PSC Inc.
                        1995 Employee Stock Purchase Plan
               (includes all amendments through February 11, 1998)


Section 1.        Purpose.

         The PSC Inc. 1995 Employee Stock Purchase Plan (the "Plan") is designed
to provide an  opportunity  for the  employees of PSC Inc. and its  subsidiaries
(hereinafter  referred  to,  unless  the  context  otherwise  requires,  as  the
"Company")  to  purchase  Common  Shares (the  "Stock")  of the Company  through
voluntary  systematic  payroll  deductions.  It is the purpose and policy of the
Plan to provide employees with an opportunity to acquire a proprietary  interest
in the economic  progress of the Company and a further  incentive to promote its
best  interests.  It is the intention of the Company to have the Plan qualify as
an "employee stock purchase plan" under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). The provisions of the Plan shall, accordingly,
be construed so as to extend and limit participation in a manner consistent with
the requirements of that Section of the Code.

Section 2.        Definitions.

         (a)  "Compensation"  means the base salary or wage paid to an Employee,
including  commissions and overtime payments.  "Compensation"  shall not include
bonuses, profit sharing contributions, Company contributions to Social Security,
contributions to the Company's 401-k Profit Sharing Plan or any other retirement
plan or  program,  or the value of any other  fringe  benefits  provided  at the
expense of the Company.

         (b) "Employee" means any person,  including an officer, who is employed
by (i) the Company or (ii) any subsidiary  company,  50% or more of whose voting
shares are owned  directly  or  indirectly  by the  Company.  A director  of the
Company who is not also a full time officer is not deemed to be an employee.

         (c) "Fair Market  Value".  For purposes of this Plan,  the "fair market
value" of the Stock on a given date shall be the  closing  price of the Stock on
the  Nasdaq  National  Market on such date,  provided  at least one sale of said
Stock took place on such  exchange on such date,  and, if not, then on the basis
of the closing  price on the last  preceding  date on which at least one sale on
such exchange did occur.  If the Stock of the Company is not admitted to trading
on any of the aforesaid  dates for which  closing  prices of the Stock are to be
determined,  then reference  shall be made to the fair market value of the Stock
on that date, as determined on such basis as shall be  established  or specified
for the purpose by the Committee.

Section 3.        Eligibility.

         (a)  Initial  Eligibility.  Any  person  who shall be  employed  by the
Company shall be  immediately  eligible to  participate in the Plan and shall be
eligible to participate in Offerings which commence on or after the first day of
employment.
<PAGE>

         (b)  Restrictions  on  Participation.  Any provision of the Plan to the
contrary  notwithstanding,  no  Employee  shall be granted an option to purchase
Stock in the Plan:

                  (i) if,  immediately  after the grant, such Employee would own
shares, and/or hold outstanding options to purchase stock, possessing 5% or more
of the  total  combined  voting  power or value of all  classes  of stock of the
Company (for purposes of this paragraph, the rules of Section 424(d) of the Code
shall apply in determining stock ownership of any Employee); or

                  (ii) if it would  permit  such  Employee's  rights to purchase
shares under all  employee  stock  purchase  plans of the Company to accrue at a
rate which exceeds $25,000 in fair market value of the Stock  (determined at the
time such rights are granted) for each calendar year in which rights to purchase
such Stock are outstanding.

Section 4.        Offerings under the Plan.

         The  Plan  will be  implemented  by ten  semi-annual  offerings  of the
Company's Stock (the  "Offerings")  beginning on January 1 and July 1 in each of
the  years  1996,  1997,  1998,  1999 and 2000  and  terminating  on June 30 and
December 31 in each of such years, respectively.  As used in the Plan, "Offering
Commencement  Date"  means the January 1 or July 1, as the case may be, on which
the particular Offering begins and "Offering Termination Date" means the June 30
or December 31, as the case may be, on which the particular Offering terminates.

         Participation  in any Offering under the Plan shall neither limit,  nor
require,  participation  in any other Offering  except that no Employee may have
more than one  authorization  for payroll  deduction  in effect  simultaneously.
Except as provided in Section 3 of the Plan, all Employees  participating  in an
Offering  shall have the same rights and  privileges  to  purchase  Stock in the
Plan.

Section 5.        Participation and Payroll Deductions.

         (a) Payment for Stock. Shares of Stock purchased under the Plan will be
paid for by  payroll  deductions  during the period  beginning  on the  Offering
Commencement  Date  and  ending  on the  Offering  Termination  Date  ("Purchase
Period").

         (b)      Participation.

                  (i) An eligible Employee becomes a participant ("Participant")
in the Plan by completing an authorization  for a payroll  deduction on the form
provided by the Company ("Employee  Authorization  Card") and filing it with the
Human  Resources   Department  of  the  Company  during  the  enrollment  period
("Enrollment  Period") prior to an Offering.  Upon becoming a Participant,  said
Employee  shall be bound by the terms of this  Plan,  including  any  amendments
hereto.
<PAGE>

                  (ii) The  Enrollment  Period for each of the  Offerings is the
thirty days prior to each Offering Commencement Date.

                  (iii) An Employee Authorization Card shall become effective on
the  Commencement  Date of the first  applicable  Offering  and shall  remain in
effect for all  subsequent  Offerings so long as the Employee  remains  eligible
under the Plan and has not withdrawn from the Plan as set forth in Section 10.

         (c)      Payroll Deductions.

                  (i) At the time an Employee  files an  Employee  Authorization
Card,  the  Employee  shall elect to have  deductions  made from his pay on each
payday during the time the Employee is a Participant  in an Offering at the rate
of 2, 3, 4, 5, 6, 7,  8, 9 or 10% of the  Compensation  which  the  Employee  is
entitled to receive on such payday ("Payroll Deduction Rate").

                  (ii) Payroll  deductions  for a Participant  shall begin as of
the first pay period after an Employee Authorization Card has become effective.

                  (iii) All payroll  deductions made for a Participant  shall be
credited to the Participant's  account under the Plan.  Amounts credited to such
accounts may be used by the Company for any corporate purpose.
A Participant may not make any separate cash payment into such account.

         (d)      Change in Payroll Deduction Rate; Discontinuance of Payroll 
Deductions.

                  (i) A Participant's  Payroll Deduction Rate, once established,
shall remain in effect for each Offering.  A Participant  may change the Payroll
Deduction Rate, at any time during the Enrollment  Period prior to the beginning
of the next Offering,  effective for the next Offering  following the receipt of
written notice by the Company on such forms as provided by the Company.

                  (ii) At any time during an Offering,  a Participant may notify
the Company that the Participant wishes to discontinue the Participant's payroll
deductions. This notice shall be in writing and on such forms as provided by the
Company and shall  become  effective as of a date not more than thirty (30) days
following its receipt by the Company.

         (e)      No Interest.

                  No interest  shall accrue on any amounts  withheld  under this
Plan.
<PAGE>

Section 6.        Granting of Option.

         (a) Number of Option Shares. On the Commencement Date of each Offering,
a  participating  Employee  shall be deemed to have  been  granted  an option to
purchase  a maximum  number of  shares of the Stock of the  Company  equal to an
amount  determined  as follows:  an amount equal to (i) that  percentage  of the
Employee's Compensation which the Employee has elected to have withheld (but not
in any case in excess of 10%)  multiplied  by (ii) the  Employee's  Compensation
during the period of the Offering  (iii) divided by 85% of the Fair Market Value
of the Stock of the Company on the applicable  Offering  Commencement  Date. The
Fair Market  Value of the  Company's  Stock shall be  determined  as provided in
Section 2(c) above.

         (b) Option  Price.  The option  price of Stock  purchased  with payroll
deductions  made during such  Offering for a  Participant  therein  shall be the
lower of:

                  (i) 85% of the Fair Market Value of the Stock on the Offering 
Commencement Date; or

                  (ii) 85% of the Fair Market Value of the Stock on the Offering
Termination Date.

Section 7.  Exercise of Option.

         (a) Automatic  Exercise.  Unless a Participant  gives written notice to
the Company as hereinafter  provided,  the Participant's option for the purchase
of Stock with payroll deductions made during any Offering will be deemed to have
been exercised automatically on the Offering Termination Date applicable to such
Offering,  for the  purchase  of the  number of full  shares of Stock  which the
accumulated  payroll  deductions in the Participant's  account at that time will
purchase  at the  applicable  option  price  (but not in excess of the number of
shares for which  options have been granted to the Employee  pursuant to Section
6(a), and any excess in the Participant's  account at that time will be returned
to the Participant.

         (b)  Withdrawal of Account.  By written  notice to the Company,  at any
time prior to the  Offering  Termination  Date  applicable  to any  Offering,  a
Participant may elect to withdraw all the accumulated  payroll deductions in the
Participant's account at such time.

         (c) Fractional  Shares.  Fractional shares will not be issued under the
Plan and any  accumulated  payroll  deductions  which  would  have  been used to
purchase  fractional shares will be returned to any Employee promptly  following
the termination of an Offering, without interest.

         (d) Transferability of Option. During a Participant's lifetime, options
held by such Participant shall be exercisable only by that Participant.

         (e) Delivery of Stock.  As promptly as  practicable  after the Offering
Termination Date of each Offering, the Company will deliver to each Participant,
as appropriate, the Stock purchased upon exercise of the Participant's option.
<PAGE>

Section 8.        Withdrawal.

         (a) In  General.  As  indicated  in Section  7(b),  a  Participant  may
withdraw payroll deductions credited to the Participant's account under the Plan
at any time by giving  written notice to the Company.  All of the  Participant's
payroll  deductions  credited to the  Participant's  account will be paid to the
Participant  promptly after receipt of the notice of withdrawal,  and no further
payroll deductions will be made from the Participant's pay during such Offering.

         (b) Effect on Subsequent Participation. A Participant's withdrawal from
any  Offering  will not have any effect upon the  Participant's  eligibility  to
participate  in  any  succeeding  Offering  or in any  similar  plan  which  may
hereafter be adopted by the Company.

         (c) Termination of Employment.  Upon  termination of the  Participant's
employment for any reason,  including  retirement  (but excluding death while in
the employ of the Company), the payroll deductions credited to the Participant's
account will be returned to the Participant or, in the case of the Participant's
death  subsequent to the  termination of the  Participant's  employment,  to the
person or persons entitled thereunder under Section 11(a).

         (d)  Termination  of Employment Due to Death.  Upon  termination of the
Participant's  employment because of the Participant's  death, the Participant's
beneficiary (as defined in Section 11) shall have the right to elect, by written
notice  given to the Company  prior to the earlier of the  Offering  Termination
Date or the expiration of a period of sixty (60) days  commencing  with the date
of the death of the Participant, either:

                  (i) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan, or

                  (ii) to exercise the Participant's  option for the purchase of
Stock  on  the  Offering  Termination  Date  next  following  the  date  of  the
Participant's death for the purchase of the number of full shares of Stock which
the accumulated  payroll deductions in the Participant's  account at the date of
the  Participant's  death will purchase at the applicable  option price, and any
excess in such account will be returned to said beneficiary, without interest.

         In the event  that no such  written  notice of  election  shall be duly
received by the Company,  the beneficiary shall  automatically be deemed to have
elected, pursuant to paragraph (ii), to exercise the Participant's option.

<PAGE>

Section 9.  Stock.

         (a) Maximum Shares.  The maximum number of shares which shall be issued
under the Plan,  subject to  adjustment  upon changes in  capitalization  of the
Company as  provided  in Section  11(d)  shall be 600,000  shares.  If the total
number of shares for which  options are  exercised on any  Offering  Termination
Date in  accordance  with Section 6 exceeds the number of shares then  available
under the Plan,  the  Company  shall  make a pro rata  allocation  of the shares
available for delivery and  distribution  in as nearly a uniform manner as shall
be  practicable  and as it shall  determine to be equitable,  and the balance of
payroll  deductions  credited to the account of each Participant  under the Plan
shall be returned to the Participant as promptly as possible.

         (b)  Participant's  Interest in Option Stock. The Participant will have
no interest in Stock covered by the  Participant's  option until such option has
been exercised.

         (c) Registration of Stock. Stock to be delivered to a Participant under
the  Plan  will  be  registered  in the  name  of the  Participant,  or,  if the
Participant  so directs by written  notice to the Company  prior to the Offering
Termination  Date  applicable  thereto,  in the names of the Participant and one
such other person as may be designated by the Participant, as joint tenants with
rights of survivorship or as tenants by the entireties,  to the extent permitted
by applicable law.

         (d)  Restrictions  on Exercise.  The Committee may, in its  discretion,
require as  conditions  to the  exercise  of any option that the shares of Stock
reserved  for  issuance  upon the  exercise  of the option  shall have been duly
listed,  upon  official  notice of  issuance,  upon a stock  exchange,  and that
either:

                  (i) A Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or

                  (ii) the  Participant  shall have  represented  at the time of
purchase,  in form and  substance  satisfactory  to the Company,  that it is the
Participant's intention to purchase the shares for investment and not for resale
or distribution.

Section 10.       Administration.

         (a) Committee.  The  Compensation  Committee (the  "Committee")  of the
Board of Directors shall  administer the Plan, The Committee shall consist of no
fewer than three members of the Board of  Directors.  No member of the Committee
shall be eligible to purchase Stock under the Plan.

         (b)  Authority of Committee.  Subject to the express  provisions of the
Plan, the Committee shall have plenary  authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and  regulations
for  administering  the  Plan,  and to  make  all  other  determinations  deemed
necessary or advisable for administering the Plan. The Committee's determination
on the foregoing matters shall be conclusive.
<PAGE>

         (c) Rules Governing the  Administration of the Committee.  The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in  addition  to members  previously  appointed  and may fill  vacancies,
however caused, in the Committee. The Committee may select one of its members as
its  Chairman  and shall hold its  meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. A majority of its members shall
constitute a quorum.  All  determinations  of the  Committee  shall be made by a
majority of its  members.  The  Committee  may correct any defect or omission or
reconcile  any  inconsistency  in the Plan,  in the  manner and to the extent it
shall deem  desirable.  Any  decision  or  determination  reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and  regulations for
the conduct of its business as it shall deem advisable.

         (d)  Indemnification of Committee.  In addition to such other rights of
indemnification  as they may have as directors  or as members of the  Committee,
under the Company's Certificate of Incorporation, By-laws, or pursuant to law or
contract,  the  members of the  Committee  shall be  indemnified  by the Company
against reasonable expenses,  including attorneys' fees actually and necessarily
incurred in connection with any action or appeal  therein,  to which they or any
of them may be party by reason of any action taken or failure to act under or in
connection with the Plan or any stock option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by  independent  legal  counsel  selected  by the  Company)  or  paid by them in
satisfaction  of a judgment in any such  action,  suit or  proceeding  except in
relation  to  matters as to which it shall be  adjudged  in such  action,  suit,
proceeding  that  such  Committee   member  is  liable  for  misconduct  in  the
performance of his duties; provided that within 60 days after institution of any
such action,  suit or  proceeding a Committee  member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.

Section 11.       Miscellaneous.

         (a)  Designation  of  Beneficiary.  A  Participant  may file a  written
designation  of a  beneficiary  who is to  receive  any  shares  and cash to the
Participant's  credit  under the Plan in the event of such  Participant's  death
prior to delivery to the Participant of such shares and cash.  Such  designation
of beneficiary  may be changed by the  Participant at any time by written notice
to the Company.  Upon the death of a Participant and upon receipt by the Company
of  proof  of the  identity  and  existence  at  the  Participant's  death  of a
beneficiary  validly  designated by the Participant  under the Plan, the Company
shall  deliver  such  shares and cash to such  beneficiary.  In the event of the
death of a Participant  and in the absence of a beneficiary  validly  designated
under  the  Plan who is  living  at the time of such  Participant's  death,  the
company shall deliver such shares and cash to the executor or  administrator  of
the estate of the Participant,  or if no such executor or administrator has been
appointed (to the knowledge of the company) the Company, in its discretion,  may
deliver such shares and cash to the spouse or to any one or more  dependents  or
relatives of the Participant or if no spouse, dependent, or relative is known to
the  Company  then to  such  other  person  as the  Company  may  designate.  No
designated  beneficiary  shall prior to the death of the Participant by whom the
beneficiary  has been  designated,  acquire  any  interest in the shares or cash
credited to the Participant under the Plan.
<PAGE>

         (b)   Transferability.   Neither  payroll  deductions   credited  to  a
Participant's account nor any rights with regard to the exercise of an option or
to  receive  stock  under the Plan may be  assigned,  transferred,  pledged,  or
otherwise  disposed of in any way by the  Participant  other than by will or the
laws of descent  and  distribution.  Any such  attempted  assignment,  transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 7(b).

         (c)  Use of  Funds.  All  payroll  deductions  received  or held by the
Company under this Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions.

         (d)      Adjustment Upon Changes in Capitalization.

                  (i) If,  while any options are  outstanding,  the  outstanding
shares of Stock of the Company have increased,  decreased, changed into, or been
exchanged for a different  number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse  stock  split or  similar  transaction,  appropriate  and  proportionate
adjustments  may be made by the  Committee  in the number  and/or kind of shares
which are  subject  to  purchase  under  outstanding  options  and on the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event,  the number  and/or  kind of shares  which may be offered in the
Offerings described in Section 4 hereof shall also be proportionately adjusted.

                  (ii) Upon the  dissolution or  liquidation of the Company,  or
upon a  reorganization,  merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving  corporation,
or upon a sale of  substantially  all of the property or stock of the Company to
another  corporation,  the holder of each option then outstanding under the Plan
will  thereafter  be entitled to receive at the next Offering  Termination  Date
upon the exercise of such option for each share as to which such option shall be
exercised,  as nearly as  reasonably  may be  determined,  the cash,  securities
and/or property which a holder of one share of the Stock was entitled to receive
upon and at the time of such transaction. The Board of Directors shall take such
steps in connection with such  transactions as the Board shall deem necessary to
assure that the provisions of this Section 11(d) shall thereafter be applicable,
as nearly  as  reasonably  may be  determined,  in  relation  to the said  cash,
securities  and/or  property  as to  which  such  holder  of such  option  might
thereafter be entitled to receive.

         (e)  Amendment  and  Termination.  The Board of  Directors  shall  have
complete power and authority to terminate or amend the Plan; provided,  however,
that the Board of Directors shall not,  without the approval of the shareholders
of the Company (i)  increase  the maximum  number of shares  which may be issued
under  the  Plan,  (ii)  amend the  requirements  as to the  class of  employees
eligible to purchase Stock under the Plan or permit the members of the Committee
to purchase stock under the Plan. No  termination,  modification or amendment of
the Plan may, without the consent of an Employee then having an option under the
Plan to purchase Stock,  adversely affect the rights of such Employee under such
option.
<PAGE>

         (f) No Rights as a Shareholder.  No right as a shareholder  shall exist
with respect to any shares of Stock  covered by stock  options until the date of
the issuance of a stock certificate for such shares. No adjustment shall be made
for  dividends  or other  rights for which the record  date is prior to the date
such certificate is issued.

         (g) No Employment  Rights.  The Plan does not,  directly or indirectly,
create  any right for the  benefit  of any  Employee  or class of  employees  to
purchase  any  shares  under the Plan,  or  create in any  Employee  or class of
employees any right with respect to  continuation  of employment by the Company,
and it shall not be deemed to interfere in any way with the  Company's  right to
terminate, or otherwise modify, an Employee's employment at any time.

         (h) Effective  Date.  The Plan shall become  effective as of January 1,
1996,  subject to  approval  by a majority  of the  shareholders  of the Company
within twelve (12) months after its adoption by the Board of  Directors.  If the
Plan is not approved, the Plan shall not become effective.

         (i) Termination Date. This Plan shall terminate,  and no further shares
of Stock  shall be sold or issued  hereunder,  on  December  31,  2000,  or such
earlier date as may be determined  by the Board of Directors or  Committee.  The
termination of this Plan, however, shall not affect any restrictions  previously
imposed  on the shares  issued  pursuant  to this Plan or rights of the  Company
granted pursuant to this Plan.

         (j) Effect of Plan.  The  provisions  of the Plan shall,  in accordance
with its terms,  be binding upon, and inure to the benefit of, all successors of
each Employee  participating in the Plan,  including,  without limitation,  such
Employee's estate and the executors,  administrator or trustees  thereof,  heirs
and legatees,  and any receiver,  trustee in  bankruptcy  or  representative  of
creditors of such Employee.

         (k)  Governing  Law.  The law of the State of New York will  govern all
matters  relating to this Plan except to the extent it is superseded by the laws
of the United States.


Date Plan adopted by Board of Directors:  November 8, 1994 Date Plan approved by
Shareholders:  May 3, 1995 Date Plan  amendment  approved by Board of Directors:
February 11, 1998 Date Plan amendment approved by Shareholders: