<PAGE>

                                                                   EXHIBIT 10.50

                                   PSC INC.
                              PSC SCANNING, INC.
                                675 Basket Road
                           Webster, New York  14580


                                                            As of March 31, 2001


JOHN HANCOCK LIFE INSURANCE COMPANY (formerly
 John Hancock Mutual Life Insurance Company)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
200 Clarendon Street
Boston, Massachusetts  02117

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LINCOLN NATIONAL INCOME FUND, INC.
c/o Delaware Lincoln Investment Advisors
200 East Berry Street
Renaissance Square
Ft. Wayne, Indiana  46802

SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South
Suite 800
Minneapolis, Minnesota  55401

THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
c/o Alliance Capital Management L.P.
1345 Avenue of the Americas, 37th Floor
New York, New York  10105

     Re:  Consent and Waiver Under Securities Purchase Agreements
          -------------------------------------------------------

Ladies and Gentlemen:

     PSC INC., a New York corporation (the "Holding Company"), and PSC SCANNING,
INC., a Delaware corporation (formerly named SpectraScan, Inc.) and a Wholly-
Owned Subsidiary of the Holding Company (the "Operating Company") (the Holding
Company and the Operating Company are sometimes collectively referred to herein
as the "Companies" and each as a "Company"), jointly and severally agree with
you as follows:

                                      -1-
<PAGE>

     1.  Definitions; Background.
         -----------------------

         (a) Reference is hereby made to those certain Securities Purchase
     Agreements dated July 12, 1996, as amended, modified and supplemented by
     (i) Amendment No. 1 to Securities Purchase Agreements dated October 10,
      -
     1996, (ii) Amendment No. 2 and Waivers Under Securities Purchase Agreements
            --
     dated as of July 4, 1997, (iii) Amendment No. 3 to Securities Purchase
                                ---
     Agreements and Warrants dated August 18, 1997, (iv) Consent and Waiver
                                                     --
     Under Securities Purchase Agreements and Warrants dated December 29, 1997,
     (v) Amendment No. 4, Consent and Waiver Under Securities Purchase
      -
     Agreements dated March 1, 1999, (vi) Amendment No. 5 and Consent Under
                                      --
     Securities Purchase Agreements dated December 20, 1999, (vii) Consent Under
                                                              ---
     Securities Purchase Agreements dated January 19, 2000, (viii) Amendment No.
                                                             ----
     6 and Consent and Waiver Under Securities Purchase Agreements dated as of
     March 31, 2000, (ix) Waiver Under Securities Purchase Agreements dated as
                      --
     of November __, 2000 and (x) Amended and Restated Amendment No. 7 and
                               -
     Consent and Waiver Under Securities Purchase Agreements ("Amended and
     Restated Amendment No. 7") dated as of December 29, 2000 (as the same may
     be amended, modified or supplemented from time to time, the "Securities
     Purchase Agreements"), among the Holding Company, the Operating Company and
     each of you.

         (b) Capitalized terms used herein without definition have the meanings
     ascribed to them in the Securities Purchase Agreements.

     2.  Waiver of Past Defaults.  The Companies have requested that the holders
         -----------------------
of the Notes waive the Events of Default arising on account of the Companies'
failure to be in compliance as of March 31, 2001 with the financial covenants
set forth in section 14.7(a) (Fixed Charge Coverage Ratio), section 14.7(b)
(Adjusted Consolidated Indebtedness Ratio), section 14.7(c) (Senior Debt to
Adjusted EBITDA Ratio) and section 14.7(d) (Net Worth) (the "Financial
Covenants").  On the basis of the information provided to the holders of the
Notes by the Companies in connection herewith, and subject to the terms and
conditions hereof, such holders by their execution hereof agree to the same.

     3.  Amendment to the Notes to Defer Certain Interest Payments.  Each of the
         ---------------------------------------------------------
Notes is hereby amended to provide that all interest accrued on the Notes from
and after September 30, 2000 to April 13, 2001 shall be paid on April 13, 2001
(not April 1, 2001 as provided in Amended and Restated Amendment No. 7) (and no
payments of interest on the Notes shall be due on December 31, 2000 and March
31, 2001), and thereafter payments of interest due on the Notes shall be payable
on each March 31, June 30, September 30 and December 31, commencing June 30,
2001.  Upon the request of any holder of Notes, the Operating Company shall
deliver to such holder new Notes in exchange for those held by such holder to
reflect the foregoing.  Exhibit 1(a)(i) to the Securities Purchase Agreements is
                        ---------------
hereby amended to be in the form of Exhibit 3 attached hereto.
                                    ---------

                                      -2-
<PAGE>

     4.  Conditions Precedent to Effectiveness.  The provisions of this Letter
         -------------------------------------
Agreement shall be effective as of the date first specified above at such time
as each of the following conditions shall have been fulfilled:

         (a) The Companies shall have delivered an executed copy of the Waiver
     dated as of April 1, 2001 (the "Bank Waiver"), among the Holding Company,
     the Operating Company, the financial institutions party thereto, Fleet
     National Bank (formerly known as Fleet Bank), as Initial Issuing Bank, and
     Fleet National Bank, as administrative agent, which must be in form and
     substance satisfactory to you.

     5.  Consent.  The holders of the Notes acknowledge that section 14.16(c) of
         -------
the Securities Purchase Agreements permits the changes to the Bank Credit
Agreement as provided for in the Bank Waiver.

     6.  Ratification, etc.
         ------------------

         (a) The Companies represent and warrant that, after giving effect to
     the provisions of this Letter Agreement, no Default or Event of Default
     exists.

         (b) The Companies each ratify and confirm the Securities Purchase
     Agreements and each of the other Operative Documents to which each is a
     party and agree that each such agreement, document and instrument is in
     full force and effect, that its obligations thereunder and under this
     Letter Agreement are its legal, valid and binding obligations enforceable
     against it in accordance with the terms thereof and hereof and that it has
     no defense, whether legal or equitable, setoff or counterclaim to the
     payment and performance of such obligations.

         (c) The Companies agree that (i) if any default shall be made in the
                                        -
     performance or observance of any covenant, agreement or condition contained
     in this Letter Agreement or in any agreement, document or instrument
     executed in connection herewith or pursuant hereto or (ii) if any
                                                            --
     representation or warranty made by the Companies herein or therein shall
     prove to have been false or incorrect on the date as of which made, the
     same shall constitute an immediate Event of Default under the Securities
     Purchase Agreements and the other Operative Documents and, in such event,
     you and each other holder of any of the Notes shall have all rights and
     remedies provided by law and/or provided or referred to in the Securities
     Purchase Agreements and the other Operative Documents.  The Companies
     further agree that this Letter Agreement is an Operative Document and all
     references thereto in the Securities Purchase Agreements and in any other
     of the other Operative Documents shall include this Letter Agreement.

     7.  Payment of Special Waiver Fee.  The Companies shall pay to the holders
         -----------------------------
of the Notes in cash on April 13, 2001 (not April 1, 2001 as provided for in
Amended and Restated Amendment No. 7) a non-refundable special waiver fee in the
aggregate amount of $75,000, which amount has been fully earned and shall be
shared among the holders of the Notes in proportion to the respective aggregate
principal amount of the Notes held by each holder.

                                      -3-
<PAGE>

     8.   Release and Waiver of Benefits.
          ------------------------------

          (a) In consideration of the agreements of the holders of the Notes set
     forth herein, each of the Companies and, by their execution, their
     Subsidiaries, for themselves and on behalf of their respective officers,
     directors, employees, and their respective predecessors, successors and
     assigns (collectively, the "Borrower Parties") do hereby forever (i)
                                                                       -
     release, discharge and acquit each of the holders of the Notes, and their
     respective participants, parent, subsidiary and affiliate corporations,
     officers, directors, shareholders, employees, attorneys, agents and
     servants, and their respective predecessors, successors, and assigns
     (collectively, the "Lender Parties"), of and from any and all claims,
     demands, obligations, liabilities, indebtedness, responsibilities,
     disputes, breaches of contract, breaches of duty or any relationship, acts,
     omissions, misfeasance, malfeasance, cause or causes of action (whether at
     law or in equity), debts, sums of money, accounts, compensations,
     contracts, controversies, promises, damages, costs, rights of offset,
     losses and expenses, of every type, kind, nature, description or character,
     whensoever arising out of any actions or omissions of the Lender Parties,
     or any of them, occurring at any time through the date hereof, and
     irrespective of how, why, or by reason of what facts, whether heretofore or
     now existing, held or alleged, or which could, might or may be claimed to
     exit, of whatever kind or name, whether known or unknown, unsuspected or
     unsuspected, liquidated or unliquidated, matured or unmatured, fixed or
     contingent (individually and collectively, the "Borrower Claims"), against
     the Lender Parties, or any of them, each as though fully set forth herein
     at length, which in any way arise out of, are connected with or relate to
     the loans and other financial accommodations made pursuant to and evidenced
     by the Securities Purchase Agreements and/or any of the Operative
     Documents, as well as any action or inaction of any person or entity
     released hereunder with respect to the Securities Purchase Agreements, any
     of the other Operative Documents, the obligations and liabilities incurred
     thereunder, any and all guaranties of such obligations and liabilities
     and/or any and all collateral security for such obligations and liabilities
     and (ii) agree not to bring any action in any judicial, administrative or
          --
     other proceeding against the Lender Parties, or any of them, alleging any
     such Borrower Claim or otherwise arising in connection with any such
     Borrower Claim.

          (b) It is the intent of the parties that except as otherwise set forth
     herein, the foregoing release shall be effective as a full and final accord
     and satisfaction of all claims hereby released and each of the parties
     hereto hereby agrees, represents and warrants that the matters released
     herein are not limited to matters which are known or disclosed.  In this
     connection, each of the parties hereto hereby agrees, represents and
     warrants that it realizes and acknowledges that factual matters now
     existing and unknown to it may have given or may hereafter give rise to
     Borrower Claims, which are presently unknown, unsuspected unliquidated,
     unmatured and/or contingent, and it further agrees, represents and warrants
     that this release has been negotiated and agreed upon in view of that
     realization.  Nevertheless, each party hereto hereby intends to release,
     discharge and acquit the Lender Parties of and from any such unknown,
     unsuspected, unliquidated unmatured and/or contingent Borrower Claims,
     which are in any way set forth in or

                                      -4-
<PAGE>

     related to the matters identified hereinabove. Each of the parties hereto
     hereby explicitly waives the benefits of any common law or statutory rule
     with respect to the release of such Borrower Claims.

          (c) The acceptance of this release by the holders of the Notes on
     behalf of the Lender Parties shall not be deemed or construed as an
     admission of liability with respect to the Borrower Claims or otherwise by
     the Lender Parties, or any of them, and the Lender Parties hereby expressly
     deny liability of any nature whatsoever arising from or related to the
     subject of the release contained herein.

          (d) Each of the Companies and, by their execution, their Subsidiaries,
     hereby agrees, represents and warrants that:  (i) such party has not
                                                    -
     voluntarily, by operation of law or otherwise, assigned, conveyed,
     transferred or encumbered, either directly or indirectly, in whole or in
     part, any right to or interest in any of the Borrower Claims purported to
     be released hereby; (ii) such party has had advice of counsel of its own
                          --
     choosing in negotiations for and the preparation of this Letter Agreement;
     and (iii) such party is fully aware of the effect of releases such as that
          ---
     contained in this Letter Agreement.

     9.  Governing Law.  This Letter Agreement, including the validity hereof
         -------------
and the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.

     10. Miscellaneous.  The headings in this Letter Agreement are for purposes
         -------------
of reference only and shall not limit or otherwise affect the meaning hereof.
This Letter Agreement embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements and understandings relating
to the subject matter hereof.  In case any provision in this Letter Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.  This Letter Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts but all such
counterparts shall together constitute but one and the same instrument.


           [The remainder of this page is intentionally left blank.]

                                      -5-
<PAGE>

     If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart hereof, whereupon this Letter
Agreement shall become a binding agreement under seal among the parties hereto.
Please then return one of such counterparts to the Companies.

                                  Very truly yours,

                                  PSC INC.



                                  By: __________________________________
                                                                 (Title)


                                  PSC SCANNING, INC.



                                  By: __________________________________
                                                                 (Title)
<PAGE>

     Each of the undersigned (a) acknowledges and assents to the terms and
                              -
provisions of the foregoing Letter Agreement and (b) ratifies and confirms each
                                                  -
of the Operative Documents to which it is a party and agrees that each such
Operative Document is in full force and effect, that its obligations thereunder
are its legal, valid and binding obligations enforceable against it in
accordance with the terms thereof and that it has no defense, whether legal or
equitable, setoff or counterclaim, to the payment and performance of such
obligations.

                                  INSTAREAD CORPORATION


                                  By: __________________________________
                                                                 (Title)


                                  PSC AUTOMATION, INC. (formerly
                                    named Lazerdata Corporation)


                                  By: __________________________________
                                                                 (Title)


                                  PERCON INCORPORATED


                                  By: __________________________________
                                                                 (Title)


           [The remainder of this page is intentionally left blank.]
<PAGE>

The foregoing is hereby accepted
and agreed to:

JOHN HANCOCK LIFE INSURANCE
 COMPANY (formerly John Hancock
 Mutual Life Insurance Company)


By:  _____________________________
                           (Title)
<PAGE>

The foregoing is hereby accepted
and agreed to:

JOHN HANCOCK VARIABLE LIFE
 INSURANCE COMPANY


By:  _______________________________
                             (Title)
<PAGE>

The foregoing is hereby accepted
and agreed to:

THE LINCOLN NATIONAL LIFE
 INSURANCE COMPANY

By:  Delaware Lincoln Investment Advisers,
     a series of Delaware Management
     Business Trust, Attorney-in-Fact


     By:  ___________________________
                              (Title)
<PAGE>

The foregoing is hereby accepted
and agreed to:

LINCOLN NATIONAL INCOME FUND, INC.


By:  _______________________________
                             (Title)
<PAGE>

The foregoing is hereby accepted
and agreed to:

SECURITY-CONNECTICUT LIFE
 INSURANCE COMPANY


By:  _______________________________
                             (Title)
<PAGE>

The foregoing is hereby accepted
and agreed to:

THE EQUITABLE LIFE ASSURANCE
 SOCIETY OF THE UNITED STATES


By:  _______________________________
                             (Title)
<PAGE>

                                                                       Exhibit 3
                                                                       ---------



                                  Form of Note
                                  ------------