EMPLOYMENT AGREEMENT

                  AGREEMENT  dated  as of July  22,  1998,  between  MICHAEL  D.
AUSTIN,   residing  at  3246   Fieldstone   Drive,   Flushing,   Michigan  48433
("Executive"),  and ATLAS TECH NOLOGIES, INC., a Michigan corporation having its
principal office at 201 South Alloy, Fenton, Michigan 48430 ("Com pany").

                  WHEREAS,  the Company and Executive desire to pro vide for the
continued employment of Executive by the Company on the terms set forth herein;

         IT IS AGREED:

         1.       Employment, Duties and Acceptance.

                  1.1 The Company hereby employs Executive as its President. All
of  Executive's  powers  and  authority  in any  capacity  shall at all times be
subject  to the  reasonable  direction  and  control of the  Company's  Board of
Directors  ("Board")  and shall  include  the  matters  set forth in  Schedule A
hereto.  During  the term of this  Agreement,  Executive  shall be  elected as a
member of the Board.

                  1.2 The Board may assign to  Executive  such  other  executive
duties for the  Company or any  Affiliate  as are  consistent  with  Executive's
status in the capacity set forth above.  As used herein,  "Affiliate"  means any
parent corpora tion or subsidiary of the Company and any other corporation under
common control with the Company.

                  1.3 Executive accepts such employment and agrees to devote all
of his business time,  energies and attention to the  performance of his duties;
provided  that nothing  herein shall be construed as preventing  Executive  from
making and supervising personal investments.

         2.       Compensation and Benefits.

                  2.1      [Intentionally omitted.]

                  2.2 The Company shall pay to Executive a salary  ("Salary") at
the rate of $198,588 per year, subject to cost-of-living increases in accordance
with  Section  2.4.   Executive's   Salary  shall  be  paid  in  equal  periodic
installments  in accordance  with the Company's  normal  payroll  procedures and
shall be subject to withholding taxes and other normal payroll deductions.

                  2.3  During  the term of this  Agreement,  Executive  shall be
entitled to such medical and life  insurance  benefits and other benefits as are
set forth in  Schedule B hereto.  Executive  shall be  entitled  to six weeks of
vacation  in each  calendar  year but shall not be  entitled  to payment in lieu
thereof to the extent not taken.






<PAGE>



                  2.4 (a) The Company will pay or  reimburse  Execu tive for all
transportation,  hotel and other  expenses  reason ably incurred by Executive on
business trips and for all other ordinary and reasonable  out-of-pocket expenses
actually  incurred by  Executive  in the conduct of the  business of the Company
against itemized  vouchers  submitted with respect to any such expenses approved
in accordance with customary procedures.

                           (b)      The Company shall provide Executive with
an automobile suitable for business use and shall pay all the costs and expenses
reasonably incurred by Executive in con nection with the use thereof,  including
but not limited to  purchase or leasing  costs,  fuel,  maintenance,  insurance,
garaging and mobile telephone.




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<PAGE>

                  2.5 For each twelve month period of the term of this Agreement
beginning on January 1, 1999, Executive's Salary shall be increased by an amount
equal  to  the  product  obtained  by  multiplying  Executive's  Salary  in  the
immediately preceding calendar year ("Prior Year") by a fraction,  the numerator
of which shall be the  difference  between (a) the Consumer  Price Index for All
Urban  Consumers - Detroit,  Michigan,  as published by the U.S. Bureau of Labor
Statistics  (reference base 1982-1984 = 100) ("CPI"),  for the month of November
in the Prior Year,  and (b) the CPI for the month of  November  in the  calendar
year  preceding the  Prior Year ("Base Year CPI") and  the  denominator of which
shall be the Base Year CPI.

                  2.6      [Intentionally omitted.]

                  2.7      [Intentionally omitted.]

                  2.8      [Intentionally omitted.]

                  2.9      [Intentionally omitted.]

                  2.10 During the term of this Agreement,  the Company shall not
amend the provisions of its  Certificate of Incorpo ration and By-Laws  relating
to indemnification and limitation of liability of directors and officers,  as in
effect on the date hereof, without the consent of Executive.

                  2.11     [Intentionally omitted.]




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                  2.12     [Intentionally omitted.]

                  2.13     [Intentionally omitted.]

         2A.      Bonus.

                  2A.1 In consideration of the  representations set forth in the
Settlement Agreement referred to below, and subject to the further provisions of
this Article 2A, the Company shall pay Executive the sum of Eight Hundred Thirty
Thousand Two Hundred  Eighty-Two and 21/100  ($830,282.21)  Dollars,  payable in
four (4) equal and consecutive annual installments, commencing on July 30, 1999,
and on each  anniversary  date  thereafter.  Payments  shall be  subject  to all
withholding requirements under applicable law.

                  2A.2 In the event of  Executive's  death  prior to  payment in
full of the amount  payable  under this Article 2A, the  payments due  Executive
shall be paid to  Executive's  spouse,  if living,  and if not,  to  Executive's
estate.

                  2A.3  The  payments  to be made by  Company  pursuant  to this
Article  2A shall  not be  subject  to  set-off  or  deduction  for any  reason,
including breach by Executive of any pro vision of this Agreement, except as set
forth below.

                  2A.4  Notwithstanding  the  foregoing,   Company  may  set-off
against  payments  to be made  pursuant  to this  Article 2A  amounts  for which
Executive  has agreed to  indemnify  the Company and  Productivity  Technologies
Corp.  in the  event  of  certain  conditions  set  forth  in  Section  8 of the
Settlement  Agreement dated July 22, 1998 between Prime, Austin, the Company and
Productivity  Technologies  Corp.  Pursuant  to  Section  8  of  the  Settlement




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Agreement, the maximum amount of the Executive's liability for all reasons shall
not exceed  Eight  Hundred  Thirty  Thousand  Two Hundred  Eighty-Two  and 21/00
($830,282.21)  Dollars less the sum of all payments  made under  Section 2A.1 of
this Agreement.  Subsequent to any date on which payment is specified to be made
pursuant to this  Article 2A, the Company and  Productivity  Technologies  Corp.
will have no further  right to seek  indemnification  with respect to any amount
for which payment has become due hereunder  unless  written notice of such right
to indemnification has been received by Executive on or prior to such date.

                  2A.5 Executive  hereby  acknowledges  that  in  the event of a
default of the senior debt referred to below, his right to payment of the amount
set forth in Section 2A.1 shall be  subordinated to the prior payment in full of
all principal and interest on any existing or future obligations of the Company,
including guarantees by the Company, for any money borrowed from any bank, trust
company,  insurance  company  or  other  financial  institution  engaged  in the
business  of  lend  ing  ("Senior  Debt").  Executive  further  agrees  that  in
accordance with this subordination, the following shall apply:

                  Upon   distribution   of  assets  of  the  Company   upon  any
         dissolution,  winding up, liquidation or reorganization of the Company,
         whether  in  bankruptcy,  insolvency,  reorganization  or  receivership
         proceedings  or upon an assignment  for the benefit of creditors or any
         other  marshaling  of the  assets  and  liabilities  of the  Company or
         otherwise,

                           (i) The  holders  of all Senior  Debt shall  first be
                  entitled to receive payment in full of the principal  thereof,
                  premium, if any, and the interest due thereon before Executive
                  is entitled to  receive  any payment pursuant to Section 2A.1;
                  and



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                           (ii) Any  payment  or  distribution  of assets of the
                  Company of any kind or character, whether in cash, property or
                  securities,  to which  Executive  would be entitled except for
                  the   provisions   of  this  Section  shall  be  paid  by  the
                  liquidating  trustee  or  agent or other  person  making  such
                  payment or dis tribution,  whether a trustee in bankruptcy,  a
                  receiver or liquidating trustee or otherwise,  directly to the
                  holders   of   Senior   Debt  or   their   representative   or
                  representatives  or to  the  trustee  or  trustees  under  any
                  indenture under which any  instruments  evidencing any of such
                  Senior Debt may have been  issued,  ratably  according  to the
                  aggregate amounts remaining unpaid on account of the principal
                  of,  premium,  if any, and interest on the Senior Debt held or
                  represented  by each, to the extent  necessary to make payment
                  in full of all Senior  Debt  remaining  unpaid,  after  giving
                  effect  to  any  concurrent  payment  or  distribution  to the
                  holders of such Senior Debt.

                  2A.6  The  Company  shall  have no  obligation  to set  aside,
earmark or entrust  any fund or money  with which to pay its  obligations  under
Section 2A.1. Executive, his ben eficiaries and any successor-in-interest to him
shall be and remain simply a general  creditor of the Company in the same manner
as any other creditor having a general claim for a matured and unpaid debt.




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                  2A.7 Executive's  rights to payments  pursuant to Section 2A.1
shall not be subject in any manner to anticipation,  alienation, sale, transfer,
assignment,  pledge,  encumbrance,  attachment  or  garnishment  by creditors of
Executive, his spouse, other heirs or beneficiaries.

                  2A.8 The  provisions  of this  Article  2A shall  continue  in
effect regardless of the termination of this Agreement for any reason.

         3.       Term and Termination.

                  3.1 The term of this  Agreement  shall commence as of the date
hereof and shall continue until December 31, 2001,  unless sooner  terminated as
herein provided.

                  3.2 If Executive dies during the term of this Agreement,  this
Agreement  shall thereupon  terminate,  except that the Company shall pay to the
legal  representative of Executive's  estate all monies due hereunder to the end
of the month during which Executive dies.

                  3.3 The Company,  by notice to Executive,  may terminate  this
Agreement if Executive  shall fail because of illness or  incapacity  to render,
for twelve consecutive  months,  services of the character  contemplated by this
Agree ment. Notwithstanding such termination, the Company shall pay to Executive
all  monies  due  hereunder  to the end of the month in which  such  termination
occurs.

                  3.4 The Company,  by notice to Executive,  may terminate  this
Agreement and Executive's employment with the Company for cause. As used herein,
"cause"  shall  mean:  (a) the  refusal  or failure  by  Executive  to carry out




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<PAGE>


specific  directions of the Board which are of a material  nature and consistent
with his status in the  capacity  set forth in Section  1.1,  or the  refusal or
failure by Executive to per form a material part of  Executive's  duties in such
capacity; provided that failure to achieve specified performance goals shall not
be "cause"  hereunder;  (b)  fraudulent or dishonest  action by Executive in his
relations  with the Company or any of its  Affiliates,  or with any  customer or
other business contact of the Company or any of its Affiliates  ("dishonest" for
these purposes  shall include  Executive's  knowingly or recklessly  making of a
material  misstatement  or  omission  for  his  personal  benefit);  or (c)  the
conviction  of  Executive  of any  crime  involving  an act of moral  turpitude.
Notwithstand  ing the foregoing,  no "cause" for termination  shall be deemed to
exist with respect to Executive's  acts described in clause (a) above unless the
Company shall have given written notice to Executive specifying the "cause" with
reasonable  particu  larity and,  within five  business  days after such notice,
Executive  shall not have cured or eliminated the situation or event giving rise
to such "cause."

         4.       Protection of Confidential Information; Non-Competition.

                  4.1      Executive acknowledges that:

                           (a)        As  a  result of  his  employment  by  the
Company,  Executive  has  obtained  and  will  obtain  secret  and  confidential
information   concerning  the  business  of  the  Company  and  its  Affiliates,
including, without limitation, financial information,  proprietary rights, trade
secrets  and  "know-how,"   customers,   and  certain   business   methodologies
("Confidential Information").




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                           (b)      The Company and  its  Affiliates will suffer
substantial  damage which will be difficult to compute if,  during the period of
his  employment  with  the  Company  or  thereafter,  Executive  should  divulge
Confidential  Information  or,  thereafter,  Executive  should  enter a business
competitive with that of the Company.

                           (c)      The   provisions  of   this  Agreement   are
reasonable and necessary for the protection of the business of the  Company  and
its Affiliates.

                  4.2  Executive  agrees  that he will not at any  time,  either
during the term of this Agreement or thereafter, divulge to any person or entity
any  Confidential  Information  obtained  or  learned  by him as a result of his
employment with the Company or any of its  Affiliates,  except (i) in the course
of performing  his duties  hereunder,  (ii) with the Company's  express  written
consent;  (iii) to the extent that any such  information is in the public domain
other  than as a result of  Executive's  breach of any of his  obligations  here
under; or (iv) where required to be disclosed by court order,  subpoena or other
government  process.  If Executive shall be required to make disclosure pursuant
to the provisions of clause (iv) of the preceding sentence,  Executive promptly,
but in no event more than 48 hours after learning of such subpoena, court order,
or other government process, shall notify, by personal delivery or by electronic
means, con firmed by mail, the Company and, at the Company's expense,  Executive
shall: (a) take all reasonably necessary steps required by the Company to defend
against  the  enforcement  of such  subpoena,  court  order or other  government
process, and (b) permit the Company to intervene and participate with counsel of
its choice in any proceeding  relating to the  enforcement  thereof.  As used in
this Agreement,  "Affiliate" means any entity that,  directly or indirectly,  is
controlled by, controlling, or under common control with the Company.


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                  4.3 Upon  termination  of his  employment  with  the  Company,
Executive will promptly  deliver to the Company all original  memoranda,  notes,
records, reports, manuals, draw ings, blueprints and other documents relating to
the business of the Company and its Affiliates  (and all copies thereof) and all
property  associated  therewith,  which he may then  possess  or have  under his
control.

                  4.4 If  Executive  commits a breach,  or threatens to commit a
breach,  of any of the  provisions  of Section 4.2,  the Company  shall have the
right and remedy to have the provi sions of this Agreement specifically enforced
by any court having equity  jurisdiction,  it being  acknowledged  and agreed by
Executive  that the services  being  rendered  hereunder to the Company are of a
special,  unique  and  extraordinary  char  acter  and that any such  breach  or
threatened  breach will cause  irreparable  injury to the Company and that money
damag es will not provide an adequate remedy to the Company.

                  4.5  If  any   provision   of  Section   4.2  is  held  to  be
unenforceable because of the scope,  duration or area of its applicability,  the
tribunal  making such  determination  shall have the power to modify such scope,
duration,  or area, or all of them, and such provision or provisions  shall then
be applicable in such modified form.

                  4.6 Executive  acknowledges that until the termina tion of the
"Non-Competition   Period"  defined  therein,  Execu  tive  is  subject  to  the
provisions of Section  5.04(b) of that certain Merger  Agreement  dated December
18, 1995,  between  Production  Systems  Acquisition  Corporation, AMS  Holding
Company, Executive, Prime and the Company.




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         5.       Miscellaneous Provisions.

                  5.1 All notices  provided  for in this  Agreement  shall be in
writing,  and shall be deemed to have been duly given when delivered  personally
to the party to receive the same, when transmitted by electronic  means, or when
mailed  first  class  postage  prepaid,  by  certified  mail,  return  re  ceipt
requested,  addressed to the party to receive the same at his or its address set
forth below,  or such other  address as the party to receive the same shall have
specified  by written  notice  given in the manner  provided for in this Section
5.1.  All notices  shall be deemed to have been given as of the date of personal
delivery or transmittal thereof or three business days after mailing thereof.

                  If to Executive:

                           Michael D. Austin
                           3246 Fieldstone Drive
                           Flushing, MI 48433

                           Marked "Personal and Confidential"

                  If to the Company:

                            Atlas Technologies, Inc.
                            201 South Alloy Drive
                            Fenton, Michigan 48430
                            Attn.:  Chief Executive Officer
                            Telecopier: (810) 629-8145

                  with a copy to:

                            Mr. Jesse A. Levine
                            Seidman & Co., Inc.
                            101 North Main Street
                            Suite 430
                            Ann Arbor, MI 48104
                            Telecopier: (313) 996-1738



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                  5.2 This  Agreement  executed  simultaneously  here  with sets
forth  the  entire  agreement  of the  parties  relating  to the  employment  of
Executive and are intended to supersede all prior  negotiations,  understandings
and agreements.  No provisions of this Agreement may be waived or changed except
by a writing  by the party  against  whom such  waiver or change is sought to be
enforced.  The  failure of any party to re quire  performance  of any  provision
hereof  shall in no manner  affect  the right at a later  time to  enforce  such
provision.

                  5.3 All  questions  with respect to the  construction  of this
Agreement,  and the rights and  obligations of the parties  hereunder,  shall be
determined  in  accordance  with the law of the State of Michigan  applicable to
agreements  made  and  to  be  performed  entirely  in  Michigan.  Any  dispute,
controversy or claim arising out of or relating to this  Agreement,  the making,
interpretation  or the breach thereof,  other than a claim solely for injunctive
relief for any alleged  breach of the provisions of Section 4.2, as to which the
parties  shall have the right to apply for  specific  per  formance to any court
having equity  jurisdiction in Genesee County,  Michigan,  shall be submitted to
arbitration to the American Arbitration Association in Flint, Michigan, before a
single  arbitrator in accordance  with the Commercial  Arbitra tion Rules of the
American  Arbitration  Association  and judg ment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof and any party
to the  arbitration  may, if he or it so elects,  institute  proceedings  in any
court having  jurisdiction  for the specific  performance of any such award. The
powers of the arbitrator  shall in clude, but not be limited to, the awarding of
injunctive  relief.  All costs and expenses of the arbitration,  including legal
fees of the prevailing party, shall be borne by the non-prevailing party.



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                  5.4  This  Agreement  shall  inure  to the  benefit  of and be
binding upon the successors  and assigns of the Compa ny. This  Agreement  shall
not be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.

                  5.5 This Agreement supersedes all prior agreements between the
Company  and  Executive  regarding  the  terms  and  conditions  of  Executive's
employment with the Company.

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

                                             /s/ Michael D. Austin
                                            ___________________________________
                                            MICHAEL D. AUSTIN


                                            ATLAS TECHNOLOGIES, INC.

                                                /s/ Ronald M. Prime
                                            By:________________________________
                                                  Ronald M. Prime
                                            Title: Chief Executive Officer


                  The undersigned  hereby agrees to the provisions of Article 2A
of the above Employment Agreement.

                                            PRODUCTIVITY TECHNOLOGIES CORP.

                                               /s/ Jesse A. Levine
                                            By:________________________________
                                                   Jesse A. Levine
                                            Title:  Chief Financial Officer




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                                   SCHEDULE A


         Executive shall be responsible for the determination of actions and the
implementation  thereof  regarding the matters set forth below,  subject to such
limitations as are set forth herein in exercising his responsibility.  Executive
shall act in a manner consistent with the terms outlined below and as determined
by the Board of Directors from time to time.

                  1. Personnel policy and the hiring and discharge of employees,
provided  that  no  person  related  to  Executive  or  Executive's   spouse  (a
"Relative")  shall  be  hired  without  the  express  approval  of the  Board of
Directors.

                  2.  Compensation  policy and the  establishment  of  salaries,
bonuses,  and other  compensation  for employees other than Executive,  provided
that increases in  compensation  to Relatives  shall not be in excess of amounts
commensurate with increases given to other employees.

                  3.  Procurement  of credit  facilities  and  authorization  of
capital  expenditures  to the extent that such are  required  to meet  projected
increases in business or as replacements  for obsolete or worn out equipment and
machinery.

                  4. Determination of sources of supply and costs thereof.

                  5. Sales and  Marketing  policy,  including  determination  of
markets and produce lines and  expansion or  discontinuance  thereof  individual
product  development efforts and priorities for products within approved product
lines.

                  6. Engagement of legal counsel.

                  7.  Various   improvement   programs  and   determination   of
individual improvement projects and the implementation thereof.

                  8.  Primary  organizational  structure  and  determination  of
individual secondary positions within the organization.

                                       A-1

<PAGE>


                                   SCHEDULE B



         1.       Paid Holidays

                  A.       Memorial Day

                  B.       Independence Day

                  C.       Labor Day

                  D.       Thanksgiving Day

                  E.       Christmas Eve Day

                  F.       Christmas Day

                  G.       New Years Day


         2.       Insurance

                  A.       Health and dental insurance, including master
                           medical and prescription plan

                  B.       Life and accident insurance

                  C.       Short-term disability pay, regular weekly
                           salary and health insurance for up to 52 weeks

         3.       Participation  in qualified  retirement  plans of the employer
                  upon meeting the eligibility requirements therefor.

         4.       Miscellaneous  benefits as  provided  in the current  Salaried
                  Employee  Handbook  including,  but  not  lim  ited  to,  tool
                  allowance, safety glasses and educational assistance.

         5.       Such other  benefits as are provided to salaried  personnel of
                  the Company.

                                       B-1

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