<PAGE>   1
                                                                    EXHIBIT 10.5

                 EMPLOYMENT AGREEMENT WITH DANIEL C. TOOMEY, JR


This EMPLOYMENT AGREEMENT ("Agreement") dated as of January 1, 1997 ("Effective
Date"), between Daniel C. Toomey, Jr. ("Toomey") an individual residing at 15509
Harte Lane Moorpark, California 93021, and Eltron International, Inc.
("Eltron"), a California corporation.

                                   WITNESSETH:

WHEREAS, Eltron desires to retain Toomey as a senior executive of Eltron and
Toomey desires to perform such duties,

This agreement replaces all previous employment agreements between Eltron and
Toomey.

NOW, THEREFORE, it is mutually agreed by among the parties as follows:

Section 1.  Employment, Term and Duties

1.1 Employment
Upon the terms and subject to the conditions and contained herein, during the
Employment Term (as hereinafter defined), Eltron hereby employs Toomey as a
senior executive officer of Eltron. Toomey shall report directly to the
President of Eltron. Toomey hereby accepts such employment and, during the
Employment Term shall devote his fill business time, skill, energy and attention
to the business of Eltron, and shall perform his duties in a diligent,
trustworthy, loyal, businesslike and efficient manner, all for the purpose of
advancing the business of Eltron.

1.2 Employment Term.
The Employment Term shall commence on the Effective Date and, unless extended by
mutual agreement of the parties hereto, or sooner terminated or canceled
pursuant to Section 3.2 hereof, shall terminate and expire on the 1st annual
anniversary of the Effective Date, provided however, that for purposes of
Section 4.3 hereof, the Employment Term shall be deemed to be 1 year.

1.3 Duties and Responsibilities
Toomey shall serve Eltron initially as its Vice President of Finance and shall
have the duties and responsibilities of its Chief Financial Officer. Toomey
agrees to observe and comply with the policies, procedures and rules of Eltron
regarding performance of his specific duties and the duties of Eltron employees
in general. Toomey specifically covenants, warrants and represents to Eltron
that he has the full, complete and entire right and authority to enter into this
Agreement, that he has no agreement, duty, commitment or responsibility of any
kind or nature whatsoever with any other party, person or entity which would
conflict in any manner whatsoever with any of his obligations to Eltron under
this Agreement, and that he is fully ready, willing and able to perform each and
all duties and responsibilities set forth in this Agreement.

Section 2. Compensation

2.1 Base Salary
During the first year of the Employment Term the Eltron shall pay, and Toomey
shall be entitled to receive from Eltron, a base salary for full-time employment
referred to in Section 1 hereof, compensation at the rate of $115,000 per year,
payable in equal bi-weekly installments. Eltron shall make all deductions,
withholdings and/or payments that are required by law from the gross sums
payable to Toomey pursuant to the provisions of this Section.

                                       1
<PAGE>   2
2.2 Adjustment
During the Employment Term, the base salary and bonus Toomey is entitled to
receive will be reviewed each December by the Compensation Committee of the
Board of Directors and adjusted effective January 1 of the coming year. The
salary and incentive bonus adjustment Toomey is entitled to receive will be
determined at the sole discretion of the Compensation Committee.

2.3 Additional Compensation
An incentive bonus shall be payable to Toomey. The incentive bonus shall be an
amount not exceeding 50% of Toomey's base salary for FY 97. The bonus Toomey
shall be entitled to receive will be based on the audited financial statements
of the Company and will be calculated based on the criteria found in Appendix A.

In the event that either the nature of the Company changes by virtue of a
merger, acquisition or similar event or if Toomey is called upon to serve in a
substantially different role by the Company, the Bonus criteria will be reviewed
and revised to reflect such terms as are mutually acceptable to both Toomey and
the Compensation Committee of the Company's Board of Directors.

2.4 Incentive Stock Option Plan
Toomey shall be eligible to participate in Eltron's Incentive Stock Option
Plans.

2.5 Expenses
Eltron shall reimburse Toomey for all ordinary and necessary expenses incurred
and paid by him in the course of the performance of his duties pursuant to this
Agreement and consistent with Eltron's policies in effect from time to time with
respect to travel, entertainment and other business expenses, and subject to
Eltron's requirements with respect to the manner of reporting such expenses.
Eltron shall continue in effect (or substitute on a comparable basis) the major
medical, hospitalization, life, travel, accident and disability insurance
policies covering Toomey and/or his eligible dependents. Eltron shall reimburse
Toomey for the fees and continuing education expenses required to maintain his
status as a Certified Public Accountant in an amount not to exceed $800 per
annum.

Section 3. Termination.

3.1 Termination.
Eltron shall have the right to terminate the Employment Term for Reasonable
Cause (as hereinafter defined) or in the event Toomey suffers an illness or
incapacity of such character as to substantially disable him from performing his
duties hereunder for a period of more than (90) consecutive days in any one year
or upon the death of Toomey. Notwithstanding anything to the contrary set forth
in this Agreement, Toomey's obligations and covenants set forth in Sections 4
and 5 hereof shall survive the termination of this Agreement.

3.2 Termination of Employment for Cause
Eltron may at time during the term of this Agreement, by written notice,
terminate the employment of Toomey for cause. In such event, Toomey shall be
entitled to receive any unpaid amounts of Base Salary and Additional
Compensation for services provided by Toomey to Eltron up to and including the
date of termination of the employment of Toomey, but under no circumstances
whatsoever shall Toomey be entitled to receive any other compensation of any


                                       2
<PAGE>   3

kind or nature whatsoever, including, without limitation, for any period of time
after the date of the termination of the employment of Toomey. The following
shall be deemed to constitute the types of acts or conduct which shall
constitute grounds for termination of Toomey's employment for cause by written
notice pursuant to this Agreement:

         (a)  The commission by Toomey of any serious felony.

         (b) Any breach by Toomey of any material term, provision or covenant
contained in this Agreement and the failure of Toomey to cure the same within a
reasonable period of time not to exceed sixty (60) days of receipt of written
notice of such failure (which notice must state specifically and precisely what
action or inaction by the Employee constitutes the breach and what Employee must
do or not do to correct the breach) and the demand that the same be cured;

         (c) The persistent and willful failure, neglect, inability or refusal
of Employee to perform his duties and responsibilities under this Agreement and
the failure to cure the same within fifteen (15) days of receipt of written
notice (which notice must state specifically and precisely what action or
inaction by the Employee constitutes the breach and what Employee must do or not
do to correct the breach) of such failure and the demand that the same be cured;
or

         (d) Any material breach by Employee of any of Company's material
policies, practices, rules and/or regulations and the failure to cure the same
within fifteen (15) days of receipt of written notice (which notice must state
specifically and precisely what action or inaction by the Employee constitutes
the breach and what Employee must do or not do to correct the breach) of such
failure and the demand that the same be cured.

3.3 Disability
If, during the Employment Term, Employee becomes disabled due to illness, injury
or similar cause in such a manner that he is unable fully to perform his duties
pursuant to this Agreement, he shall be entitled upon certification of such
disability by a physician of Company's choice to a leave of absence from Company
for the duration of such disability as certified by such physician up to but not
exceeding the expiration of a period of one (1) year or until the end of the
Employment Term of this Agreement, whichever first occurs. Such period of not to
exceed one (1) year shall be integrated with the existing Company disability
policy; provided, however, in no event shall Employee receive disability income
coverage beyond the period of one (1) year except to the extent provided in the
Company's existing disability policy. Employee's salary as provided in this
Agreement, including the Base Salary and the additional Compensation, shall
continue to be paid by the Company during any such leave of absence not to
exceed one (1) year, provided, however, that if Employee receives any payment or
payments on account of such disability from any employer-provided, governmental,
employee-provided or other program or programs of disability insurance
attributable to the one (1) year leave of absence, or, when appropriate, such
shorter time period, Company shall be obligated to pay to Employee only the
difference, if any, between the salary provided to Employee by the Company
pursuant to this Agreement for the applicable period and the total amount of
disability insurance payments payable to Employee through or by any such program
or programs of disability insurance attributable to the same applicable period.
If Employee's absence because of disability continues for more than one (1) year
and the term of this Agreement has not expired, Company shall have the full and
unrestricted right, in its sole and exclusive discretion, immediately to
terminate Employee's employment by Company.

3.4 Death of Employee


                                       3
<PAGE>   4

In the event of the death of Employee during the term of this Agreement, this
Agreement shall immediately terminate, and Employee's estate shall be entitled
to receive any unpaid amounts of Base Salary and Additional Compensation for
services provided by Employee to Company up to and including the date of
Employee's death and an additional payment equal to the aggregate of Employee's
Base Salary and Additional Compensation during his last full year of employment
by Company, but under no circumstances whatsoever shall Employee's estate be
entitled to receive any other compensation of any kind or nature whatsoever for
any period of time after the date of Employee's death.

3.5 Duties of Employee After Termination of Employment
Following any termination of Employee's employment with Company, Employee shall
fully cooperate with Company in all matters relating to the winding up of his
pending work on behalf of Company and the orderly transfer of any such pending
work and of his duties and responsibilities for Company to such other employees
of Company as may be designated by Company. Company shall be entitled to such
full-time or part-time services of Employee as Company may reasonably require
during all or any part of the thirty (30) day period, Saturdays, Sundays and
federal holidays excepted, immediately following any termination of Employee's
employment by Company. Employee shall receive reasonable compensation for any
such services so rendered. Immediately upon any termination of Employee's
employment with Company, Employee shall return to Company any and all property
of Company of any kind or nature whatsoever in Employee's possession, custody or
control.

3.6  Option to Terminate Without Reasonable Cause
If the Corporation terminates Employee's employment for any reason other than
cause. Employee shall be entitled to receive the following severance benefits,
which shall than cause, Employee shall be entitled to receive the following
severance benefits, which shall satisfy all of the Corporation's liabilities to
Employee for any claims related to such termination.

         (a) a continuation of his base compensation for a period of one (1)
year after the date of termination; and

         (b) during any such period that he is receiving a continuation of his
salary. Employee shall also receive medical coverage for himself and his
dependents and life insurance for himself, all at a level equivalent (or as
nearly equivalent as practicable) to the benefits he was receiving immediately
prior to his termination. (Employee agrees to cooperate with the Corporation to
facilitate its provision of such benefits to Employee at the lowest reasonable
cost.) No vacation benefits shall accrue during any such period. In any such
case, Employee's continued salary payments shall be made in accordance with the
Corporation's then existing payroll policies.

         (c) During any period that his salary is continued in accordance with
Section 3.6, Employee agrees to advise and consult with the Corporation's
officers and directors with respect to the Corporation affairs if requested to
do so.

3.7  Option to Terminate Upon Change in Control
In the event of a merger or sale, or in the event a third party obtains majority
control of the Company, Toomey shall have the option to terminate his employment
and shall be entitled to receive a severance payment equal to one time his
annual base salary in effect at that time. Toomey shall have this option for up
to 180 days after said change of control occurs and must notify the Company in
writing 60 days prior to his decision to terminate based upon said change of
control.




                                       4
<PAGE>   5

3.8  Option of Employee to Terminate Employment
If Employee terminates his employment with the Corporation, or his employment is
terminated by the Corporation for cause, the Corporation's obligation to provide
Employee with compensation and employment benefits shall cease upon the
effective date of such termination and employee shall not be entitled to receive
any severance payments, or any other payments or reimbursements, in connection
with such termination.

Section 4. Business Properties.

4.1 Business Properties.
Other than as required to perform his duties in accordance with this Agreement
and for purposes of furthering the business of Eltron, Toomey shall not use or
cause to be used any customer lists, trade secrets or any other confidential
business information by him as a result of his employment or relationship to
Eltron or any affiliate of Eltron.

4.2 Revealing of Trade Secrets, etc.
Toomey acknowledges the interest of Eltron in maintaining the confidentiality of
information related to its business an shall not at any time during the
Employment Term or thereafter, directly or indirectly, reveal or cause to be
revealed to any person or entity the production processes, inventions, formulae,
trade secrets, customer lists or other confidential business information
obtained by him as a result of his employment or relationship with Eltron or any
affiliate of Eltron, except when authorized in writing to do so by the Board of
Directors of Eltron; provided, however, that the parties acknowledge that it is
not the intent of this Section 4.2 to include within its subject matter (i)
information not proprietary to Eltron, or (ii) information which is in the
public domain.

4.3 Non-Competition.
During the Employment Term and for a period of one (1) year thereafter. Toomey
shall not (a) (i) compete with Eltron, in the Territory (as hereinafter defined)
in the conduct of its business as a manufacturer of bar code printers and
related accessories or in the conduct of any other business carried on by
Eltron, or (ii) engage or participate, directly or indirectly, in any business
or businesses substantially similar to the business as conducted by Eltron as of
the date of this agreement or as may thereafter be conducted by Eltron at any
time during the Employment Term, (b) solicit or cause to be solicited within or
without the Territory any customers of Eltron, or (c) recruit or cause any other
person to recruit any employee of Eltron to any of said business or businesses.


Section 5. Invention.

5.1 Assignment.
Without further consideration Toomey shall fully and promptly report to Eltron
all ideas, concepts, inventions, discoveries, formulae and designs conceived or
produced by Toomey at any time during the Employment Term, whether alone or with
others and whether patentable or unpatentable (collectively, "Inventions")
pertaining, directly or indirectly, to the business of Eltron as conducted at
any time or at any time during the employment Term, and shall assign and hereby
does assign to Eltron or its nominee Toomey's entire right, title and interest
in and to all such Inventions.



                                       5
<PAGE>   6

5.2 Cooperation.
Toomey shall take all reasonable action requested by Eltron to protect or obtain
title to any and all United States and/or foreign patents on any such
Inventions, including execution and delivery of all applications, assignments
and other document deemed necessary or desirable by Eltron, provided Toomey is
reimbursed for reasonable expenses incurred by Toomey in connection with such
execution and delivery.


Section 6. Miscellaneous.

6.1  Remedies.
The parties acknowledge that any breach, violation or evasion by Toomey of the
terms of this Agreement will result in immediate and irreparable injury and harm
to Eltron, and will cause damage to Eltron in amounts difficult to ascertain.
Accordingly, Eltron shall be entitled to the remedies of injunction and specific
performance, or either of such remedies, as well as to all other legal or
equitable remedies to which Eltron may be entitled, including, without
limitation, termination of the Employment Term and this Agreement. Any breach,
violation or evasion by Eltron of the terms of this Agreement will result in
immediate and irreparable injury and harm to Toomey, and shall entitle him to
all legal or equitable remedies to which Toomey may be entitled.

6.2 Certain Definitions.
For purposes of this Agreement, the following terms shall have the following
meanings:

   a)  "Engage or participate in any business" referred to in Section 4.3 hereof
       shall by deemed to mean engaging or participating in any business or
       businesses; directly or indirectly, whether for his own account or for
       that of any other person, firm or corporation, and whether as a
       stockholder (except as a stockholder in a publicly-held corporation with
       more that 500 holders of common stock of which Toomey owns less that 1%
       of the outstanding securities of any class), principal, agent proprietor,
       partner, officer, director, employee or consultant, or in any other
       capacity;

   (b) "Territory" shall mean any domestic or foreign jurisdiction in which
       Eltron or any affiliate or subsidiary of Eltron, as of the date of the
       Agreement or any time during the Employment Term, has conducted any part
       of its business, whether design, development engineering, manufacturing,
       sale, distribution or servicing of its products or other marketing
       operations.

6.3 Notices.
Any notice or other communications required or permitted to be given to the
parties hereto shall be deemed to have been given when received, addressed as
follows (or at such other address as the party addressed may have substituted by
notice pursuant to this Section 6.3):

         (a)      If to Eltron:

                  Eltron International, Inc.
                  41 Moreland Road
                  Simi Valley, California 93065
                  Attention: Chairman/CEO

         (b)      If to Toomey:



                                       6
<PAGE>   7

                  Dan Toomey
                  15509 Harte Lane
                  Moorpark, California 93021


6.4 Heading.
The captions set forth in this Agreement are for convenience only and shall not
be considered as part of this Agreement or as in any way limiting or amplifying
the terms and provisions hereof.


6.5 Governing Law.
The Agreement shall in all respect be interpreted, construed and governed by and
in accordance with the law of the State of California.

6.6 Severability.
In case this Agreement, or any one or more of the provision hereof, shall be
held to be invalid, illegal or unenforceable within any governmental
jurisdiction or subdivision thereof, the Agreement or any such provision or
provisions shall not as a consequence thereof be deemed to be invalid, illegal
or unenforceable in any other governmental jurisdiction or subdivision thereof.
In case any one or more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any other respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein and
there shall be deemed substituted such other provision as will most nearly
accomplish the intent of the parties to the extent permitted by applicable law.

6.7 Whole Agreement.
This Agreement embodies all the representations, warranties, covenants and
agreement of the parties in relation to the subject matter hereof, and no
representations, warranties, covenants, understandings or agreement, or
otherwise, in relation thereto exist between the parties, or in an instrument in
writing signed by the party to be bound thereby which makes reference to this
Agreement.

6.8 No Rights in Third Parties.
Nothing herein expressed or implied is intended to or shall be construed to
confer upon or give to any person, firm or other entity, other than the parties
hereto and their respective successors and assigns or personal representatives,
any rights or remedies under or by reason of this Agreement.

6.9 Assignment.
Except as provided by section 3.3 to this Agreement, Eltron may assign its
rights and delegate its responsibilities under this Agreement to any affiliated
company or to any corporation which acquires all or substantially all of the
operating assets of Eltron by merger, consolidation, dissolution, liquidation,
combination, sale or transfer or assets or otherwise. Except as herein before
provided neither of the parties hereto may assign any rights or obligations
under this Agreement.

6.10 Amendment.
The Agreement may not be amended orally but only by an instrument in writing
duly executed by the parties hereto.



                                       7
<PAGE>   8

6.11 Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.






IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

                                         ELTRON INTERNATIONAL, INC.




\s\Daniel C. Toomey, Jr.                 By  \s\Donald K. Skinner
------------------------------              ------------------------------------
   Daniel C. Toomey, Jr.                        Donald K. Skinner
                                                Chairman/CEO


                                         By  \s\Robert G. Bartizal
                                            ------------------------------------
                                                Robert G. Bartizal
                                                Compensation Committee


                                         By  \s\George L. Bragg
                                            ------------------------------------
                                                George L. Bragg
                                                Compensation Committee


                                         By  \s\William R. Hoover
                                            ------------------------------------
                                                William R. Hoover
                                                Compensation Committee



                                       8
<PAGE>   9

                                  APPENDIX 'A'

The following defines the criteria to be used for allocating the 1997 bonus
program to Daniel Toomey:


1. MOST IMPORTANT TASKS: (MIT) Toomey shall be entitled to receive a maximum
bonus equal to 50% of his quarterly salary. MIT's will be created, by Toomey and
approved by the Chairman/CEO and the Compensation Committee of the Board of
Directors, prior to the beginning of each quarter. Each task will be assigned a
numerical weighting for bonus allotment. At the end of each quarter, MIT's will
be reviewed by Toomey and the Chairman/CEO and the Compensation Committee of the
Board of Directors to assess task completion and to complete the amount of bonus
to be awarded.


                                       9