Document:

Variance to Credit Agreement

         This Variance is dated as of October 28, 1999 and is made in respect of
the  Credit  Agreement  dated  as of July  12,  1996 as  amended  and in  effect
immediately  prior to the date hereof (the "Credit  Agreement") by and among PSC
Scanning,  Inc., a Delaware  corporation  formerly known as  SpectraScan,  Inc.,
which is the successor by merger to PSC Acquisition, Inc., (the "Borrower"), PSC
Inc.  ("PSC"),  the financial  institutions  party to the Credit  Agreement (the
"Lender  Parties"),  Fleet National Bank  (formerly  known as Fleet Bank) as the
"Initial  Issuing Bank", and Fleet National Bank, as  administrative  agent (the
"Administrative  Agent")  under the Credit  Agreement.  All terms defined in the
Credit Agreement are used herein with the same meanings.

                            Statement of the Premises

         The Borrower's Total Debt Ratio,  determined according to the financial
statements of Borrower for the  quarterly  period  ending  October 1, 1999,  has
improved  from  "Level  III" to "Level  IV" as  described  under the  Applicable
Margin.  The  Borrower  has  requested  that  the  corresponding  change  in the
Applicable Margin become effective as soon as possible rather than at the end of
the current Interest Period, as provided in the Credit Agreement, and the Lender
Parties are willing to grant such variance in this specific instance.

                           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. Variance.  Effective on the date on which the Administrative Agent shall have
received all  signatures  to this  Variance by all Lender  Parties,  PSC and the
Borrower,  the Applicable Margin shall be deemed to be at Level IV.  Immediately
upon receiving all such signatures,  the Administrative Agent shall execute this
Variance and shall notify all parties to the Credit Agreement in writing of such
effective date.

2. Effect on the Credit  Agreement.  Except as  specifically  varied above,  the
Credit  Agreement  shall remain in full force and effect and is hereby  ratified
and  confirmed.  No  obligation  to make any  similar  variance in the future is
expressed or implied.

                                      -81-
<PAGE>

3.  Expenses.  The  Borrower  shall pay  promptly  when  billed  all  reasonable
out-of-pocket  expenses  of each of the Lender  Parties  and the  Administrative
Agent (including, but not limited to, reasonable fees, charges and disbursements
of counsel to each of the Lender Parties and the Administrative  Agent) incident
to this Variance.

4.  Execution in  Counterparts.  This  Variance 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  agreement,  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 Variance by telecopier shall be
effective as delivery of a manually executed counterpart of this Variance.

         IN WITNESS  WHEREOF,  the parties  hereto have caused a counterpart  of
this Variance to be executed and delivered by their  respective  representatives
thereunto duly authorized, as of the date first above written.

PSC Inc.                                    PSC Scanning, Inc.

By:                                         By:
Title:   Vice President, Chief Financial    Title:   Vice President and Chief
         Officer & Treasurer                         Financial Officer

Fleet National Bank, as Initial             Fleet National Bank, as
Issuing Bank                                Administrative Agent

By:                                         By:
Title:                                      Title:

Fleet National Bank                         First Union National Bank

By:                                         By:
Title:                                      Title:

The Chase Manhattan Bank                    Key Bank National Association

By:                                         By:
Title:                                      Title:

                                      -82-
<PAGE>

Manufacturers & Traders Trust Company

By:
Title:

                                      -83-PSC INC.
                               PSC SCANNING, INC.
                                 675 Basket Road
                             Webster, New York 14580

                                                               December 20, 1999

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 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: Amendment No. 5 and Consent Under Securities Purchase Agreements

                                      -84-
<PAGE>

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:

                                      -85-
<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 and (v) Amendment No.
4, Consent and Waiver Under Securities  Purchase  Agreements dated March 1, 1999
(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.

     (b) The Companies have requested that the holders of the Securities  issued
pursuant to the Securities Purchase Agreements (i) consent to the acquisition of
the  assets  of  GEO  Labs,  Inc.  and  GAP  Technologies,  Inc.  (the  "GEO/GAP
Acquisition")  on the  terms  set  forth  in the  term  sheet  for  the  GEO/GAP
Acquisition  attached as Exhibit 1 hereto (the  "GEO/GAP  Term  Sheet") and (ii)
amend certain provisions of the Securities Purchase Agreements as applied to the
GEO/GAP Acquisition upon the terms and provisions set forth herein.

2.  Amendment  to  the  Securities  Purchase  Agreements.  Section  15.1  of the
Securities Purchase Agreements is hereby amended:

     (a) to insert the following definitions in appropriate alphabetical order:

     ""GEO/GAP  Acquisition"  and "GEO/GAP Term Sheet" shall have the respective
meanings  specified  in that certain  Amendment  No. 5, Consent and Waiver Under
Securities Purchase Agreements dated December 20, 1999."

     (b) to amend  the  definition  of  "Capital  Expenditures"  to  insert  the
following immediately before the "." at the end of such definition:

     "; provided that for purposes of section 14.7(a) of this Agreement, Capital
Expenditures  shall not include those  expenditures  which are funded by Current
Debt  and/or  Funded  Debt  and  which  are  made  to  accomplish   the  GEO/GAP
Acquisition."

     (c) to amend the  definition  of  "Current  Debt" to insert  the  following
immediately before the "." at the end of such definition:

                                      -86-
<PAGE>

     ";  provided that for purposes of section 14.5 of this  Agreement,  Current
Debt shall not include  amounts  payable to George A. Plesko  pursuant to and in
accordance with the GEO/GAP Term Sheet."

     (d) to amend  the  definition  of  "Funded  Debt" to insert  the  following
immediately before the "." at the end of such definition:

     ";  provided  that for purposes of section 14.5 of this  Agreement,  Funded
Debt shall not include  amounts  payable to George A. Plesko  pursuant to and in
accordance with the GEO/GAP Term Sheet."

     3. Consent.  Each of you hereby consents to the consummation of the GEO/GAP
Acquisition  upon the terms set forth in the GEO/GAP Term Sheet;  provided that,
after  giving  effect to the  provisions  of this  Letter  Agreement  and to the
GEO/GAP Acquisition, no Default or Event of Default shall exist and, immediately
upon the consummation of the GEO/GAP Acquisition, the chief financial officer of
the  Companies  shall  deliver  to each of you a  certificate  stating  that the
Companies  have  complied  with and  remain in  compliance  with the  provisions
hereof.

     4. No Default, Representations and Warranties, etc.

     (a) The Companies  represent and warrant that, except as otherwise modified
by (i) the  documents  referred  to in  section  5(a)(i) of  Amendment  No. 3 to
Securities  Purchase  Agreements  and Warrants  dated August 18, 1997,  (ii) the
projections  referred  to on Exhibit B attached to  Amendment  No. 2 and Waivers
under  Securities  Purchase  Agreements  dated  as of July 4,  1997,  (iii)  the
information  delivered to the Purchasers on June 11, 1997,  which is attached to
Amendment No. 2 and Waivers Under  Securities  Purchase  Agreements  dated as of
July 4, 1997 as Exhibit C, (iv) the documents referred to in Section 3(a)(iv) of
Consent and Waiver Under  Securities  Purchase  Agreements  and  Warrants  dated
December 29, 1997, (v) the documents referred to in section 4(a)(v) of Amendment
No. 4, Consent and Waiver under  Securities  Purchase  Agreements,  and (vi) the
following  documents filed by the Holding Company with the Commission  under the
Exchange Act: (A) Form 10-K for the year ended  December 31, 1998, (B) Form 10-Q
for the quarters  ended April 2, 1999,  July 2, 1999 and October 1, 1999 and (C)
Form 8-K filed on November 10, 1999 (true, correct and complete copies of all of
which items have been  furnished to you),  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).  The Companies
further  represent  and warrant that,  after giving effect to the  provisions of
this Letter Agreement, no Default or Event of Default exists.

                                      -87-
<PAGE>

     (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 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.

     (d) On December 31, 1997, each of Laserdata Holdings,  Inc., PSC S.A., Inc.
and PSC Scanning Systems, Inc. was merged into the Holding Company.

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

     6. 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.

     7. 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.]

                                      -88-
<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: _____________________________

                             PSC SCANNING, INC.

                             By: _____________________________
                                                       (Title)
     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 Laserdata Corporation)

                             By: _____________________________

                                      -89-
<PAGE>

The foregoing is hereby accepted and agreed to:

JOHN HANCOCK MUTUAL LIFE
   INSURANCE COMPANY

By:  _____________________________
                         (Title)

JOHN HANCOCK VARIABLE LIFE
   INSURANCE COMPANY

By:  _______________________________
                         (Title)

                                      -90-
<PAGE>

THE LINCOLN NATIONAL LIFE
   INSURANCE COMPANY

By:    Lincoln Investment Management, Inc.
       Its Attorney-in-Fact

       By:  ___________________________
                              (Title)

LINCOLN NATIONAL INCOME FUND, INC.

By:  _______________________________
                              (Title)

                                      -91-
<PAGE>

SECURITY-CONNECTICUT LIFE
   INSURANCE COMPANY

By:  _______________________________
                            (Title)

THE EQUITABLE LIFE ASSURANCE
   SOCIETY OF THE UNITED STATES

By:  _______________________________
                            (Title)

                                      -92-
<PAGE>

                                                                     Exhibit 1

                               GEO/GAP Term Sheet

                                  See attached.

                                      -93-

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