EMPLOYMENT AGREEMENT

         THIS  AGREEMENT  is made as of June 2, 1997 by and between PSC Inc.,  a
New  York  corporation  ("PSC"  or  the  "Company")  and  ROBERT  C.  STRANDBERG
("Executive").

                                    RECITALS

         PSC desires to employ  Executive to devote full time to the business of
PSC, and Executive desires to be so employed.
         The parties agree as follows:

         1. Employment.  PSC hereby employs the Executive as President and Chief
Executive Officer. Executive hereby accepts such employment and agrees to remain
in the employ of PSC for the Term to perform any and all  reasonable  and lawful
duties  prescribed  by PSC's  Board of  Directors  and to abide by the terms and
conditions of this  Agreement.  During the Term, in good faith,  Executive shall
exert all  reasonable  efforts to promote the interests of the Company and shall
devote  substantially all of his entire working time,  attention and energies to
the business of the Company.

         2. Term of  Employment.  The term of  employment  under this  agreement
shall commence as of the date of this  Agreement and shall  terminate on June 1,
1998 (the "Initial  Term");  provided,  however that the term of this  Agreement
shall  be  automatically  extended  for  additional  one  year  terms  (each  an
"Additional Term") upon the end of the Initial Term, or any successor Additional
Term unless either the Executive or the Company shall have given written  notice
to the other at least seventy-five (75) days prior thereto that the term of this
Agreement shall not be so extended.

         3.       Compensation.

                  A.       Base Salary.

(i) For all services to be rendered to the Company by Executive in any capacity,
including, without limitation, services as an officer, director or member of any
committee of the Board of Directors and the  performance of any duties  assigned
to him by the Board of  Directors,  PSC shall  pay to  Employee  a salary at the
annual rate of not less than  $240,000  ("Base  Salary").  Base Salary  shall be
payable in accordance with the customary  payroll  practices of PSC,  subject to
such  deductions  and  withholdings  as may be  required  by law or agreed to by
Executive. Executive may, at his option, elect to receive up to 100% of his Base
Salary in the form of incentive  stock  options.  Said options  shall be granted
pursuant to the Company's  1994 Stock Option Plan,  shall have an exercise price
equal to the fair market  value of the  Company's  common  shares on the date of
grant,  which date shall be the  effective  date of the  election by  Executive,
shall be vested in four (4) equal  installments  on the last day of each quarter
(i.e.,  on August 31, 1997,  November 30, 1997,  February 28, 1998,  and May 31,
1998),  and shall be for a term of three (3) years  from the date of grant.  The
number of options to be granted shall be determined by the following formula:

                          [$ of Base Salary in options]
                           ----------------------------
                               1/2 exercise price
<PAGE>

Executive  must notify the  Company,  in writing,  prior to the end of the first
payroll  period  subsequent to the date of this  Agreement  whether he wishes to
make this  election and the amount of his Base Salary to be received in the form
of stock  options.  This  election is  applicable  only with respect to the Base
Salary to be paid to Executive during the Initial Term.

B.      

Performance  Bonus.  Pursuant to PSC's 1997  Management  Incentive Plan, for the
year  ending  December  31,  1997,  if  and  to  the  extent  PSC  achieves  its
pre-established performance goals for 1997, Executive shall be entitled to a
performance  bonus in an amount equal to the  percentage  of his Base Salary for
1997 opposite the performance goal percentage below:

         % of Performance Goal Achieved      % of Base Salary
                  Threshold                           40%
                  Target                              60%
                  133% of Target                      90%
                  150% of Target                      130%
                  170% of Target                      170%

In subsequent  years,  Executive shall be entitled to a performance  bonus based
upon the performance goals and targets established for that year by the Board of
Directors. 

4. Benefits.  In addition to his Base Salary,  Executive  shall also be entitled
throughout  the Term to all  benefits of full time  employees or officers as set
forth in the  Company's  Policy  Manual  as to which  he meets  the  eligibility
requirements  universally applicable to all employees and such other benefits as
may be  accorded  to  executives  of his rank by written  notification  from the
Company given from time to time.  The Company also agrees to pay the  initiation
fee and the monthly dues  associated  with  Executive's  membership in a country
club of Executive's choice.

5. Options.  Pursuant to the Company's 1994 Stock Option Plan, PSC hereby grants
Executive a stock option for 225,000 Common Shares of the Company at an exercise
price of $6.50 per share,  the fair market value of the Company's  Common Shares
on the date  hereof,  upon the terms  and  conditions  set  forth in the  Option
Agreement attached hereto as Exhibit A.

6. Relocation  Assistance.  The Company will reimburse  Executive for relocation
expenses  in the manner and to the extent set forth in the  memorandum  entitled
"PSC Scanning,  Inc., Employee Relocation  Program,  Effective:  February 1997",
attached hereto as Exhibit B. For purposes of this Agreement,  all references in
that memorandum to "PSC Scanning, Inc." shall mean "PSC Inc."; all references to
"Eugene"  shall  mean  "Webster,  NY" and all  references  to  "Human  Resources
Manager"  shall mean  "Chairman  of the Board".  In  addition,  the Company will
reimburse   Executive  for  such  other  relocation  expenses  as  it  may  deem
reasonable,  including,  but not limited to, those expenses set forth on Exhibit
C.

7. Confidential  Information.  Executive agrees that during the Initial Term and
the Additional Term, if any, and for five years thereafter,  he will not, except
as required by the performance of his duties under this  Agreement,  disclose or
authorize  anyone  else to  disclose  or use or make known for his or  another's
benefit,  any  confidential  information  or  knowledge  or data of the Company,
whether or not  patentable  or  copyrightable,  in any way acquired by Executive
from the inception of his employment  with the Company through the expiration of
the Term (hereinafter "Confidential Information").  Confidential Information for
the purposes of this  Agreement,  shall include,  but not be limited to, matters
not readily available to the public which are:

A. 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;
<PAGE>

B. 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;

C. pertaining to future developments,  such as, but not limited to, research and
development,  future marketing or merchandising plans or ideas. Immediately upon
termination of Executive's services,  Executive shall deliver to the Company all
originals and copies of everything in his  possession or under his control which
embodies  or  contains  any   Confidential   Information,   including,   without
limitation,   all   documents,   correspondence,   specifications,   blueprints,
notebooks,  reports,  sketches,  formulae,  computer  programs,  computer discs,
prototypes,  price lists,  customer lists or information,  samples and all other
materials.

Confidential  Information shall not include  information which
(i) is published or otherwise  becomes  generally  available to the public other
than by a breach of confidentiality,  or (ii) Employee can show by documentation
was properly in his  possession  prior to his  employment  with the Company,  or
(iii) becomes available to Employee from an independent source without breach of
this  Agreement  or  violation  of law, or (iv) is  independently  developed  by
Employee without the use of the Company's Confidential Information.  
<PAGE>

8. Covenant Not to Compete 

A. In light of the  special  and  unique  services  that  have  been and will be
furnished to the Company by Executive and the Confidential  Information that has
been and will be disclosed to him during his employment,  Executive  agrees that
during the Initial  Term and the  Additional  Term,  if any, and for a period of
twenty-four (24) months thereafter (the "Non-Competition  Period"), he will not,
without the written consent of the 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 any where in the world engage in,
or assist another to engage in, any work or activity in any way competitive with
the Business of the 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  Non-Competition  Period,  Executive will not, directly or
indirectly,  (a)  induce or attempt to induce  any  officer or  employee  of the
Company to leave the employ of the  Company,  or in any way  interfere  with the
relationship  between  the  Company  and  any  officer,  employee,  director  or
shareholder  thereof, (b) hire directly or through another entity any person who
is an  employee  of the  Company on the date of  termination  of  employment  of
Executive, or (c) induce or attempt to induce any customer,  dealer, supplier or
licensee to cease doing business with the Company,  or in any way interfere with
the relationship between any such customer, dealer, supplier or licensee and the
Company.

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

B. If Executive in any way breaches the  obligations  specified in this Section,
the Company shall have the right, in addition to any other remedies available to
it,  to  terminate  the  further  payment  of any  amounts  due  or the  further
provisions of any benefits under Sections 3 and 4 hereof.

C.  If any  provision  hereof  is  found  to be  unreasonably  broad,  it  shall
nevertheless  be  enforceable  to  the  extent  reasonably   necessary  for  the
protection  of the Company and to carry out to the fullest  extent the  parties'
mutual  intent  in  entering  into  this  Agreement,  which  intent  is that the
provisions of this Section will be strictly enforced as agreed to.

D.  For  purposes  of this  Agreement,  the  "Business  of the  Company"  is the
development,  manufacturing and marketing of technologies, 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 and
electronic interchange of bar coded or related data. The Business of the Company
shall also include any  business in which the Company is actually  engaged or as
to which it is doing research and development during Executive's employment with
the  Company.  Notwithstanding  anything to the  contrary in the  preceding  two
sentences, Business of the Company shall not include the manufacturing,  design,
engineering, distributing, marketing, selling or reselling of thermal or thermal
transfer bar code  printers,  bar code  verifiers or labeling  media and ribbons
used in connection with thermal bar code printers.

9.  Injunctive  Relief.  Executive  agrees  that in the  event  of a  breach  or
threatened  breach by the  Employee of any of the  provisions  of Section 7 or 8
hereof, the Company shall be entitled to an injunction restraining the Executive
from  such  breach  or  threatened  breach  without  posting  any  bond or other
security. Nothing herein, however, shall be construed as prohibiting the Company
from  pursuing,  in  conjunction  with an  injunction  or  otherwise,  any other
remedies  available  to the  Company  for  such  breach  or  threatened  breach,
including the recovery of damages from the Executive.

10. Severance Payment.

A.  Termination of Employment - In General.  In the event of the  termination of
employment of Executive by the Company for any reason other than Termination for
Cause (as hereinafter defined),  death,  disability,  or a Change in Control (as
hereinafter  defined),  or in the event the  employment  of the Executive is not
renewed after the Initial  Term,  the Company will continue to pay the Executive
for a period of one year following such termination or expiration of the Initial
Term an amount equal to the  Executive's  Base Salary at the annual rate then in
effect.  Such amount shall be payable bi-weekly.  In addition,  the Company will
provide  Executive  with  Executive's  then  current  health,  dental,  life and
accidental death and dismemberment  insurance  benefits for a period of one year
following such  termination.  In the event of Executive's  death while receiving
severance  payments  hereunder,  all remaining  severance  installment  payments
otherwise payable to Executive hereunder will be paid in the same amounts and in
the same manner to  Executive's  heirs and legal  representatives.  All payments
made to Executive  hereunder  will be subject to all  applicable  employment and
withholding taxes.
<PAGE>

B.  Termination  of  Employment  -  Change  in  Control.  In  the  event  of the
termination  of employment of Executive  within the two year period  following a
Change in Control (as hereinafter  defined) of the Company, and such termination
is (i) by the  Company  for any  reason  other  than  Termination  for Cause (as
hereinafter  defined),  death or disability,  or (ii) by the Executive for "Good
Reason" (as  hereinafter  defined),  the Company  will pay the  Executive  for a
period of three years following such  termination an amount equal to the product
of the sum of (x) Executive's  Base Salary at the annual rate then in effect and
(y) the highest  annual  bonus paid to  Executive  under the  Company's  current
Management  Incentive  Plan or any successor plan in the three full fiscal years
preceding  termination  multiplied  by  2.9.  In  addition,  Executive  will  be
immediately vested in any retirement,  incentive, or option plans then in effect
and the 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. Limitations.  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 the  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 the  Executive and
then,  if further  reductions  are  necessary,  by adjusting  other  benefits as
determined by the Company.

D. Certain Definitions.

Change in Control. 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 the 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 the 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
1997 Annual Meeting of Shareholders, any successor of a Current Director who has
been approved by a majority of the Current  Directors then on the Board, and any
other person who has been approved by a majority of the Current  Directors  then
on  the  Board);  or  (iii)  on the  date  of  approval  of (x)  the  merger  or
consolidation of the Company with another  corporation where the shareholders of
the  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 the  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)
on the date of approval of the sale or other disposition of all or substantially
all the assets of the Company.
<PAGE>

Termination  for  Cause.  The  Company  shall  have the right to  terminate  the
services of Executive at any time without  further  liability or  obligations to
Executive  if: (i)  Executive  has failed or refused to perform such services as
may  reasonably  be  delegated  or assigned  to  Executive  consistent  with the
Executive's position, 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 the  Company  or may
materially adversely affect the Company, or (iv) Executive has been convicted of
a felony.

Termination of the services of Executive for 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.  Notwithstanding  the preceding  sentence,  in
connection  with the  termination  of the services of Executive  for Cause under
section  (i)  above,  the Board of  Directors  shall  take no  action  until the
Executive has been provided written notice of the services  Executive has failed
or refused to perform and such failure or refusal remains unremedied for 30 days
after Executive has received such notice.

Good Reason.  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 employee  benefits  applies to
employees of the Company generally),  or (ii) Executive's place of employment is
moved more than 25 miles from its then current  location,  or (iii)  Executive's
title is changed or he 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 the  Company in writing of his  intention  to  terminate  and the Company
shall have 15 days after  receiving such written notice to remedy the situation,
if possible.

11.  Notices.  All notices given in connection  with this Agreement  shall be in
writing and shall be delivered either by personal delivery, by telegram,  telex,
telecopy or similar  facsimile  means, by certified or registered  mail,  return
receipt requested, or by express courier or delivery services,  addressed to the
parties hereto at the following addresses:

To Strandberg:                      To PSC:
Robert C. Strandberg                PSC Inc.
55 South Main Street                675 Basket Road
Pittsford, NY  14534                Webster, NY  14580
                                    FAX:  (716) 265-6409
<PAGE>

or at such other  address  and  number as either  party  shall  have  previously
designated by written notice given to the other party in the manner  hereinabove
set forth.  Notice  shall be deemed  given when  received,  if sent by telegram,
telex,  telecopy or similar  facsimile  means  (confirmation  of such receipt by
confirmed facsimile  transmission being deemed receipt of communications sent by
telex,  telecopy or other facsimile means); and when delivered and receipted for
(or  upon  the  date of  attempted  delivery  where  delivery  is  refused),  if
hand-delivered,  sent  by  express  courier  or  delivery  services,  or sent by
certified or registered mail, return receipt  requested.  

12. Waiver.  Any waiver of a breach of any of the terms of this Agreement  shall
not operate as a waiver of any other breach of such terms or of any other terms,
nor shall  failure to enforce  any term  hereof  operate as a waiver of any such
term or of any other
term.

13.  Severability.  If any term of this Agreement or the application  thereof is
held invalid or unenforceable, the validity or unenforceability shall not effect
any other term of this  Agreement  which can be given effect without the invalid
or unenforceable term.

14.  Governing Law;  Venue.  This  Agreement  shall be construed and enforced in
accordance  with and  governed  by the  internal  laws of the State of New York,
without  reference to conflict of law principles of any jurisdiction  (including
without  limitation  New York)  which  would  result in the  application  of the
domestic substantive laws of any other jurisdiction.  The parties consent to the
exclusive jurisdiction of the Supreme Court of New York, Monroe County or of the
United States District Court for the Western  District of New York for any legal
action  instituted  by any party  against any other with  respect to the subject
matter hereof.

15. Prior Agreements.  This Agreement supersedes all previous agreements related
to the subject matter herein.

16.  Termination  of  Obligations.  Executive  agrees  that  in  the  event  his
employment with the Company is terminated for any reason, that he will meet with
a representative of the Company and discuss, among other matters, the provisions
of this Agreement and the Executive's obligations hereunder.

17. Entire Agreement.  This Agreement  contains the entire agreement between the
parties with respect to the subject  matter  hereof.  This  Agreement may not be
amended or changed except by a writing signed by both parties.

<PAGE>


         IN WITNESS  WHEREOF,  Executive  has executed  this  Agreement  and the
Company has caused this Agreement to be executed as of the date set forth above.

                                                              PSC INC.

                                            By:
                                                     Robert S. Ehrlich

                                            Its:     Chairman of the Board



                                                     Robert C. Strandberg