Exhibit 10.1




                          WAIVER AND THIRD AMENDMENT TO
                          -----------------------------
             FIFTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
             ------------------------------------------------------
     THIS  WAIVER  AND  THIRD  AMENDMENT  TO FIFTH AMENDED AND RESTATED LOAN AND
SECURITY  AGREEMENT  (this  "Amendment")  is dated and effective as of April 30,
2003  by and among THE GSI GROUP, INC., a Delaware corporation ("Borrower"), the
several financial institutions which are or may from time to time become parties
(each, a "Bank" and collectively, the "Banks") to the Amended Loan Agreement (as
hereinafter  defined),  and  LASALLE  BANK  NATIONAL  ASSOCIATION  ("Agent").
                               W I T N E  S E T H:
     WHEREAS,  the  Borrower,  the  Banks  and  the Agent are parties to a Fifth
Amended  and  Restated Loan and Security Agreement dated as of July 25, 2001, as
amended  (the  "Amended  Loan  Agreement";  and
WHEREAS,  the  Borrower  has  defaulted  in  the  performance  of certain of its
obligations  under  the  Amended  Loan  Agreement  in  that  it has violated the
covenant  contained in Section 8.05 of the Amended Loan Agreement as of December
31,  2002  (the  "Covenant  Default").
WHEREAS,  the  Borrower  has requested that the Banks waive the Event of Default
that  exists  by  reason  of  the Covenant Default, and the Banks are willing to
grant  such a waiver, subject to the terms and conditions hereinafter set forth;
NOW,  THEREFORE,  the  parties  hereby  agree  as  follows:
     1.     Capitalized terms used in this Amendment have the meanings specified
for  such  terms  in  the  Amended  Loan  Agreement.
2.     The  parties  acknowledge that an Event of Default has occurred by reason
of  the  Covenant  Default.  The  Banks  each hereby waives the Event of Default
arising  solely  from  the  Covenant Default.  The foregoing waiver by the Banks
shall  not  be  deemed  to  be  a  waiver  of any default under the Amended Loan
Agreement  (other  than  the Covenant Default), any Event of Default (other than
the  Event of Default that exists solely by reason of the Covenant Default), any
other provision of the Amended Loan Agreement or any other Loan Document, or any
subsequent  default  or  Event  of  Default,  whether the same as, similar to or
different  than  the  default  resulting  from  the violation of the covenant in
Section  8.05  of  the  Amended  Loan  Agreement.
3.     On  the date hereof, Borrower shall pay the Banks a waiver fee of $60,000
as  further  consideration for the waiver set forth in paragraph 2 hereof.  Said
waiver  fee  shall  be  paid to each Bank in accordance with its Pro Rata Share.
4.     Effective  as  of  the  date hereof, the Amended Loan Agreement is hereby
amended  as  follows:
     (a)     The  definition  of the term "Available RCL Amount" in Section 1.01
of  the  Amended  Loan  Agreement  is  hereby  modified  to  read  as  follows:
"Available  RCL  Amount"  shall  mean  $47,000,000.
     (b)     The  definition of the term "Borrowing Base" in Section 1.01 of the
Amended  Loan  Agreement  is  hereby  modified  to  read  as  follows:
"Borrowing  Base" shall mean at any time the sum of (i) 80% of the unpaid amount
of  Eligible  Accounts  plus (ii) the lesser of (A) 50% of the value of Eligible
Inventory,  valued at the lower of cost or market and (B) $30,000,000 plus (iii)
the  Borrowing  Base  Overadvance.
     (c)     The  definition of the term "Borrowing Base Overadvance" in Section
1.01  of  the  Amended  Loan  Agreement  is  hereby modified to read as follows:
"Borrowing  Base  Overadvance"  shall  mean  (i)  from  May  1, 2003 through and
including  September  30,  2003,  the sum of $5,000,000, and (ii) from and after
September  30,  2003,  zero.
     (d)     The definition of the term "Fixed Charge Coverage Ratio" in Section
1.01  of  the  Amended  Loan  Agreement  is  hereby modified to read as follows:
"Fixed  Charge  Coverage  Ratio"  shall  mean,  with respect to Borrower for any
period  of  four  consecutive Fiscal Quarters most recently ended on or prior to
the  date  of  determination, the ratio of (a) EBITDA for such period to (b) the
sum  of  (i)  Interest  Expense incurred during such period (other than Interest
Expense  with  respect  Avemarau  Debt), (ii) the installments of principal with
respect to any Debt required to be made during such period (other than principal
payments with respect to Avemarau Debt), (iii) any dividends or distributions to
stockholders made during such period, (iv) Capital Expenditures made during such
period and (v) taxes paid by Borrower during such period, in each and every case
measured  as  of  end  of  such  period.
     (e)     The  definition of the term "Majority Banks" in Section 1.01 of the
Amended  Loan  Agreement  is  hereby  modified  to  read  as  follows:
"Majority  Banks"  shall mean, as of any date, Banks holding at least 80% of the
aggregate  Commitments  as  described  on  Schedule  6  as  of  such  date.
                                           -----------
     (f)     Clause  (G)  in  the  definition  of  the term "Permitted Liens" is
hereby  modified  in  its  entirety  to  read  as  follows:  RESERVED.
(g)     The  following definition is hereby added to Section 1.01 of the Amended
Loan  Agreement:
"Fiscal  Quarter" shall mean any 13 consecutive week period (ending on a Friday)
that  constitutes  a  quarter  of  any  fiscal  year  of  Borrower.
     (h)     The first sentence of Section 2.02(A) of the Amended Loan Agreement
is  hereby  modified  in  its  entirety  to  read  as  follows:
(A)  Except as provided in Section 2.02(B), (i) while a Term Loan or any portion
thereof is Euro-Dollar Loan, it shall bear interest at a per-annum rate equal to
the  applicable  Euro-Dollar  Rate, and at other times it shall bear interest at
the  applicable  Floating Rate, (ii) while any Revolving Credit Loan (other than
that portion thereof, if any, that represents the Borrowing Base Overadvance) is
a  Euro-Dollar  Loan,  it  shall  bear interest at a per-annum rate equal to the
applicable  Euro-Dollar  Rate,  and at other times it shall bear interest at the
applicable  Floating  Rate  and  (iii)  the  Borrowing Base Overadvance (or such
portion  thereof as may be advanced and outstanding hereunder from time to time)
shall  bear  interest at a per-annum rate equal to the Prime Rate plus 200 basis
points.
     (i)     Clause  (A) of Section 6.05 of the Amended Loan Agreement is hereby
deleted  in  its  entirety.
(j)     Section  6.08  of  the  Amended Loan Agreement is hereby modified in its
entirety  to  read  as  follows:
6.08     Dividends.  Declare  or  pay any dividends, or redeem or repurchase any
         ---------
of,  or  make  any  other  payment  or  distribution  on  account of, any Stock;
provided, however, that so long as (x) no Event of Default or Unmatured Event of
Default  has  occurred  and  is  continuing  and  (y)  none of the distributions
described  in the following clauses (i) and (ii) would, if made, create an Event
of Default or an Unmatured Event of Default (including a violation of any of the
Borrower's  covenants in Article VIII or a default or event of default under the
Indenture),  Borrower  may  make  distributions  as  follows:
(i)     Borrower  may make distributions to its stockholders in an amount not to
exceed  (A)  $900,000  in  the  aggregate  during  Borrower's fiscal year ending
December  31,  2003  and  (B) $844,000 in the aggregate during Borrower's fiscal
year  ending  December  31,  2004;  and
(ii)     for  so  long  as  Borrower  maintains  its  status  as  a Subchapter S
corporation  under  the  Internal Revenue Code of 1986, as amended, Borrower may
make  distributions  to its stockholders in the amounts of the State of Illinois
and  federal  income  tax  payments (including estimated payments) to the extent
then due and attributable to income of the Borrower, determined using the lesser
of  (A)  38.6%  as  to  the  federal  income  tax rate and 3% as to the State of
Illinois income tax rate or (B) the highest State of Illinois and federal income
tax  rates applicable to any stockholder of Borrower, provided that in the event
that  aggregate  distributions  to any stockholder in respect of any fiscal year
exceed the actual State of Illinois and federal income taxes of such stockholder
attributable  to  the income of the Borrower in respect of such fiscal year, the
amount  of  such  excess  shall be repaid to the Borrower by such stockholder or
offset  against  the  amounts next distributable to such stockholder pursuant to
this  provision.
     (k)     Clause  (H) of Section 6.14 of the Amended Loan Agreement is hereby
modified  in  its  entirety  to  read  as  follows:  RESERVED
(l)     The  following  Section  6.19  is  hereby  added  to  the  Amended  Loan
Agreement:
6.19     Operating  Leases.  Enter  into  or make any payments in respect of any
         -----------------
operating  lease;  provided,  however,  that  so  long as no Event of Default or
Unmatured  Event of Default exists, Borrower may enter into and/or make payments
in  respect of operating leases from time to time provided the aggregate cost of
equipment  subject  to  such  operating leases does not exceed $2,500,000 in the
aggregate  as  of any date, as such cost is determined in such operating leases.
     (m)     All  references therein to the term "calendar quarter" contained in
Article  VII  of  the  Amended  Loan  Agreement  are  hereby modified to read as
follows: "Fiscal Quarter."  All references therein to the term "month" contained
in  Article VII of the Amended Loan Agreement shall be deemed to mean the period
of  time that Borrower designates as a month for purposes of financial reporting
and  record  keeping,  not a calendar month.  All references in the Amended Loan
Agreement  to  the term "fiscal quarter" are hereby modified to read as follows:
"Fiscal  Quarter."
(n)     Section  8.01  of  the  Amended Loan Agreement is hereby modified in its
entirety  to  read  as  follows:
8.01     EBITDA.  (a)     Have  cumulative  EBITDA  of not less than $22,000,000
         ------
for  Borrower's  fiscal  year  ending  December  31,  2003.
(b)     Have  EBITDA  (on  a  non-cumulative  basis) for each Fiscal Quarter set
forth  below  of  not  less than the amount set forth below opposite such Fiscal
Quarter:
<TABLE>
<CAPTION>



Fiscal Quarter Ending    EBITDA
---------------------  -----------
<S>                    <C>
March 28, 2003. . . .  $ 2,200,000
                       -----------
June 27, 2003 . . . .  $ 5,000,000
                       -----------
September 26, 2003. .  $12,000,000
                       -----------
December 31, 2003 . .  $ 2,800,000
                       -----------
March 26, 2004. . . .  $ 2,200,000
                       -----------
June 25, 2004 . . . .  $ 5,000,000
                       -----------
</TABLE>


     (o)     Section  8.05  of  the Amended Loan Agreement is hereby modified in
its  entirety  to  read  as  follows:
8.05     Fixed  Charge  Coverage Ratio.  (a)  Have a Fixed Charge Coverage Ratio
         -----------------------------
of  not  less  than  1.15  to 1.00 as of the end of each fiscal year of Borrower
commencing  with  the  fiscal  year  ending  December  31,  2003.
(b)  Have a Fixed Charge Coverage Ratio as of the end of each Fiscal Quarter set
forth  below  of  not  less  than the ratio set forth below opposite such Fiscal
Quarter:
<TABLE>
<CAPTION>



Fiscal Quarter Ending  Fixed Charge Coverage Ratio
---------------------  ---------------------------
<S>                    <C>
March 28, 2003. . . .                  .90 to 1.00
                       ---------------------------
June 27, 2003 . . . .                  .80 to 1.00
                       ---------------------------
September 26, 2003. .                 1.00 to 1.00
                       ---------------------------
December 31, 2003 . .                 1.15 to 1.00
                       ---------------------------
March 26, 2004. . . .                 1.15 to 1.00
                       ---------------------------
June 25, 2004 . . . .                 1.15 to 1.00
                       ---------------------------
</TABLE>


     (p)     Schedule  2of  the  Amended  Loan  Agreement  is hereby deleted and
             -----------
Schedule  2  attached  hereto  is  substituted  in  replacement  thereof.
     ------
     5.     To  induce the Agent and the Banks to enter into this Amendment, the
Borrower  has  delivered,  or  is  delivering  to  the  Agent  contemporaneously
herewith, the following, each in form and substance satisfactory to the Agent in
its  sole  and  absolute  discretion:
     (a)     A  solvency  and business purpose affidavit executed by each of the
Borrower,  and  DMC;
(b)     A  certificate  of  the  Borrower's  corporate secretary or an assistant
secretary  as  to  the  Borrower's  certificate  of  incorporation,  by-laws and
authorizing  resolutions;
(c)     A  Reaffirmation  of  Guaranty  executed  by  DMC;  and
(d)     Such  other  documents,  instruments  and  certificates as the Agent may
require  in  its  sole  and  absolute  discretion.
     6.     To  further  induce  the  Agent  and  the  Banks  to enter into this
Agreement,  the Borrower hereby represents and warrants to the Banks as follows:
     (a)     After  giving effect to the waiver set forth in paragraph 2 hereof,
no  Event  of  Default  or  Unmatured  Event  of  Default  has  occurred  and is
continuing, and all liens on Collateral granted to the Banks and/or the Agent on
behalf of the Banks remain valid first priority liens (subject only to Permitted
Liens)  in  full  force  and  effect.
(b)     Each  and  every  representation  and  warranty  set  forth  in the Loan
Documents  remains  accurate  in all respects, subject only to changes expressly
permitted  therein.
(c)     No  material  adverse  change has occurred in the financial condition of
the  Borrower  since  the  date  of  the  Amended  Loan  Agreement.
(d)     The  execution  and  delivery  of  this  Amendment  and of the documents
contemplated  hereby have been duly authorized by all necessary corporate action
on  the  part of the Borrower, and this Amendment and the documents contemplated
hereby  have been duly executed and delivered by the Borrower and constitute the
legal  and  binding  obligations  of  the  Borrower.
     7.     Except  as expressly set forth herein, all terms of the Amended Loan
Agreement  as  amended  hereby  shall be and remain in full force and effect and
shall  constitute  the  legal, valid, binding and enforceable obligations of the
Borrower  to  the  Banks.  To  the  extent any terms or conditions in any of the
other  Loan  Documents  shall contradict or be in conflict with the Amended Loan
Agreement  as  amended  hereby,  such  terms  and  conditions  are hereby deemed
modified  and  amended  accordingly,  effective  the  date of this Agreement, to
reflect  the  terms and conditions of the Amended Loan Agreement as modified and
amended  hereby.
8.     To  further  induce the Agent and the Banks to enter into this Amendment,
the  Borrower  hereby acknowledges and agrees that, as of the date hereof, there
exists  no  right  of offset, defense, counterclaim or objection in favor of the
Borrower as against the Agent and/or any Bank with respect to the Obligations of
the  Borrower.  Without  in  any  way  limiting  the  foregoing, Borrower hereby
further  represents  and  warrants that there are no liabilities, claims, suits,
debts,  liens,  losses,  cause  of action, demands, rights, damages or costs, or
expenses of any kind, character or nature whatsoever, known or unknown, fixed or
contingent  (collectively,  the  "Claims"),  which Borrower may have or claim to
have  against  the  Agent  or  any  Bank, or any of their respective affiliates,
agents,  employees,  officers, directors, representatives, attorneys, successors
and  assigns  (collectively, the "Bank Released Parties"), which might arise out
of  or  be connected with any act or commission or omission of the Bank Released
Parties  existing  or  occurring  on  or  prior  to  the date of this Amendment,
including,  without  limitation,  any  claims  arising  with  respect  to  the
Obligations  or any Documents.  In furtherance of the foregoing, Borrower hereby
releases,  acquits and forever discharges the Bank Released Parties from any and
all  claims  that Borrower may have or claim to have, relating to or arising out
of  or  in  connection  with  the Obligations or any Loan Documents or any other
agreement  or transaction contemplated thereby or any action taken in connection
therewith  from  the  beginning  of  time  up  to  and including the date of the
execution  and  delivery  of this Amendment.  Borrower further agrees forever to
refrain from commencing, instituting or prosecuting any lawsuit, action or other
proceeding  against  any Bank Released Party with respect to any and all claims.
9.     The  Borrower hereby restates, ratifies and reaffirms each and every term
and  condition  set forth in the Amended Loan Agreement as amended hereby and in
the Loan Documents, effective as of the date hereof.  The Borrower hereby agrees
to  pay  on  demand  all  legal  fees and out-of-pocket expenses of the Agent in
connection  with the negotiation and preparation of this Amendment and all other
documents  required  hereunder.
10.     The  Borrower  hereby  agrees  to  reimburse  US Bank for any reasonable
attorneys'  fees  and  disbursements  incurred  by  US Bank from time to time in
connection with any modifications to the Loan Documents; provided, however, that
in  no  event  shall the amount of such reimbursement exceed $5,000 per calendar
year  and  provided,  further  that  US  Bank  shall  provide Borrower with such
supporting documentation (including invoices) as Borrower may reasonably request
to  verify  the  fees  and  disbursements  for  which  reimbursement  is sought.
11.     This  Amendment  shall be governed by, and construed in accordance with,
the  laws  of  the  State  of  Illinois.
12.     This  Amendment  may be executed in multiple counterparts, each of which
shall  be  deemed  an original, but all of which taken together shall constitute
one and the same instrument.  Delivery of an executed counterpart of a signature
page  of  this  Amendment  by  telecopy  shall  be effective as of delivery of a
manually  executed  counterpart  of  this  Amendment.

<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by  their  respective  officers  thereunto duly authorized, as of the date first
above  written.
THE  GSI  GROUP,  INC.



By:            /s/  Russell  C.  Mello
        ------------------------------
Title:     Secretary  and  Treasurer


LASALLE  BANK  NATIONAL  ASSOCIATION



By:            /s/  Erica  Wicklander
        -----------------------------
Title:           Assistant  Vice  President
           --------------------------------


U.S.  BANK,  N.A.,  formerly  known  as  FIRSTAR  BANK,  N.A.



By:     /s/  Curtis  Schrieber
    --------------------------
Title:     Vice  President
       -------------------