PSC Inc.
                               PSC SCANNING, INC.
                                675 Basket Road
                               Webster, NY 14580

                               As of July 4, 1997

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 Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Ft. Wayne, Indiana  46802

SECURITY-CONNECTICUT CORPORATION
SECURITY-CONNECTICUT LIFE INSURANCE COMPANY
20 Security Drive
Avon, Connecticut 06001

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

Re:  Amendment No. 2 and Waivers 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. Definitions.  Reference is hereby made to those certain  Securities  Purchase
Agreements  dated July 12, 1996, as amended by Amendment No. 1 dated October 10,
1996 (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.  Capitalized terms used herein without  definition have
the meanings ascribed to them in the Securities Purchase Agreements.

<PAGE>
2.   Amendments   and  Waivers  under  the   Securities   Purchase   Agreements;
Acknowledgment of Amendments and Waivers under Bank Credit Agreement.

(a) Section 11.1(a) of the Securities  Purchase  Agreements is hereby amended by
deleting the phrase "the one year  anniversary of the Closing Date" appearing in
the first sentence thereof and inserting "September 15, 1997" in place therof.

(b) Each of you hereby  waives any default in the  performance  or observance of
any covenant, condition or agreement contained in Section 14.7 of the Securities
Purchase  Agreements  with respect to the fiscal  quarter ended on July 4, 1997,
and, for section 14.7(d) only, through August 15, 1997.

(c) Each of you hereby  acknowleges  that  section  14.16(c)  of the  Securities
Purchase  Agreements  permits the  amdnemdnet  and waivers under the Bank Credit
Agreement  as provided for in that  certain  Amendment  Two and Waiver to Credit
Agreement  dated as of July 4,  1997,  among the  Holding  Company,  as  Initial
Issuing Agent,  and Fleet Bank, as  administrative  agent,  substantially in the
form attached hereto as Exhibit A.

3.  No Default, Representations and Warranties, etc.

(a) The Companies  represent and warrant that,  except as otherwise  modified by
(i) the  Holding  Company's  (A) Annual  Report on Form 10-K for the fiscal year
ended  December 31, 1996,  including all exhibits and  appendices  thereto,  (b)
Quarterly  Report on Form 10-Q for the  quarter  ended  April 4,  1997,  and (c)
Current  Report on Form 8-K  filed  with the  Commission  on May 7,  1997,  true
correct  and  complete  copies of which  have been  furnished  to you,  (ii) the
projections  referred to on Exhibit B attached hereto, and (iii) the information
delivered  to the  Purchasers  on June 11,  1997,  which is  attached  hereto as
Exhibit  C, the  representations  and  warranties  contained  in the  Securities
Purchase  Agreements  and the  other  Operative  Documents  are in all  material
respects correct on and as of the date hereof as if made on such date (except to
the  extent  affected  by the  consummation  of  transactions  permitted  by the
Securities Purchase Agreements), and 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 (as
amended  hereby) 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
acccordance  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.
<PAGE>

(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 (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 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 Operative
Documents shall include this Letter Agreement.

4. Payment of Transaction Costs. The Companies shall pay all reasonable fees and
disbursements  incurred  by  you in  connnection  herewith,  including,  without
limitation,  the reasonable  fees,  expenses and  disbursements  of your special
counsel.

5. 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.

6.  Miscellaneous.  The  headings in this Letter  Agreement  are for purposes of
reference only and shall not limit otherwise  affect the meanings  hereof.  This
Letter  Agreement  embodies the entire  agreement  and  understanding  among the
parties thereto 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
imparied  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.
<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.
/s/ William J. Woodard

PSC SCANNING, INC.
/s/ William J. Woodard

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
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
/s/ William J. Woodard

PSC AUTOMATION, INC.
(formerly named Laserdata Corporation).
/s/ William J. Woodard
<PAGE>

LASERDATA HOLDINGS, INC.
/s/ William J. Woodard

PSC S.A., INC.
/s/ William J. Woodard

PSC SCANNING SYSTEMS, INC.
/s/ William J. Woodard

The foregoing is hereby accepted and agreed to:

JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
/s/ D. Dana Donovan

JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
/s/ D. Dana Donovan
<PAGE>

THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: Lincoln Investment Management, Inc.
Its Attorney-in-Fact


LINCOLN NATIONAL INCOME FUND. INC.
By:  David C. Fissler

SECURITY-CONNECTICUT CORPORATION
By:  /s/ Richard D. Mocarski

SECURITY-CONNECTICUT LIFE
 INSURANCE COMPANY
By:  /s/ Richard D. Mocarski

THE EQUITABLE LIFE ASSURANCE
 SOCIETY OF THE UNITED STATES
By:  /s/ William Gobbo, Jr.