Amendment Two and Waiver
                              to Credit Agreement

THIS AMENDMENT TWO AND WAIVER is dated as of July 4, 1997 and is made in respect
of the Credit  Agreement  dated as of July 12, 1996 and as amended and in effect
immediately  prior to the date hereof (the "Credit  Agreemtn")  by and among PSC
SCANNING INC., a Delaware corporation formerly known as SpectraScan, Inc., which
is successor by merger to PSC  Acquisition,  Inc.,  (the  "Borrower"),  PSC Inc.
("PSC"),  the financial  institutions party to the Credit Agreement (the "Lender
Parties"),  FLEET  BANK as the  "Initial  Issuing  Bank",  and  FLEET  BANK,  as
administrative agent (the "Administrative Agent") under the Credit Agreement.

                           Statement of the Premises

The  Borrower,  PSC,  the  Lender  Parties,  the  Initial  Issuing  Bank and the
Administrative  Agent previously entered into the Credit Agreement and the First
Amendment to Credit  Agreement  dated as of September 27, 1996. The Borrower has
requeted that the Lender Parties amend a certain  definition  and  corresponding
schedule to the Credit  Agreement and waiver  noncompliance by the Borrower with
certain covenants in the Credit Agreement.  The Lender Parties are willing to do
so upon certain contingencies.

                           Statement of Consideration

Accordingly,  in  consideration  of the  premises,  and under the  authority  of
Section 5-1103 of the New York General Obligations Law, the parties hereto agree
as follows.

                                   Agreement

1. Defined Terms. The terms "this Agreement," "hereunder" and similar references
in the  Credit  Agreement  shall be deemed to refer to the Credit  Agreement  as
amended hereby.  Capitalized  terms used and not otherwise  defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.

2.  Amendment.  Effective  as of April 1,  1997,  upon the  satisfaction  of all
conditions  set forth in  Section 4 hereof,  Schedule  4.01 (hh) is  amended  by
deleting therefrom the reference to the Employment  Agreement between L. Michael
Hone dated  September 14, 1995;  and  "Material  Contract" as defined in Section
1.01 of the  Credit  Agreement  shall be deemed  not to  include  the  Severance
Agreement  dated April 30, 1997 between PSC and L. Michael Hone or any ancillary
agreement or instrument  pertaining to the  resignation  of L. Michael Hone from
eployment  with  PSC  and  all  of  its   subsidiaries   and  other   affiliates
(collectively  with PSC,  the  "Companies")  and his  positions  and  offices as
Chairman,  Chief  Executive  Officer,  President and as a member of the Board of
Directors of PSC as well as all other positions,  offices and directorships with
any of the Companies.

<PAGE>

3.  Waiver.  Upon the  satisfaction  of all  conditions  set forth in  Section 4
hereof,  the Lender Parties hereby waive any and all  noncompliance  by PSC with
Subsections  (a),  (b),  (c) and (d) of  Section  5.04 of the  Credit  Agreement
computed as at the fiscal quarter  end-date of July 4, 1997 (and only in respect
of compliance  required or computed as at such fiscal quarter  end-date) and any
and all  noncompliance  by PSC with Subsection (e) of Section 5.04 of the Credit
Agreement  through  August 15,  1997,  together  with the right to deem any such
noncompliance  within the  description  of the foregoing  waiver as an "Event of
Default"  pursuant  to Section  6.01 of the Credit  Agreement  or a failure of a
condition precedent pursuant to Section 3.02 of the Credit Agreement.

4. Conditions Precent to Effectiveness.  This Amendment Two and Waiver shall not
become  effective  unless and until:  (a) the holders of the  Subordinated  Debt
shall have  entered into an  amendment  or waiver in  substantially  the form of
Exhibit A annexed hereto;  and (b) the Borrower shall have paid to the Agent for
the account of each of the Lender Parties,  pro-rata  according to the amount of
the Commitment of each Lender Party, a fee equal to one-sixteenth of one percent
of the total amount of the Commitment.

5. Effect on the Credit  Agreement.  Except as  specifically  amended and waived
above,  the Credit Agreement shall remain in full force and effect and is hereby
ratified and confirmed. The Borrower and PSC each acknowledge and agree that the
Credit  Agreement (as amended by this Amendment) and each other Loan Document to
which  each is a  party  is in full  force  and  effect,  that  its  Obligations
thereunder and under this Amendment are its legal valid and binding  obligations
enforceable  against it in accordance with the terms thereof and hereof,  and it
has no  defense,  whether  legal or  equitable,  setoff or counter  claim to the
payment and performance of such Obligations.

6. Expenses.  The Borrower shall pay promptly when billed all reasonable out-of-
pocket expenses of each of the Lender Parties and the Agent (including,  but not
limited to,  reasonable fees,  charges and  reimbursements of counsel to each of
the Lender  Parties  and the Agent)  incident to the  preparation,  negotiation,
execution,  administration  and enforcement of this Amendment Two and Waiver and
all documents and  transactions  required in connection  with this Amendment Two
and Waiver.

<PAGE>

7. Execution in Counterparts  and  Effectiveness.  This Amendment Two and Waiver
may be  executed  in any number of  counterparts  and by the  different  parties
hereto  on  separate  counterparts,  each of  which  shall  be  deemed  to be an
original,  and all of which taken  together  shall  constitute  one and the same
Amendment  Two and Waiver,  regardless  of whether or not the  execution  by all
parties  shall  appear  on  any  single  counterpart.  Delivery  of an  executed
counterpart  of a signature  page to this Amendment Two and Waiver by telecopier
shall be  effective  as  delivery  of a manually  executed  counterpart  of this
Agreement.  This Amendment Two and Waiver will become effective  (subject to the
conditions precedent set forth in Section 4 above) when the Administrative Agent
shall have received  counterparts  of this Amendment Two and Waiver which,  hwen
taken  together,  bear the signatures of the Borrower,  PSC, the  Administrative
Agent and the Required Lenders.

8.  Applicable  Law.  Pursuant  to  Section  5-1401  of  the  New  York  General
Obligationis  Law, the laws of the State of New York shall govern the  validity,
construction, enforcement and interpretation of this Amendment Two and Waiver in
whole without  regard to any rules of  conflicts-of-laws  that would require the
application of the laws of any jurisdiction other than the State of New York.

9. Headings.  The headings of this Amendment Two and Waiver are for the purposes
of reference only and shall not limit or otherwise affect the meanings hereof.

IN WITNESS  WHEREOF,  the  parties  hereto  have  caused a  counterpart  of this
Amendment  Two  and  Waiver  to be  executed  and  delivered  by  their  respect
representatives thereunto duly authorized, as of the date first above written.
<PAGE>

PSC Inc.                                 PSC SCANNING, INC.
Vice President,Finance                   Vice President & Chief 
and Treasurer                            Financial Officer

FLEET BANK, as Initial Issuing Bank     FLEET BANK, as Admin. Agent
Acting Vice President                   Acting Vice President

FLEET BANK                              CORESTATES BANK, N.A.
Acting Vice President                   Senior Vice President

MANUFACTURERS & TRADERS                 KEY BANK NATIONAL
TRUST COMPANY                           ASSOCIATION
Regional Senior VP                      Vice President

                                        PILGRIM AMERICA PRIME RATE
SUMITOMO                                TRUST
Vice President, NY Office               Vice President