AMENDMENT NO. 1 AND WAIVER NO. 1


         Amendment No. 1 and Waiver No. 1 (this  "Amendment"),  dated as of July
21,  1998,  to the Credit  Agreement  (as  amended,  supplemented  or  otherwise
modified  from time to time,  the  "Credit  Agreement"),  dated as of August 27,
1997, by and among VIDEO SERVICES CORPORATION,  VSC MAL CORP., the Lenders party
thereto, and KEYBANK NATIONAL ASSOCIATION, as the Issuer and as the Agent.

                                    RECITALS

         I. Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.

         II. The Borrower and the Agent wish to amend the Credit  Agreement upon
the terms, and subject to the conditions, herein contained.

         Therefore,  in consideration of the Recitals,  the terms and conditions
herein  contained  and other good and  valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged,  the Borrower and the Agent hereby
agree as follows:

         1. The Borrower has  reported to the Agent and the Lenders  that,  with
respect to the Borrower's  fiscal year ended June 30, 1998, the Borrower and its
Subsidiaries on a Consolidated  basis made Capital  Expenditures in an aggregate
amount totalling nearly $9,800,000 and,  therefore,  the Borrower was in default
of its  obligations  under Section 8.6. The Agent hereby waives such default and
any Event of Default  arising  solely  therefrom,  provided  that the  aggregate
Capital  Expenditures  of the Borrower and its  Subsidiaries  on a  Consolidated
basis for such fiscal year did not exceed $9,800,000.

         2. The definition  "Adjusted EBITDA" contained in Section 1.1(b) of the
Credit Agreement is amended by adding the following to the end thereof:

         Notwithstanding  anything  in  this  definition  to the  contrary,  for
         purposes of this definition only,  Capital  Expenditures  shall exclude
         all Capital  Expenditures of the Borrower and the  Subsidiaries  during
         the fiscal years 1998 and 1999 directly  attributable to establishing a
         division of Audio plus Video  International,  Inc. on the West coast of
         the  contiguous  part of the United States of America to the extent not
         in excess of $5,100,000 in the aggregate on a Consolidated basis.
<PAGE>
         3. The grid contained in the definition  "Applicable  Margin" contained
in  Section  1.1(b) of the  Credit  Agreement  is amended  and  restated  in its
entirety as follows:



<TABLE>
<S>                                 <C>                         <C>                            <C>
Whenever the                                                     Commitment
Leverage Ratio is:                   Eurodollar                      Fee                         LC Fee

> 3.00                               2.000%                      0.375%                          2.000%
-

> 2.50 < 3.00                        1.750%                      0.375%                          1.750%
-      -

> 2.00 < 2.50                        1.500%                      0.375%                          1.500%
-      -

> 1.25 < 2.00                        1.250%                      0.250%                          1.250%
-      -

< 1.25                               1.000%                      0.250%                          1.000%
</TABLE>

     4.  Section  7.11 of the Credit  Agreement  is amended and  restated in its
     entirety as follows:

            7.11   Leverage Ratio

     At each fiscal  quarter end  occurring  during each period set forth below,
     have a Leverage Ratio not greater than the ratio set forth adjacent to such
     period:

                           Period                               Ratio

                    September 30, 1997 through
                    March 31, 1998                            3.00:1.00

                    April 1, 1998 through
                    March 31, 1999                            3.30:1.00

                    April 1, 1999 through
                    March 31, 2000                            3.00:1.00

                    April 1, 2000 through
                    March 31, 2001                            2.50:1.00

                    April 1, 2001 through
                    September 30, 2002                        2.00:1.00

<PAGE>
     5.  Section  7.12 of the Credit  Agreement  is amended and  restated in its
     entirety as follows:

          7.12 Fixed Charge Coverage Ratio

     At each fiscal  quarter end  occurring  during each period set forth below,
have a Fixed Charge Coverage Ratio not greater than the ratio set forth adjacent
to such period:

                   Period                                        Ratio

            September 30, 1997 through
            June 30, 1998                                      1.00:1.00

            July 1, 1998 through
            September 30, 1998                                 0.90:1.00

            October 1, 1998 through
            December 31, 1998                                  0.80:1.00

            January 1, 1999 through
            March 31, 1999                                     0.75:1.00

            April 1, 1999 through
            March 31, 2000                                     0.90:1.00

            April 1, 2000 through
            September 30, 2002                                 1.00:1.00.


     6. The first paragraph of Section 8.4(e) of the Credit Agreement is amended
     and restated in its entirety as follows:

          (e) at any  time on or after  the  date,  if any,  occurring
         after July 1, 1998 upon which the Borrower shall have delivered to each
         Lender (x) a Compliance  Certificate pursuant to Section 7.7(d) showing
         that the Fixed Charge  Coverage  Ratio was not less than  1.00:1.00 for
         the second  consecutive fiscal quarter,  and (y) financial  projections
         indicating  that the Borrower will be in compliance with Sections 7.11,
         7.12 and 7.13 through  September 30, 2002,  other  Acquisitions  by the
         Borrower  or any  Guarantor,  in either  case of one or more  Operating
         Entities (each an "Additional Permitted Acquisition"), provided that

     7.  Section  9.1(p) of the Credit  Agreement is amended and restated in its
     entirety as follows:

     (p)(1) The Borrower shall have failed to deliver to the Agent,  by no later
     than October 31, 1997, the Environmental  Questionnaire  provided by Summit
     Bank,  duly completed in all material  respects by all of the Loan Parties,
     or (2) for the fiscal year ended 1998, the Borrower shall not have positive
     net income on a Consolidated basis in accordance with GAAP.
<PAGE>
     8.  Paragraphs 1 - 7 of this  Amendment  shall not be effective  until such
     date as each of the following conditions shall have been satisfied:

     (a) Required  Lenders  shall have  consented to the  execution and delivery
     hereof by the Agent.

     (b) The  Borrower  shall  have paid to the  Agent,  for the  account of the
     Lenders pro rata based upon their  respective  credit  exposures  under the
     Credit Agreement, an amendment fee in the sum of $100,000.

     (c) The Borrower shall have paid the reasonable fees and  disbursements  of
     Special Counsel incurred in connection with this Amendment.

         9. The  Borrower  hereby (a)  reaffirms  and admits  the  validity  and
enforceability  of all the Loan Documents and its  obligations  thereunder,  (b)
agrees and admits that it has no valid  defenses to or offsets  against any such
obligation,  (c) represents and warrants that no Default or Event of Default has
occurred  or  is  continuing,   (d)  agrees  to  pay  the  reasonable  fees  and
disbursements  of Special  Counsel to the Agent incurred in connection  with the
preparation,  negotiation and closing of this Amendment,  and (e) represents and
warrants that each of the  representations and warranties made by it in the Loan
Documents is true and correct with the same effect as though such representation
and warranty had been made on the date hereof.

     10. In all other  respects,  the Loan Documents  shall remain in full force
and effect,  and no  amendment  in respect of any term or  condition of any Loan
Document  contained  herein shall be deemed to be an amendment in respect of any
other term or condition contained in any Loan Document.

     11. This  Amendment  may be executed in any number of  counterparts  all of
which, taken together,  shall constitute one Amendment.  In making proof of this
Amendment,  it shall only be necessary to produce the  counterpart  executed and
delivered by the party to be charged.

     12. THIS  AMENDMENT IS BEING  EXECUTED AND DELIVERED IN, AND IS INTENDED TO
BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN
ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
<PAGE>



                        AMENDMENT NO. 1 AND WAIVER NO. 1
                           VIDEO SERVICES CORPORATION



         AS EVIDENCE  of the  agreement  by the parties  hereto to the terms and
conditions  herein  contained,  each such party has caused this  Amendment to be
duly executed on its behalf.


                                        VIDEO SERVICES CORPORATION


                                        By:/S/ Steven G. Crane
                                        Name:Steven G. Crane
                                        Title:Vice President & Chief
                                              Financial Officer


                                        VSC MAL CORP.


                                        By:/s/ Steven G. Crane
                                        Name:Steven G. Crane
                                        Title:Vice President & Chief
                                              Financial Officer



                                        KEYBANK NATIONAL ASSOCIATION, in its
                                        capacity as a Lender, as the
                                        Issuer, and as the Agent


                                        By:/s/ Brendan Sachtjen
                                        Name:Brendan Sachtjen
                                        Title:Senior Vice President



                                        SUMMIT BANK


                                        By:/s/ Thomas Knoop
                                        Name:Thomas Knoop
                                        Title:Vice President