EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT  AGREEMENT (the  "Agreement") is made as of the 21st day of
December, 1999, by and between PSC Inc., a New York corporation ("Company"), and
George A. Plesko (the "Executive").


                                   WITNESSETH:


     WHEREAS, Executive is being employed by Company as a Senior Vice President;

     WHEREAS,  Company  anticipates  that  Executive's  contribution  as  a  key
employee  of  Company  will be  substantial  and  desires  to  assure  itself of
Executive's employment with Company for the period stated in this Agreement;

     WHEREAS,  because Executive will acquire intimate knowledge of the business
of  Company  and  will  develop   relationships   with   customers,   suppliers,
distributors,  vendors and others in  connection  with the  business of Company,
Company  recognizes the detrimental effect on Company and the decreased value of
Company  which would result if  Executive  were to enter into  competition  with
Company  during the term of this  Agreement  and for a  reasonable  period after
termination of Executive's employment with Company;

     WHEREAS,  because Executive will be exposed to confidential and proprietary
information of Company and, Company recognizes the detrimental effect on Company
and the  decreased  value of  Company  that  will  result if  Executive  were to
disclose or use in an unauthorized fashion any such information; and

     WHEREAS,  Executive is desirous of  committing  himself to serve Company on
the terms herein provided.

     NOW,  THEREFORE,  in  consideration  of the covenants and agreements of the
parties  herein  contained  and the  mutual  benefits  to be  derived  from this
Agreement,  the parties  hereto  agree as  follows:

     1. Employment and Duties.Company agrees to employ Executive,  and Executive
hereby agrees to serve Company,  as a Senior Vice President of Company. As such,
he shall be responsible  for such operations of Company as shall be specified by
Company,  shall perform his duties in a conscientious,  reasonable and competent
manner and shall devote his best efforts and entire  business time and attention
to the  performance of his duties to Company.  At all times  Executive  shall be
subject to the  direction of and shall report to Company's  President  and Chief
Executive Officer or his designee.

     2. Term.  The term  ("Term")  of  Executive's  employment  hereunder  shall
commence on the date hereof,  and shall  continue  uninterrupted  for the period
ending three (3) years  following  the date hereof except to the extent that the
Term shall be earlier  terminated  under  Section 8. Subject to agreement by and

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among  Executive  and Company,  the Term may be extended for a period of two (2)
years.  If either party  desires to extend the Term,  that party will notify the
other not less than sixty (60) days prior to the end of the  initial  three-year
Term.  Following the initial  three-year Term and the two (2) year extension (if
any) and for so long as he is employed by Company thereafter, Executive shall be
an at-will employee of Company.  The provisions of Sections 4, 5, 6, 7, 9 and 10
shall survive the expiration of the Term.

     3. Compensation. Executive shall receive the following compensation for all
services rendered to Company in any capacity:

          a. Executive shall receive base salary at a minimum annual rate of Two
     Hundred  Thousand  Dollars  ($200,000)  with all such  annual  base  salary
     payable in accordance with Company's then applicable  payroll practices and
     subject to such  deductions and  withholdings  as may be required by law or
     agreed to by Executive.

          b. In the event that 100% of the respective  Annual Target is attained
     in any calendar year  described on Exhibit A, then, in addition to his base
     salary,  Executive  shall be eligible to  participate in the PSC Management
     Incentive  Plan and qualify for a target  bonus of up to 35% of base salary
     in the event that  Company  and  Executive  achieve  their  pre-established
     performance goals in such Management Incentive Plan for such calendar year.

          c. Executive shall qualify for a performance-based bonus in the amount
     of $500,000 in the event that Company  receives  from Telxon  within twelve
     (12) months  following the date of this  Agreement a purchase  order having
     standard  prices,  terms and conditions and otherwise  being  acceptable to
     Company  for a  minimum  of 1,000  GAP Scan  Engines  or Ultra  Pens.  This
     performance-based  bonus will be payable upon payment in full by Telxon for
     the  products  purchased  under  such  purchase  order and shall be paid to
     Executive even if at the time Company receives such an order or orders from
     Telxon,  and/or at the time  Company  receives  such  payment  from Telxon,
     Executive  is no longer  employed  by  Company  (except  if  Executive  has
     terminated  his  employment  without Good Reason or Company has  terminated
     Executive's  employment  for  Good  Cause.).

          d. Executive shall receive additional  performance-based  compensation
     equal to the sum of (i) the applicable  Earned  Commission  Rate applied to
     Net  Sales of  GAP/GEO  Products  in the event  that Net  Sales of  GAP/GEO
     Products in each such calendar year exceed specific Achieved Percentages of
     Annual  Target  levels  all as  described  on  Exhibit A  attached  to this
     Agreement;  plus (ii) 50% of net royalties  received by Company during each
     such calendar year  (including the fair market value of all rights obtained
     through  cross-licensing)  from third  parties  for  rights to GEO  patents
     issued as of December 17,  1999.  For  purposes of the  foregoing,  the Net
     Sales of GAP/GEO  Products for a year shall  consist of the  aggregate  Net
     Selling  Price  for all  sales to  Company  and third  parties  of  GAP/GEO
     Products.  By way of  illustration:  (x) If Company sells a GAP engine to a
     third  party  for $80,  the  applicable  Earned  Commission  Rate  shall be
     calculated on the Net Selling Price (e.g., $80 x 4.5% = $3.60 to be paid to
     Executive);  (y) If Company uses a GAP engine in a Company product (e.g., a
     PSC gun) the applicable  Earned  Commission Rate shall be calculated on the
     engine Net Selling Price payable by OEM third parties  (Executive  will not
     earn a commission  on the selling  price of the total PSC product,  only on

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     the value of the engine);  and (z) for all GAP commercial  products  (e.g.,
     the UltraPen)  Executive will earn the applicable Earned Commission Rate on
     the Net Selling Price (e.g., if an UltraPen is sold to a customer for $150,
     a 4.5% Earned  Commission  Rate  payable to Executive  will be $6.75).  Net
     Selling   Price   shall  be  defined  as  the  selling   price,   less  (v)
     transportation  and packaging costs, (w) insurance,  (x) duties,  taxes and
     other  governmental  charges,  (y)  commercial,  trade and cash  discounts,
     returns and adjustments or allowances  actually  granted by Company and (z)
     any  royalties  paid to third  parties  with  respect to GAP/GEO  Products.
     Executive's  entitlement to the performance based compensation  pursuant to
     this Section 3.d.  shall  continue  following  termination  until the fifth
     (5th)  anniversary  date  of this  Agreement,  unless  (A) the  Term of the
     Agreement  is not  extended by  Executive  for an  additional  two years as
     described in Section 2 hereof (if, however,  Executive wishes to extend the
     Agreement  for an  additional  two (2) years and Company  does not elect to
     extend  the  Agreement,  performance-based  compensation  pursuant  to this
     Section 3.d. shall  continue  following  termination  until the fifth (5th)
     anniversary date of this Agreement),  (B) Executive's  employment hereunder
     is  terminated  by  Company  for Good Cause or (C)  Executive's  employment
     hereunder  is  terminated  by Executive  without  Good  Reason.  Otherwise,
     Executive's  entitlement to the  performance-based  compensation  hereunder
     shall terminate upon termination of Executive's  employment hereunder.  For
     purposes of this  Agreement,  "GAP/GEO  Products" shall be defined as those
     Products  listed  on  Exhibit B which is  attached  to this  Agreement.

          e.  Executive  shall be eligible to  participate in the benefit plans,
     including  stock options,  group life  insurance,  group medical  coverage,
     401(k) and other benefits generally available to senior management officers
     of Company,  all  determined in accordance  with the terms and  eligibility
     requirements  of those  plans  and as in  effect  from  time to time in the
     discretion of Company's  Board of Directors.

          f.  Pursuant to Company's  1994 Stock Option Plan, on or about January
     1, 2000, Company will award Executive 20,000 stock options,  upon the terms
     and  conditions and subject to the  restrictions  set forth in the PSC 1994
     Stock Option Plan.

          g. Executive shall receive a monthly auto allowance equal to $500 net.

          h. Effective January 1, 2000, Executive's vacation period shall be six
     weeks per calendar year. In addition,  Executive  shall be entitled to such
     Company holidays as are generally  available to senior management  officers
     of Company.

          i. After consultation with Executive,  Company shall provide Executive
     appropriate  equipment for him to work while at home. If this  Agreement is
     terminated for any reason, Executive shall have the option to purchase such
     equipment  at  its  fair  market  value  at the  time  of  Termination  (as
     hereinafter defined).

          j. In the event  that  Company is not  allowed  to deduct for  federal
     income  tax  purposes,  an  amount of  compensation  otherwise  payable  to
     Executive  in  any  fiscal  year  (other  than  payments  pursuant  to  the
     Noncompetition and Confidentiality  Agreement of even date), that amount of
     compensation  otherwise  payable to  Executive  that  exceeds or causes the

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<PAGE>


     amount payable to Executive to exceed any applicable deduction  limitations
     (the  "Deferred  Amount")  shall be deferred  and paid to Executive as such
     amounts  entitle  Company  to full  deductibility  for  federal  income tax
     purposes; notwithstanding the foregoing, any and all Deferred Amounts shall
     be paid to  Executive  no later  than seven (7) years from the date of this
     Agreement.  Executive and Company agree to explore tax  alternatives  which
     may allow for the full payment to Executive and full tax  deductibility  by
     Company, of all compensation in the year earned.

     4. Confidential Information.

          a.  Executive  currently  has  and  will  continue  to  have  intimate
     knowledge of the business and  confidential  affairs of Company  (including
     GAP  Technologies,  Inc. and GEO Labs, Inc. prior to acquisition by Company
     of the  business  and  assets  of those  companies)  and its  subsidiaries,
     including  information  and  matters not  readily  available  to the public
     relating to Company and its present and future  subsidiaries which are: (i)
     of a technical  nature,  such as, but not limited  to,  methods,  know-how,
     formulae,   compositions,   drawings,  blueprints,   compounds,  processes,
     discoveries,   machines,  prototypes,  inventions,  computer  programs  and
     similar  items;  (ii) of a business  nature,  such as, but not  limited to,
     information about sales or lists of customers,  prices, costs,  purchasing,
     profits, markets, strengths and weaknesses of products, business processes,
     business and marketing plans and activities and employee personnel records;
     or (iii)  pertaining to future  developments,  such as, but not limited to,
     research and development,  future marketing or merchandising plans or ideas
     (hereinafter  collectively  referred  to  as  "Confidential  Information").
     Confidential  Information  shall also include  information of the customers
     and vendors of Company and its subsidiaries  which was learned by Executive
     as a consequence of his employment  with Company or with GAP  Technologies,
     Inc. or GEO Labs,  Inc.  Executive  agrees to keep secret all  Confidential
     Information  and not to  disclose it to anyone  outside of Company,  not to
     authorize the disclosure of  Confidential  Information to anyone outside of
     Company, or otherwise use his knowledge of Confidential Information for his
     own  personal  benefit,  or the benefit of anyone other than Company or its
     subsidiaries, either during the Term or at any time thereafter, except with
     Company's prior written consent.

          b. Executive acknowledges and agrees that the Confidential Information
     is a valuable asset of Company, and its protection as confidential is vital
     to the success of the business of Company. All memoranda,  notes,  records,
     plans,  drawings,  reports,  papers  and other  documents  (and all  copies
     thereof) relating to or containing Confidential Information,  some of which
     may be prepared by Executive, and all objects associated therewith (such as
     models and samples) in any way  obtained by Executive  are and at all times
     shall remain  Company's  sole and  exclusive  property  even if prepared or
     created,  in whole or in part,  by  Executive,  and whether or not directly
     disclosed or entrusted  to Executive by Company or any other  person.  This
     shall include,  but is not limited to, documents and objects concerning any
     process,  apparatus,  fixture,  mold,  die or product  manufactured,  used,
     developed,  investigated or considered by Company or any subsidiary and any
     reports, sketches, formulae, computer programs, computer disks, prototypes,
     price lists, customer lists or information, samples and all other materials
     containing Confidential  Information.  Executive shall exercise the highest
     degree of care in safeguarding  Confidential Information against disclosure
     of any kind or nature,  whether  intentional or unintentional and generally

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     take all steps necessary to ensure the maintenance of its  confidentiality.
     Executive shall comply with all policies and procedures as Company may from
     time to time  establish to protect and preserve  Confidential  Information.
     Executive  shall not,  except for Company's  use or sole  benefit,  copy or
     duplicate any of the aforementioned  documents or objects,  nor remove them
     from the facilities of Company or any  subsidiary,  nor use any information
     concerning them except for the benefit of Company or any subsidiary, either
     during his  employment  or  thereafter.  Executive  agrees to  deliver  all
     originals and copies of the aforementioned  documents and objects,  if any,
     that  may  be in  his  possession  or  under  his  control  to  Company  on
     termination  of his  employment  with  Company  or at  any  other  time  on
     Company's   request.   Nothing  in  this  Agreement   modifies  or  reduces
     Executive's  obligation  to comply with  applicable  laws relating to trade
     secrets,  confidential  information or unfair competition.

          c.  Prior  to  the  date  of  this   Agreement,   Executive   received
     confidential  information from the  counter-parties  to the  Bi-Directional
     Nondisclosure Agreements and Mutual Confidentiality Agreements described on
     attached Exhibit C. Executive agrees and covenants that except as necessary
     to  fulfill  obligations  to  Counter-Parties  he shall not  utilize in the
     fulfillment  of his duties  pursuant  to this  Agreement  any  confidential
     information  received  by him from any of the  counter-parties  pursuant to
     such  Agreements  or  disclose  any such  information  to anyone  including
     employees,  agents  and  representatives  of  Company.

     5. Inventions.

          a.  Executive  shall  promptly  disclose to Company,  in writing,  all
     ideas,  discoveries,  designs,  improvements,  innovations  and  inventions
     (collectively  referred to herein as  "Inventions"),whether  patentable  or
     not,  either  relating  to the  existing  or  planned  business,  products,
     processes,  or  procedures  of  Company,  or any  parent or  subsidiary  of
     Company,  or suggested by or resulting from Executive's work at Company, or
     resulting  wholly  or in part  from the use of  Company's  time,  material,
     facilities or ideas,  which  Executive has made or conceived or may make or
     conceive,  whether during or outside of working hours, whether or not using
     resources of Company or its subsidiaries,  whether alone or with others, at
     any time during Executive's employment or within one year after termination
     thereof.  Executive  agrees that all such Inventions shall be the exclusive
     property of Company.

          b. Executive hereby assigns to Company all his rights and interests in
     and to all such  Inventions  and all  patents and  copyrights  which may be
     obtained on them, in this and all foreign countries.  At Company's expense,
     but without charge to it,  Executive will execute,  acknowledge and deliver
     to  Company  any  specific  assignments  to any  such  Inventions  or other
     relevant  documents  and take any such further  action as may be considered
     necessary  by Company  at any time  during or  subsequent  to the period of
     Executive's  employment to obtain or defend  letters  patent in any and all
     countries or to obtain  documents  relating to  registration,  ownership or
     transfer of copyrights,  or to vest title in such  Inventions in Company or
     its  successors  or  assigns  or to obtain  for  Company  any  other  legal
     protection for such Inventions, and Executive will continue to cooperate in
     this manner even after  Executive's  employment by Company  terminates.

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          c. Executive  represents  that he has listed and briefly  described on
     Exhibit D attached hereto all inventions,  if any,  patented or unpatented,
     which he conceived or made prior to his  employment  by Company,  and which
     were  not  previously,  validly  assigned  to  GEO  Labs,  Inc.,  or to GAP
     Technologies,  Inc., and which he wishes to exclude from this Agreement.

          d. Executive  acknowledges  that all Creative Works (as defined below)
     that are  covered  by the  definition  of a "work  made for hire"  under 17
     U.S.C.ss.101 of the U.S.  Copyright Act of 1976 (the "Copyright  Act") will
     be  considered a "work made for hire",  and Company will be regarded as the
     author and owner of all  copyrights  in any such works.  As to any Creative
     Works that are not "work made for hire" under the Copyright  Act, such that
     Executive is regarded as the copyright  author and owner,  Executive hereby
     assigns  and  agrees to  assign  to  Company  all of his  right,  title and
     interest in any such Creative  Works  Executive  authors,  either solely or
     jointly with others,  at any time during  Executive's  employment or within
     one year after  termination  thereof,  either  relating to the  existing or
     planned business,  products,  processes,  or procedures of Company,  or any
     parent  or  subsidiary  of  Company,  or  suggested  by or  resulting  from
     Executive's work at Company, or resulting wholly or in part from the use of
     Company's time,  material,  facilities or ideas, that Executive has made or
     conceived or may make or conceive,  whether or not during  working hours or
     with  Company's  resources.  Executive  agrees that all such Creative Works
     shall be the  exclusive  property of  Company.  As used  herein,  "Creative
     Works" shall mean any and all  original  works of  authorship  fixed in any
     tangible  medium of  expression,  including  but not  limited to  writings,
     compilations  of  data,  charts,   forms,   drawings,   software,   videos,
     photographs,  music,  designs and mask works, and further including but not
     limited  to any  other  subject  matter  for which  copyright  or mask work
     protection would apply, specifically including original or revised designs,
     computer software,  advertising and marketing materials,  instructional and
     procedural   manuals,   and  related  documents  and  copies  thereof.

     6. Noncompete.

          a. In light of the special and unique services that have been and will
     be furnished to Company by Executive and the Confidential  Information that
     has been and will be  disclosed  to him  during his  employment,  Executive
     agrees that during the  Noncompetition  Period (as  defined),  he will not,
     without the written consent of Company, directly or indirectly,  whether as
     principal,  agent,  officer,  director,   consultant,   employee,  partner,
     stockholder  or  owner  of  or  in  any  capacity  with  any   corporation,
     partnership,  business,  firm,  individual  company or any  entity  located
     anywhere in the world  engage in, or assist  another to engage in, any work
     or  activity  in any way  competitive  with the  Business  of  Company  (as
     hereinafter defined).  However, nothing herein shall prevent Executive from
     owning not more than five percent (5%) of the  outstanding  publicly traded
     shares of common stock of a corporation,  as to which corporation Executive
     has no relationship  other than as a shareholder.  In addition,  during the
     Noncompetition  Period,  Executive will not,  directly or  indirectly,  (i)
     induce or  attempt  to induce any  officer  or  employee  of Company or its
     subsidiaries  (other than Pam Plesko) to leave the employ of Company or its
     subsidiaries, or in any way interfere with the relationship between Company
     or its  subsidiaries  and any officer,  employee,  director or  shareholder
     thereof;  (ii) hire directly or through another entity any person who is an
     employee  of  Company or its  subsidiaries  on the date of  termination  of

                                      -60-
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     employment of Executive; or (iii) induce or attempt to induce any customer,
     dealer,  supplier or licensee to cease doing  business  with Company or its
     subsidiaries,  or in any way interfere with, or induce or attempt to induce
     any change in, the relationship between any such customer, dealer, supplier
     or licensee  and Company or its  subsidiaries.

          b. Executive specifically agrees that because of his special expertise
     and the special and unique services that he will be furnishing Company, and
     because of the  Confidential  Information  that has been acquired by him or
     that will be  disclosed  to him during his  employment  with  Company,  the
     above-stated  geographic areas and the Noncompetition Period, in and during
     which he will  not  compete  with  Company,  are  reasonable  in scope  and
     duration and are necessary to afford  Company just and adequate  protection
     against  the  irreparable  damage  which would  result to Company  from any
     activities  prohibited by this Section.

          c. For purposes of this  Agreement,  the  "Business of Company" is the
     development,   manufacturing   and  marketing  of  technologies,   products
     (including  such  products  as radio  frequency  and  batch  portable  data
     collection terminals, handheld or fixed or miniature bar code laser, CCD or
     image   scanners  or  engines,   RFID   readers,   other  laser   scanners,
     self-checkout  systems,  verification  products,  electronic shelf labeling
     products)  and services for the automatic  identification  and keyless data
     entry industry,  and includes,  but is not limited to, products,  services,
     applications, systems and technologies relating to bar coded data, magnetic
     stripe encoded data, radio frequency communications of bar coded or related
     data,  optical  character  recognition,  machine  vision as  applied to the
     recognition  of bar  coded  data,  electronic  interchange  of bar coded or
     related  data.  The Business of Company  shall also include any business in
     which Company or any of its subsidiaries is actually engaged or as to which
     it is doing research and  development  during  Executive's  employment with
     Company.

          d. For purposes of this Agreement,  the "Noncompetition  Period" shall
     begin on the  date of this  Agreement  and  continue  so long as  Executive
     receives any  compensation of any kind pursuant to this Agreement and for a
     period of 24 months  thereafter  provided,  that any compensation  received
     under the Stock  Option Plan  described at Section 3.f. and any deferral of
     compensation  pursuant to Section 3.j. shall not extend the  Noncompetition
     Period otherwise applicable.

     7. Remedies.

          a. If Executive  commits a breach, or threatens to commit a breach, of
     any of  the  provisions  of  Sections  4, 5 or 6  Company  shall  have  the
     following  rights  and  remedies:  (i) the  right  and  remedy  to have the
     provisions of Sections 4, 5 or 6 specifically  enforced by any court having
     equity jurisdiction,  it being acknowledged and agreed that any such breach
     or  threatened  breach  will  cause  irreparable  injury to  Company or its
     subsidiaries  and that money damages will not provide an adequate remedy to
     Company or its subsidiaries; (ii) the right and remedy to require Executive
     to account for and pay over to Company all compensation,  profits,  monies,
     accruals,  increments or other benefits (hereinafter  collectively referred
     to as the  "Benefits")  derived  or  received  thereby as the result of any

                                      -61-
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     transactions  constituting a breach of any of the provisions of Sections 4,
     5 or 6, Executive  hereby agreeing to account for and pay over the Benefits
     to  Company;  and  (iii)  the  right and  remedy  to  withhold  payment  of
     compensation or other benefits otherwise payable to Executive  hereunder or
     otherwise,  and such withheld amount may be a portion or all of the payable
     compensation  or  benefits,  at the  discretion  of the Board.  Each of the
     foregoing rights and remedies  enumerated above shall be independent of the
     other,  and shall be  severally  enforceable,  and all of such  rights  and
     remedies  shall be in addition to, and not in lieu of, any other rights and
     remedies  available to Company  under law or in equity.

          b.  If any  covenant  contained  in  Sections  4,  5 or 6 or any  part
     thereof, is hereafter  construed to be invalid or unenforceable,  except as
     provided  in Section  7.c.,  the same shall be given full  effect,  without
     regard to the invalid portions.

          c.  If any  covenant  contained  in  Sections  4,  5 or 6 or any  part
     thereof,  is held  to be  unenforceable  because  of the  duration  of such
     covenant or the area covered thereby, the parties agree and intend that the
     court making such  determination  should reduce the duration and/or area of
     such  covenant to the extent  reasonably  necessary  for the  protection of
     Company  and,  in its reduced  form,  the  covenant  shall then be strictly
     enforceable.

          d. The parties  hereto  intend to and hereby  confer  jurisdiction  to
     enforce the  covenants  contained  in Sections 4, 5 or 6 upon the courts of
     any state or foreign  jurisdiction  within the  geographical  scope of such
     covenants. If the courts of any one or more of such states or jurisdictions
     shall hold such covenants wholly  unenforceable by reason of the breadth of
     such scope or  otherwise,  it is the  intention of the parties  hereto that
     such  determination  not bar or in any way  affect  Company's  right to the
     relief  provided  above in the courts of any other states or  jurisdictions
     within the  geographical  scope of such  covenants,  as to breaches of such
     covenants as they relate to each state being,  for this purpose,  severable
     into diverse and  independent  covenants.

          e. If any  action,  suit or other  proceedings  in law or in equity is
     brought to enforce  the  covenants  contained  in  Sections 4, 5 or 6 or to
     obtain money damages for the breach thereof, and such action results in the
     award of a judgment for money damages or in the granting of any  injunction
     in favor, all expenses (including  attorneys' fees) in such action, suit or
     other  proceeding shall (on demand) be paid by the prevailing party in such
     suit,  action or other proceeding.

     8. Termination.

          a. In the event of the  termination  of  employment  of  Executive  by
     Company prior to the  expiration of the Term for any reason other than Good
     Cause (as hereinafter defined),  death, disability,  or a Change in Control
     (as  hereinafter  defined),  Company will continue to pay Executive for the
     applicable Severance Period as specified in this Section an amount equal to
     Executive's  base  salary at the annual  rate then in effect.  Such  amount
     shall be payable  biweekly.  In addition,  Company will continue to provide
     Executive with Executive's then current health, dental, life and accidental
     death and  dismemberment  insurance  benefits for the applicable  Severance
     Period.  In the event of termination  pursuant to this Section prior to the
     expiration of the initial  three-year  Term, the Severance  Period shall be

                                      -62-
<PAGE>


     equal to the then remaining portion of the three-year Term. In the event of
     termination of employment  pursuant to this Section after the expiration of
     the initial  three-year Term, the Severance Period shall be a period of one
     (1) year.  All payments made to Executive  hereunder will be subject to all
     applicable  employment  and  withholding  taxes.

          b. In the event of the  termination of employment of Executive  within
     the two (2) year  period  following  a Change in  Control  (as  hereinafter
     defined) of Company, and such termination is: (i) by Company for any reason
     other than Good Cause (as  hereinafter  defined),  death or disability,  or
     (ii) by Executive for "Good Reason" (as hereinafter defined),  Company will
     pay Executive over a period of three (3) years  following such  termination
     an amount equal to the product of (x) Executive's base salary at the annual
     rate then in effect and (y) the  highest  annual  bonus  paid to  Executive
     under Company's current Management  Incentive Plan or any successor plan in
     the three  full  fiscal  years  preceding  termination  multiplied  by 2.9.
     Payments of such amount shall be made biweekly. In addition, Executive will
     be immediately vested in any retirement,  incentive or option plans then in
     effect and Company will continue to provide Executive with Executive's then
     current  health,  dental,  life  and  accidental  death  and  dismemberment
     insurance  benefits  for a period  of three  years.  All  payments  made to
     Executive  hereunder  will be  subject  to all  applicable  employment  and
     withholding  taxes.

          c.  Notwithstanding  anything  in this  Section to the  contrary,  the
     maximum amount of cash and other benefits  payable (whether on a current or
     deferred  basis and  whether  or not  includible  in income  for income tax
     purposes) under this Section (the "Severance Benefits") shall be limited to
     the  extent  necessary  to avoid  causing  any  portion  of such  Severance
     Benefits,  or any other payment in the nature of compensation to Executive,
     to be  treated  as a  "parachute  payment"  within  the  meaning of Section
     280G(b)(2) of the Internal Revenue Code of 1986, as amended. Any adjustment
     required to satisfy the  limitation  described  in the  preceding  sentence
     shall be  accomplished  first by  reducing  any cash  payments  that  would
     otherwise  be made  to  Executive  and  then,  if  further  reductions  are
     necessary,  by adjusting  other  benefits as  determined  by Company.

          d. A "Change in Control" shall be deemed to have occurred:

               (i) On the date that any  person or group  deemed a person  under
          Sections 3(a)(9) and 13(d)(3) of the Securities  Exchange Act of 1934,
          other than Company,  in a transaction or series of  transactions,  has
          become the beneficial  owner,  directly or indirectly (with beneficial
          ownership as  determined  as provided in Rule 13d-3,  or any successor
          rule  under  such  Act),  of 30% or  more  of the  outstanding  voting
          securities of Company;  or

               (ii) On the date on which one third or more of the members of the
          Board of  Directors  shall  consist  of  persons  other  than  Current
          Directors (for these  purposes,  a "Current  Director"  shall mean any
          member of the Board of Directors  elected at or  continuing  in office
          after,  the 1999 Annual  Meeting of  Shareholders,  any successor of a
          Current  Director who has been appointed or nominated by a majority of
          the Current  Directors then on the Board, and any other person who has
          been  appointed or  nominated  by a majority of the Current  Directors
          then on the Board); or

                                      -63-
<PAGE>


               (iii) On the date of approval of (x) the merger or  consolidation
          of Company with another corporation where the shareholders of Company,
          immediately   prior  to  the  merger  or   consolidation,   would  not
          beneficially  own,  immediately  after the  merger  or  consolidation,
          shares  entitling  such  shareholders  to 50%  or  more  of all  votes
          (without  consideration  of the  rights of any class of stock to elect
          directors by a separate class vote) to which all  shareholders  of the
          corporation  would be entitled in the  election of  directors or where
          the members of the Board of Directors of Company, immediately prior to
          the merger or consolidation, would not immediately after the merger or
          consolidation,  constitute a majority of the Board of Directors of the
          corporation  issuing cash or securities in the merger or consolidation
          or (y) the sale or other  disposition of all or  substantially  all of
          the assets of Company.

          e. Company shall have the right to terminate the services of Executive
     at any time without  further  liability or obligations to Executive for any
     of the following  reasons,  each constituting  "Good Cause" hereunder:  (i)
     Executive has failed or refused to perform such services as may  reasonably
     be  delegated  or  assigned  to  Executive,   consistent  with  Executive's
     position, by the Chief Executive Officer or by the Board of Directors; (ii)
     Executive has been grossly  negligent in connection with the performance of
     Executive's   duties;   (iii)   Executive  has  committed   acts  involving
     dishonesty,  willful  misconduct,  breach of fiduciary duty,  fraud, or any
     similar offense which  materially  affects  Executive's  ability to perform
     Executive's duties for Company or may materially  adversely affect Company;
     (iv)  Executive  has  violated a law material to the Business of Company or
     has caused Company or any of its subsidiaries to violate such a law; or (v)
     Executive has been  convicted of a felony.  Termination  of the services of
     Executive for Good Cause shall not be effective unless and until acted upon
     by the Board of Directors  and unless and until  written  notice shall have
     been given to  Executive  which notice shall  include  identification  with
     specificity  of each and every  factual  basis or  incident  upon which the
     termination is based.

          f.  For  purposes  of this  Agreement,  Good  Reason  shall  mean  the
     occurrence or existence of any of the following  with respect to Executive:
     (i) Executive's  annual rate of salary is reduced from the annual rate then
     currently  in effect or  Executive's  other  employee  benefits  are in the
     aggregate  materially  reduced from those then  currently in effect (unless
     such  reduction of salary or employee  benefits  applies to  executives  or
     employees of Company generally); or (ii) Executive is required, in order to
     fulfill his employment obligations hereunder, to relocate his residence; or
     (iii)  Executive is assigned  duties that are  demeaning  or are  otherwise
     materially  inconsistent  with  the  duties  then  currently  performed  by
     Executive.  Before  Executive may terminate his employment for Good Reason,
     Executive  must notify Company in writing of his intention to terminate and
     Company shall have 20 days after  receiving  such written  notice to remedy
     the situation,  if possible.

                                      -64-
<PAGE>


          g. The  election  by either  party not to extend the Term  pursuant to
     Section 2 hereof shall not constitute a termination  of Executive  pursuant
     to this  Agreement  or for any  other  reason.

          h. Executive shall not be entitled to receive any benefits pursuant to
     this Agreement following  termination or nonrenewal of the Agreement unless
     and until Executive  executes and delivers to Company a release in form and
     substance  satisfactory to Company releasing Company,  its subsidiaries and
     its directors,  officers and employees, from any and all claims arising out
     of or relating to Executive's  employment with Company,  the termination of
     such  employment  or the decision by Company not to extend the Term of this
     Agreement.

     9.  Notice.  For the  purposes  of this  Agreement,  notices  and all other
communications  provided for in the  Agreement  shall be in writing and shall be
(a)  personally  delivered;  or (b)  sent to the  parties  at  their  respective
addresses  indicated herein by private mail or courier  service.  The respective
addresses  to be used for all  such  notices  and  other  communications  are as
follows:

         If to Executive:

         George A. Plesko
         380 Steeplechase Drive
         Media, PA 19063

         With a copy to:

         Reed Smith Shaw & McClay LLP
         2500 One Liberty Place
         1650 Market Street
         Philadelphia, Pennsylvania 19103-7301
         Attention:  Peter J. Tucci

         If to Company:

         PSC Inc.
         675 Basket Road
         Webster, NY  14580
         Attention:  Elizabeth J. McDonald, Esq.

         With a copy to:

         Foley & Lardner
         Firstar Center
         777 East Wisconsin Avenue
         Milwaukee, Wisconsin 53202-5367
         Attention:  Timothy J. Sheehan

                                      -65-
<PAGE>


If personally  delivered,  such  communications  shall be deemed  delivered upon
receipt;  if sent by courier pursuant to this section,  such communication shall
be deemed  delivered  upon receipt.  Any party to this  Agreement may change its
address for purposes of this  Agreement by giving  notice  thereof in accordance
with this section.

     10. Miscellaneous.

          a.  No  provisions  of  this  Agreement  may be  modified,  waived  or
     discharged  unless such waiver,  modification  or discharge is agreed to in
     writing signed by the parties hereto.  No waiver by any party hereto at any
     time of any breach by the other party hereto of, or  compliance  with,  any
     condition  or  provision  of this  Agreement  to be performed by such other
     party  shall be deemed a waiver of  similar  or  dissimilar  provisions  or
     conditions at the same or at any prior or subsequent time.

          b. No agreements  or  representations,  oral or otherwise,  express or
     implied, with respect to the subject matter hereof have been made by either
     party which are not set forth  expressly  in this  Agreement  or the Option
     Agreement between Company and Executive.

          c. This  Agreement  shall not be  assigned  by  Executive  without the
     written  consent of Company,  and any  attempted  assignment  without  such
     written  consent  shall be null and void and  without  legal  effect.  This
     Agreement  shall be binding  upon and inure to the benefit of Company,  its
     successors   and  assigns   and   Executive   and  his  heirs,   executors,
     administrators and legal representatives.

          d. Executive  shall be liable for all taxes levied  against  Executive
     relating  to amounts  paid to  Executive  by Company,  and amounts  paid by
     Company will be net of all applicable FICA and income tax  withholding,  if
     any.

          e. The validity, interpretation,  construction and performance of this
     Agreement shall be governed by the laws of the State of New York, excluding
     any  choice of law rules that may  direct  the  application  of the laws of
     another jurisdiction. The parties hereto consent to the jurisdiction of any
     federal or state court situated in Monroe  County,  New York, and waive any
     objection based on lack of personal  jurisdiction,  improper venue or forum
     non-conveniens, with regard to any actions, claims, disputes or proceedings
     relating to this Agreement.

          f.  Executive  acknowledges  and agrees that the recitals set forth at
     the beginning of this  Agreement are true and correct and constitute a part
     of this Agreement.

          g. If any  provision  of this  Agreement  shall be deemed  illegal  or
     unenforceable,  such  illegality or  unenforceability  shall not affect the
     validity and enforceability of any legal and enforceable provisions hereof,
     unless such  illegality or  unenforceability  shall destroy the  underlying
     business purpose of this Agreement.

     11.   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an  original  but all of such
together will constitute one and the same instrument.

                                      -66-
<PAGE>

     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the day
and year first above written.


                                    /s/ George A. Plesko
                                    --------------------------------------------
                                    George A. Plesko


                                    PSC INC.


                                    By: /s/ William J. Woodard
                                       -----------------------------------------
                                    Its: Vice President--Chief Financial Officer
                                       -----------------------------------------

                                      -67-
<PAGE>


<TABLE>
<CAPTION>


                                                               EXHIBIT A

                                      ANNUAL TARGETS, ACHIEVED PERCENTAGE, EARNED COMMISSION RATE


    Annual      Achieved Percentage     100% or more of     85% of Target     70% of Target    55% of Target     Below 55% of
                                            Target                                                                  Target
-------------------------------------------------------------------------------------------------------------------------------
    Target     Earned Commission Rate        4.50%              3.75%             3.00%            2.25%               0%
===============================================================================================================================
<S>                                       <C>                <C>               <C>                <C>                  <C>
2000 @ $ 5M=                              $  225K            $  159K           $  105K            $ 62K                $0
2001 @ $10M=                              $  450K            $  319K           $  210K            $124K                $0
2002 @ $15M=                              $  675K            $  478K           $  315K            $186K                $0
2003 @ $20M=                              $  900K            $  638K           $  420K            $248K                $0
2004 @ $25M=                              $1.125M            $  797K           $  525K            $309K                $0

                             Total        $3.375M            $2.391M           $1.575M            $929K                $0

</TABLE>

                                      -68-
<PAGE>


                                    EXHIBIT B

                                GAP/GEO PRODUCTS

All versions of products that are being sold by GAP, as of the effective date of
this  Employment  Agreement,  and any  similar or  repackaged  versions  of such
current GAP products, as follows:

          a)   Laser  scanning  pens and  wands
          b)   Nanoscanners
          c)   Fixed beam  scanners  such as those  shipped to ISI or prototyped
               for ATL
          d)   SQ engines
          e)   Fixed-mount FM series scanners
          f)   Tetherless  laser scanning pens or wands  (excluding the value of
               any radio components)

Products  covered by claims  contained  in GEO's issued  patent  portfolio as of
December  17,  1999,  all as  described  in the  GEO  Asset  Purchase  Agreement
(collectively,  the "GEO Patents"), provided that no commission shall be owed or
paid on any PSC products  existing on the Closing Date,  any PSC product  design
existing on the Closing Date, and/or any new, enhanced,  or repackaged  versions
of such products having similar design.

New  scan  engine  products  which   incorporate  an  articulated  scan  element
("flipper") of the type generally shown in figures 1-8, 10-12, and 16-19 of U.S.
Patent Application, Serial No. 09/286,577.

The following new GAP products specifically  described by George Plesko prior to
the date hereof:

          a)   Ultrapen  with  USB  interface
          b)   Any card scanner or module incorporating SQ or flipper technology
          c)   3 volt ultra pen

                                      -69-
<PAGE>

                                    EXHIBIT C

                    BI-DIRECTIONAL NON-DISCLOSURE AGREEMENTS

1.   Bi-Directional  Non-Disclosure Agreement dated June 23, 1997 by and between
     GAP Technologies, Inc. and ITS

2.   Bi-Directional Non-Disclosure Agreement dated March 20, 1997 by and between
     GAP Technologies, Inc. and Datavision, Inc.

3.   Bi-Directional  Non-Disclosure  Agreement  dated  February  5,  1997 by and
     between GAP Technologies, Inc. and Telxon Corporation

4.   Bi-Directional  Non-Disclosure  Agreement  dated  January  4,  1999  by and
     between GAP Technologies, Inc. and Casio Manufacturing Corporation

5.   Mutual  Confidentiality  Agreement dated January 6, 1999 by and between GAP
     Technologies, Inc. and Symbol Technologies, Inc.

6.   Confidentiality and Non-Disclosure Agreement dated February 16, 1999 by and
     between GAP Technologies, Inc. and Internet Cargo Services, Inc.

7.   Bi-Directional  Non-Disclosure Agreement dated June 11, 1998 by and between
     GAP Technologies, Inc. and Microvision, Inc.

8.   Bi-Directional  Non-Disclosure Agreement dated March 9, 1999 by and between
     GAP Technologies, Inc. and JTEL CO. LTD.

9.   Bi-Directional  Non-Disclosure Agreement dated June 29, 1999 by and between
     GAP Technologies, Inc. and Metrologic Instruments, Inc.

10.  Bi-Directional  Non-Disclosure Agreement dated July 14, 1999 by and between
     GAP Technologies, Inc. and Intermec Technologies Corporation

11.  Agreement  dated March 24, 1997 by and between GAP  Technologies,  Inc. and
     William Svedas

12.  Associates Agreement on Inventions and Confidential Information dated March
     24, 1997 by and between GAP Technologies, Inc. and Edward Casacia

                                      -70-
<PAGE>


                                    EXHIBIT D

                              RETAINED TRADE RIGHTS


                                      None

                                      -71-