TENTH AMENDMENT AND WAIVER

     TENTH  AMENDMENT  AND WAIVER  dated as of December  29,  2000 (this  "Tenth
Amendment")  with respect to the Credit  Agreement dated as of July 12, 1996, as
amended by the First  Amendment to Credit  Agreement  dated as of September  27,
1996,  Amendment  Two and Waiver to Credit  Agreement  dated as of July 4, 1997,
Amendment Three to Credit  Agreement (With Consent) dated as of August 13, 1997,
Amendment Four to Credit Agreement dated as of April 8, 1998, Amendment Five and
Consent and Waiver to Credit Agreement dated as of March 1, 1999,  Amendment Six
dated as of May 1,  1999,  Amendment  Seven  and  Consent  and  Waiver to Credit
Agreement  dated as of October 13, 1999,  Amendment Eight and Consent and Waiver
to Credit Agreement dated as of January 19, 2000, and Amendment Nine and Consent
and  Waiver  to  Credit  Agreement  dated  as of March  31,  2000  (the  "Credit
Agreement"), among PSC Scanning, Inc., formerly known as SpectraScan, Inc. which
was the successor by merger to PSC Acquisition,  Inc. (the "Borrower"), PSC Inc.
("PSC"),  the lenders party thereto (the  "Lenders") and Fleet National Bank, as
administrative agent (the "Administrative Agent").

                              W I T N E S S E T H :
                               -------------------

     WHEREAS,  pursuant to the Credit Agreement,  the Lenders have made Advances
and other extensions of credit to the Borrower which remain outstanding;

     WHEREAS, certain Events of Default have occurred and are continuing; and

     WHEREAS,  the Borrower has requested that the Administrative  Agent and the
Lenders,  and the  Administrative  Agent and the Lenders  are willing to,  waive
certain  Events of Default and defer during the Waiver Period (as defined below)
the payment of the Deferred  Default Spread (as defined below),  but only on the
terms and conditions set forth herein;

     NOW,  THEREFORE,  in  consideration  of the premises and for other good and
valuable   consideration   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1 Defined Terms.  Unless  otherwise  defined herein,  capitalized
terms used herein have the  meanings  assigned in the Credit  Agreement  and the
other Loan Documents, and the following terms shall have the following meanings:

                   "Deferred  Default  Spread":   the  spread  between  (a)  the
         contractual  rate of interest due on the  Advances  pursuant to Section
         2.07(a) of the Credit  Agreement  and (b) the default  rate of interest
         due on the  Advances  accruing  upon  the  occurrence  and  during  the
         continuance  of a Default  pursuant  to  Section  2.07(b) of the Credit
         Agreement.

                  "Expiration Date":  March 31, 2001.

                  "Effective  Date":  the  first  date on which  the  conditions
         precedent  specified in Article VI of this Tenth  Amendment  shall have
         been  satisfied or the  satisfaction  thereof shall have been waived in
         accordance with the terms hereof.

                  "F/X Commitment":  as defined in Section 5.1(d).

                  "F/X  Lender"  means Key Bank or such other Lender that agrees
         to be the F/X Lender.

<PAGE>

                  "Waiver Period":  the period beginning on the Effective Date
          and ending on the earlier of (a) the Termination Date or (b) the
          Expiration Date.

                  "Specified  Events of Default":  Events of Default  arising or
         which may arise in  respect of (i)  Section  6.01(c) as a result of the
         Borrower's failure to satisfy covenants  contained in Sections 5.04(a),
         (b), (c), (d), and (e) of the Credit  Agreement and (ii) 6.01(e) of the
         Credit  Agreement in  connection  with the  Borrower's  failure to make
         certain payments to Spectra-Physics,  Inc. pursuant to the terms of the
         Subordinated Installment Promissory Note dated July 12, 1996.

                  "Termination Date":  the date on which  there is  an  event of
         termination as provided in Article III of this Tenth Amendment.

                                   ARTICLE II

                             LIMITATION ON REMEDIES

                  Section 2.1.  Waiver.  Subject to the terms and conditions
hereof, the Administrative Agent and the Lenders hereby agree to waive during
the Waiver Period the Specified Events of Default.

                  Section  2.2.  Deferral.  The  Administrative  Agent  and  the
Lenders  hereby agree to defer  payment by the Borrower of the Deferred  Default
Spread during the Waiver  Period;  provided,  that the Deferred  Default  Spread
shall be paid in full in cash  immediately  upon the earlier of the  Termination
Date or the Expiration  Date; it being  understood that during the Waiver Period
the Borrower shall continue to pay the  contractual  rate of interest due on the
Advances pursuant to Section 2.07(a) of the Credit Agreement.

                                   ARTICLE III

                          WAIVER EVENTS OF TERMINATION

                  Upon the occurrence of any of the following events:

                            (a) the  Borrower  or any  other  Loan  Party  shall
         default in the  observance or  performance of any agreement or covenant
         contained in this Tenth Amendment;

                           (b) the occurrence of a Default or Event of Default
        (other than the Specified Events of Default); or

                           (c) the  exercise  of any rights or  remedies  by the
         holders  of  Subordinated  Debt,  including  without  limitation,   the
         acceleration of any amounts due or to become due under the Subordinated
         Debt Documents;

then,  and in any  such  event,  the  provisions  of  Article  II of this  Tenth
Amendment  shall  immediately  and  automatically  terminate and thereafter such
Article shall have no force or effect.

<PAGE>

                                   ARTICLE IV

                         AMENDMENTS TO CREDIT AGREEMENT

                  Section  4.1.  Amendments  to Section 1.1  (Definitions).  (a)
Section  1.1 of the  Credit  Agreement  is hereby  amended by (i)  deleting  the
definitions  of Eligible  Assignee and Fixed  Charge  Coverage  Ratio,  and (ii)
inserting the following definitions in their proper alphabetical order:

                  "Eligible  Assignee"  means (a) with  respect to any  Facility
         (other  than the  Letter of  Credit  Facility),  (i) a Lender;  (ii) an
         Affiliate of a Lender; (iii) a commercial bank organized under the laws
         of the United States, or any State thereof,  and having total assets in
         excess of $500,000,000;  (iv) a savings and loan association or savings
         bank  organized  under  the laws of the  United  States,  or any  State
         thereof,  and having  total  assets in excess of  $500,000,000;  (iv) a
         commercial bank organized under the laws of any other country that is a
         member of the OECD or has concluded  special lending  arrangements with
         the   International   Monetary   Fund   associated   with  its  General
         Arrangements  to  Borrow  or of  the  Cayman  Islands,  or a  political
         subdivision  of such  country,  and  having  total  assets in excess of
         $500,000,000, so long as such bank is acting through a branch or agency
         located in the United States; (vi) the central bank of any country that
         is a member of the OECD; (vii) a finance company,  insurance company or
         other financial institution or fund (whether a corporation, partnership
         trust or  other  entity)  that is  engaged  in  making,  purchasing  or
         otherwise  investing in commercial  loans in the ordinary course of its
         business and having total assets in excess of $500,000,000;  and (viii)
         any other  Person  approved by the  Administrative  Agent or any Person
         authorized by the  Administrative  Agent to grant such  approval,  such
         approval  not to be  unreasonably  withheld  or  delayed,  and (b) with
         respect to the Letter of Credit Facility,  a Person that is an Eligible
         Assignee under  subclause (iii) or (v) of clause (a) of this definition
         and is approved by the Administrative Agent or any Person authorized by
         the Administrative  Agent to grant such approval,  such approval not to
         be unreasonably  withheld or delayed;  provided,  however, that neither
         any Loan Party nor any  Affiliate  of a Loan Party shall  qualify as an
         Eligible Assignee under this definition.

                  "Eligible   Inventory"  means   inventory,   calculated  on  a
         "first-in,  first-out"  basis, less work-in process,  cartons,  labels,
         obsolescence  reserves and any other reserves  deemed  necessary by the
         Administrative Agent in its sole discretion.

                  "Eligible  Receivable  Aging Report" means the detailed report
         identifying  as of the last  Business  Day of each week the  Borrower's
         Domestic  and  Foreign  Accounts  Receivable,  in  form  and  substance
         satisfactory  to the  Administrative  Agent,  and  which  shall be duly
         certified by the Borrower's Chief Executive  Officer or Chief Financial
         Officer.

                  "Eligible  Receivables"  means Receivables (a) with respect to
         domestic  shipments  within  90 days of the  invoice  date and (b) with
         respect to international shipments within 150 days of the invoice date,
         in each case, and as otherwise  acceptable to the Administrative  Agent
         in its sole discretion.

                   "Eligible   Inventory   Report"  means  the  detailed  report
         identifying  as of the last  Business Day of each month the  Borrower's
         Eligible  Inventory,   in  form  and  substance   satisfactory  to  the
         Administrative  Agent,  and  which  shall  be  duly  certified  by  the
         Borrower's Chief Executive Officer or Chief Financial Officer.

                  "Tenth  Amendment"  means the Tenth Amendment and Waiver dated
         as of December 29, 2000 with respect to the Credit Agreement.

<PAGE>

                  Section 4.2  Amendments  to Section 2.01 (The  Advances).  (a)
Section  2.01(c) of the Credit  Agreement  is hereby  amended by  inserting  the
following sentence immediately prior to the period at the end of said section:

                  "Notwithstanding  anything to the contrary  set forth  herein,
                  each  Working  Capital  Advance  shall be made as a Prime Rate
                  Advance.".

                  (b) Section 2.01(d) of the Credit  Agreement is hereby amended
by deleting  the  reference  to  "$5,000,000"  and  inserting  in lieu thereof a
reference to "$2,000,000".

                  Section 4.3. Amendment to Section 2.06 (Prepayments).  Section
2.06(b) of the Credit  Agreement  is hereby  amended  by  inserting  immediately
before the period at the end of said Section the following:

                  "provided,  further,  that Net Cash Proceeds received pursuant
                  to clause  (ii) above  shall be applied  first to the  Working
                  Capital  Facility  as set forth in clause (vi) below and shall
                  permanently  reduce the aggregate Working Capital  Commitments
                  on a pro rata basis, and second, the balance,  if any, ratably
                  to the Term Loan Facility and to the  installments  thereof in
                  inverse order of maturity".

                  Section 4.4.  Amendment to Section 2.07 (Interest).  Section
2.07 of the Credit Agreement is hereby amended by inserting a new paragraph (d)
as follows:

                  "(d) Waiver Period  Interest.  Notwithstanding  the foregoing,
                  the Borrower shall pay interest on the unpaid principal amount
                  of  each  Advance  (i)  during  the  period  beginning  on the
                  Effective Date (as defined in the Tenth Amendment) through and
                  including  December 31, 2000, at the Prime Rate plus 1.50% and
                  (ii) during the period  beginning  on January 1, 2001  through
                  and  including  March 31, 2000,  at the Prime Rate plus 2.00%.
                  The Borrower shall pay interest on a monthly basis in arrears.

                  "

                  Section 4.5. Amendments to Section 5.03 (Reporting Require-
ments). (a) Section 5.03(b) of the Credit Agreement is hereby amended by delet-
ing Section 5.03(b) in its entirety and inserting in lieu thereof the following:

                  "As soon as available and in any event within thirty (30) days
                  after the end of each month,  the  Borrower  shall  submit for
                  itself,  PSC and all of  their  Subsidiaries,  a  Consolidated
                  statement  of  income  and a  Consolidated  statement  of cash
                  flows, for (i) each month,  beginning on the first day of each
                  month and ending on the last day of such  month,  and (ii) the
                  period commencing on the first day of the then-current  Fiscal
                  Year and ending with the last day of the most recent month, in
                  each case,  duly certified by the Borrower's  Chief  Executive
                  Officer or Chief Financial Officer";

                  (b) Section 5.03 of the Credit  Agreement is hereby amended by
inserting in said Section a new paragraph (w) as follows:

                  "(w) The  Borrower  shall submit to the  Administrative  Agent
                  within  fifteen  (15)  days  after the end of each  month,  an
                  Inventory Report for the immediately preceding month.";

                  (c)  Section 5.03 of the Credit Agreement is hereby amended by
inserting in said Section a new paragraph (x) as follows:
<PAGE>

                  "(x) The Borrower shall submit to the Administrative  Agent on
                  Tuesday of each week, an Accounts  Receivable Aging Report for
                  the immediately  preceding week;  provided,  that amounts with
                  respect to PSC Japan K.K.,  PSC Asia Pacific Pty,  Limited and
                  PSC SRL shall be reported on a monthly basis."

                  Section  4.6.  Amendment to Article V. Article V of the Credit
Agreement is hereby amended by inserting a new Section 5.05 as follows:

                  "Section 5.05.  Collateral  Covenants.  So long as any Advance
                  shall remain unpaid, any Letter of Credit shall be outstanding
                  or any Lender Party shall have any Commitment  hereunder,  PSC
                  will:

                           (a) Minimum Eligible  Accounts  Receivable.  Maintain
                  (i) at all times, Eligible Receivables having a value equal to
                  at least  $37,500,000  and  (ii) as at the end of each  month,
                  Eligible   Receivables  having  a  value  equal  to  at  least
                  $39,000,000;   provided,   however,   if  on   any   date   of
                  determination  Eligible  Receivables are less than the amounts
                  set forth above,  (x) the Borrower shall,  within one Business
                  Day of  the  Administrative  Agent's  receipt  of an  Eligible
                  Receivable  Aging  Report,   permanently  reduce  the  Working
                  Capital  Commitments  by an amount equal to such shortfall and
                  (y) the  amounts set forth above shall be deemed to be reduced
                  by an equal amount.

                           (b)  Minimum  Eligible  Inventory.  Maintain  at  all
                  times,  Eligible  Inventory  having a value  equal to at least
                  $15,000,000;   provided,   however,   if  on   any   date   of
                  determination  Eligible  Inventory is less than the amount set
                  forth above,  (x) the Borrower shall,  within one Business Day
                  of the Administrative Agent's receipt of an Eligible Inventory
                  Report,  permanently reduce the Working Capital Commitments by
                  an amount equal to such shortfall and (y) the amount set forth
                  above shall be deemed to be reduced by an equal amount.".

                  Section  4.7.   Amendment  to  Schedule  1  (Commitments   and
Applicable  Lending  Offices).  Schedule  1 to the  Credit  Agreement  is hereby
amended by deleting  said Schedule in its entirety and inserting in lieu thereof
the  Schedule 1 attached  hereto as Exhibit A.  Schedule  1, as amended  hereby,
shall show Working  Capital  Commitments in the aggregate  amount of $45,000,000
and Term Loan Commitments in the aggregate amount of $67,500,000.

                                    ARTICLE V

                      OVERRIDE AGREEMENTS OF THE BORROWERS

                  Section 5.1 Override Agreements.  (a) Continued  Availability.
Notwithstanding  anything to the  contrary in the Credit  Agreement,  during the
Waiver Period the Borrower shall be permitted (i) to borrow, prepay, in whole or
in part, and reborrow,  in accordance  with the terms and conditions  hereof (A)
Working Capital Advances and (B) Swing Line Advances, which, in each case, shall
be Prime Rate  Advances,  (ii) enter into Hedge  Agreements  pursuant to Section
5.1(d)  of this  Amendment,  and  (iii) to open  Letters  of  Credit;  provided,
however,  notwithstanding  anything  to the  contrary  in the Credit  Agreement,
during the Waiver Period the Borrower shall not be permitted to borrow in excess
of  $40,000,000  (which  amount shall  include the  aggregate  amount of the F/X
Commitment)  without  the  prior  consent  of the  Administrative  Agent and the
Lenders.

                  (b)  Principal  Payments.   Notwithstanding  anything  to  the
contrary set forth in the Credit Agreement, the $2,500,000 principal payment due
on December  31, 2000 with  respect to the Term Loan  Advances  shall be paid as
follows:  (i) $833,333.33 on December 31, 2000, (ii)  $833,333.33 on January 31,
and (iii) $833,333.33 on February 28, 2001.

<PAGE>

                  (c)  Financial Covenants.  (i)  Minimum Consolidated EBITDA.
During the Waiver Period, the Borrower shall not permit consolidated EBITDA for
the periods set forth below, measured on a cumulative basis, to be less than the
amounts set forth opposite such period:

              Period                              Amount
              ------                              ------
     October 1 - October 31, 2000             $     100,000
     October 1 - November 30, 2000            $     500,000
     October 1 - December 31, 2000            $  (6,000,000)

For  purposes  of this Tenth  Amendment,  during the fourth  quarter of the year
2000, inventory write-offs and asset write-downs aggregating Ten Million Dollars
($10,000,000)  or less will be disregarded in  calculating  consolidated  EBITA.
Following  delivery of the Business Plan (as defined below),  the Administrative
Agent shall reasonably determine the appropriate  consolidated EBITDA levels for
January,  February and March 2001 and shall  deliver a written  schedule of such
amounts to the Borrower.  This Borrower shall not permit consolidated EBITDA for
such periods,  measured on a cumulative  basis,  to be less than the amounts set
forth on such schedule.

                  (ii)  Capital  Expenditures.  During  the Waiver  Period,  the
         Borrower shall not make or commit to make Capital  Expenditures for the
         periods set forth below,  measured on a cumulative  basis, in excess of
         the amounts set forth opposite such period:

               Period                              Amount
               ------                              ------
     October 1 - October 31, 2000                 $  250,000
     October 1 - November 30, 2000                $  500,000
     October 1 - December 31, 2000                $1,000,000

         Following  delivery  of the  Business  Plan  (as  defined  below),  the
         Administrative Agent shall reasonably determine the appropriate Capital
         Expenditure  levels  for  January,  February  and March  2001 and shall
         deliver  a  written  schedule  of such  amounts  to the  Borrower.  The
         Borrower  shall  not  permit  Capital  Expenditures  for such  periods,
         measured on a cumulative  basis,  to be more than the amounts set forth
         on such schedule.

                  (d) F/X Hedging Facility. (i) Notwithstanding  anything to the
contrary set forth in the Credit Agreement, the Borrower may maintain during the
Waiver Period Hedge Agreements with the F/X Lender covering a notional amount of
$6,000,000 (the "F/X Commitment"). During the Waiver Period, the Working Capital
Commitment shall be reduced by the amount of the F/X Commitment, which reduction
shall be allocated pro rata among the Working Capital Lenders.

<PAGE>

                  (ii) The F/X Lender shall furnish to the Administrative  Agent
         on the first Business Day of each week a written report summarizing the
         Borrower's swap  transactions  with the F/X Lender.  The payment by the
         F/X Lender of any amount  owing by the F/X Lender  under any such Hedge
         Agreements  shall  constitute  for all purposes of this  Agreement  the
         making by the F/X  Lender of an  Advance,  which  shall be a Prime Rate
         Advance, in such amount. If the Borrower fails to pay the F/X Lender on
         account of any Hedge Agreement,  upon written demand by the F/X Lender,
         with a copy of such demand to the  Administrative  Agent,  each Working
         Capital Lender shall  purchase from the F/X Lender,  and the F/X Lender
         shall  sell and  assign  to each  such  Working  Capital  Lender,  such
         Lender's Pro Rata Share of such  outstanding  Advance as of the date of
         such  purchase,  by making  available for the account of its Applicable
         Lending Office to the  Administrative  Agent for the account of the F/X
         Lender, by deposit to the Administrative  Agent's Account,  in same day
         funds,  an amount  equal to the  portion of the  outstanding  principal
         amount of such Advance to be purchased by such Lender.  Promptly  after
         receipt thereof,  the Administrative Agent shall transfer such funds to
         the F/X  Lender.  The  Borrower  hereby  agrees  to each  such sale and
         assignment.

     (e) Borrowings.  Notwithstanding  anything to the contrary set forth in the
Credit  Agreement,  during the Waiver Period,  each Notice of Borrowing shall be
made  directly to the attention of Daniel D. Butler (Fleet  National  Bank,  111
Westminster Street Providence,  Rhode Island 02903; Fax: 401-278-6004) and shall
be accompanied by a certificate signed by the Borrower's Chief Executive Officer
or Chief Financial  Officer  stating that, as of the date of the Borrowing,  the
Borrower is in compliance with the terms of the Credit  Agreement and this Tenth
Amendment.

     (f) Cash Management  Services.  (i) Promptly  following the Effective Date,
the  Borrower  shall  enter  into an  agreement  with the  Administrative  Agent
providing for the establishment  and continual  maintenance of a lockbox account
(the  "Lock-Box")  and  a  blocked  account  (the  "Blocked  Account")  for  the
collection  of  all  the  Borrower's   Receivables  and  other  Collateral.   In
conjunction  therewith,  the Borrower shall promptly  direct all account debtors
and other obligors to direct all payments owing to the Borrower to the Lock-Box.
All monies on deposit  in the  Lock-Box  shall be  promptly  transferred  to the
Blocked  Account.  All  checks and other  payment  instruments  that  constitute
proceeds of Receivables or other  Collateral  received  directly by the Borrower
shall be held in trust and  promptly  upon  receipt,  delivered  to the  Blocked
Account.  Amounts in the Blocked  Account shall, on a daily basis, be applied to
repayment of the Working Capital Facility and may not be directly withdrawn.

                  (ii) All amounts  deposited in or any investments with respect
         to the Lock-Box and the Blocked  Account  shall at all times be subject
         to the exclusive dominion and control of the Administrative Agent.

                  (iii) For  purposes  of  calculating  interest  on the Working
         Capital  Advances,  all amounts received in the Blocked Account will be
         deemed to have been applied to the Working Capital  Facility on the 2nd
         Business Day after the date of receipt. For purposes of calculating the
         availability  under  the  Working  Capital  Commitments,   all  amounts
         received  in the Blocked  Account  (A) before  1:00 p.m.  (EST) will be
         deemed to have been  applied to the  Working  Capital  Facility  on the
         Business  Day after the date of receipt  and (B) after 1:00 p.m.  (EST)
         will be deemed to have been applied to the Working Capital  Facility on
         the 2nd Business Day after the date of receipt.  In the event there are
         not  sufficient,  available funds in the Borrower's  operating  account
         when debited  and/or  charged under this  paragraph,  under the Blocked
         Account or  otherwise,  the  Borrower  agrees to  immediately  pay such
         amounts to the Administrative Agent in immediately available funds.

     (g) Financial Advisor;  Investment  Banker. The Borrower shall,  during the
Waiver Period, continue the retention of (i) Raymond James & Company, or another
investment  banker  reasonably  acceptable to the  Administrative  Agent and the
Lenders (the  "Investment  Banker") and (ii)  FTI/Policano  & Manzo,  or another
financial  advisor  reasonably  acceptable to the  Administrative  Agent and the
Lenders (the "Financial Advisor").

     (h) Business Plan; Cash Flow Forecast;  Progress Reports.  (i) The Borrower
shall  deliver a detailed  "bottom-up"  business  plan for fiscal year 2001 (the
"Business  Plan.")  to the  Administrative  Agent and the  Lenders  on or before
January 15, 2001. The Business Plan shall include,  on a monthly basis,  for the
twelve  month  period  beginning  January 1, 2001,  (a)  Consolidated  forecasts
detailing cash flow and Collateral levels, (b) Consolidated pro forma profit and
loss statements,  and (c) Consolidated  balance sheets.  The Business Plan shall
identify (x) all sources of revenue and expenses,  including without limitation,
intended  executive  compensation,  (y)  the  nature  of  all  proposed  Capital
Expenditures,  and (z) all human resource actions, including without limitation,
impacts on staffing levels and itemized severance costs. The Business Plan shall
contemplate  both a realization of the sale of the real property  located at 675
Basket Road,  Webster,  New York 14580 and a sale of the  Borrower's  automation
division,  as well as a scenario  where neither sale occurs prior to January 31,
2001.  The  Business  Plan shall be in form and  substance  satisfactory  to the
Administrative Agent.

<PAGE>

     (ii) The Borrower  shall deliver a thirteen week rolling cash flow forecast
     (the "Cash Flow Forecast") to the  Administrative  Agent and the Lenders on
     or before  Wednesday of each week. The Cash Flow Forecasts shall detail all
     sources and uses of cash on a weekly basis and shall  report any  variances
     from the prior week. The Cash Flow Forecasts shall be in form and substance
     satisfactory to the Administrative Agent.

     (iii) The  Borrower  shall,  on or before  the last  Friday of each  month,
     deliver  to the  Administrative  Agent  and  the  Lenders  monthly  written
     progress reports prepared by the Investment Banker with the first report to
     be  delivered on or before  January 5, 2001.  The  progress  reports  shall
     provide updates  regarding the Borrower's  marketing  efforts in connection
     with certain of its divisions and real property,  including with respect to
     the valuation of such divisions and real property, and shall be in form and
     substance satisfactory to the Administrative Agent.

     (iv) Upon request,  the Lenders shall be provided  reasonable access to the
     Financial  Advisor and the Investment  Banker and copies of all information
     provided to either.

     (i)  Retention  of  Advisors  by  Administrative  Agent.  In the  event the
Administrative  Agent or its counsel  determines  to retain a financial  advisor
and/or an investment  banker, the Borrower hereby agrees to pay or reimburse the
Administrative Agent for all reasonable fees and out-of-pocket expenses incurred
in connection therewith.

     (j)  Perfection.  In the event  the  Lenders  determine  to  perfect  their
interests in the Borrower's  foreign  subsidiaries the Borrower shall assist the
Administrative Agent in perfecting the Lenders' interests in each such companies
and shall  reimburse the  Administrative  Agent for all costs and  out-of-pocket
expenses incurred in connection therewith.

     (k) Field Examinations.  The Borrower agrees that the Administrative Agent,
its counsel or any other professional representing the Administrative Agent, may
conduct  independent field examinations of the Borrower's books and records,  as
often as the Administrative Agent, in its sole discretion,  deems necessary. The
Borrower agrees to fully cooperate with such independent field  examinations and
agrees to reimburse the Administrative  Agent on demand for the costs associated
with any such independent field examinations.

     (l)  Appraisals.  The  Borrower  shall  cooperate  with the  Administrative
Agent's    undertaking    of   updated    appraisals    of   real   estate   and
machinery/equipment.  The Borrower agrees to reimburse the Administrative  Agent
on demand for the costs associated with such appraisals.

     (m) Dividends.  Notwithstanding  anything to the contrary  contained in the
Credit  Agreement,  neither  the  Borrower  nor  PSC  shall  declare  or pay any
dividends,  purchase, redeem, retire, defease or otherwise acquire for value any
of their  capital  stock or any  warrants,  rights or options  to  acquire  such
capital  stock,  now or  hereafter  outstanding,  return  any  capital  to their
stockholders as such, make any distribution of assets,  capital stock, warrants,
rights,  options,  obligations  or securities to their  stockholders  as such or
issue or sell any capital stock,  or any warrants,  rights or options to acquire
such  capital  stock,  or  permit  any of  their  Subsidiaries  to do any of the
foregoing  or permit any of their  Subsidiaries  to  purchase,  redeem,  retire,
defease or otherwise  acquire for value any capital stock of PSC or the Borrower
or any warrants,  rights or options to acquire such capital stock or to issue or
sell any  capital  stock,  or any  warrants,  rights or options to acquire  such
capital stock except with the prior written consent of the Administrative Agent.
<PAGE>

     (n) Dissolution of Certain Subsidiaries;  Limitation on Transfer of Assets.
The Borrower and PSC hereby agree that GAP  Technologies,  Inc.  ("GAP") and GEO
Labs, Inc.  ("GEO") shall be dissolved on or before January 31, 2001. No assets,
rights or other  interests  in  property  of the  Borrower,  PSC or any of their
subsidiaries  shall be  transferred  to GAP or GEO.  No assets,  rights or other
interests in property of the Borrower, PSC or any of their domestic subsidiaries
shall be transferred to any of their foreign subsidiaries.

     (o) Costs and Expenses. In furtherance of the provisions of Section 8.04 of
the Credit Agreement,  the Borrower and PSC hereby agree that the Administrative
Agent shall be entitled,  upon one Business  Day's  notice to the  Borrower,  to
debit any  operating  account of either the Borrower or PSC to collect costs and
expenses to which the Administrative  Agent is entitled pursuant to Section 8.04
of the Credit Agreement.

     (p)  Acknowledgement.  The Administrative Agent and the Lenders acknowledge
that the payment  required  under Section 4(a) of the Subdebt Waiver (as defined
below)  shall  not  constitute  Subordinated  Indebtedness  (as  defined  in the
Securities Purchase Agreement) and shall not be subject to disgorgement pursuant
to Section 10 of the Securities Purchase Agreement.

     Section  5.2  Override   Agreements  Deemed  Agreements  under  the  Credit
Agreement.  For purposes of the Credit Agreement, the agreements of the Borrower
contained  in this  Article V shall be deemed  to be,  and shall be,  agreements
under the Credit Agreement.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     This Tenth  Amendment shall not become  effective  unless and until each of
the conditions precedent set forth below have been satisfied or the satisfaction
thereof shall have been waived in accordance with the terms hereof:

     (a)  Receipt  by the  Administrative  Agent of  counterparts  of this Tenth
Amendment, duly executed and delivered by the Borrower and the Guarantors;

     (b) Receipt by the  Administrative  Agent of a fully executed amendment and
waiver (the "Subdebt Waiver") to the Securities  Purchase  Agreement dated as of
July  12,  1996,  as  amended,  in  form  and  substance   satisfactory  to  the
Administrative  Agent,  which shall,  among other things,  acknowledge  that any
obligations of the Borrower  incurred in connection  with the F/X Facility shall
be  deemed  Superior   Indebtedness  (as  defined  in  the  Securities  Purchase
Agreement).

     (c) Receipt by the Administrative  Agent of all documents  requested by the
Administrative Agent in respect of Collateral.

     (d) Receipt by the  Administrative  Agent of payment in full in cash of its
invoiced and unpaid fees and out-of-pocket  expenses incurred in connection with
the  preparation  and  execution  of this Tenth  Amendment,  including,  without
limitation,   the  reasonable   fees  and   disbursements   of  counsel  to  the
Administrative Agent.

     (e) Receipt by the  Administrative  Agent of an Eligible  Receivables Aging
Report and Eligible Inventory Report.
<PAGE>

     (f)  Receipt  by the  Administrative  Agent of those  portions  of the fees
referred to in Sections  8.2(b) and (c) that are due and owing on the  Effective
Date.

                                   ARTICLE VII

                                 INTERPRETATION

     Section 7.1 Continuing  Effect of the Credit Agreement.  The Borrower,  the
Guarantors,  the  Administrative  Agent and the Lenders hereby  acknowledge  and
agree that the Credit  Agreement  shall  continue to be and shall remain in full
force and  effect  in  accordance  with its  terms,  as  amended  by this  Tenth
Amendment.  Any  terms or  conditions  contained  in the Tenth  Amendment  shall
control over any inconsistent term(s) or condition(s) in the Credit Agreement or
the other Loan Documents.

     Section 7.2 No Limitation on Remedies after Waiver Period. The Borrower and
the  Guarantors  hereby  acknowledge  and agree  that,  at the end of the Waiver
Period,  the provisions of Article II of this Tenth Amendment shall become of no
force and effect and the Administrative  Agent and the Lenders shall be free, in
accordance with the Credit  Agreement and the other Loan  Documents,  to declare
the Advances and all other amounts  outstanding under the Credit Agreement to be
due and payable and to exercise  and  enforce,  or to take steps to exercise and
enforce,  all other rights,  powers,  privileges and remedies  available to them
under the Credit Agreement, any other Loan Document or applicable law on account
of the Specified Events of Default (or any other Default or Event of Default) as
if this Tenth Amendment had not been entered into by the parties hereto.

     Section 7.3 No Waiver;  Other  Defaults  or Events of Default.  (a) Nothing
contained  in this Tenth  Amendment  shall be  construed  or  interpreted  or is
intended  as a waiver of any rights,  powers,  privileges  or remedies  that the
Administrative  Agent or the Lenders have or may have under the Credit Agreement
or any other Loan Document on account of the Specified Events of Default, except
as expressly provided herein.

     (b)  Nothing  contained  in this  Tenth  Amendment  shall be  construed  or
interpreted  or is intended as a waiver of or limitation on any rights,  powers,
privileges or remedies that the Administrative  Agent or the Lenders have or may
have under the Credit  Agreement  or any other Loan  Document  on account of any
Default or Event of Default other than the Specified Events of Default.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section 8.1 Representations and Warranties. The Borrower and the Guarantors
hereby  represent and warrant as of the date hereof that, after giving effect to
this Tenth  Amendment,  (a) no Default or Event of Default has  occurred  and is
continuing,  except the Specified Events of Default, and (b) all representations
and  warranties  of the  Borrower  and  the  Guarantors  contained  in the  Loan
Documents  (with such term being deemed to include this Tenth  Amendment and the
Credit  Agreement)  are true and correct in all material  respects with the same
effect as if made on and as of such date, except that Section 6.01 of the Credit
Agreement shall be deemed to exclude any Specified Events of Default.

     Section 8.2 Payment of Fees and Expenses. (a) The Borrower agrees to pay or
reimburse  the  Administrative   Agent  upon  demand,  for  all  its  reasonable
out-of-pocket  costs and expenses incurred in connection with the preparation of
this Tenth Amendment,  including,  without  limitation,  the reasonable fees and
disbursements of counsel to the Administrative Agent.

     (b) The borrower further agrees to pay to the Administrative Agent, for the
account  of each  Lender on a pro-rata  basis,  an  extension  fee in the amount
$500,000 (the "Extension  Fee").  The Extension Fee shall be deemed to be earned
on the  Effective  Date and shall be payable as  follows:  (i)  $350,000  on the
Effective Date and (ii) $150,000 on the earlier of the  Termination  Date or the
Expiration  Date.  It is  understood  that in the event that the Borrower  shall
repay in full its  obligations  under the  Credit  Agreement  and the other Loan
Documents prior to the earlier of the Termination  Date or the Expiration  Date,
the second installment of the Extension Fee shall be decreed waived. <PAGE>

     (c) The Borrower further agrees to pay to the Administrative Agent, for its
own  account,  an agency fee in the  amount of $5,000  per month  (the  "Monthly
Agency Fee").  The Monthly Agency Fee shall be paid on the first Business Day of
each month,  except that the Monthly  Agency Fee for November and December  2000
shall be due on the Effective Date.

     Section  8.3  Counterparts.  This Tenth  Amendment  may be  executed by the
parties  hereto  in any  number  of  separate  counterparts,  and  all  of  said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.

     Section  8.4  GOVERNING  LAW.  THIS  TENTH  AMENDMENT  AND THE  RIGHTS  AND
OBLIGATIONS OF THE PARTIES UNDER THIS TENTH  AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     Section 8.5 Reservation of Rights.  Notwithstanding  anything  contained in
this  Tenth  Amendment  to the  contrary,  the  Borrower  and  each  Loan  Party
acknowledges  that the  Administrative  Agent and the Lenders do not waive,  and
expressly reserve, the right to exercise,  at any time during the Waiver Period,
any and all of their rights and  remedies  under (a) the Credit  Agreement,  any
other Loan Document and  applicable  law in respect of the  Specified  Events of
Default against any Person other than the Borrower or any Loan Party and (b) the
Credit  Agreement,  any other Loan Document and applicable law in respect of any
Default or Event of Default other than the Specified Events of Default.

     Section 8.6 Consent of Guarantors.  Each  Guarantor  hereby (a) consents to
the  transactions  contemplated  hereby and (b) acknowledges and agrees that the
guarantees (and all security therefor) contained in the Credit Agreement and the
other Loan  Documents  previously  executed by it is, and shall remain,  in full
force and effect after giving effect to this Tenth Amendment and all other prior
modifications to the Credit Agreement.

     Section 8.7 Waiver. The Borrower and the Guarantors hereby release,  waive,
and forever relinquish all claims, demands, obligations,  liabilities and causes
of action of whatever  kind or nature,  whether  known or unknown,  which any of
them  have,  may have,  or might  assert at the time of  execution  of the Tenth
Amendment or in the future against the Administrative  Agent, the Lenders and/or
their  respective  parents,  affiliates,   participants,   officers,  directors,
employees, agents, attorneys, accountants,  consultants, successors and assigns,
directly or indirectly,  which occurred,  existed, was taken, permitted or begun
prior to the execution of the Tenth Amendment, arising out of, based upon, or in
any manner  connected with (i) any  transaction,  event,  circumstance,  action,
failure to act or occurrence of any sort or type, whether known or unknown, with
respect  to  the  Credit   Agreement,   any  other  Loan  Document   and/or  the
administration thereof or the Obligations created thereby; (ii) any discussions,
commitments,  negotiations,  conversations or communications with respect to the
refinancing,  restructuring  or  collection  of any  Obligations  related to the
Credit Agreement,  any other Loan Document and/or the administration  thereof or
the Obligations created thereby, or (iii) any matter related to the foregoing.

     Section 8.8 Confirmation of  Indebtedness.  The Borrower and the Guarantors
hereby confirm and acknowledge  that, as of the Effective Date, (i) the Borrower
is truly and justly indebted to the Lenders,  without  defense,  counterclaim or
offset of any kind,  (ii) the  Borrower  is liable to the  Lenders in respect of
Advances  in the  aggregate  principal  amount of  $101,500,000,  and (iii) each
Guarantor is contingently liable to the Lenders pursuant to such guarantee.

<PAGE>

     IN WITNESS WHEREOF,  the parties hereto have caused this Tenth Amendment to
be duly executed and delivered by their proper and duly  authorized  officers as
of the date first above written.

                                              PSC SCANNING, INC.


                                              By:
                                              Title:





<PAGE>



                                             FLEET NATIONAL BANK, as
                                             Agent, Issuing Bank and a Lender

                                             By:
                                             Title:



                                              CITIZENS BANK OF
                                              MASSACHUSETTS, as a Lender

                                              By:
                                              Title:



                                              HSBC BANK USA, as a Lender

                                              By:
                                              Title:


                                              KEY BANK, as a Lender


                                              By:
                                              Title:


                                              THE CHASE MANHATTAN
                                              BANK, as a Lender


                                              By:
                                              Title:


                                              M&T BANK, as a Lender


                                              By:
                                              Title:

<PAGE>

               ACKNOWLEDGED AND AGREED


               PSC INC.

               By:    ______________________

               Title:


               PSC AUTOMATION, INC.

               By: ________________________

               Title:


               INSTAREAD CORPORATION

               By:
                  --------------------------
               Title:


               PERCON INCORPORATED

               By:
                  -------------------------
               Title:


               PSC BELGIUM, INC.

               By:
                  -------------------------
               Title:

<PAGE>

                                    EXHIBIT A

                                   SCHEDULE I

                                        Working Capital   Term Loan

Lender                                  Commitments       Commitments

Fleet National Bank                      $7,920,000       $11,880,000

Citizens Bank of Massachusetts           $6,120,000       $9,180,000

HSBC Bank USA                            $6,120,000       $9,180,000

Key Bank                                 $9,000,000       $13,500,000

The Chase Manhattan Bank                 $7,920,000       $11,880,000

M&T Bank                                 $7,920,000       $11,880,000