             to wholly owned subsidiaries of the Company or customary loans or
             advances to employees in the ordinary course of business and
             consistent with past practice); or (E) enter into any material
             commitment or transaction except in the ordinary course of
             business consistent with past practice;

     o       will not, and will not permit any of its subsidiaries to, change
             any of the accounting methods used by it unless required by
             generally accepted accounting principles;

     o       will not, and will not permit its subsidiaries to, pay, discharge
             or satisfy any claims, liabilities or obligations (absolute,
             accrued, asserted or unasserted, contingent or otherwise), other
             than the payment, discharge or satisfaction of any such claims,
             liabilities or obligations, in the ordinary course of business
             and consistent with past practice, of claims, liabilities or
             obligations reflected or reserved against in, or contemplated by,
             the consolidated financial statements (or the notes thereto) of
             the Company and its consolidated subsidiaries; or, except in the
             ordinary course of business consistent with past practice, waive
             the benefits of, or agree to modify in any manner, any
             confidentiality, standstill or similar agreement to which the
             Company or any of its subsidiaries is a party;

     o       will not, and will not permit its subsidiaries to, enter into an
             agreement, contract, commitment or arrangement to do any of the
             foregoing, or to authorize, recommend, propose or announce an
             intention to do any of the foregoing; and

     o       will not, and will not permit its subsidiaries to, take any
             action that would result in (i) any of its representations and
             warranties set forth in the Merger Agreement that are qualified
             as to materiality to become untrue, (ii) any of such
             representations and warranties that are not so qualified becoming
             untrue in any material respect or (iii) any of the conditions to
             the Offer not being satisfied (subject to the Company's right to
             take action specifically permitted under the terms of the Merger
             Agreement).

   Access; Confidentiality. The Merger Agreement provides that, prior to the
time the designees of Parent have been elected or appointed to, and shall
constitute a majority of, the Board, or the Merger Agreement is terminated,
the Company:

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     o       shall, and shall cause each of its subsidiaries to, afford to the
             representatives of Parent reasonable access on reasonable prior
             notice during normal business hours, throughout the period prior
             to the earlier of the effective time of the Merger (the
             "Effective Time") or the termination of the Merger Agreement, to
             all of its properties, offices, employees, contracts,
             commitments, books and records (including but not limited to tax
             returns) and any report, schedule or other document filed or
             received by it pursuant to the requirements of federal or state
             securities laws.

     o       shall, and shall cause each of its subsidiaries to, furnish
             promptly to Parent such additional financial and operating data
             and other information as to its and its subsidiaries' respective
             businesses and properties as Parent may from time to time
             reasonably request. Parent and Purchaser will make all reasonable
             efforts to minimize any disruption to the businesses of the
             Company and its subsidiaries which may result from the requests
             for data and information hereunder and pursuant to the terms of
             the Merger Agreement.

   The Merger Agreement further provides that Parent, the Purchaser and the
Company will be bound by the terms of a letter agreement, dated November 11,
2000, between Parent and the Company.

   Further Action; Reasonable Best Efforts. The Merger Agreement provides
that:

     (1) Upon the terms and subject to the conditions provided in the Merger
    Agreement, each of Parent, Purchaser and the Company agrees to use its
    reasonable best efforts to take, or cause to be taken, all action and to
    do, or cause to be done, all things necessary under applicable laws and
    regulations to consummate and make effective in the most expeditious
    manner practicable, the Offer and the other transactions, including, (A)
    the preparation and filing with the SEC of the offer documents, this
    Schedule 14D-9, the information required to be distributed to the
    shareholders of the Company pursuant to Section 14(f) of the Exchange Act
    and Rule 14f-1 promulgated thereunder as is necessary so as to enable
    Parent's designees to be elected to the Board pursuant to the terms of the
    Merger Agreement, the preliminary proxy statement and the proxy statement
    and all necessary amendments or supplements thereto; (B) the obtaining of
    all necessary actions or nonactions, waivers, consents and approvals from
    any governmental entity and the making of all necessary registrations and
    filings (including filings with any governmental entity, if any) and the
    taking of all reasonable steps as may be necessary to obtain an approval
    or waiver from, or to avoid an action or proceeding by, any governmental
    entity; (C) the obtaining of all necessary consents, approvals or waivers
    from third parties; (D) the defending of any lawsuits or other legal
    proceedings, whether judicial or administrative, challenging the Merger
    Agreement or the consummation of any of the transactions contemplated by
    the Merger Agreement (the "Transactions"), including seeking to have any
    stay or temporary restraining order entered by any court or other
    governmental entity vacated or reversed; and (E) the execution and
    delivery of any additional instruments necessary to consummate the
    Transactions and to fully carry out the purposes of the Merger Agreement.

     (2) Each of the Company, Parent and Purchaser shall give prompt notice to
    the other of (i) any of their representations or warranties contained in
    the Merger Agreement becoming untrue or inaccurate in any respect
    (including receiving knowledge of any fact, event or circumstance which
    may cause any representation qualified as to knowledge to be or become
    untrue or inaccurate in any respect) or (ii) the failure by them to comply
    with or satisfy in any material respect any covenant, condition or
    agreement to be complied with or satisfied by them under the Merger
    Agreement; provided, however, that no such notification shall affect the
    representations, warranties, covenants or agreements of the parties or the
    conditions to the obligations of the parties under the Merger Agreement.

   Employee Benefits; Current Obligations. The Merger Agreement provides that
the Parent will, or will cause the Surviving Corporation to, give all persons
who are employed by the Company immediately prior to the Effective Time full
credit for purposes of eligibility and vesting, under any tax-qualified
employee benefit plans or arrangements maintained by Parent or the Surviving
Corporation for such employees' service with Parent or the Surviving
Corporation to the same extent recognized by the Company immediately prior to
the Effective Time. For a period of one year immediately following the

                                7

Effective Time, Parent has agreed that the coverage and benefits provided to
the Company's employees pursuant to employee benefit plans or arrangements
maintained by Parent or Surviving Corporation and generally applicable to a
group or groups of employees (including certain bonus arrangements, after
which Parent will consider appropriate bonus arrangements going forward)
shall be, in the aggregate, not less favorable than those provided to such
employees immediately prior to the Effective Time. Pursuant to the Merger
Agreement, Parent also agreed to cause the Company to honor certain
employment agreements with officers of the Company and its subsidiaries.

   Stock Options. The Merger Agreement provides that at or immediately prior
to the Effective Time, each then outstanding option and warrant to purchase
any shares of capital stock of the Company (in each case, an "Option") shall
be cancelled by the Company. In consideration of such cancellation of Options
with an exercise price of less than the Offer Price, the Company (or, at
Parent's option, the Purchaser) shall pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any, of
the Offer Price over the exercise price of each such Option and (B) the
number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without
interest) In connection with such cancellation, the Company shall use its
best efforts to obtain such consents from holders of Company Options as are
required pursuant to the plans (the "Option Plans"). The Company shall take
all other actions necessary and appropriate so that all stock option, other
equity based plans or deferred compensation plans maintained with respect to
the Shares, including, without limitation, the Option Plans, shall terminate
as of the Effective Time (except for the payments to be made out of the cash
assets remaining in the deferred compensation plans (including interest
thereon) to be paid to the participants, at the option of the Company, either
(i) in a lump sum upon termination of the plans or (ii) one-third in each of
January 2002, January 2003 and January 2004) and the provisions in any other
benefit plan providing for the issuance, transfer or grant of any capital
stock of the Company or any interest in respect of any capital stock of the
Company shall be deleted as of the Effective Time, and the Company shall use
its best efforts to ensure that following the Effective Time no holder of an
Option or any participant in any Option Plan or other benefit plan shall have
any right thereunder to acquire any capital stock of the Company, Parent,
Purchaser or the Surviving Corporation.

   Notification of Certain Matters. The Merger Agreement provides that each
of the Company, Parent and Purchaser shall give prompt notice to the other of
(i) any of their representations or warranties contained in the Merger
Agreement becoming untrue or inaccurate in any respect (including receiving
knowledge of any fact, event or circumstance which may cause any
representation qualified as to knowledge to be or become untrue or inaccurate
in any respect) or (ii) the failure by them to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by them under the Merger Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under the Merger Agreement.

   No Solicitation. The Merger Agreement provides that the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize (and
shall use its best efforts not to permit) any officer, director or employee
of, or any investment banker, attorney or other advisor or representative of,
the Company or any of its subsidiaries to, (i) solicit or initiate, or
encourage, directly or indirectly, any inquiries or the submission of, any
Takeover Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information or data with
respect to or access to the properties of, or take any other action to
knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal or (iii) enter into
any agreement with respect to any Takeover Proposal or approve or resolve to
approve any Takeover Proposal; provided, that nothing contained in the Merger
Agreement prohibits the Company or the Board from (i) taking and disclosing
to the Company's shareholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 under the Exchange
Act, or (ii) making such disclosure to the Company's shareholders as, in the
good faith judgment of the Board, after receiving advice from outside legal
counsel, is required under applicable law, provided that the Company may not,
except as permitted under the Merger Agreement, withdraw or modify, or
propose to withdraw or modify,

                                8

its position with respect to the Offer or the Merger or approve or recommend,
or propose to approve or recommend any Takeover Proposal, or enter into any
agreement with respect to any Takeover Proposal. Upon execution of the Merger
Agreement, the Company was required to immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Notwithstanding the foregoing, prior to
the time of acceptance of Shares for payment pursuant to the Offer, the
Company may furnish information concerning its business, properties or assets
to any person or group and may negotiate and participate in discussions and
negotiations with such person or group concerning a Takeover Proposal (as
defined below) if:

    (x) such person or group has submitted a Superior Proposal (as defined
        below); and

    (y) the Board determines in good faith based on advice of outside legal
        counsel that such action is necessary for the Board to comply with its
        fiduciary duty under applicable law.

The Company is then required to promptly (but in no case later than 24 hours)
notify Parent of the existence of any proposal, discussion, negotiation or
inquiry received by the Company regarding any Takeover Proposal, and the
Company must immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry which it may receive regarding any
Takeover Proposal and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation, and must provide
Parent with a copy of such proposal or inquiry, if available. The Company
must promptly provide to Parent any non-public information concerning the
Company provided to any other Person in connection with any Takeover Proposal
which was not previously provided to Parent. The Company must keep Parent
informed of the status and details of any such Takeover Proposal and of any
amendments or proposed amendments to any Takeover Proposal and must promptly
(but in no case later than 24 hours) notify Parent of any determination by
the Board that a Superior Proposal has been made.

   Except as set forth in the Merger Agreement, neither the Board nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board or any such committee of the Offer, the Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, subject to
compliance with the provisions of the Merger Agreement, if, prior to the time
of acceptance for payment of Shares pursuant to the Offer, the Board
determines in good faith, based upon the advice of outside legal counsel,
that its failure to do so would constitute a breach of its fiduciary duties
under applicable Law, the Board may withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement or the Merger, approve or
recommend a Superior Proposal, or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the fifth business day
following Parent's receipt of written notice (including by facsimile) from
the Company advising Parent that the Board has received a Superior Proposal
which it intends to accept, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior
Proposal, but only if Parent has not, within such five business days, made
such adjustments to the terms and conditions of the Merger Agreement as would
cause the Superior Proposal to no longer qualify as such. The Company shall
promptly deliver to Parent a copy of the minutes of any meeting of its Board
of Directors at which it determines that a Takeover Proposal is a Superior
Proposal.

   "Takeover Proposal," as defined in the Merger Agreement, means any bona
fide proposal or offer, whether in writing or otherwise, from any Person
other than Parent, Purchaser or any affiliates thereof (a "Third Party") to
acquire beneficial ownership (as determined pursuant to Rule 13d-3 under the
Exchange Act) of all or a material portion of the assets of the Company or
any of its subsidiaries or 20% or more of any class of equity securities of
the Company or any of its subsidiaries pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of assets,
tender offer, exchange offer or similar transaction with respect to either
the Company or any of its subsidiaries, including any single or multi-step
transaction or series of related transactions, which is structured to permit
such Third Party to acquire beneficial ownership of any material portion of
the assets of or 20% or more of the equity interest in either the Company or
any of its subsidiaries.

                                9

   "Superior Proposal," as defined in the Merger Agreement, means an
unsolicited bona fide written proposal by a Third Party to acquire, directly
or indirectly, for consideration consisting of cash and/or securities, more
than a majority of the Shares then outstanding or all or substantially all of
the assets of the Company or to acquire, directly or indirectly, the Company
by merger or consolidation, and otherwise on terms which the Board determines
in good faith to be more favorable to the Company's shareholders (taking into
account the time period reasonably believed necessary to consummate such
transaction) than the Offer and the Merger (after receipt of opinion of a
nationally recognized independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Offer and the Merger, and after taking into
account all legal, financial and regulatory aspects of such proposal, the
identity of the Third Party making such proposal, and the benefits to be
derived by the Company from the Transactions), for which financing, to the
extent required, is then committed and which, in the good faith reasonable
judgment of the Board, be consummated.

   Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that the Company shall, to the fullest extent permitted
under applicable New York Law, the terms of the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective Time, the
Surviving Corporation shall, to the fullest extent permitted under applicable
New York Law, the terms of the Surviving Corporation's certificate of
incorporation or by-laws, indemnify and hold harmless, each present and
former director or officer of the Company and each other person to whom
indemnification is provided under the Company's By-Laws as in effect on the
date of the Merger Agreement (collectively, the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees),
judgments, losses, claims, damages and liabilities incurred in connection
with, and amounts paid in settlement of, any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative
and wherever asserted, brought or filed, (x) arising out of or pertaining to
the Transactions or (y) otherwise with respect to any acts or omissions or
alleged acts or omissions occurring at or prior to the Effective Time, in
each case for a period of six years after the date of the Merger Agreement;
provided, further, that the Surviving Corporation may not amend the terms of
its certificate of incorporation or by-laws to be less favorable with respect
to such indemnification than the Company's Certificate of Incorporation or
By-Laws on the date of the Merger Agreement. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after
the Effective Time), (i) any counsel retained by the Indemnified Parties for
any period after the Effective Time must be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received, and (iii) the Surviving
Corporation will cooperate in the defense of any such matter; provided,
however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims.
The Indemnified Parties as a group may retain only one law firm to represent
them with respect to any single action unless there is, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Indemnified Parties. The indemnity
agreements of the Surviving Corporation in the Merger Agreement extend, on
the same terms to, and shall inure to the benefit of and shall be enforceable
by, each Person or entity who controls, or in the past controlled, any
present or former director, officer or employee of the Company or any of its
subsidiaries.

   For a period of three years after the Effective Time, Parent must cause
the Surviving Corporation to maintain in effect, if available, directors' and
officers' liability insurance covering those Persons who are currently
covered by the Company's directors' and officers' liability insurance policy
(a copy of which has been made available to Parent) on terms (including the
amounts of coverage and the amounts of deductibles, if any) that are no less
favorable to the terms now applicable to them under the Company's current
policies; provided, however, that in no event shall Parent or the Surviving
Corporation be required to expend in excess of 125% of the annual premium
currently paid by the Company for such coverage; and provided further, that,
if the premium for such coverage exceeds such amount, Parent or the Surviving
Corporation shall purchase a policy with the greatest coverage available for
such 125% of the annual premium.

                               10

   Parent Undertaking. The Merger Agreement provides that Parent shall be
responsible for and shall cause the Purchaser to perform all of its
obligations under the Merger Agreement in a timely manner.

   Takeover Statute. The Merger Agreement provides that in no event shall the
Company's approval of the Merger Agreement, the Offer, the acquisition of the
Shares pursuant to the Offer and the Merger for purposes of Section 912 of
the NYBCL be withdrawn, revoked or modified by the Board. If any state
takeover statute other than Section 912 of the NYBCL becomes or is deemed to
become applicable to the Offer, the acquisition of Shares pursuant to the
Offer or the Merger, the Company shall take all action necessary to render
such statute inapplicable to all of the foregoing.

   Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time:

        (a) By the mutual written consent of Parent and the Company; provided,
    however, that if Parent shall have a majority of the directors pursuant to
    the terms of the Merger Agreement, such consent of the Company may only be
    given if approved by the Continuing Directors.

        (b) By either of Parent or the Company if (i) a statute, rule or
    executive order shall have been enacted, entered or promulgated prohibiting
    the Transactions on the terms contemplated by the Merger Agreement or (ii)
    any Governmental Entity shall have issued an order, decree or ruling or
    taken any other action (which order, decree, ruling or other action the
    parties hereto shall use their reasonable efforts to lift), in each case
    permanently restraining, enjoining or otherwise prohibiting the Transactions
    and such order, decree, ruling or other action shall have become final and
    non-appealable.

        (c) By either of Parent or the Company if the Effective Time shall not
    have occurred on or before June 30, 2001; provided, that the party seeking
    to terminate the Merger Agreement for such reason, such party shall not have
    breached in any material respect its obligations under the Merger Agreement
    in any manner that shall have proximately contributed to the failure to
    consummate the Merger on or before such date.

        (d) By the Company:

            (i) if the Company has entered into an agreement with respect to a
        Superior Proposal in accordance with the terms of the Merger Agreement,
        provided the Company has complied with all provisions thereof, including
        the notice provisions therein, and that it simultaneously terminates the
        Merger Agreement and makes simultaneous payment to the Parent of its
        expenses and the Termination Fee (as defined below);

            (ii) if Parent or Purchaser shall have terminated the Offer or the
        Offer expires without Parent or Purchaser, as the case may be,
        purchasing any Shares pursuant thereto; provided that the Company may
        not terminate the Merger Agreement pursuant to this provision of the
        Merger Agreement if the Company is in material breach of the Merger
        Agreement;

            (iii) if Parent, Purchaser or any of their affiliates shall have
        failed to commence the Offer on or prior to ten business days following
        the date of the initial public announcement of the Offer; provided that
        the Company may not terminate the Merger Agreement pursuant to this
        provision of the Merger Agreement if the Company is in material breach
        of the Merger Agreement; or

            (iv) if there shall be a material breach by Parent or Purchaser of
        any of their representations, warranties, covenants or agreements
        contained in the Merger Agreement.

        (e) By Parent or Purchaser:

            (i) (A) if prior to the purchase of the Shares pursuant to the
        Offer, the Board shall have withdrawn, or modified or changed in a
        manner adverse to Parent or Purchaser, its approval or recommendation of
        the Offer, the Merger Agreement or the Merger or shall have recommended
        or approved a Takeover Proposal;

                (B) there shall have been a material breach of any provision of
        the non-solicitation provisions of the Merger Agreement;

                               11

            (ii) if Parent or Purchaser shall have terminated the Offer without
        Parent or Purchaser purchasing any Shares thereunder, provided that
        Parent or Purchaser may not terminate the Merger Agreement pursuant to
        this provision if Parent or Purchaser is in material breach of the
        Merger Agreement;

            (iii) if, due to an occurrence that if occurring after the
        commencement of the Offer would result in a failure to satisfy any of
        the conditions set forth in Annex A hereto, Parent, Purchaser or any of
        their affiliates shall have failed to commence the Offer on or prior to
        ten business days following the date of the initial public announcement
        of the Offer; or

            (iv) if there shall be a material breach by the Company of any of
        its representations, warranties, covenants or agreements contained in
        the Merger Agreement.

   Fees and Expenses. The Merger Agreement provides that, except as otherwise
specified below, all costs and expenses incurred in connection with the
Merger Agreement and the consummation of the Transactions shall be paid by
the party incurring such expenses, whether or not the Offer or the Merger is
consummated.

        (a) If Parent or Purchaser terminates the Merger Agreement because the
    Company has withdrawn, or modified or changed in a manner adverse to Parent
    or Purchaser, its approval or recommendation of the Offer, the Merger
    Agreement or the Merger or shall have recommended or approved a Takeover
    Proposal, or the Company terminates the Merger Agreement because it has
    entered into an agreement with respect to a Superior Proposal, then in each
    case, the Company shall pay, or cause to be paid to Parent, at the time of
    termination, an amount equal to $3,000,000 (the "Termination Fee").

        (b) If the Termination Fee becomes payable or Parent or Purchaser
    terminates the Merger Agreement due to a material breach by the Company of
    any of its representations, warranties, covenants or agreements contained in
    the Merger Agreement, then in each case, the Company shall pay, or cause to
    be paid to Parent, at the time of termination an amount equal to Parent's
    and Purchaser's actual and reasonably documented out-of-pocket expenses
    incurred by Parent or Purchaser in connection with the Offer, the Merger,
    the Merger Agreement and the consummation of the Transactions, including,
    without limitation, the fees and expenses payable to all banks, investment
    banking firms and other financial institutions and Persons and their
    respective agents and counsel incurred in connection with acting as Parent's
    or Purchaser's financial advisor with respect to, or arranging or committing
    to provide or providing any financing for, the Transactions up to
    $1,000,000.

   Parent shall be solely responsible for any and all filing fees that are
payable in connection with or on account of any filing by Parent or any other
party concerning the transactions contemplated by the Merger Agreement under
or pursuant to the HSR Act.

   Amendment and Waiver. The Merger Agreement provides that subject to
applicable law, the Merger Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
shareholders of the Company contemplated thereby, by written agreement of the
parties thereto, at any time prior to the effective date of the Merger with
respect to any of the terms contained therein; provided, however, that after
the approval of the Merger Agreement by the shareholders of the Company, no
such amendment, modification or supplement shall reduce the amount or change
the form of the Merger Consideration or otherwise adversely affect the rights
of shareholders.

  3. STOCK OPTION AGREEMENT.

   In connection with the Merger Agreement, Parent and the Company have
entered into a Stock Option Agreement, dated as of December 10, 2000 (the
"Stock Option Agreement"). Parent subsequently assigned all its rights in the
Stock Option Agreement to Purchaser. The following summary of certain
provisions of the Stock Option Agreement is qualified in its entirety by
reference to the complete

                               12

text of the Stock Option Agreement, a copy of the form of which is filed as
Exhibit 3 hereto and is incorporated by reference in this Schedule 14D-9.
Capitalized terms used in the following summary and not otherwise defined
below shall have the meanings set forth in the Stock Option Agreement.

   Under the Stock Option Agreement, the Company has granted Parent an
irrevocable option (the "Company Option") to purchase from the Company up to
1,138,596 newly issued Shares (the "Option Shares"), at an exercise price of
$18.00 per Share in cash. Parent has assigned its rights under the Stock
Option Agreement to the Purchaser.

   The Company Option is not presently exercisable and will not become
exercisable until January 2, 2001. The Company Option may be exercised by the
Purchaser, in whole or in part.

   The Company has made certain representations and warranties in the Stock
Option Agreement, including with respect to (i) its authority to enter into
and perform its obligations under such Stock Option Agreement and the absence
of required consents and statutory or contractual conflicts or violations,
and (ii) the absence of liens or any other encumbrances on or in respect of
the Option Shares.

   The Stock Option Agreement provides that the Company Option will
terminate, without any action by Parent or the Company, in certain
circumstances where: (a) Purchaser fails to commence the Offer within 10
business days after the date thereof, except if the Board (i) shall have
withdrawn, or modified or changed in a manner adverse to Parent or Purchaser
(including by amendment of this Schedule 14D-9) its recommendation of the
Offer, the Merger Agreement, or the Merger, (ii) shall have recommended a
Takeover Proposal, or (iii) shall have adopted any resolution to effect any
of the foregoing; (b) Purchaser fails to purchase Shares pursuant to the
Offer, because (i) there shall be threatened by a governmental entity or
pending any suit, action or proceeding (A) seeking to prohibit or impose any
material limitations on Parent's or Purchaser's ownership or operation (or
that of any of their respective subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, (B) seeking
to compel Parent or Purchaser or their respective subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets
of the Company or Parent and their respective subsidiaries, in each case
taken as a whole, (C) challenging the acquisition by Parent or Purchaser of
any Shares pursuant to the Offer, (D) seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other Transactions, (E) seeking to impose material limitations on the
ability of Purchaser, or rendering Purchaser unable, to accept for payment,
pay for or purchase some or all of the Shares pursuant to the Offer and the
Merger, or (F) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased
by it on all matters properly presented to the Company's shareholders; (ii)
there shall be any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated or deemed applicable to the Offer or
the Merger, or any other action shall be taken by any governmental entity,
other than the application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (A) through (F)
of paragraph (i) above; (iii) there shall have occurred and be continuing (A)
any general suspension of trading in, or limitation on prices for, securities
on the Nasdaq National Market System, for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (B) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (C) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (D) any
limitation or proposed limitation (whether or not mandatory) by any United
States governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial
institutions, (E) any decline in the Dow Jones Industrial Average, the
Standard & Poor's Index of 500 Industrial Companies or the Nasdaq Composite
Index by an amount in excess of 20% measured from the close of business on
the date of the Merger Agreement or (F) in the case of any of the situations
in clauses (A) through (E) inclusive, existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; (iv)
the representations and warranties of the Company set forth in the Merger
Agreement shall not be true and accurate as of the date of consummation of
the Offer as though made on or as of such date (except for those
representations and

                               13

warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as
of such date or with respect to such period) or the Company shall have
breached or failed to perform or comply with any obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with by
it except, in each case where the failure of such representations and
warranties to be true and accurate (without giving effect to any limitation
as to "knowledge," "materiality" or "material adverse effect" set forth
therein), or the failure to perform or comply with such obligations,
agreements or covenants, which do not, individually or in the aggregate, have
a Material Adverse Effect on the Company or a materially adverse effect on
the ability to consummate the Offer or the Merger; or (v) there shall have
occurred any event or any development of a state of facts or circumstances
that constitutes a Material Adverse Change or has a Material Adverse Effect
on the Company; (c) Parent or the Company terminates the Merger Agreement (i)
with the mutual written consent of the other party; provided, however, that
if Parent shall have a majority of the directors pursuant to the terms of the
Merger Agreement, such consent of the Company may only be given if approved
by the Continuing Directors; (ii) if (1) a statute, rule or executive order
shall have been enacted, entered or promulgated prohibiting the Transactions
on the terms contemplated by the Merger Agreement or (2) any governmental
entity shall have issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties hereto shall use
their reasonable efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the Transactions and such order, decree,
ruling or other action shall have become final and non-appealable; or (iii)
if the Effective Time shall not have occurred on or before June 30, 2001;
provided, that the party seeking to terminate the Merger Agreement for such
reason, such party shall not have breached in any material respect its
obligations under the Merger Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger on or before
such date; (d) Parent terminates the Merger Agreement (i) if Parent or
Purchaser shall have terminated the Offer without Parent or Purchaser
purchasing any Shares thereunder, provided that Parent or Purchaser may not
terminate the Merger Agreement pursuant to this provision if Parent or
Purchaser is in material breach of the Merger Agreement; (ii) if, due to an
occurrence that if occurring after the commencement of the Offer would result
in a failure to satisfy any of the conditions set forth under "Merger
Agreement -- Offer Conditions" in part 2 of this Item 3, Parent, Purchaser or
any of their affiliates shall have failed to commence the Offer on or prior
to ten business days following the date of the initial public announcement of
the Offer; or (iii) if there shall be a material breach by the Company of any
of its representations, warranties, covenants or agreements contained in the
Merger Agreement; (e) the Company terminates the Merger Agreement (i) if
Parent or Purchaser shall have terminated the Offer or the Offer expires
without Parent or Purchaser, as the case may be, purchasing any Shares
pursuant thereto; provided that the Company may not terminate the Merger
Agreement pursuant to this provision of the Merger Agreement if the Company
is in material breach of the Merger Agreement; (ii) if Parent, Purchaser or
any of their affiliates shall have failed to commence the Offer on or prior
to ten business days following the date of the initial public announcement of
the Offer; provided that the Company may not terminate the Merger Agreement
pursuant to this provision of the Merger Agreement if the Company is in
material breach of the Merger Agreement; or (iii) if there shall be a
material breach by Parent or Purchaser of any of their representations,
warranties, covenants or agreements contained in the Merger Agreement, in,
the cases of (i) and (ii) only if the failure of Purchaser to commence the
Offer or purchase Shares is not due to the failure of the condition set forth
in paragraph (a) hereto.

  4. VOTING AND OPTION AGREEMENT.

   In connection with the Merger Agreement, Karl H. Kostusiak, Chairman and
Chief Executive Officer of the Company, and David B. Lederer, Executive Vice
President of the Company (collectively, the "Agreement Shareholders") have
entered into a Voting and Option Agreement, dated as of December 10, 2000,
with Parent (the "Voting and Option Agreement"). Parent has assigned its
rights under the Voting and Option Agreement to the Purchaser.

   The following summary of certain provisions of the Voting and Option
Agreement is qualified in its entirety by reference to the complete text of
the Voting and Option Agreement, which is filed herewith as Exhibit 4 and is
incorporated by reference herein. Capitalized terms used in the following
summary and not otherwise defined below shall have the meanings set forth in
the Voting and Option Agreement.

                               14

   Each Agreement Shareholder has agreed to tender (and not withdraw) his
Shares (the "Agreement Shares") pursuant to the Offer. In addition, each
Agreement Shareholder has agreed not to transfer, sell, offer, pledge or
otherwise dispose of or encumber, or grant any proxies for or enter into any
voting agreements or arrangements respecting, any of the Agreement Shares
until the consummation of the Merger, the expiration of the period commencing
January 2, 2001 and expiring, without any action by Parent or the Company's
shareholders, upon the termination of the Offer or the Merger Agreement under
certain circumstances (the "Option Period"), the purchase of the Agreement
Shares by Parent or the date the Voting and Option Agreement is terminated.

   Each Agreement Shareholder has retained all voting rights with respect to
the Agreement Shares, except he has agreed to irrevocably appoint the
officers of Parent the lawful agent, attorney, and proxy of the Agreement
Shareholder, to (a) vote the Agreement Shares in favor of the Merger, (b)
vote the Agreement Shares against any action or agreement that would result
in a breach in any material aspect of any covenant, representation, or
warranty or any other obligation of the Company under the Merger Agreement;
and (c) vote the Agreement Shares against any action or agreement that would
impede, interfere with, delay, postpone, or attempt to discourage the Merger,
including, but not limited to: (i) any extraordinary corporate transaction,
such as a merger, rights offering, consolidation or other business
combination involving the Company, (ii) a sale or transfer of a material
amount of the assets of the Company or a reorganization, recapitalization, or
liquidation of the Company, (iii) any change in the management or Board,
except as otherwise agreed to in writing by Parent, or (iv) any other change
in the Company's corporate structure.

   Each Agreement Shareholder also irrevocably granted to Parent an option to
purchase his Agreement Shares at the Offer Price. Parent can exercise this
option, in whole and not in part, at any time after January 2, 2001.

   In the event that: (i) the option is exercised, (ii) the Merger is not
consummated and (iii) any party other than Parent and its subsidiaries
acquires, through merger or otherwise, all or substantially all of the
business or assets of the Company pursuant to a transaction or series of
transactions providing aggregate consideration to shareholders of the Company
greater than $18 per Share (the "Alternative Consideration"), then within 5
days following receipt of such consideration by Parent or its affiliates,
Parent shall pay to each of the Shareholders the product of (x) the amount by
which the Alternative Consideration exceeds $18 and (y) the number of Shares
sold by such shareholder to Parent pursuant to the option.

   Each Agreement Shareholder has made certain representations and warranties
in the Voting and Option Agreement, including with respect to (i) ownership
of his Shares and his Agreement Shares, (ii) the authority to enter into and
perform his/its obligations under such Voting and Option Agreement and the
absence of required consents and statutory or contractual conflicts or
violations, and (iii) the absence of liens or any other encumbrances on or in
respect of his/its Shares and his Agreement Shares.

   The Voting and Option Agreement, and all rights and obligations under the
Voting and Option Agreement, terminates upon the earlier of (a) the
expiration of the Option Period, (b) the purchase of the Agreement Shares,
(c) the agreement of the parties to terminate the Voting and Option
Agreement, or (d) the consummation of the Merger.

   5. INDEMNIFICATION.

   Article V, Section 2 of the Company's By-Laws, as amended and restated by
the Company's Board of Directors on February 21, 2000, requires the Company
to indemnify to the maximum extent permitted by law each of its directors and
officers for all reasonable expenses and any other liabilities paid or
incurred by reason of the fact that such person is or was a director or
officer of the Company. To the maximum extent permitted by law, the Company
must make advances of expenses incurred by any such person in connection with
an action prior to final disposition of such action, subject to receipt by
the Company of an undertaking by or on behalf of such person to repay such
advances to the extent such person is ultimately found not to be entitled to
indemnification. Such indemnification shall inure to the benefit of such
person's testator or intestate. The right of such indemnification is deemed
to constitute a

                               15

contract between the Company and the persons entitled thereto and may not,
without the consent of such persons, be amended or repealed with respect to
any act or omission occurring or allegedly occurring prior to the end of the
term of office such person. A copy of such Article V is filed as Exhibit 5
hereto, and is incorporated herein by reference.

   The Merger Agreement provides that the Company's officers and directors
shall have continued rights to indemnification and insurance, as described
under "The Merger Agreement -- Directors' and Officers' Insurance and
Indemnification" under part 2 of this Item 3.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

 RECOMMENDATION OF THE BOARD.

   The Board (a) has unanimously determined that the Offer, the Merger and
the Merger Agreement are advisable, fair to, and in the best interests of,
the Company's shareholders, (b) has unanimously approved the Merger Agreement
and the transactions contemplated thereby, including the Merger and the
Offer, and (c) unanimously recommends that the Company's shareholders accept
the Offer and tender their Shares to Purchaser pursuant to the offer and, if
approval and adoption is required under applicable law, approve and adopt the
Merger Agreement.

 BACKGROUND.

   Five years ago, the Company committed to becoming a worldwide,
full-catalog supplier of electronic protection equipment to professional
installation and service companies. With this goal in mind, the Company
adopted a strategy to: (a) expand its product catalog, (b) expand its market
reach, (c) increase its manufacturing capacity and (d) improve its overall
cost structure. The Company has invested considerable financial, managerial
and other resources in connection with this strategy. The Company believes
that these investments will have a positive impact on its long-term
performance, but have had a short-term negative impact on the Company's
performance and stock price, which may not reflect the Company's future
potential.

   Since 1997, the Company has had intermittent discussions with Bosch (as
well as other well-known companies in the industry) regarding various
potential business transactions, arrangements and combinations. Bosch again
approached the Company in late 1999 to express its interest in an
acquisition. At that time, the Board authorized management to pursue
discussions regarding a partial or total acquisition of the Company by Bosch.

   Representatives of Bosch and the Company had several meetings between
February and May 2000. Bosch's representatives twice visited the Company's
offices for presentations regarding the Company's technology. Senior Company
executives also met with Bosch and its investment banker in New York City on
one occasion. In addition, the Company arranged for Bosch to visit its
manufacturing facility in Zhuhai, China.

   After various meetings and other communications, the Company ended these
discussions, since the Board believed the valuation of $14 per Share
indicated by Bosch was inadequate.

   The Company subsequently discussed an alternative transaction with Bosch
that would have provided those shareholders who wanted to sell their Shares
for cash at an above-market price with an opportunity to do so, while
providing other shareholders who wished to retain their Shares with the
opportunity to participate in the future growth of the Company. Discussions
progressed satisfactorily with Bosch's security systems division; however,
Bosch senior management subsequently decided not to proceed with the
transaction. These discussions terminated in approximately May 2000.

   On May 12, 2000, Ultrak, Inc. ("Ultrak"), a shareholder of the Company,
notified the Company that it was nominating a slate of candidates for
election to the Board at the Company's 2000 annual meeting of shareholders,
thereby commencing a proxy contest for control of the Company. Ultrak stated
at the time that its directors, if elected, and subject to their fiduciary
duties to the shareholders of the Company, would seek to negotiate a sale of
the Company or take other steps to maximize shareholder value.

                               16

   On July 21, 2000 the Company engaged Fleet Securities, Inc. ("Fleet
Securities") to provide financial advisory and investment banking services to
the Company and to explore various strategic alternatives available to it,
including (a) one or more possible acquisitions by the Company of, business
combinations involving the Company with, or other strategic equity
investments by the Company in, a third party and/or (b) a possible sale of,
business combination involving, or other strategic equity investment by a
third party in, the Company.

   On August 30, 2000 Fleet Securities reviewed with the Board certain
analyses and valuations it had performed relating to the Company. Fleet
Securities performed a comparable companies analysis, a precedent transaction
analysis and a discounted cash flow analysis. Fleet Securities also analyzed
the financial implications to the Company as well as the potential valuations
that might be realized upon certain strategic alternatives, including a
leveraged buyout of the Company, a Share repurchase, the payment of special
dividends by the Company, a minority investment in the Company by a third
party and a business combination involving the Company. As part of this
analysis, Fleet Securities examined the potential debt capacity of the
Company and estimated theoretical values that may be paid for the Shares in a
business combination where such combination would not be dilutive to a
strategic acquirer's earnings in calendar year 2001. These analyses were
presented to the Board in connection with the Board's general efforts to
enhance shareholder value, and were not presented with respect to any
particular offer or proposal that the Company had received.

   In a letter to the Board dated September 23, 2000, Bosch formally proposed
to acquire Detection Systems for $14 per Share in cash, subject to certain
conditions. The Board met several times, both formally and informally to
consider Bosch's proposal. At a meeting on October 5, 2000, Fleet Securities
noted that its analyses of the value of the Company had not materially
changed from its presentation of August 30, 2000. After further discussions
at a meeting on October 12, 2000, and after considering the Company's
prospects as a stand alone entity, its track record of financial results and
its growth potential due to its significant investments, as well as Fleet
Securities' analyses of the Company's value and other factors, the Board
unanimously determined that $14 per Share did not represent a fair value for
the Company and rejected the Bosch offer.

   On October 31, 2000 the Board authorized Fleet Securities to contact third
parties who might have a strategic interest in the Company, which could
include a joint venture arrangement, leveraged buyout, licensing agreement,
minority investment or potential sale of the Company. In furtherance of this
assignment, Fleet Securities prepared offering materials respecting the
Company and its business, developed a list of potential recipients of those
offering materials, and contacted 13 parties who were regarded as potentially
interested in pursuing a strategic transaction with the Company, including
several parties who had previously expressed an interest in the Company. Of
those parties, 8 initially expressed an interest in reviewing materials with
respect to the Company, 7 executed confidentiality agreements and six parties
(including Bosch) had expressed interest in continuing discussions with the
Company. By November 16, 2000, four parties had submitted initial indications
of interest at prices ranging from $13.04 to $16.95 per Share. All of those
indications of interest were subject to conditions, including completion of
due diligence and the receipt of certain approvals. Thereafter, those parties
conducted more detailed due diligence with respect to the Company.

   Each of the potential bidders was advised to submit its best offer by no
later than December 6, 2000; On that day, Bosch submitted a proposal at $17
per Share, another company ("Company A") submitted a proposal at $18 per
Share, and a third company ("Company B") submitted a proposal at $16.25 per
Share. After further discussion, Bosch increased its offer to $18 per Share
and Company B increased its offer to $17.50 per Share and indicated that it
had received board approval for the transaction.

   At a meeting of the Board held on December 8, 2000, the Board considered
the terms of the proposals made by Bosch, Company A and Company B, including
the terms contained in the proposed forms of merger agreement submitted by
each. The Board especially noted that the proposals of Company A and Company
B were subject to substantial conditions. The Company A proposal was subject
to the approval of its own board of directors, additional due diligence and
completion of financing arrangements, and the Company B proposal was subject
to additional due diligence. In contrast, the Bosch proposal was

                               17

fully financed, required no additional due diligence and was subject to very
few conditions, all of which appeared capable of being readily fulfilled. At
the request of the Board, Fleet Securities delivered its oral opinion to the
effect that the $18 per Share cash consideration was fair, from a financial
point of view, to the shareholders of the Company. After discussing the
proposals with its legal and financial advisors, the Board determined that
because it had fewer conditions and was more likely to be consummated, the
transaction with Bosch was superior to the transaction with Company A. The
Bosch proposal also appeared more advantageous with respect to the Company's
customers, employees and other constituencies. The Board then approved the
Bosch proposal, subject to (a) receipt of a written fairness opinion from
Fleet Securities, (b) receipt of the analyses supporting Fleet Securities'
fairness opinion, (c) negotiation by the Company's senior management of
satisfactory documentation and (d) no superior proposal being made prior to
the time such documentation was entered into.

   The Board authorized its advisors to contact Company A to determine
whether it would be willing to eliminate the significant conditions to its
proposal, and to increase its price. Fleet Securities and the Company's
counsel then spoke with representatives of Company A, who indicated that it
(a) would seek its own board's approval of the proposed transaction on the
evening of December 10, (b) would eliminate the financing condition (although
it still needed to obtain financing to fund the transaction), (c) believed it
could complete its due diligence over the next two days (but might require
additional representations and warranties) and (d) would be willing to
increase its proposal by $0.25 per Share, all provided, however, that it be
given exclusive negotiating rights for the next two days. Representatives of
the Company also contacted Bosch in an effort to determine whether Bosch
would be willing to increase its offer. However, Bosch made clear that it was
unwilling to do so.

   The Board considered the responses of Bosch and Company A on December 8,
and reconvened on the morning of December 9 to give the matter further
consideration. Following such consideration, the Board determined that (i)
there was no assurance that Company A's board would approve a transaction
with the Company, (ii) there was no assurance that Company A could complete
its due diligence promptly or that, as a result of such due diligence,
Company A would not revise its price or impose further conditions on its
proposal, (iii) there remained a risk that satisfactory financing for the
transaction could not be obtained and (iv) Bosch had indicated that it would
consider withdrawing its offer if the Company did not indicate a willingness
to proceed promptly to negotiate a definitive agreement with Bosch. In light
of (1) the small financial difference between the Bosch offer and the
potential improved proposal by Company A, (2) the greater degree of certainty
that the transaction with Bosch would be completed, (3) the risk that Bosch's
proposal might be withdrawn if it was not pursued and (4) the advantages of
the Bosch transaction with respect to the Company's customers, employees and
other constituencies, on December 9 the Board determined to reject Company
A's demand for exclusive negotiating rights and to proceed with negotiations
with Bosch.

   On December 10, Bosch and its advisors met with the Company and its
advisors to negotiate final documentation with respect to the Bosch offer. As
part of such negotiations, and at the Board's request, Bosch reduced by $1
million the size of the termination fee it had proposed to be included in the
Merger Agreement. Later the same day, the Board met and determined to
reaffirm its conclusions reached on December 8. Shortly afterward, Bosch and
the Company executed the Merger Agreement and the Option Agreement, and
Messrs. Kostusiak and Lederer entered into the Voting and Option Agreement
with Bosch.

   On December 20, 2000, Purchaser commenced the Offer.

 REASONS FOR THE BOARD'S RECOMMENDATION; FACTORS CONSIDERED.

   In approving the Merger Agreement and the other transactions contemplated
thereby, including the Offer and the Merger, and recommending that all
holders of Shares accept the Offer and tender their Shares pursuant to the
Offer, approve the Merger and approve and adopt the Merger Agreement, the
Board considered a number of factors including:

   1.      The historical market prices, price to earnings ratios, EBITDA
           multiples, recent trading activity and trading range of the Shares,
           including the fact that the Offer Price represents (a) a premium

                               18

           of approximately 110% over the $8.5625 closing price of the Shares
           on The Nasdaq Stock Market on October 13, 2000, the last full
           trading day prior to the announcement that Bosch had made a
           proposal to acquire the Company, and (b) a premium of approximately
           39.8% over the $12.875 closing price of the Shares on The Nasdaq
           Stock Market on December 7, 2000, the last full trading day prior
           to the meeting of the Board to approve the Merger Agreement.

   2.      The financial condition, results of operations and cash flows of
           the Company, including the outlook for the Company's third fiscal
           quarter ending December 31, 2000.

   3.      The current national and international economic climate.

   4.      The fairness opinion of Fleet Securities rendered at the meeting of
           the Board held on December 8, 2000 and confirmed in writing on
           December 10, 2000, as well as the analysis of Fleet Securities
           supporting such opinion. The full text of the written opinion of
           Fleet Securities, dated as of December 10, 2000, which sets forth
           the assumptions made, matters considered and limitations on the
           review undertaken, is attached to this Schedule 14D-9 and is filed
           as Exhibit 7 hereto and is incorporated herein by reference.
           Holders of Shares are urged to read such opinion carefully in its
           entirety.

   5.      The fact that the consideration to be paid in the Offer and the
           Merger is all cash.

   6.      The transaction has been structured to include a first-step cash
           tender offer for all of the outstanding Shares, thereby enabling
           shareholders who tender their Shares to promptly receive $18 per
           Share in cash, and the fact that any public shareholders who do not
           tender their Shares will receive the same cash price per Share in
           the subsequent Merger.

   7.      The likelihood of the consummation of the transactions contemplated
           by the Merger Agreement due to (a) the fact that the Offer and the
           Merger are not subject to any consents and approvals, other than
           the filing required under the Hart Scott Rodino Antitrust
           Improvements Act of 1976, as amended, (b) the fact that Purchaser's
           obligations under the Offer are not subject to any financing
           condition, (c) the representations of Bosch in the Merger Agreement
           that it or Purchaser has available sufficient funds to consummate
           the Offer and the Merger and (d) Bosch's financial strength.

   8.      The fact that the Offer provides shareholders of the Company with
           liquidity to dispose of their Shares which may not be available in
           the public market due to the low level of trading volume of the
           Shares.

   9.      The results of the discussions with certain companies in the
           security industry regarding a possible strategic alliance,
           partnership, business combination, acquisition or similar
           transaction with the Company.

   10.     The fact that since the Company's public disclosure that it would
           be exploring strategic alternatives to enhance shareholder value,
           no other party had presented the Company with an acquisition
           proposal that, taken as a whole, would be more favorable to the
           Company and its shareholders than the Offer and the Merger,
           including timing and certainty of completion.

   11.     The other provisions of the Merger Agreement, including the
           respective representations, warranties and covenants proposed by
           the parties, and the response of Bosch to the proposed merger
           agreement prepared by the Company's counsel as compared to the
           responses of Company A and Company B.

   12.     That, pursuant to the Merger Agreement, the Company and its
           representatives may (a) furnish to any third party who might submit
           an unsolicited Takeover Proposal (as defined in the Merger
           Agreement) (a "Third Party Acquiror") information concerning the
           Company's business, properties or assets, and (b) participate in
           discussions or negotiations with such Third Party Acquiror
           concerning an unsolicited Takeover Proposal, if in each case the
           Board determines, in good faith, based on advice of its financial
           advisor and counsel, that such Takeover Proposal is a Superior
           Proposal.

                               19

   13.     That, pursuant to the Merger Agreement, the Board has the right,
           prior to the purchase of Shares pursuant to the Offer, to terminate
           the Merger Agreement in order to accept a Superior Proposal, if (a)
           the Board has determined, in good faith, based upon the advice of
           legal counsel, that it is required to accept such proposal to
           discharge properly its fiduciary duties under applicable law, (b)
           the Company gives Bosch five full business days advance notice of
           the Company's intention to accept such Superior Proposal and (c)
           the Company, prior to termination, pays to Bosch a $3 million
           termination fee, plus up to $1 million in itemized expenses.

   14.     The aggregate amount of the termination fee and the expense
           reimbursement fee, relative to other transactions, and the
           circumstances under which such fees would be payable to Bosch
           pursuant to the Merger Agreement, appear reasonable taking into
           account that (a) Bosch was only willing to make its proposal on the
           express condition that the Company agreed to such a termination fee
           and expense reimbursement fee upon the terms set forth in the
           Merger Agreement; and (b) the belief of the Board that the
           aggregate amount of the termination fee and the expense
           reimbursement fee, which amount to approximately $0.56 per Share,
           would not be likely to deter potentially interested third parties
           from pursuing an acquisition of the Company. The Board also
           considered the Stock Option Agreement, and the fact that Bosch was
           only willing to make its proposal on the express condition that the
           Company enter into the Stock Option Agreement.

   15.     That, pursuant to the Merger Agreement, Bosch has agreed that, for
           a one-year period following the Effective Time, Bosch will provide,
           or cause the Surviving Corporation and its subsidiaries and
           successors to provide, those persons who, immediately prior to the
           Effective Time, were employees of the Company or its subsidiaries
           and who continue in such employment following the Effective Time
           ("Continuing Employees"), with benefits that are, in the aggregate,
           not less favorable than those provided to such employees
           immediately prior to the Effective Time.

   16.     The business reputation and capabilities of Bosch and its
           management.

   17.     The possible loss of customers and employees due to the uncertainty
           surrounding the future direction of the Company, and the Board's
           concern that the opportunity to maximize value for shareholders
           might be in jeopardy as a result of such uncertainty.

   18.     That, while the Offer gives the Company's shareholders the
           opportunity to realize a premium over the price at which the Shares
           traded immediately prior to the public announcement of the
           execution of the Merger Agreement, the consummation of the Offer
           and the Merger would eliminate the opportunity for the Company's
           shareholders to participate in the future growth and profits of the
           Company.

   The foregoing discussion of information and factors considered and given
weight by the Board is not intended to be exhaustive, but is believed to
include all of the material factors, both positive and negative, considered
by the Board. In view of the variety of factors considered in connection with
its evaluation of the Offer and the Merger, the Board did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determinations and
recommendations. In addition, individual members of the Board may have given
different weights to different factors.

 INTENT TO TENDER.

   For tax reasons, certain officers of the Company may exercise stock
options and/or sell some of their Shares in the open market between the date
hereof and December 31, 2000. Except as otherwise provided herein, to the
Company's knowledge after reasonable inquiry, all of the Company's executive
officers, directors and affiliates currently intend to tender all Shares held
of record or beneficially owned by them pursuant to the Offer. The foregoing
does not include any Shares over which, or with respect to which, any such
executive officer, director or affiliate acts in a fiduciary or
representative capacity or is subject to the instructions of a third party
with respect to such tender.

 OPINION OF INVESTMENT BANKER.

   On July 21, 2000, the Company retained Fleet Securities as its exclusive
financial advisor in connection with the Company's efforts to explore various
strategic alternatives to enhance value for the

                               20

Company's shareholders. On December 10, 2000, at a meeting of the Company's
Board, Fleet Securities delivered to the Board its written opinion that the
cash consideration to be paid to shareholders of the Company (other than
Purchaser, Parent or any of their affiliates) was fair, from a financial
point of view, to such shareholders. The Fleet Securities opinion was: (i)
made as of December 10, 2000; (ii) based on certain assumptions; and (iii)
limited in its coverage to a specified scope of review.

   No limitations were imposed by the Board on Fleet Securities with respect
to the investigations made or procedures followed by it in furnishing its
opinion. The cash consideration to be paid to holders of Shares in the Offer
and the Merger was determined through negotiations between the managements of
the Company and Parent.

   The full text of the Fleet Securities opinion can be found attached to
this Schedule 14D-9 as Exhibit 7. The opinion sets forth, among other things,
the assumptions made, matters considered and limitations on Fleet Securities'
review, and is incorporated into this Schedule 14D-9. This summary of the
Fleet Securities opinion is qualified in its entirety by reference to the
full text of the Fleet Securities opinion, and you are urged to read the
Fleet Securities opinion in its entirety. The Fleet Securities opinion was
prepared for the benefit and use of the Board in its consideration of the
Offer and the Merger. The opinion is not a recommendation to shareholders of
the Company as to whether they should tender their shares or how they should
vote on, or take any other action with respect to, the Merger.

   In connection with Fleet Securities' role as the Company's financial
advisor and the preparation of its opinion, Fleet Securities, among other
things:

   o       reviewed certain publicly available financial statements and other
           business and financial information of the Company;

   o       reviewed certain internal financial statements and other financial
           and operating data concerning the Company prepared by the Company's
           management;

   o       reviewed certain financial forecasts and other forward looking
           financial information prepared by the Company's management;

   o       held discussions with the management of the Company concerning the
           business, past and current operations, financial condition and
           future prospects of the Company;

   o       reviewed the financial terms and conditions set forth in the draft
           Merger Agreement dated December 10, 2000;

   o       reviewed the stock price and trading history of the Company;

   o       compared the financial performance of the Company and the prices
           and trading activity of Shares with that of certain other publicly
           traded companies that it deemed comparable to the Company;

   o       compared the financial terms of the Offer and the Merger with the
           financial terms, to the extent publicly available, of other
           transactions that it deemed relevant and comparable, in whole or in
           part;

   o       considered the equity premiums paid, to the extent publicly
           available, in other transactions that it deemed relevant;

   o       prepared a discounted cash flow analysis of the Company;

   o       prepared a leveraged buyout analysis of the Company;

   o       participated in discussions and negotiations among representatives
           of the Company and Parent and their financial and legal advisors;
           and

   o       made such other studies and inquiries, and reviewed such other
           data, as it deemed relevant.

   In its review and analysis, and in arriving at its opinion, Fleet
Securities assumed and relied on the accuracy and completeness of all of the
financial and other information provided to it (including information
furnished to it orally or otherwise discussed with it by the management of
the Company) or publicly available.

                               21

   Fleet Securities did not attempt to verify or assume responsibility for
verifying any of this information. Fleet Securities relied on the assurances
of management of the Company that they were not aware of any facts that would
make this information inaccurate or misleading. Furthermore, Fleet Securities
did not obtain or make, or assume any responsibility for obtaining or making,
any independent evaluation, physical inspection or appraisal of the
properties, assets or liabilities (contingent or otherwise) of the Company,
nor was Fleet Securities furnished with any such evaluation or appraisal.

   With respect to the forecasted financial performance and projections of
the Company and the assumptions and bases underlying this information that
Fleet Securities reviewed, Fleet Securities assumed that such forecasts and
projections:

   o       had been prepared reasonably and in good faith on the basis of
           reasonable assumptions;

   o       reflected the best available estimates and judgments as to the
           future financial condition and performance of the Company; and

   o       will be realized in the amounts and in the time periods estimated.

   In rendering its opinion, Fleet Securities expressed no view as the
reasonableness of the Company's forecasts and projections or the assumptions
upon which they were based.

   In addition, Fleet Securities assumed that:

   o       the Offer and Merger will be consummated in accordance with the
           terms of the Merger Agreement without material changes to or
           alterations of these terms; and

   o       the historical financial statements of the Company reviewed by it
           had been prepared and fairly presented in accordance with U.S.
           generally accepted accounting principles consistently applied.

   Fleet Securities relied as to all legal matters relevant to rendering its
opinion on the advice of its counsel.

   Although developments following the date of the Fleet Securities opinion
may affect the conclusion expressed in the opinion, the engagement letter
between the Company and Fleet Securities does not require Fleet Securities to
update, revise or reaffirm its opinion. The Fleet Securities opinion is
necessarily based upon market, economic and other conditions as in effect on,
and information made available to Fleet Securities as of, the date of the
Fleet Securities opinion. The Company's shareholders should understand that
subsequent developments may affect the conclusion expressed in the Fleet
Securities opinion if this opinion were rendered as of a later date. Fleet
Securities disclaims any undertaking or obligation to advise any person of
any change in any matter affecting the opinion which may come or be brought
to its attention after the date of the opinion. The Fleet Securities opinion
is limited to solely the fairness, from a financial point of view as of the
date of the opinion, of the cash consideration to be paid to the Company's
shareholders in the Offer and the Merger.

   Fleet Securities did not express any opinion with respect to:

   o       the relative merits of the Offer and the Merger and the other
           business strategies that the Company's Board has considered or may
           be considering;

   o       the underlying business decision of the Board to proceed with the
           Offer and the Merger;

   o       the value of any employee agreement or other arrangement entered
           into in connection with the Offer and the Merger; and

   o       any tax or other consequences to the Company or its shareholders
           that might result from the Offer and the Merger.

   The following is a summary of the material financial analyses performed by
Fleet Securities in connection with rendering its opinion. This summary is
not a complete description of all of the analyses performed by Fleet
Securities. Portions of the information in this section are presented in a
tabular form. In order to better understand the financial analyses performed
by Fleet Securities, these tables must be read together with the text of each
summary. The Fleet Securities opinion is based on all of the various analyses
performed by Fleet Securities considered as a whole, and no particular
portion of the analyses has any merit standing alone.

                               22

   Fleet Securities employed several analytical methodologies in performing
its analyses and rendering its opinion. No one method of analysis should be
regarded as critical to the overall conclusion reached by Fleet Securities.
Each analytical technique has inherent strengths and weaknesses, and the
nature of the available information may further affect the value of
particular techniques. The conclusions reached by Fleet Securities are based
on all analyses and factors taken as a whole and also on application of Fleet
Securities' own experience and judgment. These conclusions may involve
significant elements of subjective judgment and qualitative analysis. Because
of this, Fleet Securities did not provide an opinion as to the value or merit
standing alone of any one or more parts of its analysis. In performing its
analyses, Fleet Securities considered general economic, market and financial
conditions and other matters, many of which are beyond the control of the
Company.

   No company, business or transaction compared in the comparable companies
analysis or precedent transaction analysis is identical to the Company or the
Offer and the Merger. Accordingly, an analysis of the results of the
comparable companies analysis or precedent transaction analysis is not
entirely mathematical. It involves complex considerations and judgments
concerning differences in financial and operating characteristics and other
factors that could affect the acquisition, public trading and other values of
the comparable companies, precedent transactions or the business segment,
company or transactions to which they are being compared.

   Comparable Companies Analysis.  Using publicly-available information,
Fleet Securities analyzed certain financial, trading and valuation statistics
for certain publicly-traded companies that were deemed by Fleet Securities to
have business and operating profiles and characteristics similar to those of
the Company. These statistics were the aggregate net debt and equity values
as a multiple of earnings before interest and taxes and as a multiple of
earnings before interest, taxes, depreciation and amortization for the most
recent twelve months, and equity values as a multiple of earnings per share
for the most recent twelve months and calendar year 2001. These comparable
companies were comprised of AXCESS, Inc., Checkpoint Systems, Inc., Cohu,
Inc., CompuDyne Corporation, Interlogix, Inc., Lifeline Systems, Inc.,
Lo-Jack Corporation, Napco Security Systems, Inc., Sensormatic Electronics
Corporation, Silent Witness Enterprises, Ltd., Ultrak, Inc. and Vicon
Industries, Inc. Fleet Securities then derived potential values for the
Company by applying multiples based upon these comparable companies to the
historical results and the projections provided by the Company's management.

   The table below summarizes the range of the multiples described above as
derived by Fleet Securities, as well as the implied value for the Company's
Common Stock. Fleet Securities also derived implied valuation ranges for the
Shares on a premium adjusted basis, utilizing a 41% premium derived from its
precedent transaction analysis described below.



                                AGGREGATE NET DEBT AND EQUITY
                                    VALUE AS A MULTIPLE OF                      AGGREGATE EQUITY
                                  MOST RECENT TWELVE MONTHS'                 VALUE AS A MULTIPLE OF
                          ------------------------------------------ --------------------------------------
                          EARNINGS BEFORE  EARNINGS BEFORE INTEREST,     MOST RECENT     ESTIMATED CALENDAR
                              INTEREST        TAXES, DEPRECIATION       TWELVE MONTHS    YEAR 2000 EARNINGS
                             AND TAXES         AND AMORTIZATION      EARNINGS PER SHARE      PER SHARE
                          --------------- -------------------------  ------------------ ------------------
                                                                            
Multiple                       9.0-11.5x              6.0-7.5x             16.0-20.0x         12.0-15.0x
Implied Value Per Share    $ 8.39-$11.23         $ 8.72-$11.36          $  7.15-$8.93      $ 8.03-$10.04
Premium Adjusted Implied
 Value Per Share           $11.83-$15.83         $12.30-$16.01          $10.08-$12.60      $11.33-$14.16


   Precedent Transaction Analysis.  Using publicly-available information,
Fleet Securities analyzed the implied cash flow multiples paid in prior
acquisition transactions involving companies deemed by Fleet Securities to
have business and operating profiles similar to those of the Company. The
precedent transactions cited in this analysis are set forth in the following
table.

                               23



 DATE                   ACQUIRED COMPANY                              ACQUIRING COMPANY
- ----------------------  --------------------------------------------- --------------------------------
                                                                
December 4, 2000        Simplex Time Recorder Co.                     Tyco International Ltd.
August 11, 2000         BI Inc.                                       Kohlberg & Co.
August 3, 2000          Burns International                           Securitas AB
July 27, 2000           Continental Instruments LLC                   Napco Security Systems, Inc.
December 20, 1999       Pittway Corp.                                 Honeywell International Inc.
September 29, 1999      Interlogix, Inc. (ITI Technologies, Inc.)     SLC Technologies, Inc.
February 19, 1999       Pinkerton's Inc.                              Securitas AB
January 1, 1999         Alarmguard Holdings Inc.                      Tyco International Ltd.


   In analyzing these precedent transactions, Fleet Securities evaluated the
consideration paid in such transactions as a multiple of the preceding twelve
months' earnings before interest, taxes, depreciation and amortization and
the preceding twelve months' earnings before interest and taxes. Fleet
Securities then derived potential values for the Company by applying
multiples based upon these precedent transactions to the historical Company
results.

   The table below summarizes the ranges of multiples described above as
derived by Fleet Securities, as well as the implied value for the Company's
Common Stock.



                            MOST RECENT TWELVE MONTHS'
                         EARNINGS BEFORE INTEREST, TAXES,      MOST RECENT TWELVE MONTHS'
                           DEPRECIATION AND AMORTIZATION   EARNINGS BEFORE INTEREST AND TAXES
                         -------------------------------- ----------------------------------
                                                    
Multiple                              10.0-12.0x                        15.0-18.0x
Implied Value Per Share            $15.74-$19.25                     $15.19-$18.59


   Discounted Cash Flow Analysis.  Fleet Securities performed a discounted
cash flow analysis of the Company using estimates of after-tax free cash
flows for the fiscal years 2002 to 2006. The purpose of the discounted cash
flow analysis was to establish a range for the potential equity value of the
Company by determining a range for the net present value of the Company's
projected future cash flows.

   Fleet Securities derived a value based upon two methodologies. Under one
methodology, Fleet Securities first discounted the projected, after-tax free
cash flows through December 31, 2006 using discount rates ranging from 14% to
18%. After-tax free cash-flows were calculated as the after-tax operating
earnings of the Company adjusted to add back non-cash expenses and deduct
uses of cash not reflected in the income statement. Fleet Securities then
added to the present value of the after-tax free cash flows the terminal
value of the Company at March 31, 2006, discounted back to the present at the
same discount rates. The terminal value was computed by multiplying the
projected earnings before interest, taxes, depreciation and amortization for
the Company in fiscal year 2006 by exit multiples ranging from 5.0x to 7.0x.
The range of exit multiples selected reflects Fleet Securities' judgment as
to an appropriate range of multiples at the end of the reference period.

   Under the second methodology, Fleet Securities discounted the projected,
after-tax free cash flows through perpetuity, assuming perpetual growth rates
ranging from 3.0% to 4.0% per year. Fleet Securities used the same 14% to 18%
discount rates. The following tables summarize the resulting implied values
per share for the Shares.



                                                           
                         Projected Cash Flows 2002-2006
                              with Terminal Value
Discount Rates             Terminal Value Multiples               Implied Value Per Share
- --------------             ------------------------              -----------------------
14%-18%                            5.0X-7.0X                         $15.00-$24.50

                        Projected Cash Flows in Perpetuity
Discount Rates             Assumed Annual Growth Rate             Implied Value Per Share
- --------------             --------------------------            -----------------------
14%-18%                                 3%-4%                          $12.50-$21.00


                               24

   Leveraged Acquisition Analysis.  Fleet Securities also performed a
leveraged acquisition analysis to ascertain the price that would be
attractive to a potential financial buyer based upon current market
conditions. For this analysis, Fleet Securities reviewed financial
projections of the Company's management and assumed the following in
performing this analysis:

   o       a Company capital structure comprised of approximately $92.5
           million in equity and $50.7 million in debt;

   o       an equity investment that would achieve a 32.5% rate of return over
           a five-year period; and

   o       exit multiples ranging from 5.0x to 7.0x fiscal 2006 projected
           earnings before interest, taxes, depreciation and amortization.

   Based on these assumptions, Fleet Securities derived a range of values per
Share of $12.14 to $14.84.

   Other Factors and Comparative Analyses.  In rendering its opinion, Fleet
Securities considered certain other factors and conducted certain other
comparative analyses, including a review of:

   o       the history of trading prices and volumes for the Shares from
           December 8, 1997 to December 8, 2000; and

   o       the low and high closing prices per share of the Shares over the
           prior 52 weeks, as a 253 day moving average and on the date 180
           days before the initial offer of $14 by Parent was disclosed.

   Based upon these trading ranges, Fleet Securities derived an implied value
per share for the Shares, both on an unadjusted basis and on a premium
adjusted basis, utilizing the 41% premium derived from its precedent
transaction analysis described above.

   The table below summarizes the implied value for the Shares, based upon
these trading ranges.



                                            RECENT TRADING    PREMIUM ADJUSTED
                                                 RANGE         TRADING RANGE
                                           ----------------- ------------------
                                             LOW      HIGH      LOW      HIGH
                                           ------- --------  -------- --------
                                                          
52 Week Closing Price.....................  $8.00    $13.00   $11.28    $18.33
253 Day Moving Average....................  $9.49    $10.49   $13.38    $14.79
Closing Date 180 Days Before Parent
 Offer....................................  $8.50    $10.75   $11.99    $15.16


   While the summary above describes certain analyses and factors that Fleet
Securities deemed material in its presentation to the Company's Board, it is
not a comprehensive description of all analyses and factors considered by
Fleet Securities. The preparation of a fairness opinion is a complex process
that involves various determinations as to the most appropriate and relevant
methods of financial analyses and the application of these methods to the
particular circumstances. Therefore, this kind of opinion cannot readily be
summarized. Fleet Securities believes that its analyses must be considered as
a whole. Selecting only portions of its analyses and of the factors
considered by it, would create an incomplete view of the evaluation process
underlying the Fleet Securities opinion.

   The analyses performed by Fleet Securities do not predict actual values or
future results, which may be significantly more or less favorable than those
suggested by Fleet Securities' analyses. Accordingly, analyses relating to
the value of a business do not purport to be appraisals or to reflect the
prices at which the business actually may be purchased. Furthermore, Fleet
Securities is not expressing an opinion with respect to the prices at which
shares of the Company's common stock may be traded at any future time.

   The engagement letter between Fleet Securities and the Company provides
that Fleet Securities is entitled to receive a fee for its services as
described in Item 5 below. The Company has also agreed to reimburse Fleet
Securities for certain of its out-of-pocket expenses, including legal fees.
In addition, the Company has agreed to indemnify Fleet Securities and its
affiliates and any director, employee or agent of Fleet Securities or any of
its affiliates, or any person controlling Fleet Securities or its affiliates,
for certain losses, claims, damages, expenses and liabilities relating to or
arising out of Fleet Securities rendering a fairness opinion to the Company.
The Company and Fleet Securities negotiated the terms of the engagement
letter, which the Company and Fleet Securities believe are customary in
transactions of this nature, at arm's length, and the Board was aware of such
arrangements.

                               25

   In the ordinary course of its business, Fleet Securities or one of its
affiliates may trade in the Company's securities for its own account and the
accounts of its customers and, accordingly, may at any time hold a long or
short position in the Company's securities. Fleet National Bank, an affiliate
of Fleet Securities, has provided senior debt financing and other commercial
banking services to the Company, for which it has received customary banking
fees.

   The Company retained Fleet Securities based on Fleet Securities'
experience in preparing and rendering fairness opinions in connection with
mergers and acquisitions and in securities valuations generally. Fleet
Securities, a nationally recognized investment-banking firm, is frequently
engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, negotiated underwritings, secondary
distributions and securities, private placements and other purposes.

ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

   Fleet Securities was retained pursuant to the terms of a letter agreement,
dated July 21, 2000 (the "Letter Agreement"), to provide financial advisory
and investment banking services to the Company. In connection with the
Board's consideration of the Merger Agreement, Fleet Securities rendered a
fairness opinion (the "Opinion") to the Board. The Opinion is attached hereto
as Exhibit 7.

   Pursuant to the Letter Agreement, the Company agreed to pay Fleet
Securities a non-refundable cash retainer fee of $100,000, to be credited
against subsequent transaction fees due. For each Sale Transaction (as
defined below) completed, the Company agreed to pay Fleet Securities a fee
equal to $750,000 plus one and one quarter of one percent (1.25%) of the
aggregate transaction value (including, among other things, cash, securities
and notes paid or issued and debt assumed) in excess of $50 million.

   The term "Sale Transaction" in the Letter Agreement means a transaction or
series of related transactions resulting in the sale of 50% or more of the
Shares or assets of the Company. If less than 50% of the Shares or assets of
the Company were sold in a transaction, the Company would be required to pay
Fleet: (i) 3%, if the aggregate transaction value was no greater than $10
million; (ii) 2.50%, if the aggregate transaction value was in excess of $10
million up to $20 million; (iii) 2.00%, if the aggregate transaction value
was in excess of $20 million up to $30 million; (iv) 1.75%, if the aggregate
transaction value was in excess of $30 million up to $40 million; and (v)
1.5%, if the aggregate transaction value was in excess of $40 million.

   Additionally, pursuant to the Letter Agreement, for each Purchase
Transaction (as defined below) completed, the Company agreed to pay Fleet
Securities a fee equal to $750,000 plus one and one quarter of one percent
(1.25%) of the aggregate transaction value (including, among other things,
cash, securities and notes paid or issued and debt assumed in excess of $50
million). The term "Purchase Transaction" in the Letter Agreement means a
transaction or series of related transactions resulting in the purchase of
50% or more of the voting stock or assets of the target company. If less than
50% of the Shares or assets of the Company were purchased in a transaction,
the Company would be required to pay Fleet: (i) 3%, if the aggregate
transaction value was no greater than $10 million; (ii) 2.50%, if the
aggregate transaction value was in excess of $10 million up to $20 million;
(iii) 2.00%, if the aggregate transaction value was in excess of $20 million
up to $30 million; (iv) 1.75%, if the aggregate transaction value was in
excess of $30 million up to $40 million; and (v) 1.5%, if the aggregate
transaction value was in excess of $40 million.

   The Letter Agreement also provides that the Company shall pay Fleet
Securities $250,000 for delivery of the first opinion to the Company, to be
credited against any subsequent transaction fees due, with payment for
subsequent opinions to be negotiated. If Fleet Securities provides the
Company advice and assistance in connection with the adoption of potential
anti-takeover strategies, the Company shall pay Fleet a fee to be negotiated
by the parties. The Company also agreed to reimburse Fleet Securities for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees).

   Pursuant to the Letter Agreement, the Company also agreed to indemnify
Fleet Securities and its affiliates and any director, employee or agent of
Fleet Securities or any of its affiliates, or any person controlling Fleet
Securities or its affiliates, for certain losses, claims, damages, expenses
and liabilities relating to or arising out of the services provided by Fleet
Securities to the Company.

                               26

   Except as described above, neither the Company nor any other person acting
on its behalf currently intends to employ, retain or compensate any other
person to make solicitations or recommendations to the shareholders on its
behalf concerning the Offer or the Merger.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

   On November 6, 2000, the Stock Option Committee of the Board granted, with
an exercise price of $11.875 per share, stock options to purchase: (i) 5,000
Shares to Jeffrey M. Swan, Vice President, Engineering of the Company; (ii)
3,000 Shares to Bruce E. Becker, Chairman, Detection Systems Australia Pty.
Limited (a subsidiary of the Company); and (iii) an aggregate of 24,500
Shares to five non-officer employees. On December 8, 2000, the Company
granted stock options to purchase an aggregate of 750 Shares to two
non-officer employees with an exercise price of $13 per Share.

   On November 27, 2000, the Company issued from its treasury 8,400 and 933
Shares to Meinrad J. Formosa, Vice President, International Engineering and
European General Manager of Detection Systems International, Inc. (a
subsidiary of the Company), and John H. Chappell (unaffiliated with the
Company), respectively, in satisfaction of the remaining payment obligations
in connection with the Company's acquisition of Electronic Design &
Manufacturing Pty. Limited in January 1998.

   On November 29, 2000, each of Donald R. Adair and Mortimer B. Fuller, III,
directors of the Company, exercised options to purchase 2,000 Shares pursuant
to the Company's Non-Employee Director Stock Option Plan as follows: (i)
1,200 Shares at a price of $8.688 per Share and (ii) 800 Shares at a price of
$9.656 per share. Such Shares were issued from the Company's treasury.

   On November 30, 2000, the Company newly issued 370,057 Shares to a trustee
on behalf of participants in the Company's deferred compensation plans, all
of which were previously allocated to such participants under such plans.

   On December 15, 2000, Frank J. Ryan, Vice President, Secretary and
Treasurer of the Company, donated 750 Shares to the Rochester Area Community
Foundation.

   Except as set forth in the preceding paragraphs, during the past 60 days,
neither the Company nor any subsidiary of the Company nor, to the best of the
Company's knowledge, any executive officer, director or affiliate of the
Company has effected a transaction in the Shares.

ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

   Except as set forth in this Schedule 14D-9, the Company is not engaged in
any negotiations in response to the Offer which relates to or would result in
(i) a tender offer or other acquisition of the Company's securities by the
Company, any of its subsidiaries or any other person; (ii) an extraordinary
transaction, such as a merger, reorganization or liquidation, involving the
Company or any subsidiary of the Company; (iii) a purchase, sale or transfer
of a material amount of assets of the Company or any subsidiary of the
Company; or (iv) any material change in the present dividend rate, policy,
indebtedness or capitalization of the Company. Except as set forth in this
Schedule 14D-9, there are no transactions, board resolutions, agreements in
principle or signed contracts in response to the Offer that relate to or
would result in one or more of the matters described above.

ITEM 8. ADDITIONAL INFORMATION.

 SHORT FORM MERGER.

   Under Section 905 of the NYBCL, if the number of Shares in the Offer,
together with the number of Shares owned by Parent and the Purchaser,
constitutes 90% or more of the outstanding Shares, on a fully diluted basis,
the Purchaser will be able to effect the Merger without a meeting of the
Company's shareholders. However, if the Purchaser does not acquire at least
90% of the outstanding Shares in such manner pursuant to the Offer or
otherwise, a meeting of the Company's shareholders will be required under the
NYBCL to effect the Merger. Upon successful completion of the Offer, the
Purchaser would have a sufficient number of Shares to approve the Merger
without the vote of any other shareholder of the Company.

                               27

 APPRAISAL RIGHTS.

   No appraisal rights are available in connection with the Offer. However,
if the Merger is consummated, shareholders of the Company at the time the
Merger is consummated may, under certain circumstances, have certain rights
to dissent and demand appraisal of their Shares under Section 623 of the
NYBCL. Dissenting shareholders who comply with the requisite statutory
procedures under the NYBCL would be entitled to a judicial determination and
payment of the "fair value" of their Shares as of the close of business on
the day prior to the date of shareholder authorization of the Merger,
together with interest thereon, at such rate as the court finds equitable,
from the date the Merger is consummated until the date of payment. Under the
NYBCL, in fixing the fair value of the Shares, a court would consider the
nature of the transaction giving rise to the shareholders' right to receive
payment for Shares and its effects on the Company and its shareholders, the
concepts and methods then customary in the relevant securities and financial
markets for determining fair value of Shares of a corporation engaging in a
similar transaction under comparable circumstances, and all other relevant
factors. The foregoing summary of the rights of objecting shareholders does
not purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights. The
preservation and exercise of dissenters' rights require strict adherence to
the applicable provisions of the NYBCL.

                               28

ITEM 9. EXHIBITS.



 EXHIBIT NO.                                            DESCRIPTION
- ---------------  -----------------------------------------------------------------------------------------
              
1.               Agreement and Plan of Merger, dated as of December 10, 2000, by and between Robert Bosch
                 GmbH and Detection Systems, Inc., dated as of December 10, 2000.+

2.               Amendment Agreement, dated as of December 14, 2000, by and among Robert Bosch GmbH, Bosch
                 Security Systems Corporation, a New York corporation, and Detection Systems, Inc.+

3.               Stock Option Agreement, dated as of December 10, 2000, between Robert Bosch GmbH and
                 Detection Systems, Inc. (incorporated by reference to Exhibit 10-b of the Current Report
                 on Form 8-K, filed by the Company with the SEC on December 12, 2000).

4.               Voting and Option Agreement, dated as of December 10, 2000, by and among Robert Bosch
                 GmbH, Karl H. Kostusiak and David B. Lederer (incorporated by reference to Exhibit A the
                 Schedule 13D/A filed by Karl H. Kostusiak with the SEC on December 13, 2000).

5.               Pages 18-30 of the Proxy Statement dated November 20, 2000, relating to the Company's
                 2000 annual meeting of shareholders (incorporated by reference to the Proxy Statement on
                 Schedule 14A, filed by the Company with the SEC on November 20, 2000).

6.               Article Five of the Company's By-Laws, as amended and restated by the Company's Board of
                 Directors on February 21, 2000 (incorporated by reference to Exhibit 3 to the Current
                 Report on Form 8-K, filed by the Company with the SEC on February 28, 2000).

7.               Opinion of Fleet Securities, Inc., dated December 10, 2000.*

8.               Press release issued by the Company on December 11, 2000 (incorporated by reference to
                 the Schedule 14A, filed by the Company with the SEC on December 11, 2000).

9.               Letter to shareholders from Karl H. Kostusiak, dated December 12, 2000 (incorporated by
                 reference to the Schedule 14A, filed by the Company with the SEC on December 12, 2000).

10.              Letter to shareholders from Karl H. Kostusiak, dated December 20, 2000.*


- ------------
*     Included in the copy of the Schedule 14D-9 mailed to the Company's
      shareholders and filed herewith.

+     Filed herewith.

                               29

                                  SIGNATURE

   After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.



                                 By:  /s/ Frank J. Ryan
                                      ----------------------------------------
                                      Name: Frank J. Ryan
                                      Title:  Vice President, Secretary and
                                      Treasurer



Dated: December 20, 2000

EX-1

                                                                       Exhibit 1

                          AGREEMENT AND PLAN OF MERGER


                                 by and between


                                ROBERT BOSCH GMBH


                                       and


                             DETECTION SYSTEMS, INC.


                                   dated as of


                                December 10, 2000






                          AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of December 10, 2000, by and between
Robert Bosch GmbH, a limited liability company organized under the laws of
Germany ("Parent"), and DETECTION SYSTEMS, INC., a New York corporation (the
"Company"). Certain capitalized terms used in this Agreement have the meanings
ascribed to them in Article VIII.

     WHEREAS, the Board of Directors of each of Parent and the Company have
approved, and deem it fair to, advisable and in the best interests of their
respective shareholders to consummate, the acquisition of the Company by Parent
and Purchaser upon the terms and subject to the conditions set forth herein;

     WHEREAS, in furtherance thereof, it is proposed that a wholly owned
Subsidiary of Parent to be organized under the laws of New York ("Purchaser")
make a cash tender offer to acquire all shares of the issued and outstanding
common stock, $.05 par value, of the Company (the "Shares") for $18 per share,
net to the seller in cash, upon the terms and subject to the conditions set
forth herein;

     WHEREAS, also in furtherance of such acquisition, the Board of Directors of
each of Parent and the Company have approved this Agreement and the Merger (as
herein defined) following the Offer (as herein defined) pursuant to which
Purchaser shall merge with and into the Company and outstanding Shares shall be
converted into the right to receive the Offer Price (as herein defined) in cash,
without interest, all in accordance with the NYBCL (as herein defined) and upon
the terms and subject to the conditions set forth herein;

     WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein; and

     WHEREAS, the Company and Parent desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the
Merger;



                                        1





     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, the parties hereto,
intending to be legally bound hereby, agree as follows:

                                    ARTICLE I

                                    THE OFFER

     Section 1.1 The Offer.

          (a) As promptly as practicable (but in no event later than 10 business
days after the public announcement of the execution hereof), Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for all of
the outstanding Shares at a price of $18 per Share, net to the seller in cash
(such price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"), subject to the conditions set forth in
Annex A hereto.

          (b) The obligations of Purchaser to commence the Offer and to accept
for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement and the conditions set forth in Annex A hereto.

          (c) Purchaser expressly reserves the right to modify the terms of the
Offer; provided, that, without the Company's prior written consent, Purchaser
shall not decrease the Offer Price, change the form of consideration to be paid
in the Offer or decrease the number of Shares sought or amend any other
condition of the Offer in any manner adverse to the holders of the Shares (other
than with respect to insignificant changes or amendments and subject to the
penultimate sentence of this Section 1.1) or impose additional conditions
without the written consent of the Company; provided further, however, that, if
on the initial scheduled expiration date of the Offer, which shall be 20
business days after the date that the Offer is commenced, all conditions to the
Offer shall not have been satisfied or waived, Purchaser may, from time to time
until such time as all such conditions are satisfied or waived, in its sole
discretion, extend the expiration date. In addition, the Offer Price may be
increased and the Offer may be extended to the extent required by applicable Law
in connection with such increase, in each case without the consent of the
Company. Purchaser shall, on the terms and subject to the prior satisfaction or
waiver of the



                                        2





conditions of the Offer, accept for payment and pay for Shares validly tendered
as promptly as practicable; provided, however, that if, as of the initial
expiration date of the Offer, the Shares validly tendered and not withdrawn
pursuant to the Offer equal less than 90% of the outstanding Shares, Purchaser
may elect to provide a subsequent offering period pursuant to Rule 14d-11 under
the Exchange Act.

     Section 1.2 Company Actions.

          (a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, has (i) determined that each of the Agreement, the Offer and the
Merger (as defined in Section 2.1) are fair to and in the best interests of the
shareholders of the Company, (ii) approved this Agreement, the Offer, the
acquisition of Shares pursuant to the Offer and the Merger for purposes of
Section 912 of the NYBCL (the "Section 912 Approval"), (iii) received the
written opinion of the Company's financial advisor, Fleet Securities, Inc., a
New York corporation ("Fleet"), to the effect that the Offer Price to be
received by holders of Shares pursuant to the Offer and the Merger Consideration
(as defined herein) pursuant to the Merger is fair to the shareholders of the
Company from a financial point of view, (iv) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger
(collectively, the "Transactions") and (v) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser and approve and adopt this Agreement and the Merger. The Company has
been advised by each of its directors and by each executive officer who as of
the date hereof is actually aware of the Transactions that each such Person
currently intends to tender pursuant to the Offer all Shares owned by such
Person.

          (b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listings or computer files containing the names and addresses
of all holders of record of the Shares as of a recent date, and shall furnish
Purchaser with such additional information (including, but not limited to,
updated lists of holders of the Shares and their addresses, mailing labels and
lists of security positions) and such assistance as Purchaser or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Subject to the requirements of applicable Law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Purchaser and its affiliates and
associates shall hold in confidence the information contained in any such
labels, listings and files and all other information delivered pursuant to this
Section 1.2(b), will use such information only in connection with the


                                        3





Offer and the Merger and, if this Agreement shall be terminated, will deliver to
the Company all copies, extracts or summaries of such information in their
possession or the possession of their agents.

     Section 1.3 SEC Documents.

          (a) On the date the Offer is commenced, Parent and Purchaser shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule TO in accordance with the Exchange Act with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule TO"). The Schedule TO will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). The Company and its counsel shall be given a reasonable opportunity
to review and comment upon the Schedule TO and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to shareholders of
the Company. Concurrently with the filing of the Schedule TO by Parent and
Purchaser, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9"), which shall, except as otherwise provided herein, contain the
recommendation referred to in clause (v) of Section 1.2(a) hereof, and the
Company shall also file therewith the information required to be distributed to
the shareholders of the Company pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected to the Com pany's Board of Directors pursuant to Section
1.4 hereof

          (b) Parent and Purchaser will take all steps necessary to ensure that
the Offer Documents, and the Company will take all steps necessary to ensure
that the Schedule 14D-9 and the information required to be distributed to the
shareholders of the Company pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder as is necessary to enable Parent's designees
to be elected to the Company's Board of Directors pursuant to Section 1.4
hereof, will comply in all material respects with the provisions of applicable
federal and state securities Laws. Each of Parent and Purchaser will take all
steps necessary to cause the Offer Documents, and the Company will take all
steps necessary to cause the Schedule 14D-9 and the information required to be
distributed to the shareholders of the Company pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof, to be filed with the


                                        4





SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal and state securities Laws and Parent or
Purchaser will supply the Company any information with respect to either of them
and their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. Each of Parent and Purchaser, on the one hand, and the
Company, on the other hand, will promptly correct any information provided by it
for use in the Offer Documents and the Schedule 14D-9 if and to the extent that
it shall have become false and misleading in any material respect and Purchaser
will take all steps necessary to cause the Offer Documents, and the Company
will take all steps necessary to cause the Schedule 14D-9, as so corrected to be
filed with the SEC and to be disseminated to holders of the Shares, in each
case as and to the extent required by applicable federal and state securities
Laws. Parent and its counsel shall be given a reasonable opportunity to review
and comment upon the Schedule 14D-9 and all amendments and supplements thereto
and the information required to be distributed to the shareholders of the
Company pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder prior to their filing with the SEC or dissemination to shareholders
of the Company. The Company agrees to provide Parent and its counsel with copies
of any written comments that the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and each of Parent and Purchaser agrees to provide the Company and
its counsel with copies of any written comments that Parent, Purchaser or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.

     Section 1.4 Directors.

          (a) Promptly after the purchase of and payment for any Shares by
Purchaser or any of its affiliates as a result of which Purchaser and its
affiliates own beneficially at least a majority of then outstanding Shares,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Company's Board of Directors as is equal to the
product of the total number of directors on such Board (giving effect to the
increase in the size of such Board pursuant to this Section 1.4) multiplied by
the percentage that the number of Shares beneficially owned by Purchaser
(including Shares so accepted for payment) bears to the total number of Shares
then outstanding. In furtherance thereof, the Company shall, upon request of
Parent, promptly either (at the election of the Company) increase the size of
its Board of Directors or use its best efforts to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Company's Board of
Directors, and the Company shall take all actions available to the Company to
cause


                                        5





such designees of Parent to be so elected or appointed. At such time, the
Company shall also take all action necessary to cause Persons designated by
Parent to constitute at least the same percentage (rounded up to the next whole
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary of the Company and (iii) each committee (or similar body) of
each such board.

          (b) Notwithstanding the provisions of this Section 1.4, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time (as defined in Section 2.2 hereof) be, Continuing Directors. From and after
the time, if any, that Parent's designees constitute a majority of the Company's
Board of Directors, any amendment or modification of this Agreement, any
amendment to the Company's Certificate of Incorporation or By-Laws inconsistent
with this Agreement, any termination of this Agreement by the Company, any
extension of time for performance of any of the obligations of Parent or
Purchaser hereunder (except as permitted under Section 1.1(c) hereof), any
waiver of any condition to the Company's obligations hereunder or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the Continuing Directors of the
Company, which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of the Company to approve the
actions contemplated hereby and the Transactions and the full Board of Directors
of the Company. The provisions of this Section 1.4 are in addition to and shall
not limit any rights which Purchaser, Parent or any of their affiliates may have
as a holder or beneficial owner of Shares as a matter of applicable Law with
respect to the election of directors or otherwise.

                                   ARTICLE II

                                   THE MERGER

     Section 2.1 The Merger. (a) Upon the terms and subject to the conditions of
this Agreement, and in accordance with the NYBCL, at the Effective Time (as
defined in Section 2.2 hereof), the Company and Purchaser shall consummate a
merger (the "Merger") pursuant to which (x) Purchaser shall be merged with and
into the Company and the separate corporate existence of Purchaser shall
thereupon cease and (y) the Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the Laws of the State of New York.


                                        6






          (b) Pursuant to the Merger, at the Effective Time, the Certificate of
Incorporation and By-Laws of the Purchaser, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation and by-laws of the
Surviving Corporation, each until thereafter changed or amended as provided
therein and by the NYBCL, except that the name shall be changed to "Detection
Systems, Inc.".

          (c) The directors of Purchaser at the Effective Time shall be the
initial directors of the Surviving Corporation until their respective successors
are duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.

          (d) The Merger shall have the effects specified in the applicable
provisions of the NYBCL.

     Section 2.2 Effective Time. Subject to the terms and conditions of this
Agreement, Parent, Purchaser and the Company will cause a certificate of merger
or, if applicable, a certificate of ownership and merger (as applicable, the
"Certificate of Merger"), to be executed and filed on the date of the Closing
(as defined in Section 2.3) (or on such other date as Parent and the Company may
agree) with the department of state of the State of New York (the "Department of
State") as provided in the NYBCL. The Merger shall become effective on the date
on which the Certificate of Merger has been duly filed with the Department of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."

     Section 2.3 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m., local time, on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof (the "Closing Date"), at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, New York, 10036, unless another date or place is agreed to in writing by
the parties hereto.

                                        7






     Section 2.4 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Purchaser:

          (a) Purchaser Capital Stock. Each issued and outstanding share of
common stock of Purchaser shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.

          (b) Cancellation of Treasury Stock and Purchaser-Owned Stock. All
Shares that are owned by the Company or any Subsidiary of the Company and any
Shares owned by Parent, Purchaser or any Subsidiary of Parent or Purchaser shall
be cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.

          (c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.4(b)) shall be converted
into the right to receive the Offer Price in cash, without interest (the "Merger
Consideration"). All such Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.5, without interest.

     Section 2.5 Exchange of Certificates.

          (a) Paying Agent. Prior to the Effective Time, Parent shall designate
a bank, trust company or other Person, reasonably acceptable to the Company, to
act as agent for the holders of the Shares in connection with the Merger (the
"Paying Agent") to receive the funds to which holders of the Shares shall become
entitled pursuant to Section 2.4(c). At the Closing, Parent shall deliver to the
Paying Agent funds in an amount necessary for the payment of the Merger
Consideration as provided herein. All interest earned on such funds shall be
paid to Parent.

          (b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates") whose Shares were
converted into the right to receive the Merger Consideration pursuant to Section
2.4, (i) a letter of

                                        8





transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form not inconsistent with
this Agreement as Parent may specify) and (ii) instructions for use in
surrendering the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, Parent shall cause
the Paying Agent to pay to the holder of such Certificate the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
In the event of a surrender of a Certificate representing Shares which are not
registered in the transfer records of the Company under the name of the Person
surrendering such Certificate, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
Taxes required by reason of payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.5, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration which the holder thereof has the right to receive in
respect of such Certificate pursuant to the provisions of this Article II. No
interest shall be paid or will accrue on the Merger Consideration payable to
holders of Certificates pursuant to the provisions of this Article II.

          (c) Transfer Books; No Further Ownership Rights in Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.

          (d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation and Parent
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect

                                        9





to the Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation or the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.

          (e) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall pay in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration pursuant to this Agreement.

     Section 2.6 Withholding Taxes. Parent and Purchaser shall be entitled to
deduct and withhold, or cause the Paying Agent to deduct and withhold, from the
Offer Price or the Merger Consideration payable to a holder of Shares pursuant
to the Offer or the Merger any withholding and stock transfer Taxes and such
amounts as are required under the Code, or any applicable provision of state,
local or foreign Tax law. To the extent that amounts are so withheld by Parent
or Purchaser, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent or Purchaser.

     Section 2.7 Stock Options. (a) At or immediately prior to the Effective
Time, each then outstanding option and warrant to purchase any shares of capital
stock of the Company (in each case, an "Option") shall be cancelled by the
Company. In consideration of such cancellation of Options with an exercise price
of less than the Offer Price, the Company (or, at Parent's option, the
Purchaser) shall pay to such holders of Options an amount in respect thereof
equal to the product of (A) the excess, if any, of the Offer Price over the
exercise price of each such Option and (B) the number of Shares previously
subject to the Option immediately prior to its cancellation (such payment to be
net of withholding taxes and without interest).

          (b) In connection with such cancellation, the Company shall use its
best efforts to obtain such consents from holders of Company Options as are
required pursuant to the plans (the "Option Plans") listed in Schedule 3.3(c) of
the disclosure schedule delivered by the Company to Parent at or prior to the
execution of this Agreement (the "Disclosure Schedule"). The Company shall take
all other


                                       10





actions necessary and appropriate so that all stock option, other equity based
plans or deferred compensation plans maintained with respect to the Shares,
including, without limitation, the Option Plans, shall terminate as of the
Effective Time (except for the payments to be made out of the cash assets
remaining in the deferred compensation plans (including interest thereon) to be
paid to the participants, at the option of the Company, either (i) in a lump sum
upon termination of the plans or (ii) one-third in each of January 2002, January
2003 and January 2004) and the provisions in any other Benefit Plan providing
for the issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as of
the Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of an Option or any participant in any
Option Plan or other Benefit Plan shall have any right thereunder to acquire any
capital stock of the Company, Parent, Purchaser or the Surviving Corporation.

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Parent and Purchaser as follows:

     Section 3.1 Organization, Standing and Corporate Power. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is organized and
has the requisite corporate power and authority to carry on its business as it
is now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect on the Company. The Company has made available to Parent complete and
correct copies of the Certificate of Incorporation and By-Laws of the Company,
in each case as amended to the date of this Agreement.

     Section 3.2 Subsidiaries. (a) Schedule 3.2(a) of the Disclosure Schedule
includes the names, jurisdictions of incorporation and capitalization of all of
the Subsidiaries of the Company. All the outstanding shares of capital stock of,



                                       11





or other equity interests in, each Subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned directly or indirectly
by the Company, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests).

          (b) The Company does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity
(including through joint ventures or partnership arrangements) other than (i)
the Subsidiaries of the Company or (ii) as disclosed on Schedule 3.2(b) of the
Disclosure Schedule.

     Section 3.3 Capital Structure. The authorized capital stock of the Company
consists of 24,000,000 Shares. As of the date hereof, (i) 6,726,615 Shares were
issued and outstanding, (ii) 502,685 Shares were reserved for issuance upon
exercise of outstanding Options, and (iii) 200,108 Shares were issued and are
held in the Company's treasury. Except as set forth above or on Schedule 3.3(a)
of the Disclosure Schedule, as of the date of this Agreement: (i) no shares of
capital stock or other voting securities of the Company are issued, reserved for
issuance or outstanding; (ii) there are no stock appreciation rights, phantom
stock units, restricted stock grants, contingent stock grants or Benefit Plans
which grant awards of any of the foregoing, and there are no other outstanding
contractual rights to which the Company is a party the value of which is based
on the value of Shares; (iii) all outstanding shares of capital stock of the
Company are, and all Shares which may be issued will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights; and (iv) there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above or in Schedule
3.3(b) of the Disclosure Schedule, as of the date of this Agreement, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
of its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding contractual obligations of the Company
or any of its Subsidiaries, to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries. Schedule
3.3(c) of the Disclosure Schedule accurately sets



                                       12





forth information regarding the current exercise price, date of grant and number
of outstanding Options for each holder of Options pursuant to any Company Option
Plan. Following the Effective Time, no holder of Options will have any right to
receive shares of common stock of the Surviving Corporation upon exercise of
Options.

     Section 3.4 Authority; Noncontravention; Company Action. The Company has
the requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding Shares, to consummate the Merger contemplated by this Agreement. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Transactions have been duly authorized by all
necessary corporate action on the part of the Company, subject to approval of
this Agreement by the holders of a majority of the outstanding Shares. This
Agreement has been duly executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding obligation of Parent and Purchaser,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth on Schedule 3.4 of the
Disclosure Schedule, the execution, delivery and performance of this Agreement
do not, and the consummation of the Transactions (including the changes in the
composition of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries under,
or result in the termination of, or require that any consent be obtained or any
notice be given with respect to, (i) the Certificate of Incorporation or By-Laws
of the Company or the comparable charter or organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or Permit applicable
to the Company or any of its Subsidiaries or their respective properties or
assets or (iii) any Law applicable to the Company or any of its Subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
or (iii), any such conflicts, violations, defaults, rights, Liens, losses of a
material benefit, consents or notices that, individually or in


                                       13





the aggregate, would not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or any
other Person, is required by the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Transactions, except for (i) the filings,
permits, authorizations, consents and approvals set forth in Schedule 3.4 of the
Disclosure Schedule, or as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act, the HSR Act, any
applicable state securities or "blue sky" Laws and the NYBCL, and (ii) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, (x) impair, in any material respect, the ability of the
Company to perform its obligations under this Agreement, (y) prevent or
significantly delay the consummation of the Transactions or (z) have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole. The Board
of Directors of the Company has taken all appropriate action to approve pursuant
to Section 912(c)(1) of the NYBCL this Agreement and any other agreement
contemplated hereby and the consummation of the Transactions.

     Section 3.5 SEC Documents; Financial Statements. The Company has filed all
SEC Documents required to be filed by it since April 1, 1999 (the "Company's SEC
Documents"). As of their respective dates, (i) the Company's SEC Documents
complied in all material respects with the requirements of the Securities Act,
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such documents, and (ii) none of the
Company's SEC Documents contained at the time of their filing any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company's SEC Documents, as of the
dates of such documents, were true and complete and complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") in the United
States applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly presented the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).


                                       14






     Section 3.6 Schedule 14D-9; Offer Documents; Proxy Statement. Neither the
Schedule 14D-9, any other document required to be filed by the Company with the
SEC in connection with the Transactions, nor any information supplied by the
Company for inclusion in the Offer Documents shall, at the respective times the
Schedule 14D-9, any such other filings by the Company, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to shareholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will not, on the date the Proxy Statement
(including any amendment or supplement thereto) is first mailed to shareholders
of the Company, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not misleading or shall, at the time of the Special Meeting (as
hereinafter defined) or at the Effective Time, omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Meeting which shall have become
false or misleading in any material respect. The Schedule 14D-9, any other
document required to be filed by the Company with the SEC in connection with the
Transactions and the Proxy Statement will, when filed by the Company with the
SEC, comply as to form in all material respects with the applicable provisions
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
the statements made in any of the foregoing documents based on and in conformity
with information supplied by or on behalf of Parent or Purchaser in writing
specifically for inclusion therein.

     Section 3.7 Absence of Certain Changes or Events. Except as set forth in
the Company's SEC Documents or on Schedule 3.7 of the Disclosure Schedule, since
April 1, 2000, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course, and (i) there has not been any Material
Adverse Change in the Company and its Subsidiaries, taken as a whole and (ii)
neither the Company nor any of its Subsidiaries has taken any of the actions
prohibited by Section 5.1 or otherwise acted in such a way as to impair, prevent
or impede the consummation of the Transactions.

     Section 3.8 Litigation. Except as specifically set forth in the Company's
SEC Documents or on Schedule 3.8 of the Disclosure Schedule, there are (i) no
suits, actions or proceedings pending or, to the Knowledge of the Company,

                                       15





threatened against the Company or any of its Subsidiaries, (ii) no complaints,
lawsuits, charges or other proceedings pending or, to the Knowledge of the
Company, threatened in any forum by or on behalf of any present or former
employee of the Company or any of its Subsidiaries, any applicant for employment
or classes of the foregoing alleging breach of any express or implied contract
of employment, any applicable Law governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship that, individually or in the aggregate, could have a
Material Adverse Effect on the Company, (iii) no judgments, decrees, injunctions
or orders of any Governmental Entity or arbitrator outstanding against the
Company or any of its Subsidiaries, and (iv) no orders, writs, judgments,
injunctions, decrees, determinations or awards applicable to the Trademarks or
the Other Intellectual Property.

     Section 3.9 Absence of Changes in Benefit Plans; SEC Disclosure. Except as
disclosed on Schedule 3.9 of the Disclosure Schedule: (i) there has not been any
adoption or amendment by the Company or any of its Subsidiaries or any ERISA
Affiliate (as defined in Section 3.10 hereof) of any Benefit Plan (as defined in
Section 3.10 hereof) since April 1, 2000; and (ii) neither the Company nor any
of its Subsidiaries or any ERISA affiliate has any formal plan or commitment to
create any additional Benefit Plan or modify or change any existing Benefit Plan
that would affect any employee or terminated employee of the Company or any
Company Subsidiary. All employment, consulting, severance, termination, change
in control or indemnification agreements, arrangements or understandings between
the Company or any of its Subsidiaries and any current or former officer or
director of the Company or any of its Subsidiaries which are required to be
disclosed in the Company's SEC Documents have been disclosed therein.

     Section 3.10 Employee Benefits; ERISA. (a) Schedule 3.10(a) of the
Disclosure Schedule contains a true and complete list of each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, employment,
severance or termination pay, health insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan, program and domestic
agreement or arrangement, and each other employee benefit plan, program and
domestic agreement or arrangement, other than a non-material fringe benefit
plan, sponsored, maintained or contributed to or required to be contributed to
(at any time during the past six years) by the Company or any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that is a member of a "controlled group" within the meaning of
section 4001 of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA") of which the
Company or a Subsidiary is a member or which is under "common control" within
the meaning of Section 4001 of ERISA, with the

                                       16





Company or a Subsidiary, for the benefit of any employee or former employee of
the Company, its Subsidiaries or any ERISA Affiliate (or, with respect to
employment agreements and arrangements, any domestic employee thereof), whether
formal or informal (the "Benefit Plans").

          (b) With respect to each Benefit Plan, the Company has made available
a true and complete copy thereof (including all amendments thereto), as well as
true and complete copies of the two most recent annual reports, if required
under ERISA, with respect thereto; the two most recent actuarial reports, if
required under ERISA, with respect thereto; the two most recent reports prepared
with respect thereto in accordance with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for Pensions; the most recent Summary
Plan Description, together with each Summary of Material Modifications, if
required under ERISA with respect thereto; if the Benefit Plan is funded through
a trust or any third party funding vehicle, the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof;
and the most recent determination letter received from the Internal Revenue
Service with respect to each Benefit Plan that is intended to be qualified under
section 401 of the Code.

          (c) No liability to the Pension Benefit Guaranty Corporation ("PBGC")
under Title IV of ERISA has been incurred by the Company, its Subsidiaries or
any ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company, its Subsidiaries or any ERISA Affiliate of incurring a liability under
such Title, other than liability for premiums due the PBGC (which premiums have
been paid when due). Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable Law, including but
not limited to ERISA and the Code.

          (d) The PBGC has not instituted proceedings to terminate any Benefit
Plan and no condition exists that presents a material risk that such proceedings
will be instituted.

          (e) No Benefit Plan is subject to Section 302 or Title IV of ERISA.

          (f) Neither the Company, nor any Subsidiary of the Company, nor any
trust created thereunder, nor, to the Knowledge of the Company, any trustee or
administrator thereof has engaged in a transaction in connection with which the
Company or any Subsidiary of the Company, any such trust, or any trustee or


                                       17





administrator thereof, or any party dealing with any Benefit Plan or any such
trust could be subject to either a material civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a material tax imposed pursuant to section
4975 or 4976 of the Code.

          (g) All employee Benefit Plans that are subject to the laws of any
jurisdiction outside the United States are in material compliance with such
applicable laws, including relevant tax laws, and the requirements of any trust
deed under which they are established, and all required contributions thereto
have been made or have been accrued in the Company's financial statements.

          (h) Each Benefit Plan which is intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code and no
event has occurred to cause the loss of such qualified or exempt status.

          (i) Except as set forth in Schedule 3.10(i) of the Disclosure
Schedule, no Benefit Plan provides health, death or medical benefits (whether or
not insured) with respect to current or former employees of the Company or its
Subsidiaries beyond their retirement or other termination of service (other than
(a) coverage mandated by applicable Law or (b) benefits the full cost of which
is borne by the current or former employee (or his beneficiary)).

          (j) There are no pending, anticipated or, to the Knowledge of the
Company, threatened claims by or on behalf of any Benefit Plan, by any employee
or beneficiary covered under any such Benefit Plan, or otherwise involving any
such Benefit Plan (other than routine claims for benefits).

     Section 3.11 Taxes.

          (a) Each of the Company and each of its Subsidiaries has duly and
timely filed (or has had duly and timely filed on its behalf) all Tax Returns
required to be filed by it, and all such Tax Returns are to the Knowledge of the
Company true, complete and correct. Each of the Company and each of its
Subsidiaries has paid (or has had paid on its behalf) all Taxes due and owing by
them and the most recent financial statements contained in the Company's SEC
Documents reflect adequate reserves in accordance with generally accepted
accounting principles for all Taxes payable by the Company or its Subsidiaries
for all taxable periods and portions thereof through the date of such financial
statements.

                                       18






          (b) Each of the Company and each of its Subsidiaries has complied with
all applicable Laws relating to the payment and withholding of Taxes (including,
without limitation, the withholding of Taxes pursuant to Sections 1441 and 1442
of the Code or similar provisions under any applicable foreign Laws) and have,
within the time and in the manner prescribed by applicable Laws, withheld from
employee wages and paid over to the proper Governmental Entity all amounts
required to be so withheld and paid over under all applicable Laws.

          (c) Except as set forth on Schedule 3.11(c) of the Disclosure
Schedule, (i) no deficiencies for any Taxes have been threatened, proposed,
asserted or assessed (either in writing or orally) against the Company or any of
its Subsidiaries, (ii) no Governmental Entity is conducting or proposing to
conduct an audit with respect to Taxes or any Tax Returns of the Company or any
of its Subsidiaries, (iii) no extension or waiver of the statute of limitations
with respect to Taxes or any Tax Return has been granted by the Company or any
of its Subsidiaries, which remains in effect, (iv) neither the Company nor any
of its Subsidiaries is a party to any agreement or arrangement to allocate,
share or indemnify another party for Taxes, (v) there are no Liens for Taxes
upon the assets of the Company or any of its Subsidiaries, except for Liens for
Taxes not yet due, (vi) all Tax deficiencies which have been claimed, proposed
or asserted against the Company or any of its Subsidiaries have been fully paid
or finally settled, and no issue has been raised in any examination by the
Taxing Authority, which by application of similar principles, could be expected
to result in the proposal or assertion of a Tax deficiency against the Company
or any of its Subsidiaries for another year not so examined, (vii) the Company
has filed, as a common parent corporation of an affiliated group (within the
meaning of Section 1504(a) of the Code) a consolidated return for federal income
tax purposes on behalf of such affiliated group and (viii) no power of attorney
has been granted by or with respect to the Company or any of its Subsidiaries
with respect to any matter relating to Taxes.

          (d) Schedule 3.11(d) of the Disclosure Schedule sets forth the taxable
years of the Company or any of its Subsidiaries as to which the respective
statutes of limitations with respect to Taxes have not expired and, with respect
to such taxable years, those years for which examinations have been completed,
those years for which examinations are presently being conducted, those years
for which examinations have not been initiated and those years for which
required Returns have not yet been filed.




                                       19




     Section 3.12 Compliance with Applicable Laws.


     Except as set forth on Schedule 3.12 of the Disclosure Schedule:

          (a) The Company and each of its Subsidiaries have complied and are
presently complying in all material respects with all applicable Laws, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except such non-compliance that
(i) has not and will not prevent the Company from carrying on its business
substantially as now conducted, or (ii) would not be reasonably expected to (x)
result in a Material Adverse Effect on the Company or (y) materially impair the
ability of the parties hereto to consummate the Transactions.

          (b) Each of the Company and its Subsidiaries has in effect, or has
timely filed applications for, all material Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business
substantially as now conducted and there are no appeals nor any other actions
pending to revoke any such Permits, and there has occurred no material default
or violation under any such Permits.

          (c) Each of the Company and its Subsidiaries is, and has been, and
each of the Company's former Subsidiaries, while a Subsidiary of the Company,
was in compliance in all material respects with all applicable Environmental
Laws, and there are no circumstances or conditions that would be reasonably
likely to prevent or interfere with compliance by the Company or its
Subsidiaries in the future with Environmental Laws (or Permits issued
thereunder).

          (d) Neither the Company nor any Subsidiary of the Company has received
any written claim, demand, notice, complaint, court order, administrative order
or request for information from any Governmental Entity or private party,
alleging violation of, or asserting any noncompliance with or liability under or
potential liability under, any Environmental Laws, except for matters which are
no longer threatened or pending or for which the Company or its Subsidiaries are
not subject to further requirements pursuant to an administrative or court
order, judgment or settlement agreement.

          (e) During the period of ownership or operation by the Company and its
Subsidiaries of any of their respective current or previously owned or leased
properties, there have been no Releases of Hazardous Material in, on, under or
affecting such properties and none of the Company or its Subsidiaries have
disposed of any Hazardous Material or any other substance either on said owned
or leased properties or at other properties, in a manner that has led, or could
reasonably be


                                       20





anticipated to lead, to a Release. Prior to the period of ownership or operation
by the Company and its Subsidiaries of any of their respective current or
previously owned or leased properties, to the Knowledge of the Company, no
Hazardous Material was disposed of at such current or previously owned or leased
properties, and there were no Releases of Hazardous Material in, on, under or
affecting any such property.

          (f) Neither the Company nor any of its Subsidiaries has entered into
any agreement that may require it to pay to, reimburse, guarantee, pledge,
defend, indemnify, or hold harmless any Person for or against any Environmental
Liabilities and Costs.

          (g) The Company has made available to Parent true and correct copies
of all environmental studies and reports in its possession or in the possession
of its representatives, agents or consultants, prepared within the last five
years, relating to (i) the Company's and its Subsidiaries' compliance with
Environmental Laws; (ii) the environmental condition of the Company's and its
Subsidiaries' currently owned or leased properties, including, but not limited
to, the extent of any on-site contamination at any of such properties, results
of investigations at such properties, remedial action plans for such properties,
and asbestos surveys; and (iii) the environmental condition of any properties
formerly owned or operated by the Company or any of its Subsidiaries, or of any
other location at which the Company or any of its Subsidiaries is subject to an
environmental claim, including, but not limited to, the extent of any on-site
contamination at any such properties, results of investigations at such
properties and remedial action plans at such properties.

     Section 3.13 Intellectual Property. The Company and its Subsidiaries own or
are validly licensed, or otherwise possess legally enforceable rights, to use
the Trademarks and Other Intellectual Property and the consummation of the
Transactions will not alter or impair such ability in any respect. The Company
and its Subsidiaries are the sole and exclusive owners of the Trademarks and
Other Intellectual Property, free and clear of all Liens and free of all
licenses except those set forth on Schedule 3.13(a) of the Disclosure Schedule.
There are no oppositions, cancellations, invalidity proceedings, interferences
or re-examination proceedings presently pending with respect to the Trademarks
and Other Intellectual Property. The conduct of the business of the Company and
its Subsidiaries and the Trademarks and Other Intellectual Property do not
infringe any rights of any Person, and, except as set forth on Schedule 3.13(b)
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has
received any written notice from any other Person pertaining to or challenging
the right of the Company or any of its Subsidiaries to use any of the Trademarks
or Other Intellectual Property. To the Company's Knowledge,

                                       21





no third party is infringing upon any of the Trademarks or Other Intellectual
Property. Neither the Company nor any of its Subsidiaries has made any claim of
a violation or infringement by others of its rights to or in connection with the
Trademarks and Other Intellectual Property which is still pending.

     Section 3.14 Properties. Each of the Company and each of its Subsidiaries
has sufficiently good and valid title to, or an adequate leasehold interest in,
its material properties and assets (including the Real Property) in order to
allow it to conduct, and continue to conduct, its business as currently
conducted in all material respects. Except as set forth on Schedule 3.14 of the
Disclosure Schedule: (i) such material tangible properties and assets (including
the Real Property) are sufficiently free of Liens to allow the Company and each
of its Subsidiaries to conduct, and continue to conduct, its business as
currently conducted in all material respects and the consummation of the
Transactions will not alter or impair such ability in any material respect; and
(ii) the Company and/or its Subsidiaries have good, valid, marketable and fee
simple title to all the Fee Property, free and clear of all Liens.

     Section 3.15 Contracts. (a) Except as set forth in the Company's SEC
Documents or Schedule 3.15(a) of the Disclosure Schedule, neither the Company
nor any of its Subsidiaries is a party to or bound by (i) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC), (ii) any voting or other agreement governing how any Shares shall be
voted, (iii) any material agreement with any shareholders of the Company, (iv)
any acquisition, merger, asset purchase or sale agreement or (v) any contract or
other agreement which would prohibit or materially delay the consummation of the
Merger or any of the Transactions (all contracts of the type described in
clauses (i) - (v) being referred to herein as "Company Material Contracts").
Each Company Material Contract is valid and binding on the Company (or, to the
extent a Subsidiary of the Company is a party, such Subsidiary) and is in full
force and effect, and the Company and each Subsidiary of the Company have, in
all material respects, performed all obligations required to be performed by
them to date under each Company Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Neither the Company nor any Subsidiary of the
Company knows of, or has received notice of, any violation or default under
(nor, to the Knowledge of the Company, does there exist any condition which with
the passage of time or the giving of notice or both would result in such a
violation or default under) any Company Material Contract.


                                       22






          (b) Except as disclosed in the Company's SEC Documents or on Schedule
3.15(b) of the Disclosure Schedule or as provided for in this Agreement, neither
the Company nor any of its Subsidiaries is a party to any oral or written (i)
employment or consulting agreements not terminable on thirty (30) days' or less
notice, (ii) union or collective bargaining agreement, or (iii) agreement with
any executive officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of its Subsidiaries of the nature contemplated by this Agreement.

     Section 3.16 Labor Relations. Except to the extent set forth in the
Company's SEC Documents or Schedule 3.16 of the Disclosure Schedule, (i) the
Company and each of its Subsidiaries is in material compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment, employment of aliens in the United States, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable Law; (ii) there is no labor strike, slowdown, stoppage or lockout
actually pending, or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries.

     Section 3.17 Voting Requirements. The affirmative vote of the holders of a
majority of all the Shares entitled to vote approving this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the Transactions.

     Section 3.18 Brokers. No broker, investment banker, financial advisor or
other Person, other than Fleet, the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any of its Affiliates. The
Company has made available to Parent true and correct copies of all agreements
between the Company and Fleet, including, without limitations, any fee
arrangements.

     Section 3.19 Opinion of Financial Advisor. The Company has received the
written opinion of Fleet, to the effect that, as of the date of this Agreement,
the consideration to be received in the Offer and the Merger by the Company's
shareholders is fair to the Company's shareholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent. The Company has been
authorized by



                                       23



Fleet to permit the inclusion of such opinion in its entirety in the Offer
Documents and the Schedule 14D-9 and the Proxy Statement, so long as such
inclusion is in form and substance reasonably satisfactory to Fleet.

     Section 3.20 Sales in Germany. The Company and its Subsidiaries did not
derive revenues in excess of DM 3 million from sales in Germany during the
Company's fiscal year ended March 31, 2000.


                                   ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES OF
                              PARENT AND PURCHASER

     Parent and Purchaser represent and warrant to the Company as follows,
provided that the representations and warranties by and with respect to
Purchaser shall apply only from and after the time Purchaser is formed pursuant
to Section 5.10 hereof:

     Section 4.1 Organization, Standing and Corporate Power. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction in which each is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Parent and Purchaser is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on Parent.

     Section 4.2 Authority; Noncontravention. Parent and Purchaser have the
requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly authorized by all necessary corporate action on the
part of Parent and Purchaser, as applicable. This Agreement has been duly
executed and delivered by Parent and Purchaser and, assuming this Agreement
constitutes the valid and binding obligation of the Company, constitutes a valid
and binding obligation of each such party, enforceable against each such party
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency,


                                       24



reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
The execution and delivery of this Agreement do not, and the consummation of the
Transactions will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien upon any of
the properties or assets of Parent under, (i) the certificate of incorporation
or by-laws of Parent or Purchaser, (ii) any loan or credit agreement note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or Permit
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, or (iii) any Law applicable to Parent or Purchaser or
their respective properties or assets, other than, with respect to clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) impair in any material respect
the ability of Parent and Purchaser to perform their respective obligations
under this Agreement or (y) prevent or impede the consummation of any of the
Transactions. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or any other Person is
required by Parent or Purchaser in connection with the execution and delivery of
this Agreement or the consummation by Parent or Purchaser, as the case may be,
of any of the Transactions, except for (i) the filings, permits, authorizations,
consents and approvals set forth in Schedule 4.2 of the disclosure schedule
delivered by Parent to the Company at or prior to the execution of this
Agreement, or as may be required under, and other applicable requirements of,
the Securities Act, the Exchange Act, the HSR Act, any applicable state
securities or "blue sky" Laws and the NYBCL, and (ii) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent the consummation of or materially impair the ability of
Parent or Purchaser to consummate the Transactions.

     Section 4.3 Proxy Statement; Offer Documents. The Offer Documents and any
other documents to be filed by Parent with the SEC or any other Government
Entity in connection with the Merger and the other Transactions will (in the
case of the Offer Documents and any such other documents filed with the SEC
under the Securities Act or the Exchange Act) comply as to form in all material
respects with applicable provisions of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder. None of the Offer
Documents, any other documents required to be filed by Parent or Purchaser with
the SEC in

                                       25



connection with the Transactions, nor any information supplied by Parent or
Purchaser for inclusion in the Schedule 14D-9 or in the information required to
be distributed to the shareholders of the Company pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof shall, at the respective times the Offer Documents or any
amendments and supplements thereto, any such other filings by Parent or
Purchaser are filed with SEC or are first published, sent or given to
shareholders of the Company, as the case may be, or, in the case of the Proxy
Statement, on the date the Proxy Statement is first mailed to shareholders of
the Company, contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
are made, not misleading or shall, at the time of the Special Meeting (as
defined in Section 5.3) or at the Effective Time, omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Special Meeting which shall have
become false or misleading in any material respect. Notwithstanding the
foregoing, neither Parent nor Purchaser makes any representation or warranty
with respect to the statements made in any of the foregoing documents based on
and in conformity with information supplied by or on behalf of the Company in
writing specifically for inclusion therein.

     Section 4.4 Operations of Purchaser. Purchaser is a wholly owned Subsidiary
of Parent and was formed solely for the purpose of engaging in the Transactions
and has not engaged in any business activities or conducted any operations other
than in connection with the Transactions.

     Section 4.5 Brokers. No broker, investment banker, financial advisor or
other Person, other than Arnhold and S. Bleichroeder, Inc., the fees and
expenses of which will be paid by Parent or Purchaser, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
Parent, Purchaser or any of their Affiliates.

     Section 4.6 Sufficient Funds. Either Parent or Purchaser has available
sufficient funds to purchase all of the Shares outstanding on a fully diluted
basis at the Offer Price and to pay all fees and expenses related to the
Transactions.




                                       26





                                    ARTICLE V

                                    COVENANTS

     Section 5.1 Interim Operations of the Company. After the date hereof and
prior to the time the designees of Parent have been elected or appointed to, and
shall constitute a majority of, the Board of Directors of the Company pursu ant
to Section 1.4 or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1, and except (i) as expressly contemplated by
this Agreement, (ii) as set forth on Schedule 5.1 of the Disclosure Schedule or
(iii) as agreed in writing by Parent:

          (a) the Company shall and shall cause its Subsidiaries to carry on
their respective businesses in the ordinary course;

          (b) neither the Company nor any of its Subsidiaries shall, directly or
indirectly, amend its certificate of incorporation or by-laws or similar
organizational documents;

          (c) Representatives of the Company and its Subsidiaries shall confer
at such times as Parent may reasonably request with one or more Representatives
of Parent to report material operational matters and the general status of
ongoing operations;

          (d) neither the Company nor any of its Subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to the Company's capital stock or that of its
Subsidiaries, except that a wholly-owned Subsidiary of the Company may declare
and pay a dividend or make advances to its parent or the Company or (B) redeem,
purchase or otherwise acquire directly or indirectly any of the Company's
capital stock or that of its Subsidiaries; (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares issued upon the exercise of Options outstanding
on the date hereof in accordance with the Option Plans as in effect on the date
hereof; or (iii) split, combine or reclassify the outstanding capital stock of
the Company or of any of the Subsidiaries of the Company;

          (e) except as permitted by this Agreement, neither the Company nor any
of its Subsidiaries shall acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by


                                       27




any other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof (including
entities which are Subsidiaries of the Company or any of the Company's
Subsidiaries) or (B) any assets, including real estate, except purchases in the
ordinary course of business consistent with past practice;

          (f) neither the Company nor any of its Subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by this
Agreement, amend or terminate any Company Material Contract where such amendment
or termination would have a Material Adverse Affect on the Company, or waive,
release or assign any material rights or claims;

          (g) neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of or encumber any property or
assets other than in the ordinary course of business and consistent with past
practice;

          (h) neither the Company nor any of its Subsidiaries shall: (A) enter
into any employment or severance agreement with or grant any severance or
termination pay to any officer, director or key employee of the Company or any
its Subsidiaries; or (B) hire or agree to hire any new or additional executives
or senior officers;

          (i) neither the Company nor any of its Subsidiaries shall, except in
the ordinary course of business and except as required to comply with applicable
Law or contracts disclosed in the Company's SEC Documents or otherwise disclosed
to Parent or expressly provided in this Agreement, (A) adopt, enter into,
terminate, amend or increase the amount or accelerate the payment or vesting of
any benefit or award or amount payable under any Benefit Plan or other
arrangement for the current or future benefit or welfare of any director,
officer or current or former employee, except to the extent necessary to
coordinate any such Benefit Plans with the terms of this Agreement, (B) increase
in any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee, (C) pay any benefit not provided for under any
Benefit Plan, (D) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any Benefit Plans or agreements or awards made thereunder);


                                       28



          (j) neither the Company nor any of its Subsidiaries shall: (A) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with past
practice; (B) materially increase its bank debt; (C) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person, except in the ordinary
course of business and consistent with past practice; (D) make any loans,
advances or capital contributions to, or investments in, any other Person (other
than to wholly owned Subsidiaries of the Company or customary loans or advances
to employees in the ordinary course of business and consistent with past
practice); or (E) enter into any material commitment or transaction except in
the ordinary course of business consistent with past practice;

          (k) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP;

          (l) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company and
its consolidated Subsidiaries; or, except in the ordinary course of business
consistent with past practice, waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its Subsidiaries is a party;

          (m) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing; and

          (n) neither the Company nor any of its Subsidiaries shall take any
action that would result in (i) any of its representations and warranties set
forth in this Agreement that are qualified as to materiality becoming untrue,
(ii) any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions to the
Offer set forth in Annex A not being satisfied (subject to the Company's right
to take action specifically permitted by Section 5.5).

                                       29



     Section 5.2 Access; Confidentiality. The Company shall (and shall cause
each of its Subsidiaries to) afford to the Representatives of Parent reasonable
access on reasonable prior notice during normal business hours, throughout the
period prior to the earlier of the Effective Time or the termination of this
Agreement, to all of its properties, offices, employees, contracts, commitments,
books and records (including but not limited to Tax Returns) and any report,
schedule or other document filed or received by it pursuant to the requirements
of federal or state securities laws and shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent such additional financial and
operating data and other information as to its and its Subsidiaries' respective
businesses and properties as Parent may from time to time reasonably request.
Parent and Purchaser will make all reasonable efforts to minimize any disruption
to the businesses of the Company and its Subsidiaries which may result from the
requests for data and information hereunder and pursuant to Section 5.1(d)
hereof. Except as otherwise agreed to by the other party, Parent and the Company
will be bound by the terms of a letter agreement (the "Confidentiality
Agreement"), dated as of November 11, 2000 between Parent and the Company.

     Section 5.3. Special Meeting, Proxy Statement.

          (a) If required by applicable Law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable Law, its Certificate of Incorporation and By-Laws:

                    (i) as promptly as practicable following the acceptance for
          payment and purchase of Shares by Purchaser pursuant to the Offer duly
          call, give notice of, convene and hold a special meeting of its
          shareholders (the "Special Meeting") for the purposes of considering
          and taking action upon the approval of the Merger and the approval and
          adoption of this Agreement;

                    (ii) prepare and file with the SEC a preliminary proxy or
          information statement relating to the Merger and this Agreement and
          (x) obtain and furnish the information required to be included by the
          SEC in the Proxy Statement (as hereinafter defined) and, after
          consultation with Parent, respond promptly to any comments made by the
          SEC with respect to the preliminary proxy or information statement and
          cause a definitive proxy or information statement, including any
          amendment or supplement thereto (the "Proxy Statement") to be mailed
          to its shareholders at the earliest practicable date; provided that no
          amendment or supplement to the Proxy Statement will be made by the
          Company without consultation with Parent and its counsel

                                       30





         and (y) use its reasonable best efforts to obtain the necessary
         approvals of the Merger and this Agreement by its shareholders; and

                    (iii) unless this Agreement has been terminated in
          accordance with Article VII, subject to its rights pursuant to Section
          5.5, include in the Proxy Statement the recommendation of its Board of
          Directors that shareholders of the Company vote in favor of the
          approval of the Merger and the approval and adoption of this
          Agreement.

          (b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, Purchaser or any of its other Subsidiaries in favor of the approval
and adoption of this Agreement.

          (c) Notwithstanding anything else herein or in this Section 5.3, in
the event that Parent, Purchaser and any other Subsidiaries of Parent shall
acquire in the aggregate a number of the outstanding shares of each class of
capital stock of the Company, pursuant to the Offer or otherwise, sufficient to
enable Purchaser or the Company to cause the Merger to become effective under
applicable Law without a meeting of shareholders of the Company, the parties
hereto shall, subject to Article VI, take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after the
consummation of such acquisition, without a meeting of shareholders of the
Company, in accordance with Section 905 of the NYBCL.

     Section 5.4 Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, including without
limitation Section 5.5 hereto, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer and the Merger, and the other
Transactions, including (i) the preparation and filing with the SEC of the Offer
Documents, the Schedule 14D-9, the information required to be distributed to the
shareholders of the Company pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder as is necessary to enable Parent's designees
to be elected to the Company's Board or Directors pursuant to Section 1.4
hereof, the preliminary Proxy Statement and the Proxy Statement and all
necessary amendments or supplements thereto; (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from any Governmental
Entity and the making of all necessary registrations and filings (including
filings with any Governmental Entity, if any) and the taking of all reasonable
steps as may be

                                       31



necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the Transactions,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed, and (v) the execution
and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement.

          (b) Each of the Company, Parent and Purchaser shall give prompt notice
to the other of (i) any of their representations or warranties contained in this
Agreement becoming untrue or inaccurate in any respect (including receiving
Knowledge of any fact, event or circumstance which may cause any representation
qualified as to Knowledge to be or become untrue or inaccurate in any respect)
or (ii) the failure by them to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by them
under this Agreement; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.

     Section 5.5 No Solicitation. (a) The Company shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize (and shall use its best
efforts not to permit) any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of, the Company or any of
its Subsidiaries to, (i) solicit or initiate, or encourage, directly or
indirectly, any inquiries or the submission of, any Takeover Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information or data with respect to or access to the properties of,
or take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or resolve to approve any Takeover Proposal; provided, that nothing contained in
this Section 5.5 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the Company's
shareholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's shareholders as, in the good faith
judgment of the Company's Board of Directors, after receiving advice from
Outside Legal Counsel, is required under applicable Law, provided that the
Company may not, except as permitted by Section 5.5(b), withdraw or modify, or
propose to

                                       32



withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Takeover Proposal,
or enter into any agreement with respect to any Takeover Proposal. Upon
execution of this Agreement, the Company will immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Notwithstanding the foregoing, prior to
the time of acceptance of Shares for payment pursuant to the Offer, the Company
may furnish information concerning its business, properties or assets to any
Person or group and may negotiate and participate in discussions and
negotiations with such Person or group concerning a Takeover Proposal if:

          (x) such Person or group has submitted a Superior Proposal; and

          (y) the Board of Directors of the Company determines in good faith
based on advice of Outside Legal Counsel that such action is necessary for the
Board of Directors of the Company to comply with its fiduciary duty under
applicable Law.

The Company will promptly (but in no case later than 24 hours) notify Parent of
the existence of any proposal, discussion, negotiation or inquiry received by
the Company regarding any Takeover Proposal, and the Company will immediately
communicate to Parent the terms of any proposal, discussion, negotiation or
inquiry which it may receive regarding any Takeover Proposal and the identity of
the party making such proposal or inquiry or engaging in such discussion or
negotiation, and shall provide Parent with a copy of such proposal or inquiry,
if available. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other Person in connection
with any Takeover Proposal which was not previously provided to Parent. The
Company will keep Parent informed of the status and details of any such Takeover
Proposal and of any amendments or proposed amendments to any Takeover Proposal
and will promptly (but in no case later than 24 hours) notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal has
been made.

          (b) Except as set forth in this Section 5.5(b), neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Purchaser,
the approval or recommendation by the Board of Directors of the Company or any
such committee of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
enter into any agreement with respect to any Takeover Proposal. Notwithstanding
the foregoing,

                                       33



subject to compliance with the provisions of this Section 5.5, if, prior to the
time of acceptance for payment of Shares pursuant to the Offer, the Company's
Board of Directors determines in good faith, based upon the advice of Outside
Legal Counsel, that its failure to do so would constitute a breach of its
fiduciary duties under applicable Law, the Company's Board of Directors may
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time after
the fifth business day following Parent's receipt of written notice (including
by facsimile) from the Company advising Parent that the Board of Directors of
the Company has received a Superior Proposal which it intends to accept,
specifying the material terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal, but only if Parent has
not, within such five business days, made such adjustments to the terms and
conditions of this Agreement as would cause the Superior Proposal to no longer
qualify as such. The Company shall promptly deliver to Parent a copy of the
minutes of any meeting of its Board of Directors at which it determines that a
Takeover Proposal is a Superior Proposal.

     Section 5.6 Publicity. Except as required by Law or as permitted by Section
5.5, so long as this Agreement is in effect, neither the Company, Parent nor any
of their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other Transactions without the prior consultation of the other party.

     Section 5.7 State Takeover Laws. Notwithstanding any other provision in
this Agreement, in no event shall the Section 912 Approval be withdrawn, revoked
or modified by the Board of Directors of the Company. If any state takeover
statute other than Section 912 of the NYBCL becomes or is deemed to become
applicable to the Offer, the acquisition of Shares pursuant to the Offer or the
Merger, the Company shall take all action necessary to render such statute
inapplicable to all of the foregoing.

     Section 5.8 Indemnification and Insurance.

          (a) The Company shall, to the fullest extent permitted under
applicable New York Law, the terms of the Company's Certificate of Incorporation
or By-Laws and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, the Surviving Corporation shall,
to the fullest extent permitted under applicable New York Law, the terms of the
Surviving Corporation's certificate of incorporation or by-laws, indemnify and
hold harmless,

                                 34




each present and former director or officer of the Company and each other person
to whom indemnification is provided under the Company's By-Laws as in effect on
the date of this Agreement (collectively, the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees), judgments, losses,
claims, damages and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted, brought
or filed, (x) arising out of or pertaining to the Transactions or (y) otherwise
with respect to any acts or omissions or alleged acts or omissions occurring at
or prior to the Effective Time, in each case for a period of six years after the
date hereof; provided, further, that the Surviving Corporation may not amend the
terms of its certificate of incorporation or by-laws to be less favorable with
respect to such indemnification than the Company's Certificate of Incorporation
or By-Laws on the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time must be reasonably satisfactory to the Surviving Corporation,
(ii) after the Effective Time, the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received, and (iii) the Surviving Corporation will cooperate in the defense
of any such matter; provided, however, that the Surviving Corporation shall not
be liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed); and provided, further, that, in
the event that any claim or claims for indemnification are asserted or made
within such six year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and all such
claims. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The
indemnity agreements of the Surviving Corporation in this Section 5.8(a) shall
extend, on the same terms to, and shall inure to the benefit of and shall be
enforce able by, each Person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of its
Subsidiaries.

          (b) For a period of three years after the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect, if available, directors'
and officers' liability insurance covering those Persons who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) on terms (including the amounts
of coverage and the amounts of deductibles, if any) that are no less favorable
to the terms now applicable to them under the Company's current policies;
provided, however, that in no event

                               35



shall Parent or the Surviving Corporation be required to expend in excess of
125% of the annual premium currently paid by the Company for such coverage; and
provided further, that, if the premium for such coverage exceeds such amount,
Parent or the Surviving Corporation shall purchase a policy with the greatest
coverage available for such 125% of the annual premium.

          (c) This Section 5.8 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.

     Section 5.9 Employees; Employee Benefits. (a) Parent will, or will cause
the Surviving Corporation to, give all Persons who are employed by the Company
immediately prior to the Effective Time ("Affected Employees") full credit for
purposes of eligibility and vesting, under any tax-qualified employee benefit
plans or arrangements maintained by Parent or the Surviving Corporation for such
Affected Employees' service with Parent or the Surviving Corporation to the same
extent recognized by the Company immediately prior to the Effective Time.

          (b) Parent will, or will cause the Surviving Corporation to, (i) waive
all limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Effective Time under any welfare plan maintained
for the Affected Employees immediately prior to the Effective Time, and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time.

          (c) For a period of one year immediately following the Effective Time,
the coverage and benefits provided to Affected Employees pursuant to employee
benefit plans or arrangements maintained by Parent or Surviving Corporation and
generally applicable to a group or groups of employees (including bonus
arrangements through the end of the fiscal year ending March 31, 2001, after
which Parent will consider appropriate bonus arrangements going forward) shall
be, in the aggregate, not less favorable than those provided to such employees
immediately prior to the Effective Time.

                                       36




          (d) Parent and Purchaser shall cause the Surviving Corporation to
honor all obligations under each of the Company's employment, severance and
retirement contracts set forth on Schedule 5.9(d) of the Disclosure Schedule.

     Section 5.10 Organization of Purchaser. Within five days after the date
hereof, Parent shall (a) cause Purchaser to be organized (b) cause Purchaser's
board of directors to approve this Agreement and the transactions contemplated
hereby as fair to, advisable and in the best interests of its shareholder and
(c) cause Purchaser to acknowledge its obligations hereunder by executing and
delivering a copy of this Agreement to the Company.


                                   ARTICLE VI

                                   CONDITIONS

     Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Effective Time of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable Law:

          (a) this Agreement shall have been approved and adopted by the
requisite vote of the holders of Shares, if required by applicable Law and the
Certificate of Incorporation, in order to consummate the Merger;

          (b) any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, and no statute, rule,
regulation, order, decree or injunction shall have been enacted, promulgated or
issued by any Governmental Entity precluding, restraining, enjoining or
prohibiting consummation of the Merger; and

          (c) Parent, Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer.



                                       37


                                   ARTICLE VII

                                   TERMINATION

     Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the shareholders of the Company:

          (a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the directors pursuant to
Section 1.4, such consent of the Company may only be given if approved by the
Continuing Directors.

          (b) By either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting the
Transactions on the terms contemplated by this Agreement or (ii) any
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the Transactions and such order,
decree, ruling or other action shall have become final and non-appealable.

          (c) By either of Parent or the Company if the Effective Time shall not
have occurred on or before June 30, 2001; provided, that the party seeking to
terminate this Agreement pursuant to this Section 7.1(c) shall not have breached
in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate the Merger on or
before such date.


          (d) By the Company:

                    (i) if the Company has entered into an agreement with
          respect to a Superior Proposal in accordance with Section 5.5(b),
          provided the Company has complied with all provisions thereof,
          including the notice provisions therein, and that it simultaneously
          terminates this Agreement and makes simultaneous payment to the Parent
          of the Expenses and the Termination Fee; or

                    (ii) if Parent or Purchaser shall have terminated the Offer
          or the Offer expires without Parent or Purchaser, as the case may be,
          purchasing any Shares pursuant thereto; provided that the Company may
          not terminate this Agreement pursuant to this Section 7.1(d)(ii) if
          the Company is in material breach of this Agreement;


                                       38


                    (iii) if Parent, Purchaser or any of their affiliates shall
          have failed to commence the Offer on or prior to ten business days
          following the date of the initial public announcement of the Offer;
          provided, that the Company may not terminate this Agreement pursuant
          to this Section 7.1(d)(iii) if the Company is in material breach of
          this Agreement; or

                    (iv) if there shall be a material breach by Parent or
          Purchaser of any of their representations, warranties, covenants or
          agreements contained in this Agreement.

          (e) By Parent or Purchaser:

                    (i) (A) if prior to the purchase of the Shares pursuant to
          the Offer, the Board of Directors of the Company shall have withdrawn,
          or modified or changed in a manner adverse to Parent or Purchaser, its
          approval or recommendation of the Offer, this Agreement or the Merger
          or shall have recommended or approved a Takeover Proposal; or

                    (B) there shall have been a material breach of any provision
          of Section 5.5; or

                    (ii) if Parent or Purchaser shall have terminated the Offer
          without Parent or Purchaser purchasing any Shares thereunder, provided
          that Parent or Purchaser may not terminate this Agreement pursuant to
          this Section 7.1(e)(ii) if Parent or Purchaser is in material breach
          of this Agreement; or

                    (iii) if, due to an occurrence that if occurring after the
          commencement of the Offer would result in a failure to satisfy any of
          the conditions set forth in Annex A hereto, Parent, Purchaser or any
          of their affiliates shall have failed to commence the Offer on or
          prior to ten business days following the date of the initial public
          announcement of the Offer; or

                    (iv) if there shall be a material breach by the Company of
          any of its representations, warranties, covenants or agreements
          contained in this Agreement.

     Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent or Purchaser as provided in Section


                                       39



7.1, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or the Company, other
than the provisions of Sections 3.18, 4.5 and 5.2, this Section 7.2 and Article
VIII and except to the extent that such termination results from the breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.


                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section 8.1 Fees and Expenses. (a) Except as provided below, all fees and
expenses incurred in connection with the Offer, the Merger, this Agreement and
the Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.

          (b) If (x) Parent or Purchaser terminates this Agreement pursuant to
Section 7.1(e)(i) or (y) the Company terminates this Agreement pursuant to
Section 7.1(d)(i), then in each case, the Company shall pay, or cause to be paid
to Parent, at the time of termination, an amount equal to $3,000,000 (the
"Termination Fee").

          (c) If (x) the fee referred to in Section 8.1(b) of this Agreement
becomes payable or (y) Parent or Purchaser terminates this Agreement pursuant to
Section 7.1(e)(iv), then in each case, the Company shall pay, or cause to be
paid to Parent, at the time of termination an amount equal to Parent's and
Purchaser's actual and reasonably documented out-of-pocket expenses incurred by
Parent or Purchaser in connection with the Offer, the Merger, this Agreement and
the consummation of the Transactions, including, without limitation, the fees
and expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as Parent's or Purchaser's financial advisor with respect
to, or arranging or committing to provide or providing any financing for, the
Transactions up to $1,000,000 (the "Expenses").

          (d) Any payments required to be made pursuant to this Section 8.1
shall be made by wire transfer of same day funds to an account designated by
Parent.

     Section 8.2 Amendment and Modification. Subject to applicable Law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company


                                       40


contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall include approvals as contemplated in Section 1.4(c)),
at any time prior to the Closing Date with respect to any of the terms contained
herein; provided, however, that after the approval of this Agreement by the
shareholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration or otherwise
adversely affect the rights of share holders.

     Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.3 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective
Time.

     Section 8.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon receipt, and shall be given to the
parties at the following addresses or telecopy numbers (or at such other address
or telecopy number for a party as shall be specified by like notice):


          (a) if to Parent or Purchaser, to:

                           Robert Bosch GmbH
                           Robert Bosch Platz 1
                           70049 Stuttgart
                           Germany
                           Telephone No:  0049 711 811 6864
                           Telecopy No.:   0049 711 811 6760
                           Attention:  Dr. Heiko Carrie

                           with a copy to:

                           Coudert Brothers
                           1114 Avenue of the Americas
                           New York, New York 10036
                           Telephone No.:  (212) 626-4524
                           Telecopy No.:    (212) 626-4120
                           Attention: Brian McGunigle



                                       41


                          and if to the Company, to:

                          Detection Systems, Inc.
                          130 Perinton Parkway
                          Fairport, New York 14450
                          Attention: Karl H. Kostusiak,
                                     Chairman and Chief Executive Officer
                          Telephone No.: (716) 421-4202
                          Telecopy No.: (716) 421-4287

                          with a copy to:

                          Skadden, Arps, Slate, Meagher & Flom LLP
                          Four Times Square
                          New York, New York 10036
                          Attention: Stephen M. Banker
                          Telephone No.: (212) 735-7760
                          Telecopy No.: (917) 777-2760

     Section 8.5 Interpretation. (a) The words "hereof," "herein" and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." All terms defined in this Agreement shall have
the defined meanings contained herein when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements and
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted
successors and assigns.

                                       42


          (b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date first written above. The phrase "made available" in this
Agreement shall mean that the information referred to has been actually
delivered to the party to whom such information is to be made available.

          (c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

     Section 8.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.

     Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement and the Confidentiality Agreement: (a) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) except as provided in Section 5.8, are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.

     Section 8.8 Severability. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.

     Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York without giving

                                       43




effect to the principles of conflicts or choice of law thereof or of any
other jurisdiction.

     Section 8.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.

     Section 8.11 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any federal
court located in the State of New York in the event any dispute arises out of
this Agreement or any of the Transactions, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the Transactions in any court other than a
federal court sitting in the State of New York.

     Section 8.12 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 8.2, waive compliance by the other parties with any of
the agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.

                                       44


     Section 8.13 Certain Undertakings of Parent. Parent shall perform, or cause
to be performed, any obligation of Purchaser under this Agreement which shall
have been breached by Purchaser.


     Section 8.14 Definitions. For purposes of this Agreement:

     "Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange Act.

     "Affected Employees" has the meaning assigned thereto in Section 5.9.

     "Benefit Plans" has the meaning assigned thereto in Section 3.10.

     "By-Laws" means the by-laws of the Company as in effect on the date of this
Agreement.

     "Certificate of Incorporation" means the certificate of incorporation of
the Company as in effect on the date of this Agreement.

     "Certificate of Merger" has the meaning assigned thereto in Section 2.2.

     "Certificates" has the meaning assigned thereto in Section 2.5.

     "Closing" has the meaning assigned thereto in Section 2.3.

     "Closing Date" has the meaning assigned thereto in Section 2.3.

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

     "Company" means Detection Systems, Inc., a New York corporation.

     "Company Material Contract" has the meaning assigned thereto in Section
3.15.

     "Company's SEC Documents" has the meaning assigned thereto in Section 3.5.

     "Confidentiality Agreement" has the meaning assigned thereto in Section
5.2.

                                       45


     "Continuing Director" means (i) any member of the Board of Directors of the
Company as of the date hereof; (ii) from and after his election to the Company
Board of Directors, Jerald D. Bidlack; or (iii) any successor of a Continuing
Director who is (A) unaffiliated with, and not a designee or nominee of, Parent
or Purchaser, and (B) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors of the Company.

     "Department of State" has the meaning assigned thereto in Section 2.2.

     "Disclosure Schedule" has the meaning assigned thereto in Section 2.7.

     "Effective Time" has the meaning assigned thereto in Section 2.2.

     "Environmental Laws" means all foreign, federal, state and local Laws
relating to pollution or protection of human health, safety or the environment,
including, without limitation, Laws relating to Releases or threatened Releases
of Hazardous Materials into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Materials, and all Laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials, and all Laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources.

     "Environmental Liabilities and Costs" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages, deficiencies,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any Person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, including any Environmental
Law, or arising from environmental, health or safety conditions, or the Release
or threatened Release of Hazardous Materials into the environment.

     "ERISA" has the meaning assigned thereto in Section 3.10.

     "ERISA Affiliate" has the meaning assigned thereto in Section 3.10.

                                       46


     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Expenses" has the meaning assigned thereto in Section 8.1(b).

     "Fee Properties" means all real property and interests in real property
owned in fee by the Company or one of its Subsidiaries.

     "Fleet" has the meaning assigned thereto in Section1.2.

     "GAAP" has the meaning assigned thereto in Section 3.5.

     "Governmental Entity" means any (i) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (ii) federal, state,
local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official or entity and any court or other tribunal); or (iv)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of any
nature.

     "Hazardous Materials" means all substances defined as hazardous substances
in the National Oil and Hazardous Substances Pollution Contingency Plan, 40
C.F.R. ss. 300.5, or substances defined as hazardous substances, hazardous
materials, toxic substances, hazardous wastes, pollutants or contaminants, under
any Environmental Law, or substances regulated under any Environmental Law,
including, but not limited to, petroleum (including crude oil or any fraction
thereof), asbestos and polychlorinated biphenyls.

     "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

     "Indemnified Parties" has the meaning assigned thereto in Section 5.9.

     "Knowledge of the Company" means knowledge of: (a) any executive officer of
the Company, Meinrad Formosa and Bruce Becker.

     "Law" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment, decree,
license or permit enacted, promulgated, issued, enforced or entered by any
Governmental Entity.

                                       47


     "Leased Properties" means all real property and interests in real property
leased by the Company or one of its Subsidiaries.

     "Licenses" has the meaning assigned thereto in Section 3.13(c) hereof.

     "Lien" means any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or other security arrangement,
or any adverse right or interest, charge or claim of any nature whatsoever of,
on, or with respect to, any asset, property or property interest.

     "Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company or Parent, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that is materially adverse to the business, properties, assets,
prospects, financial condition or results of operations of such party and its
Subsidiaries taken as a whole.

     "Merger" has the meaning assigned thereto in Section 2.1.

     "Merger Consideration" has the meaning assigned thereto in Section 2.4.

     "Minimum Condition" has the meaning assigned thereto in Annex A.

     "NYBCL" means the New York Business Corporation Law, as amended.

     "Offer" has the meaning assigned thereto in Section 1.1.

     "Offer Documents" has the meaning assigned thereto in Section 1.3.

     "Offer Price" has the meaning assigned thereto in Section 1.1.

     "Offer to Purchase" has the meaning assigned thereto in Section 1.1.

     "Option Plans" has the meaning assigned thereto in Section 2.7.

     "Option" has the meaning assigned thereto in Section 2.7.

     "Other Intellectual Property" shall mean all intellectual property rights
used in the business of the Company or any of its Subsidiaries as currently
conducted, including but not limited to all patents and patent applications;
copyrights, copyright

                                       48


registrations and applications (including copyrights in Computer Programs);
Computer Programs; technology, trade secrets, know-how, confidential
information, proprietary processes and formulae; "semiconductor chip product"
and "mask works" (as such terms are defined in 17 U.S.C. 901); and rights of
publicity and privacy relating to the use of the names, signatures, likenesses,
voices and biographical information of real persons; together with any and all
rights of renewal thereof and the right to sue for past, present or future
infringements or misappropriations thereof.

     "Outside Legal Counsel" means Skadden, Arps, Slate, Meagher & Flom LLP or a
firm of comparable national standing.

     "Paying Agent" has the meaning assigned thereto in Section 2.5(a).

     "Parent" means Robert Bosch GmbH, a limited liability company organized
under the laws of Germany.

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Permit" means any federal, state, local and foreign governmental approval,
authorization, certificate, filing, franchise, license, notice, permit or right.

     "Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, labor union,
estate, trust, unincorporated organization or other entity, including any
Governmental Entity.

     "Proxy Statement" has the meaning assigned thereto in Section 5.3.

     "Purchaser" means the New York corporation to be organized by Parent
pursuant to Section 5.10 hereof.

     "Real Property" means the Leased Properties and the Fee Properties.

     "Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or into or out of
any property of any Hazardous Material, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.

     "Representative" means, with respect to any Person, such Person's officers,
directors, employees, agents and representatives (including any investment
banker,

                                       49




financial advisor, accountant, legal counsel, agent, representative or expert
retained by or acting on behalf of such Person or its Subsidiaries).

     "Schedule TO" has the meaning assigned thereto in Section 1.3.

     "Schedule 14D-9" has the meaning assigned thereto in Section 1.3.

     "SEC" means the United States Securities and Exchange Commission or any
successor agency.

     "Section 912 Approval" has the meaning assigned thereto in Section 1.2.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Shares" has the meaning assigned thereto in the recitals.

     "Special Meeting" has the meaning assigned thereto in Section 5.3.

     "Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person (i)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests, (ii) is entitled to elect at least a majority of the Board
of Directors or similar governing body or (iii) is a general partner (excluding
such partnerships where such Person or any Subsidiary of such Person do not have
a majority of the voting interests in such partnership).

     "Superior Proposal" means an unsolicited bona fide written proposal by a
Third Party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than a majority of the Shares then outstanding or
all or substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Board of Directors of the Company determines in good faith to be more
favorable to the Company's shareholders (taking into account the time period
reasonably believed necessary to consummate such transaction) than the Offer and
the Merger (after receipt of opinion of a nationally recognized independent
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the Offer
and the Merger, and after taking into account all legal, financial and
regulatory aspects of such proposal, the identity of the Third Party making such
proposal, and the benefits to be derived by the Company from the Transactions),
for which financing, to the extent required, is then committed and


                                       50



which, in the good faith reasonable judgment of the Board of Directors of the
Company, is reasonably likely to be consummated.

     "Surviving Corporation" has the meaning assigned thereto in Section 2.1.

     "Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of all or
a material portion of the assets of the Company or any of its Subsidiaries or
20% or more of any class of equity securities of the Company or any of its
Subsidiaries pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of its
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of or 20% or more of
the equity interest in either the Company or any of its Subsidiaries.

     "Tax" or "Taxes" mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any federal, state, local or foreign Taxing Authority
including but not limited to net income, gross income, receipts, windfall
profit, severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
transfer, stamp or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.

     "Taxing Authority" shall mean a governmental authority or any subdivision,
agency, commission or authority thereof, any judicial body, or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (including, without
limitation, the Internal Revenue Service).

     "Tax Returns" mean all returns, reports or statements required to be filed
with any Governmental Entity with respect to any Tax (including any attachments
thereto), including, without limitation, any consolidated, unitary or similar
return, information return, claim for refund, amended return or declaration of
estimated Tax.

     "Termination Fee" has the meaning assigned thereto in Section 8.1(b).

                                       51


     "Third Party" has the meaning assigned thereto in this Section 8.14 in the
definition of "Takeover Proposal."

     "Trademarks" shall mean all United States and foreign trademarks (including
service marks and trade names, whether registered or at common law),
registrations and applications therefor, owned or licensed by the Company or its
Subsidiaries, and the goodwill of the Company's and each of its Subsidiaries'
respective businesses associated therewith, together with any and all (i) rights
of renewal thereof and (ii) rights to sue for past, present and future
infringements or misappropriation thereof.

     "Transactions" has the meaning assigned thereto in Section 1.2(a).




                                       52





     IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.


                                    ROBERT BOSCH GmbH


                                    By: /s/ Georg Hanen
                                       --------------------------------
                                    Name:  Dr. Georg Hanen
                                    Title: Senior Vice President



                                    By: /s/ Heiko Carrie
                                       --------------------------------
                                    Name:  Dr. Heiko Carrie
                                    Title: Director


                                    DETECTION SYSTEMS, INC.


                                    By: /s/ Karl H. Kostusiak
                                       --------------------------------
                                    Name:  Karl H. Kostusiak
                                    Title: Chairman and Chief Executive Officer



BOSCH SECURITY SYSTEMS CORPORATION


By: /s/ Gary M. Saunders
    ---------------------------
Name:  Gary Saunders
Title:  President


                                       53



                                                                         ANNEX A


                             CONDITIONS TO THE OFFER

     Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement and Plan of Merger of which this Annex A is a part.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may amend the Offer consistent with the terms of
the Merger Agreement or terminate the Offer and not accept for payment any
tendered Shares, if (i) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares which, when
added to the Shares, if any, beneficially owned by Parent or Purchaser, would
constitute at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act has not expired or been terminated, or (iii) at any time on or after the
date of the Merger Agreement and prior to the expiration of the Offer, any of
the following events shall occur:

          (a) there shall be threatened by a Governmental Entity or pending any
suit, action or proceeding (i) seeking to prohibit or impose any material
limitations on Parent's or Purchaser's ownership or operation (or that of any of
their respective Subsidiaries or Affiliates) of all or a material portion of
their or the Company's businesses or assets, (ii) seeking to compel Parent or
Purchaser or their respective Subsidiaries and Affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (iii)
challenging the acquisition by Parent or Purchaser of any Shares pursuant to the
Offer, (iv) seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other Transactions, (v)
seeking to impose material limitations on the ability of Purchaser, or rendering
Purchaser unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, or (vi) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's shareholders; or



                                       A-1




          (b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through
(vi) of paragraph (a) above; or

          (c) there shall have occurred and be continuing (1) any general
suspension of trading in, or limitation on prices for, securities on the Nasdaq
National Market System, for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) any limitation or proposed limitation (whether
or not mandatory) by any United States governmental authority or agency that has
a material adverse effect generally on the extension of credit by banks or other
financial institutions, (5) any decline in the Dow Jones Industrial Average, the
Standard & Poor's Index of 500 Industrial Companies or the Nasdaq Composite
Index by an amount in excess of 20% measured from the close of business on the
date of this Agreement or (6) in the case of any of the situations in clauses
(1) through (5) inclusive, existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or

          (d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of consummation
of the Offer as though made on or as of such date (except for those
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time which need only be true and
accurate as of such date or with respect to such period) or the Company shall
have breached or failed to perform or comply with any obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with by it
except, in each case where the failure of such representations and warranties to
be true and accurate (without giving effect to any limitation as to "knowledge,"
"materiality" or "material adverse effect" set forth therein), or the failure to
perform or comply with such obligations, agreements or covenants, do not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or a materially adverse effect on the ability to consummate the Offer or the
Merger; or



                                       A-2





          (e) the Company's Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) shall have recommended a Takeover Proposal, or
(iii) shall have adopted any resolution to effect any of the foregoing;

          (f) the Merger Agreement shall have been terminated in accordance with
its terms; or

          (g) there shall have occurred any event or any development of a state
of facts or circumstances that constitutes a Material Adverse Change or has a
Material Adverse Effect on the Company.

which, in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to such condition, makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.

     The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.


                                       A-3

EX-2

                                                                       Exhibit 2

                               AMENDMENT AGREEMENT

     AMENDMENT AGREEMENT dated as of December 14, 2000 by and among Robert Bosch
GmbH, a limited liability company organized under the laws of Germany
("Parent"), Bosch Security Systems Corporation, a New York corporation (the
"Purchaser"), and Detection Systems, Inc., a New York corporation (the
"Company").


     WHEREAS, Parent and the Company have entered into an Agreement and Plan of
Merger dated as of December 10, 2000, to which the Purchaser subsequently became
a party (the "Merger Agreement"); and


     WHEREAS, the parties desire to amend the Merger Agreement in certain
respects;


     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto, intending to be legally bound hereby, agree as
follows:


          1. Amendment of Section 3.4. Section 3.4 of the Merger Agreement is
hereby amended to delete the words "a majority" in the first and second
sentences and to insert in place of such words, in each of such sentences, the
phrase "two-thirds".


          2. Amendment of Section 3.17. Section 3.17 of the Merger Agreement is
hereby amended to delete the words "a majority" and to insert in place of such
words the phrase "two-thirds".


          3. Amendment of Annex A. Clause (i) of the second sentence of the
introductory paragraph of Annex A to the Merger Agreement is hereby amended to
delete the words "a majority" and to insert in place of such words the phrase
"two-thirds".


          4. Other Provisions Unaffected. Except as set forth above, this
Amendment Agreement shall not constitute a modification or amendment of any
other provision of the Merger Agreement or any other agreements executed in
connection therewith.







     IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.


                                           Robert Bosch GmbH

                                           By: /s/ Martin Reuter
                                               --------------------
                                           Name:  Martin Reuter
                                           Title: Director



                                           By: /s/ Dr. Heiko Carrie
                                               ---------------------
                                           Name:  Dr. Heiko Carrie
                                           Title: Director




                                           Detection Systems, Inc.

                                           By: /s/ Karl H. Kostusiak
                                               ---------------------
                                           Name:  Karl H. Kostusiak
                                           Title: Chairman and CEO





                                           Bosch Security Systems Corporation

                                           By: /s/ Luke Baer
                                               ---------------
                                           Name:  Luke Baer
                                           Title: Vice President




                                       2

EX-7

                                                                     Exhibit 7

[Fleet Logo]

                                                          Fleet Securities, Inc.
                                                          100 Federal Street
                                                          Boston, MA 02110


                                                             December 10, 2000
Board of Directors
Detection Systems, Inc.
130 Perinton Parkway
Fairport, NY 14450-9199

Members of the Board:

We understand that Detection Systems, Inc. (the "Company"), Robert Bosch GmbH
("Parent") and a subsidiary to be formed (a wholly owned subsidiary of
Parent, "Purchaser") are proposing to enter into an Agreement and Plan of
Merger (the "Agreement") which will provide, among other things, for the
Offer and the Merger (as such terms are defined below). Under the terms, and
subject to the conditions, set forth in a draft of the Agreement dated
December 10, 2000 (the "Draft Agreement"), (i) Purchaser will commence a
tender offer (the "Offer") to purchase all of the outstanding shares of
common stock of the Company, par value $.05 per share ("Company Common
Stock"), at a price equal to $18.00 per share net to the seller in cash, and
(ii) following the Offer, Purchaser will be merged with and into the Company
(the "Merger"). Pursuant to the Merger, the Company will become a wholly
owned subsidiary of Parent and each share of Company Common Stock (other than
shares of Company Common Stock held in treasury or owned by Parent or
Purchaser or any of their respective subsidiaries) shall be converted into
the right to receive $18.00 in cash (or any higher price paid for a share of
Company Common Stock in the Offer), without interest. The terms and
conditions of the Offer and the Merger are set out more fully in the
Agreement.

You have asked us whether, in our opinion, the cash consideration to be paid
to the "Holders of Company Common Stock" in the Offer and the Merger is fair
from a financial point of view and as of the date hereof to the Holders of
Company Common Stock. As used herein, the "Holders of Company Common Stock"
shall mean all holders of Company Common Stock other than Parent, Purchaser,
or any affiliates of Parent or Purchaser.

For purposes of this opinion we have, among other things:

   (i)      reviewed certain publicly available financial statements and
            other business and financial information of the Company;

   (ii)     reviewed certain internal financial statements and other
            financial and operating data concerning the Company prepared by
            the Company's management;

   (iii)    reviewed certain financial forecasts and other forward looking
            financial information prepared by the Company's management;

   (iv)     held discussions with the management of the Company concerning
            the business, past and current operations, financial condition
            and future prospects of the Company;

   (v)      reviewed the financial terms and conditions set forth in the
            Draft Agreement;

   (vi)     reviewed the stock price and trading history of the Company;

A FLEETBOSTON FINANCIAL COMPANY






   (vii)    compared the financial performance of the Company and the prices
            and trading activity of Company Common Stock with that of certain
            other publicly traded companies comparable with the Company;

   (viii)   compared the financial terms of the Offer and the Merger with the
            financial terms, to the extent publicly available, of other
            transactions that we deemed relevant;

   (ix)     considered the equity premiums paid, to the extent publicly
            available, in other transactions that we deemed relevant;

   (x)      prepared a discounted cash flow analysis of the Company;

   (xi)     prepared a leveraged buyout analysis of the Company;

   (xii)    participated in discussions and negotiations among
            representatives of the Company and Parent and their financial and
            legal advisors; and

   (xiii)   made such other studies and inquiries, and reviewed such other
            data, as we deemed relevant.

In our review and analysis, and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided to us (including information furnished to us
orally or otherwise discussed with us by the Company's management) or
publicly available and we have neither attempted to verify, nor assumed
responsibility for verifying, any of such information. We have relied upon
the assurances of the Company's management that it is not aware of any facts
that would make such information inaccurate or misleading. Furthermore, we
did not obtain or make, or assume any responsibility for obtaining or making,
any independent evaluation or appraisal of the properties, assets or
liabilities (contingent or otherwise) of the Company, nor were we furnished
with any such evaluation or appraisal. With respect to the financial
forecasts and projections (and the assumptions and bases therefor) for the
Company that we have reviewed, upon the advice of the Company's management,
we have assumed that such forecasts and projections have been reasonably
prepared in good faith on the basis of reasonable assumptions and reflect the
best currently available estimates and judgments as to the future financial
condition and performance of the Company, and we have further assumed that
such projections and forecasts will be realized in the amounts and in the
time periods currently estimated. We have assumed that the Offer and the
Merger will be consummated upon the terms set forth in the Draft Agreement
without material alteration thereof or the waiver of any condition thereof.
In addition, we have assumed that the historical financial statements of the
Company reviewed by us have been prepared and fairly presented in accordance
with U.S. generally accepted accounting principles consistently applied. We
have relied as to all legal matters relevant to rendering our opinion on the
advice of counsel.

This opinion is necessarily based upon market, economic and other conditions
as in effect on, and information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect the
conclusion expressed in this opinion and that we disclaim any undertaking or
obligation to advise any person of any change in any matter affecting this
opinion which may come or be brought to our attention after the date of this
opinion. Our opinion is limited to the fairness, from a financial point of
view and as of the date hereof, to the Holders of Company Common Stock of the
cash consideration to be paid in the Offer and the Merger. We do not express
any opinion as to (i) the value of any employee agreement or other
arrangement entered into in connection with the Offer and the Merger or (ii)
any tax or other consequences that might result from the Offer and the
Merger. Our opinion does not address the relative merits of the Offer and the
Merger and the other business strategies that the Company's Board of
Directors has considered or may be considering, nor does it address the
decision of the Company's Board of Directors to proceed with the Offer and
the Merger.

We are acting as financial advisor to the Company in connection with the
Offer and the Merger and will receive (i) a fee contingent upon the delivery
of this opinion and (ii) an additional fee contingent upon the consummation
of the Offer and the Merger. In addition, the Company has agreed to indemnify
us for certain liabilities that may arise out of our engagement. Fleet
National Bank, one of our affiliates,

                                2

currently provides senior debt financing and other commercial banking
services to the Company. In the ordinary course of business, we or one of our
affiliates may trade in the Company's securities for our own account and the
account of our customers and, accordingly, may at any time hold a long or
short position in the Company's securities.

Our opinion expressed herein is provided for the information of the Board of
Directors of the Company in connection with its evaluation of the Offer and
the Merger. Our opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company whether or not to tender
his/her shares of Company Common Stock in the Offer or, if required, how to
vote, or whether or not to take any action, with respect to the Offer and the
Merger. This opinion may not be summarized, described or referred to or
furnished to any party except with our express prior written consent.

Based upon and subject to the foregoing considerations, it is our opinion
that, as of the date hereof, the cash consideration to be paid in the Offer
and the Merger is fair to the Holders of Company Common Stock from a
financial point of view.

                                          Very truly yours,

                                          FLEET SECURITIES, INC.

                                          /s/ Fleet Securities, Inc.

                                3

EX-10

[DETECTION SYSTEMS, INC. LETTERHEAD]



                                                              December 20, 2000


Dear Shareholder:


     As you know, Detection Systems, Inc. (the "Company") has entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Robert Bosch GmbH
and Bosch Security Systems Corporation, its wholly owned subsidiary, pursuant
to which Bosch Security Systems Corporation has today commenced a cash tender
offer (the "Offer") to purchase all of the outstanding shares (the "Shares") of
the common stock of the Company at $18 per share. Under the Merger Agreement,
the Offer will be followed by a merger (the "Merger") in which any remaining
Shares will be converted into the right to receive $18 per Share in cash,
without interest.

     YOUR BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND MERGER ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND HAS
APPROVED THE OFFER AND THE MERGER. THE BOARD ALSO RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.

     In arriving at its recommendation, the Board gave careful consideration to
the factors described in the enclosed Schedule 14D-9 including, among other
things, the opinion of Fleet Securities, Inc., the Company's financial advisor,
dated December 10, 2000, that the consideration to be received by the
shareholders in the Offer and Merger is fair to such shareholders from a
financial point of view.

     In addition to the attached Schedule 14D-9, also enclosed are the Offer to
Purchase, dated December 20, 2000, and related materials, including a Letter of
Transmittal, to be used for tendering your Shares in the Offer. These documents
state the terms and conditions of the Offer and the Merger and provide
instructions as to how to tender your Shares. We urge you to read these
documents carefully and encourage you to tender your Shares pursuant to the
Offer.




                                          On behalf of the Board of Directors,



                                          /s/ Karl H. Kostusiak
                                          -------------------------------
                                              Karl H. Kostusiak


Enclosures