Document:

<PAGE>

                                                                   EXHIBIT 10.51

                                           April 13, 2001

PSC Inc.
PSC Scanning, Inc.
675 Basket Road
Webster, New York 14580-9787
Attention: Edward Borey, President and
           Chief Executive Officer
           Elizabeth J. McDonald, Vice President and
           Corporate Counsel

       Re:   PSC Scanning, Inc.

Ladies and Gentlemen:

      Reference is hereby made to the Securities Purchase Agreements dated July
12, 1996 (as amended, modified and supplemented, the "Securities Purchase
Agreements") by and among PSC Inc. (the "Holding Company"), PSC Scanning, Inc.
(the "Operating Company") and the institutional investors named therein.
Capitalized terms used but not defined herein shall be given the meanings
accorded to such terms in the Securities Purchase Agreements.

      Attached hereto as Annex 1 is a term sheet (the "Term Sheet") setting
forth our agreement on the terms of an amendment to or amendment and restatement
of the Securities Purchase Agreements. The parties hereto agree to promptly
prepare all documentation required in connection with such amendment or
amendment and restatement. Such documentation will not contain any economic
terms with respect to principal, interest, fees or financial covenants more
restrictive terms than those set forth in the Term Sheet. The holders of the
Notes hereby waive the Events of Default waived by them pursuant to the Consent
and Waiver Under Securities Purchase Agreements dated as of March 31, 2001
pending completion of final documentation. This letter agreement shall be
superseded and replaced upon completion of documentation in connection with the
amendment or amendment and restatement of the Securities Purchase Agreements
referred to above.

      By each party's signature below, each such party acknowledges that it is
duly authorized to approve the Term Sheet and agrees that the terms of the
Securities Purchase Agreements shall be deemed to be modified effective as of
the date hereof as set forth in the Term Sheet.
<PAGE>

      Please return executed counterparts of this letter agreement to Charles L.
Glerum and W. Brewster Lee at Choate, Hall & Stewart (fax no. 617-248-4000).

                                           Very truly yours,

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

                                           By: _________________________
                                                                 (Title)

                                           JOHN HANCOCK VARIABLE LIFE
                                           INSURANCE COMPANY

                                           By: _________________________
                                                                 (Title)

                                           THE LINCOLN NATIONAL LIFE
                                           INSURANCE COMPANY

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

                                                 By: ___________________
                                                                 (Title)

                                           LINCOLN NATIONAL INCOME FUND,
                                           INC.

                                           By: _________________________
                                                                 (Title)
<PAGE>

                                           SECURITY-CONNECTICUT LIFE
                                           INSURANCE COMPANY

                                           By: _________________________
                                                                 (Title)

                                           THE EQUITABLE LIFE ASSURANCE
                                           SOCIETY OF THE UNITED STATES

                                           By: _________________________
                                                                 (Title)
<PAGE>

ACKNOWLEDGED AND AGREED

PSC INC.

By: __________________________

PSC SCANNING, INC.

By: __________________________

PSC AUTOMATION, INC.

By: __________________________

INSTAREAD CORPORATION

By: __________________________

PERCON INCORPORATED

By: __________________________<PAGE>

                                                                   EXHIBIT 10.55

                              SETTLEMENT AGREEMENT
                              --------------------

     This Settlement Agreement dated and effective as of October 1, 2000, (the
"Effective Date") by and among SYMBOL TECHNOLOGIES, INC., a Delaware
corporation, and its subsidiaries and affiliates, (collectively "Symbol") having
its principal place of business at One Symbol Plaza, Holtsville, NY  11742-1300;
and PSC INC., a New York corporation, and its subsidiaries and affiliates,
(collectively "PSC"), having its principal place of business at 675 Basket Road,
Webster, New York, 14580, including its wholly owned subsidiary PSC SCANNING,
INC. (formerly named "SPECTRA-PHYSICS SCANNING SYSTEMS, INC., hereinafter
referred to as "SPSSI") a Delaware corporation, having its principal place of
business at 959 Terry Street, Eugene, OR  97402.

                                    RECITALS
                                    --------

     WHEREAS, Symbol is, and has been engaged in the design, development,
manufacture and sale of electronic equipment, including laser scanning bar code
readers, and more particularly, laser scanning "scan engine" subassemblies of
various types as well as bar code readers in the form of finished products and
is the owner of various U.S. and foreign patents pertaining to such laser
scanning subassemblies and readers;

     WHEREAS, PSC is, and has been engaged in the design, development,
manufacture and sale of electronic equipment, including laser scanning bar code
readers, and more particularly, laser scanning "scan engine" subassemblies of
various types as well as bar code readers in the
<PAGE>

form of finished products and is the owner of various U.S. and foreign patents
pertaining to such laser scanning subassemblies and readers;

     WHEREAS, on March 30, 1995, PSC and Symbol amended a license agreement
between the parties which is dated March 6, 1991 (such agreement, as amended,
being hereinafter referred to as the "1991 PSC-Symbol Agreement"), and at the
same time entered into a second license agreement dated March 30, 1995 (the
"1995 PSC-Symbol Agreement") pertaining to the license and option to license
patents of both parties;

     WHEREAS, Symbol and SPSSI are also parties to (i) a license agreement of
October 1, 1985; and (ii) an agreement dated January 1, 1995, which amends the
1985 license agreement and provides for the license of certain other Symbol
patents to SPSSI (such agreements being collectively referred to as the "Spectra
Agreements");

     WHEREAS, in 1996, PSC Inc. purchased SPSSI and SPSSI became a wholly-owned
subsidiary of PSC Inc.;

     WHEREAS, on April 1, 1996, PSC Inc. commenced suit against Symbol in the
United States District Court for the Western District of New York, (Civil Action
96 Civ. 6152T) asserting claims against Symbol for alleged violations of the
federal antitrust laws, the Lanham Act, unfair competition and also seeking a
declaratory judgment of non-infringement and invalidity as to certain Symbol
patents, and Symbol counterclaimed for patent infringement, breach of contract
and fraud;

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<PAGE>

     WHEREAS, Symbol brought an action against Data General Corporation ("Data
General")(now part of EMC Corporation) for infringement of United States Letters
Patent Nos. 4,758,717; 5,130,520; 5,262,628; 5,396,055; 5,532,469; 5,144,120;
5,254,844; 5,401,948; and 5,558,332, and Data General asserted counterclaims
against Symbol, which claims are currently pending in the Western District of
New York, Civil Action No. 96-CV-6314T (the "Data General Litigation");

     WHEREAS, on March 14, 2000, Symbol commenced suit against PSC in the United
States District Court for the Eastern District of New York (Civil Action 00 Civ
1432 JS) asserting claims for patent infringement under two unlicensed Symbol
patents;

     WHEREAS, the parties are desirous of (i) settling the aforementioned
pending litigations and resolving the disputes between them, including the
amount of the obligation due to Symbol by PSC for unpaid royalties; (ii)
simplifying the computation of royalties due to Symbol by PSC under the various
applicable license agreements as a matter of mutual business and accounting
convenience by entering into an Amendment in the form attached hereto as Exhibit
B; and  (iii) entering into agreements wherein Symbol and PSC each agree to
supply products to the other in accordance with the terms of the agreements set
forth as Exhibits C and D (collectively, the "Master Purchase Agreements");

NOW THEREFORE, in consideration of the premises and mutual covenants contained
herein the parties hereby agree as follows:

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<PAGE>

ARTICLE 1 - RELEASE AND SATISFACTION
------------------------------------

1.1  In consideration for entry into this Settlement Agreement and in settlement
     of all disputes between the parties arising out of events occurring prior
     to November 20, 2000, each party hereby releases and discharges any and all
     claims or demands, of any type or description, whether known or unknown,
     that have been asserted or could have been asserted against the other party
     as of November 20, 2000, except for the contractual obligations due under
     the Operative Documents as of, or after, the Effective Date.

1.2  The release set forth in Section 1.1 shall not excuse PSC's obligation to
     make payments of sums payable to Symbol arising from the sale, use or lease
     of Royalty Bearing Products by PSC after the Effective Date.

1.3  In further consideration for entry into this Settlement Agreement, Symbol
     is discontinuing the Data General Litigation without prejudice, and Data
     General is dismissing its counterclaims with prejudice, through the filing
     of the Stipulation of Dismissal appended hereto as Exhibit E.

1.4  In full and complete satisfaction of all damages and costs, including those
     in Civil Action 96 Civ. 6152 T, Civil Action 96-CV-6314T, and Civil Action
     00- 1432 JS, PSC shall transfer to Symbol the following:

     (I)  Cash Payment: On or before November 30, 2000, PSC shall pay Symbol the
          sum of monies equivalent to the appropriate royalty payable under the
          Spectra Agreements, as they read prior to the amendments effected by
          Exhibit B, for the quarter ending September 30, 2000.

                                       4
<PAGE>

     (II) Note: The Note in the form attached hereto as Exhibit G for the sum of
          two million dollars ($2,000,000.00);

    (III) Other Consideration: Provide such other consideration as is
          contemplated in accordance with the terms of the Operative Documents
          (hereinafter defined) and the Exhibits thereto.

1.5  The parties agree to, and shall have executed by their respective attorneys
     and shall submit to the designated Court for entry within 10 days from
     November 20, 2000, papers in the form as set forth in the attached Exhibits
     A and E.

ARTICLE 2 - AMENDMENT OF LICENSES
---------------------------------

   PSC Inc., PSC Scanning Inc. and Symbol shall execute and deliver the
Amendment to the Spectra Agreement in the form attached hereto as Exhibit B.

ARTICLE 3 - MASTER PURCHASE AGREEMENTS
--------------------------------------

   PSC and Symbol shall execute and deliver the Master Purchase Agreements in
the form attached hereto as Exhibits C and D.  The Master Purchase Agreements,
License Amendment and this Agreement shall constitute the "Operative Documents."

ARTICLE 4 - ACKNOWLEDGEMENT
---------------------------

     The parties acknowledge that this Settlement Agreement is entered into, and
the amount of the consideration and the specific amendment to the Spectra
Agreements have been negotiated

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<PAGE>

between the parties and determined in light of many business, accounting,
financial and tax interests of the parties. Moreover, Symbol and PSC believe it
is mutually advantageous in the context of this Settlement Agreement to provide
renewable Master Purchase Agreements so that the parties have the assurance of
continued access to the products of the other party as more fully set forth in
the Master Purchase Agreements.

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
------------------------------------------

5.1  Each of the parties hereto represents and warrants to the other that such
     party is duly incorporated, validly existing and in good standing under the
     laws of its respective state of incorporation, that it has all requisite
     corporate power and authority to enter into the Operative Documents, that
     its execution, delivery and performance of the Operative Documents have
     been duly authorized by all necessary corporate actions and that the
     Operative Documents constitute the valid and binding obligations of such
     party enforceable against such party in accordance with their terms.

5.2  PSC represents and warrants that it has paid or will pay on or before
     November 30, 2000 to Symbol the royalty (i) on all DI Modules and all
     Handheld Scanners incorporating DI Modules sold prior to the Effective Date
     and on all Portable Integrated Scanning Terminals incorporating DI Modules
     sold after October 1, 1998, except for payments due under Section 7.2 of
     this Agreement, and (ii) on all Royalty Bearing Products under the Spectra
     Agreements due as of September 30, 2000.

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<PAGE>

ARTICLE 6 -   SPECIFIC PERFORMANCE
------------  --------------------

     PSC and Symbol each acknowledge that the other will not have an adequate
remedy at law in the event of any breach of this Settlement Agreement and that
such other party shall have the right, in such event, in addition to any other
rights it may have, to specific performance of this Settlement Agreement
(without the need to prove irreparable harm, actual damages or to post bond or
furnish any other security).

ARTICLE 7 - DI MODULE
---------------------

7.1  As of November 20, 2000, PSC will immediately cease and desist
     manufacturing, having manufactured, leasing, selling and/or causing to be
     sold or distributed the DI Module, either alone or as a component part of a
     finished product, except that PSC may supply any customer who purchased a
     DI Module, or a handheld laser scanner or a portable integrated scanning
     terminal incorporating a DI Module, prior to the Effective Date, with a DI
     Module for repair or replacement (e.g., breakage under warranty). As used
     herein the "DI Module" means PSC's DI-1000 family of scan engines sold by
     PSC prior to the Effective Date, any other PSC direct illumination scan
     engine that had been developed or was under development as of the Effective
     Date, and any colorable imitation of the DI-1000 family of Scan Engines
     whose sale would constitute contempt of court were there an injunction
     against the DI Module. This section shall not be deemed to preclude or
     otherwise diminish any rights PSC may have under any of the direct
     illumination patents licensed to PSC for the manufacture of Fixed Mount
     Retail Mini-Slot and Bi-Optic Scanners (as defined in Paragraph 17 of the
     License

                                       7
<PAGE>

     Agreement), including without limitation the right to employ any form of
     direct illumination technology (whether or not currently existing in a DI
     Module) within such scanners.

7.2  PSC shall pay, on or before November 30, 2000, the sum of $28,067.00
     representing: i) a 3% royalty on all DI Modules and Handheld Scanners
     incorporating DI Modules sold prior to the Effective Date on which PSC has
     not yet paid a royalty and ii) a royalty of $112.50 for each DI-1000 sold
     after October 1, 1998 by PSC to Data General or to any other party which
     was not an express licensee of Symbol's `717 Patent Family (as defined
     below) for integration into a Portable Integrated Scanning Terminal.
     Subject to the filing of the Stipulation of Dismissal in Exhibit E, Symbol
     waives all claims for past damages, fees and costs with respect to the Data
     General Terminals and their use by Data General customers and the Portable
     Integrated Scanning Terminals of any other party incorporating a DI Module
     and the use of those terminals by such parties and their customers. Prior
     to November 20, 2000, PSC will identify to Symbol all customers who
     purchased over 500 DI Modules. As used herein, "Portable Integrated
     Scanning Terminal" means a bar code scanning device including an integrated
     display and/or integrated manual data input, including but not limited to a
     keyboard, that is covered by U.S. Patent No. 4,758,717 or a continuation or
     divisional thereof (the " '717 Patent Family"). "Data General Terminal"
     shall mean any Portable Integrated Scanning Terminal being sold by Data
     General as of the Effective Date which utilizes or incorporates a DI
     Module, and any colorable imitation thereof whose sale would constitute
     contempt of court were there an injunction against the Data General
     Terminal. As used herein, "HandHeld Scanners" shall mean any device (i)
     which is capable of reading and/or decoding bar codes, and (ii) which is
     designed to be portable and to be held, worn or carried by the

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<PAGE>

     operator while performing bar code reading or decoding; and (iii) which
     contains a laser light source used to scan the bar code being read and/or
     decoded.

7.3  Upon Data General's request, Symbol shall enter into a license agreement to
     enable Data General to manufacture and sell Portable Integrated Scanning
     Terminals, upon the same terms and conditions as are contained in the draft
     license agreement forwarded to PSC by Symbol by fax dated December 6, 1995,
     a copy of which was produced by PSC in the Symbol/PSC WDNY Action as
     document number PCL 6682-6692; except that the license agreement will
     include all five '717 Family patents asserted against Data General in the
     Data General Litigation, and would extend over the lifetime of all such
     patents.

ARTICLE 8- MISCELLANEOUS
------------------------

8.1  Entire Agreement. This Settlement Agreement, including all of the attached
     ----------------
     Exhibits referenced herein, constitutes the entire agreement and
     understanding between the parties as to the subject matter thereof, and
     supersedes and replaces all prior or contemporaneous arrangements, written
     or oral, as to the subject matter. This Settlement Agreement may be changed
     only in writing stating that it is an amendment or modification to this
     Settlement Agreement, and signed by an authorized representative of each of
     the parties hereto.

8.2  Notices. All notices to be given under this Settlement Agreement shall be
     -------------------------------------------------------------------------
     sent by certified mail, return receipt requested, or by a nationally
     recognized overnight courier, directed to the party in question at the
     respective addresses set forth below, provided, however, that such
     addresses may be changed by written notice thereof to the other parties:

                                       9
<PAGE>

          If to Symbol Technologies, Inc.:

               Leonard H. Goldner, Esq.
               Senior Vice President, General Counsel &
                Secretary
               Symbol Technologies, Inc.
               One Symbol Plaza
               Holtsville, NY  11742

          If to PSC Inc.:

               Elizabeth J. McDonald, Esq.
               Vice President and Corporate Counsel
               PSC Inc.
               675 Basket Road
               Webster, NY  14580

8.3  Unenforceability. Any term or provision of this Settlement Agreement which
     ----------------
     is held to be invalid or unenforceable or in conflict with the law of any
     jurisdiction, shall, as to such jurisdiction, be ineffective to the extent
     of such invalidity or unenforceability without affecting the validity of
     the remaining terms and provisions of this Settlement Agreement or
     affecting the validity or enforceability of any of the terms and provisions
     of this Settlement Agreement in any other jurisdiction. Further, the
     parties agree that a court of competent jurisdiction in a particular
     jurisdiction may reform a specific term of this Settlement Agreement should
     the applicability of such term or provision be held invalid or
     unenforceable in that jurisdiction so as to reflect the intended agreement
     of the parties hereto solely with respect to the applicability of such
     provision in said jurisdiction.

8.4  Cure Period. In the event it is determined that PSC has underpaid any of
     -----------
     the amounts due Symbol under one or more of sections 1.4 (I) (provided it
     is the result of a good faith error), 5.2 and 7.2 of this Settlement
     Agreement, PSC shall have 45 days from receiving written notice in
     accordance with the terms of this Settlement Agreement in which to cure any
     such

                                       10
<PAGE>

     underpayment. In the event such payments are made in accordance with this
     section, PSC shall not be deemed to be in breach of this Settlement
     Agreement by reason of the underpayment. Notwithstanding anything herein to
     the contrary, Symbol shall, in accordance with the terms of the Spectra
     Agreements, as amended, have the right to audit any royalty amounts due
     under sections 1.4(I), 5.2 and 7.2 and receive payments due thereunder and
     such amounts shall be subject to interest payments. This auditing right
     shall be limited in scope to the period subsequent to the last audit
     performed by Symbol (in 1999), performed for the purpose of calculating
     royalties due under sections 1.4(I), 5.2 and 7.2 of this Settlement
     Agreement, and performed within 12 months from the date of this Settlement
     Agreement. In the event such audit determines that PSC has overpaid said
     amounts due Symbol then such overpayments shall be treated as a credit
     against future royalty payments.

8.5  Press Release. On November 20, 2000, Symbol and PSC shall issue the joint
     -------------
     press release attached hereto as Exhibit F. Except as may be required by
     law or regulation, any additional press release pertaining to this
     Settlement Agreement shall be made only after consultation with and consent
     of the other party (whose consent shall not be unreasonably withheld).

8.6  Release. Neither this Settlement Agreement nor any provision thereof may be
     -------
     released, discharged, waived, abandoned or modified in any manner, except
     by an instrument in writing signed on behalf of both of the parties hereto
     by their duly authorized officers or representative.

8.7  Waiver. Any waiver of a default or condition hereof by either party shall
     ------
     not be deemed a continuing waiver of such default or condition. Any delay
     or omission by either party to exercise any right or remedy under this
     Settlement Agreement shall not be construed to be a waiver of any such
     right or remedy or any right hereunder. All of the rights of either party

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<PAGE>

     under this Settlement Agreement shall be cumulative and may be exercised
     separately or concurrently.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       12
<PAGE>

8.8  Grammar. Where the context of this Settlement Agreement requires, singular
     -------
     terms shall be considered plural, and plural terms shall be considered
     singular.

8.9  Choice of Law. This Settlement Agreement shall be governed by, performed
     -------------
     under and construed in accordance with the laws of the State of New York
     without giving effect to the conflicts of law principles thereof.

8.10 Attorneys Fees. Each of the parties shall pay its own costs and attorneys'
     --------------
     fees.

     In WITNESS WHEREOF, the parties hereto have caused this Settlement
Agreement to be duly executed as of the date and year written above.

SYMBOL TECHNOLOGIES, INC.                    PSC INC.

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

PSC SCANNING, INC.

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

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