<PAGE>
 
                                                                    Exhibit 10.7


                              THE GSI GROUP, INC.
 AMENDED AND RESTATED STOCK RESTRICTION AND BUY-SELL AGREEMENT  -  NON-VOTING
                                    SHARES


       THIS AMENDED AND RESTATED STOCK RESTRICTION AND BUY-SELL AGREEMENT is
made as of the 31st day of March 1999 and amends and restates the original Stock
Restriction and Buy-Sell Agreement dated as of January 1, 1997 by and between
John C. Sloan ("Sloan"), Jorge Andrade ("Andrade"), John Funk ("Funk") and
Howard Buffett ("Buffett"), The GSI Group, Inc., a Delaware corporation (the
"Corporation"), and the persons identified on Exhibit A attached hereto.


                                   RECITALS


       The Voting Shareholders are owners and holders of all of the issued and
outstanding voting common stock ("Voting Shares") of the Corporation.

       The Non-Voting Shareholders are owners and holders of issued and
outstanding Shares of common stock of the Corporation.

       The parties hereto believe that in the interest of their continued
success, it is desirable to maintain continuity in the management, policies and
ownership of the Corporation, provide for the purchase of Shares upon the
occurrence of certain contingencies and provide certain other agreements as more
fully set forth herein.

       NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements hereinafter contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:


                                    ARTICLE
                                       1

                   INCORPORATION OF RECITALS AND DEFINITIONS

1.1.   Incorporation of Recitals.   The Recitals are incorporated herein and
       -------------------------                                            
constitute covenants, representations and warranties of the parties hereto.

1.2    Definitions.   For purposes of this Agreement:
       -----------                                   

                                       1
<PAGE>
 
       (a) The term "and/or" shall mean one or the other or both, or any one or
more or all, of the things or persons in connection with which the conjunction
is used.

       (b) The term "Approved Sale" shall mean the sale of the Corporation to an
Independent Third Party (whether by merger, consolidation, sale of all or
substantially all of its assets or sale of a majority of the Voting Shares)
approved by the Corporation's Board of Directors and/or the Controlling
Shareholder(s).

       (c) The term "Controlling Shareholders" shall mean the Voting
Shareholders owning more than fifty percent (50%) of the outstanding Voting
Shares.

       (d) The term "Independent Third Party" means any person who, immediately
prior to the contemplated transactions, does not own in excess of 5% of the
Voting Shares, who is not controlling, controlled by or under common control
with any such 5% owner of the Voting Shares, and who is not the spouse or
descendant (by birth or adoption) of any such 5% owner.

       (e) The term "Non-Voting Shareholder" shall mean any person or entity
that at any time may become a party hereto by reason of his, her or its
ownership of Shares.

       (f) The term "Shares" shall mean all shares of the Corporation's non-
voting common stock now owned or hereafter acquired by any Shareholder,
including but not limited to, newly authorized non-voting shares, non-voting
shares issued out of authorized but unissued stock, non-voting shares issued or
credited in connection with any stock dividend, stock split or other capital
readjustment, as well as any voting trust certificates (there being none at this
date) representing any shares of non-voting stock issued by the Corporation and
owned by the Non-Voting Shareholder which are part of any voting trust or
similar agreement.

       (g) The term "Shareholders" and/or "Shareholder" shall mean the Voting
Shareholders, Non-Voting Shareholders and/or any other person or entity that at
any time may become a party hereto by reason of his, her or its ownership of
Shares or Voting Shares.

       (h) The term "Voting Shareholder" shall mean any person or entity that is
the record owner of Voting Shares.

       (i) The term "Event" shall mean an event which triggers the right to
purchase or sell Shares hereunder and shall specifically refer to:

           (i)   the death of a Non-Voting Shareholder;
           (ii)  the termination of employment of a Non-Voting Shareholder,
           (iii) the Effective Date of Permanent Disability or
           (iv)  the delivery by the Offering Shareholder of a Notice of an
                         Offer (as such terms are defined in Section 3.1 below).

                                       2
<PAGE>
 
                                    ARTICLE
                                       2

                             RESTRICTION ON SHARES

       2.1.  Prohibition on Transfer.  Except as expressly permitted herein,
             -----------------------                                        
none of the Non-Voting Shareholders shall at any time sell, pledge, hypothecate,
transfer, encumber, assign, give away or in any way dispose of any Shares now
owned or hereafter acquired by him, nor shall such Shares be transferable,
voluntarily or involuntarily, by operation of law or otherwise, except in strict
compliance with the covenants, terms and conditions set forth in this Agreement.
Any attempt to do so in violation of this Agreement shall not be recognized by
the Corporation and shall be null and void and of no force or effect whatsoever.
The Shareholders acknowledge and agree that the rights afforded Sloan pursuant
to the terms of any documents and/or agreements pertaining to the sale of Shares
by Sloan to any given Non-Voting Shareholder shall, with respect to the Shares
acquired by such Non-Voting Shareholder from Sloan, supersede the rights and
obligations of the parties hereunder.

       2.2   Restriction on Certificates.   The Corporation shall cause to be
             ---------------------------                                     
placed on each certificate of its Shares which may now or hereafter be issued to
a Non-Voting Shareholder (except certificates evidencing Shares sold free of the
restrictions of this Agreement), a notice in the following form:

       "The shares of stock evidenced by this Certificate are subject to the
terms and conditions of a certain Stock Restriction and Buy-Sell Agreement,
dated as of January 1, 1997, as amended (the "Agreement"), between the
Corporation and the Shareholders.  A copy of the Agreement is on file at the
offices of the Corporation, reference to all the terms and conditions thereof
being hereby made.  No sale or transfer of the Shares evidenced hereby may be
effected, except pursuant to the terms and conditions of the Agreement."

       If such legend is placed on the reverse side rather than the face of any
such certificate, there shall be placed on the face of such certificate a legend
in the following form:

       "For restrictions on transfer, see notice on reverse side hereof."

       2.3   Wrongful Transfer.   Subject to Section 2.1, no sale, pledge,
             -----------------                                            
hypothecation, transfer, encumbrance, assignment, gift or other disposition by a
Non-Voting Shareholder of any of his Shares shall be effective, unless and
until:  (i) he has first complied with all the provisions of this Agreement, and
(ii) such transferee shall take such Shares subject to the terms of this
Agreement, shall agree in writing to become a 

                                       3
<PAGE>
 
party to this Agreement and be bound by all of the terms, conditions and
provisions hereof. If a Non-Voting Shareholder fails to comply with this
Agreement, the Voting Shareholders and/or the Corporation shall have the right
to compel such Non-Voting Shareholder or any transferee to transfer and deliver
his or its Shares in accordance with the provisions of this Agreement.

       2.4  Maintenance of S Corporation Status.
            ----------------------------------- 

       (a)  Each Non-Voting Shareholder agrees that he or she will take all
action necessary to permit the Corporation to retain its tax status as an S
Corporation ("S Corporation") under Subchapter S (Section 1361 et seq) of the
Internal Revenue Code of 1986, as amended (the "Code"), including, but not
limited to, the execution and delivery of any and all consents and other
documents required at any time for the continuance of S Corporation status, or
required to carry out, effectuate, implement or exercise any and all other
elections available to, or powers exercisable by, a corporation having elected S
Corporation status.  Unless and until the Controlling Shareholders direct
otherwise in writing, the Non-Voting Shareholders shall not take any action
which will cause the Corporation not to be taxed as an S Corporation.

       (b)  Subject to the limitations of the Delaware General Corporation Law
("DGCL"), as long as the Corporation remains an S Corporation, the Voting
Shareholders agree to take all actions necessary to cause the directors of the
Corporation to declare and pay to the Shareholders dividends each year in an
amount not less than all federal and state income taxes, including but not
limited to estimated tax payments, payable by the Shareholders each year with
respect to the income of the Corporation, based upon the maximum marginal
federal and state individual income tax rates applicable to any Shareholder.

       (c)  Upon any transfer of the Shares permitted hereunder, the Corporation
may require arrangements reasonably satisfactory to it to assure that any
transferee shall take any and all action necessary to maintain the election
under Section 1362(a) of the Code.

       2.5. Take-Along Rights.  The Controlling Shareholders agree that if they
            -----------------                                                  
sell or transfer, in the aggregate, a majority of the Voting Shares to a third
party, they will first give written notice (the "Take-along Notice") to the Non-
Voting Shareholders stating all of the material terms of the offer.  Each of the
Non-Voting Shareholders may then participate pro rata in such transfer based on
his proportionate holdings of Shares in relation to the total number of
outstanding shares (both voting and non-voting) of the common stock of the
Corporation.  If a Non-Voting Shareholder wishes to participate in such
transaction, he will give the Corporation and the Voting Shareholders written
notice within five (5) days of receipt of the Take-along Notice, and the sale
transaction will not close prior thereto.  The foregoing notwithstanding, the
provisions of this Section 2.5 shall not apply to (i) any transfers of Voting
Shares among or between the Voting Shareholders and/or their respective family
members, in trust or otherwise, either during their lifetimes or after their
deaths, and (ii) the pledge or hypothecation of Voting Shares.

                                       4
<PAGE>
 
       2.6  Drag-Along Rights.  In the event of any Approved Sale, each of the
            -----------------                                                 
Non-Voting Shareholders agrees to sell his Shares on the terms and conditions
approved by the Corporation's Board of Directors and/or the Controlling
Shareholders.  Each Non-Voting Shareholder will not exercise any statutory
dissenters' rights with regard to an Approved Sale and will take all necessary
and desirable actions in connection with the consummation of the Approved Sale.
The foregoing notwithstanding, the right of the Corporation and/or the
Controlling Shareholders to consummate any Approved Sale structured as a sale of
common stock is subject to the satisfaction of the condition that, upon the
consummation of the Approved Sale, each Non-Voting Shareholder will receive the
same form and amount of consideration per Share as the Voting Shareholders
receive for their Voting Shares, or if the Voting Shareholders are given an
option as to the form and amount of consideration to be received, the Non-Voting
Shareholders will be given the same option.


                                    ARTICLE
                                       3

                  PURCHASE OF SHARES - RIGHT OF FIRST REFUSAL

       3.1  Notice of Transfer.   If a Non-Voting Shareholder ("Offering
            ------------------                                          
Shareholder") receives during his lifetime a bona fide offer ("Offer") to sell
or otherwise transfer up to ten percent of his original Shares in any calendar
year ("Offered Shares") to any other Non-Voting Shareholder, the Offering
Shareholder shall give at least sixty (60) days prior written notice to the
Corporation and the Voting Shareholders of his intention to so transfer his
Shares (the "Notice"). The Notice shall state (i) the number of Offered Shares;
(ii) the name of the Non-Voting Shareholder who is the proposed transferee (the
"Transferee"); (iii) whether or not the transfer is for valuable consideration
and, if so, the consideration (the "Offered Price"); (iv) the date upon which
the proposed transfer to the Transferee is to be consummated; and (v) all other
material terms of the proposed transfer. A copy of any written agreement
(whether executed or not) evidencing the Offer shall be attached to the Notice.

       3.2  Rights of First Offer.   From and after the date of the Notice
            ---------------------                                         
("Notice Date"), the Corporation and the Voting Shareholders shall have options
to purchase the Offered Shares, upon the terms set forth in Section 3.3 hereof,
exercisable in the order of priority and within the time periods set forth
below:

       (a)  Within twenty one (21) days after the Notice Date (the "Sloan's
Option Period"), Sloan shall have the option to acquire all or any portion of
the Offered Shares (the "Sloan's Option").  Sloan shall exercise Sloan's Option,
if at all, by giving written notice to that effect to the Offering Shareholder,
the other Voting Shareholders and the Corporation within Sloan's Option Period.

                                       5
<PAGE>
 
       (b)  Within twenty one (21) days following the first to occur of (i) the
expiration of Sloan's Option Period without Sloan exercising his option or (ii)
Sloan's written notice to the Offering Shareholder, the other Voting
Shareholders and the Corporation that he will not purchase any or all of the
Offered Shares (the "Voting Shareholders' Option Period"), the Voting
Shareholders, other than Sloan, shall have the option to acquire all of the
Offered Shares not being purchased by Sloan (the "Voting Shareholders' Option").
In the event that more than one of such Voting Shareholders elects to purchase
the Offered Shares, then unless otherwise agreed, each electing Voting
Shareholder must purchase that percentage of the Offered Shares as is equal to
his proportionate ownership of all of the electing Voting Shareholders' then
respective Shares unless an electing Voting Shareholder chooses to purchase less
than his maximum number of such Shares, in which case the other electing Voting
Shareholders may purchase, in addition to their own pro rata allotment, such
electing Voting Shareholders' unpurchased allotment on a pro rata basis.  The
Voting Shareholders shall exercise the Voting Shareholders' Option, if at all,
by giving written notice to that effect to Sloan, the Corporation and the
Offering Shareholder within the Voting Shareholders' Option Period.

       (c)  Within fourteen (14) days following the first to occur of (i) the
expiration of the Voting Shareholders' Option Period without Sloan and/or the
other Voting Shareholders exercising their options; or (ii) written notice to
the Corporation that neither Sloan nor the other Voting Shareholders intend to
purchase all of the Offered Shares (the "Corporation's Option"), the Corporation
shall have the option to acquire all of the Offered Shares not being purchased
by Sloan or the other Voting Shareholders.  The Corporation shall exercise the
Corporation's Option, if at all, by giving written notice to that effect to the
Offering Shareholder and the Voting Shareholders within the Corporation's Option
Period.

       The exercise of the aforesaid option must, in the aggregate, include all
of the Offered Shares or the exercise of such option(s) shall be null and void.

       On the closing date of the transfer of Offered Shares, the Offering
Shareholder shall be obligated to prepay a pro rata portion of the outstanding
principal of the promissory note owed by such Offering Shareholder to Sloan that
was entered into in connection with the Offering Shareholder's initial purchase
of Shares (the "Sloan Note").

       3.3  Purchase Price and Terms.  In the event Sloan's Option, the Voting
            ------------------------                                          
Shareholders' Option and/or the Corporation's Option is exercised, the
party(ies) exercising such option(s) shall purchase the Offered Shares at the
lower of (i) the Offered Price or (ii) the Purchase Price (as hereinafter
defined), upon the same terms and conditions provided in the Notice.  The
Closing of such purchase shall occur in the manner described in Section 7.2(a)
hereof.

       3.4  Failure to Exercise Rights of First Offer Options.   If Sloan, the
            -------------------------------------------------                 
Voting Shareholders and/or the Corporation fail to exercise their respective
Options in accordance with Section 3.2 hereof to purchase in the aggregate all
of the Offered Shares, 

                                       6
<PAGE>
 
the Offered Shares may be transferred to the Transferee as provided in the
Notice. The effectiveness of such transfer is conditioned upon the Transferee
then being a Non-Voting Shareholder immediately prior to such transfer and his
reaffirming in writing his agreement to be bound by all of the terms, conditions
and provisions hereof. If the transfer does not occur in accordance with the
terms disclosed in the Notice, such transfer shall be automatically null and
void without any further action being required on the part of the Corporation or
the Voting Shareholders, and any attempt to transfer the Offered Shares
thereafter without first complying with the terms of this Article 3 shall be
deemed a wrongful transfer within the meaning of Section 2.3 hereof.

 
                                    ARTICLE
                                       4

                              PURCHASE OF SHARES

       4.1.  Purchase Upon Death, Permanent Disability or Termination of
             -----------------------------------------------------------
Employment of Non-Voting Shareholder.   If a Non-Voting Shareholder dies (the
------------------------------------                                         
"Decedent"), becomes Permanently Disabled (as defined below)(the "Disabled
Shareholder"), or his employment by the Corporation terminates (the "Terminating
Shareholder")(a Decedent, Disabled Shareholder or Terminating Shareholder is
sometimes hereinafter referred to as a "Departed Shareholder"), the Shares owned
by the Departed Shareholder shall be subject to the following rights and
obligations, and the Non-Voting Shareholders, for themselves and their
respective heirs, successors, representatives and assigns, agree as follows:

       (a)   Within sixty (60) days following:   (i) the date of the Decedent's
death, (ii) the Effective Date of Permanent Disability (as defined below) of the
Disabled Shareholder, or (iii) the last date of employment of the Terminating
Shareholder, as the case may be ("Sloan's Purchase Option Period"), Sloan shall
have the option to acquire all or any portion of the Shares owned by the
Departed Shareholder ("Sloan's Purchase Option"), at the price and on the terms
set forth in Articles 5, 6 and 7 hereof.  Sloan shall exercise Sloan's Purchase
Option, if at all, by giving written notice to that effect to the Departed
Shareholder, the other Voting Shareholders and the Corporation within Sloan's
Purchase Option Period.

       (b) Within thirty (30) days following the first to occur of (i) the
expiration of Sloan's Purchase Option Period without Sloan exercising his option
or (ii) Sloan's written notice to the Departed Shareholder, the other Voting
Shareholders and the Corporation that he will not purchase any or all of the
Departed Shareholder's Shares (the "Voting Shareholders' Purchase Option
Period"), the Voting Shareholders, other than Sloan, shall have the option to
acquire all of the Departed Shareholder's Shares not being purchased by Sloan
(the "Voting Shareholders' Purchase Option"), at the price and on the terms set
forth in Articles 5, 6 and 7 hereof.  In the event that one or more of such
Voting Shareholders elects to purchase the Departed Shareholder's Shares, then,
unless otherwise 

                                       7
<PAGE>
 
agreed, each electing Voting Shareholder must purchase that percentage of the
Departed Shareholder's Shares as is equal to his proportionate ownership of all
of the electing Voting Shareholders' Voting Shares. The Voting Shareholders
shall exercise the Voting Shareholders' Purchase Option, if at all, by giving
written notice to that effect to Sloan, the Corporation and the Departed
Shareholder within the Voting Shareholders' Purchase Option Period.

       (c)   Other than as set forth in the next sentence, the Corporation shall
have the option to purchase, and, upon the exercise of such option, the Departed
Shareholder or his legal representative shall be required to sell, all of the
Shares owned by the Departed Shareholder which are not purchased by Sloan and/or
the other Voting Shareholders pursuant to Sections 4.1(a) or (b) above, at the
price and on the terms set forth in Articles 5, 6 and 7 hereof. The Corporation
shall be obligated to purchase a Decedent's Shares to the extent the Corporation
receives proceeds from a life insurance policy on such Decedent.

       (d)   Notwithstanding the foregoing provisions of this paragraph 4.1 but
subject in all events, however, to the rights and obligations to sell Shares
otherwise set forth herein, any Senior Terminating Shareholder (as defined
below) who resigns prior to January 1, 2002, may irrevocably elect to defer the
purchase and sale of his Shares (due to such termination of employment), such
that with respect to determining the Purchase Price for such Senior Terminating
Shareholder's Shares, the Event shall be deemed to have occurred either on
January 1, 2002 or on the fifth (5th) anniversary of the last day of such Senior
Terminating Shareholder's employment by the Corporation.  The Senior Terminating
Shareholder shall give written notice of such election to the Voting
Shareholders and the Corporation within thirty (30) days following the last day
of his employment , which notice shall express such irrevocable election and
shall specify whether the Event shall be deemed to occur on January 1, 2002 or
on the fifth (5th) anniversary of the last date of his employment.  In such
circumstance, Sloan's Purchase Option Period, the Voting Shareholder's Purchase
Option Period and the respective rights and obligations of the Voting
Shareholders, the Corporation and such Senior Terminating Shareholder with
respect to the purchase and sale of his Shares shall pertain as if the date
designated by such Senior Terminating Shareholder for the Event was the last day
of his employment.  As used herein, the term "Senior Terminating Shareholder"
means a Terminating Shareholder who was either (i) 62 years of age, or (ii)
employed by the Corporation for a period of at least twenty (20) years, at the
time he first acquired Shares.

 
       4.2   Definition of Permanent Disability.   A Non-Voting Shareholder
             ----------------------------------
shall be deemed to be "Permanently Disabled" upon the first to occur of the
following events:

             (a) if by reason of injury, sickness or other incapacity he is
unable, for a period of six (6) consecutive months or for six (6) months during
any nine (9) consecutive month period, to discharge his regular duties and
responsibilities as an employee and/or officer of the Corporation. If the
parties shall at any time be unable to

                                       8
<PAGE>
 
agree on whether a Non-Voting Shareholder is or has been so disabled, the
Corporation and the Non-Voting Shareholder shall promptly and jointly appoint a
medical doctor or if they are unable to so agree, they shall each promptly
appoint a medical doctor to make such determination, and the collective decision
of such medical doctors shall be binding on all parties hereto. If such doctors
are unable to agree, they shall promptly appoint a third medical doctor to make
such determination, and the decision of such third medical doctor shall be
binding on all parties hereto; or

          (b) the failure or refusal of a Non-Voting Shareholder to submit to
any examination or to appoint a medical doctor pursuant to subsection (a) of
this Section 4.2 within sixty (60) days after the date on which the Shareholder
receives a notice from the Voting Shareholders and/or the Corporation to do so;
or

          (c) the adjudication of such Non-Voting Shareholder as an incompetent
or a disabled person by a court of competent jurisdiction.

     4.3  Definition of Effective Date of Permanent Disability.  If a Non-Voting
          ----------------------------------------------------           
Shareholder is deemed to be Permanently Disabled pursuant to Section 4.2 hereof,
then the "Effective Date of Permanent Disability" shall be the first to occur of
the following:

          (a) the date upon which the examining doctor(s) shall determine that
the Non-Voting Shareholder is Permanently Disabled; or

          (b) the sixtieth (60) day immediately succeeding the day on which a
Non-Voting Shareholder receives a notice from the Corporation to submit to an
examination pursuant to Section 4.2(a) hereof, if the Shareholder fails or
refuses to submit to such examination or fails or refuses to appoint a medical
doctor; or

          (c) the sixtieth (60) day immediately succeeding the date of the
adjudication described in Section 4.2(c) hereof unless prior to the expiration
of such period the adjudication has been reversed; or

          (d) the first day of the seventh (7th) consecutive month or the first
day of the seventh (7th) month during any nine (9) consecutive month period of
the Non-Voting Shareholder's inability to perform his regular duties and
responsibilities as an employee and/or officer of the Corporation as a result of
his injury, sickness or other incapacity.

     4.4  Definition of Cause.   As used herein, "Cause" shall mean one or more
          -------------------                                             
of the following as determined by the Board of Directors in its sole discretion:
(i) commission of any dishonest act by a Non-Voting Shareholder in connection
with his or her employment by the Corporation or any act of willful misconduct
which has affected or can be reasonably expected to affect the business or
reputation of the Corporation in a materially adverse manner; or (ii) diversion
of any material corporate opportunity of the Corporation for the Non-Voting
Shareholder's direct or indirect benefit.

                                       9
<PAGE>
 
       4.5  Sloan Purchase Obligation.  Sloan shall be obligated to purchase a
Shareholder's Shares if on the date of an Event the Purchase Price in effect is
less than $6.34 plus interest accrued and paid under the Sloan Note (the "Sloan
Purchase Price").  Sloan shall purchase such Shares at the Sloan Purchase Price
and such purchase and sale shall take place within 60 days of the date of the
Event.


                                    ARTICLE
                                       5

                      DETERMINATION OF THE PURCHASE PRICE

The parties hereto recognize the problems relative to determining the value of
the Corporation.  As a result, the parties hereto agree that the purchase price
(the "Purchase Price") for each Share to be purchased pursuant to Articles 3 or
4 hereof shall be Thirty Seven and 50/100 Dollars ($37.50) per Share.  The
Purchase Price shall be conclusive and binding on the parties hereto.

Notwithstanding the foregoing, the Purchase Price to be paid for the Shares to
be purchased upon (i) the exercise of rights of first offer under Section 3.2
hereof; (ii) the voluntary resignation of a Terminating Shareholder, other than
a Senior Terminating Shareholder who elects to defer the Event pursuant to
paragraph 4.1(d) hereof, occurring prior to January 1, 2002; (iii) the
termination of a Terminating Shareholder without Cause prior to January 1, 2002;
or (iv) the termination of a Terminating Shareholder with Cause, shall be an
amount equal to the initial purchase price per Share (plus any interest accrued
and paid to Sloan under the Sloan Note).  The parties expressly acknowledge that
the Purchase Price for Shares purchased following the voluntary resignation of a
Terminating Shareholder occurring from and after January 1, 2002 shall be
determined in accordance with Article 5 hereof.

Any changes to the "Purchase Price" as set forth in the buy sell agreement
between the Voting Shareholders and the Corporation governing the purchase and
sale of Voting Shares among them shall be reflected in this Agreement.


                                    ARTICLE
                                       6

                PAYMENT OF THE PURCHASE PRICE AND OTHER MATTERS

       6.1.  Payment.  The Purchase Price for the Shares purchased hereunder
             -------                                                        
shall be paid in full in cash at the closing, except that at the option of each
purchasing party, up to seventy percent (70%) of the Purchase Price may be
deferred as provided herein, provided that at least thirty percent (30%) of the
Purchase Price is paid in cash at closing.  

                                       10
<PAGE>
 
Notwithstanding the foregoing, if the Event resulting in a sale of Shares is a
Non-Voting Shareholder becoming Permanently Disabled (as defined in Section 4.2
hereof) or a Shareholder being terminated for Cause (as defined in Section 4.4
hereof), up to ninety percent (90%) of the Purchase Price may be deferred as
provided herein, provided that at least ten percent (10%) of the Purchase Price
is paid in cash at closing.

       6.2.  Promissory Note.   The deferred portion of the Purchase Price shall
             ---------------                                                    
be evidenced by a promissory note ("Note") of the purchasing party made payable
to the order of the selling party.  The Note shall be in the form of Exhibit B
attached hereto and shall be dated as of the closing.  Except as otherwise set
forth below, the principal balance shall be paid over a time not exceeding sixty
(60) months and each installment of the principal balance shall include
interest, accruing from the date of the Note, at a rate announced from time to
time by the LaSalle National Bank as its prime rate (the "Interest Rate");
provided, however, that if the Event resulting in a sale of Shares is a Non-
Voting Shareholder becoming Permanently Disabled (as defined in Section 4.2
hereof) or a Non-Voting Shareholder being terminated for Cause (as defined in
Section 4.5 hereof), the principal balance shall be paid over a time not
exceeding one hundred and twenty (120) months.
 .

                                    ARTICLE
                                       7

                                  THE CLOSING

       7.1   Location.   Unless otherwise agreed by the parties, the closing of
             --------                                                          
the sale and purchase of the Shares under Article 3 or 4 hereof shall take place
at such location as the parties to such sale shall agree upon.

       7.2   Time.
             ---- 

       (a)   Article 3 Transfer.   In the case of a purchase under Article 3,
the closing shall take place in accordance with the terms of the Notice,
provided that (i) if the Corporation elects to purchase Shares, such closing
shall not occur before the later to occur of (x) the first business day in
January of the year following the year in which the Notice is received by the
Corporation and the Voting Shareholders or (y) thirty (30) days after the
expiration of the Corporation's Option Period, or (ii) if Sloan and/or the other
Voting Shareholders are purchasing the Offered Shares, such closing shall occur
within thirty (30) days after the Voting Shareholders' Option Period if the
Shares are to be purchased by Sloan and/or the other Voting Shareholders and not
the Corporation.

       (b)   Article 4 Transfer. In the case of a purchase of Shares under
Article 4, the closing shall take place (i) within ninety (90) days after the
date of the notice exercising the options set forth in Sections 4.1 or 4.2;
provided that, with regard to purchases by the 

                                       11
<PAGE>
 
Corporation, under neither scenario shall the closing take place prior to the
first business day in the calendar year after the year in which the Event takes
place.

       7.3  Execution and Delivery of Documents.  Upon the closing of the sale
            -----------------------------------                               
and purchase, the selling Non-Voting Shareholder and the purchasing party shall
execute and deliver to each other the various documents which shall be required
to carry out their undertakings hereunder, including, without limitation, the
payment of cash and the execution and delivery of the Note and any collateral
instruments.

       7.4. Resignation as Officer.  Upon the closing of the sale and purchase,
            ----------------------                                             
the selling Non-Voting Shareholder shall resign as an officer of the
Corporation, if he holds any such position.


                                    ARTICLE
                                       8

                           TERMINATION OF AGREEMENT

       8.1  Events Causing Termination.   This Agreement and all restrictions on
            --------------------------                                          
transfer created hereby shall terminate on the occurrence of any of the
following events:

       (a)  Upon the adoption of a plan of dissolution of the Corporation,
provided said plan is carried out diligently and all assets remaining after
payment of or provision for liabilities are distributed to the Shareholders
within a reasonable time thereafter; or

       (b)  The execution of a written instrument to that effect signed by the
Controlling Shareholders and the Corporation; or
 
       (c)  Permanent cessation of the business of the Corporation; or
 
       (d)  The sale of substantially all of the assets or business of the
Corporation; or

       (e)  The Voting Shareholder becoming the legal and beneficial owner of
all then issued and outstanding Shares; or

       (f)  The consummation of a firm underwritten public offering (a "Public
Offering") of securities of the Corporation..

       8.2  Effect of Termination.   The termination of this Agreement for any
            ---------------------                                             
reason shall not effect any right or remedy existing hereunder prior to the
effective date of such termination.

                                       12
<PAGE>
 
                                    ARTICLE
                                       9

                                 MISCELLANEOUS

       9.1  Piggyback Registration Rights.   The Corporation agrees that, at any
            -----------------------------                                       
time during the term of this Agreement, if the Corporation shall seek a Public
Offering, each Non-Voting Shareholder shall be notified and shall be entitled to
elect to have included in such proposed registration, without cost or expense,
such number of Shares as the underwriter for the offering shall permit;
provided, however, that in the event the underwriter shall permit less than all
of the Shares to be registered, the number of shares included in such
registration shall be reduced on a pro rata basis among the Non-Voting
Shareholders (the "Piggy-Back Rights").  In the event of such a proposed
registration, the Corporation shall furnish the Non-Voting Shareholders with no
less than thirty (30) days written notice prior to the proposed filing of the
registration statement.  Such notice shall continue to be given by the
Corporation to such Non-Voting Shareholders for each proposed registration by
the Corporation until such time as all of the Shares have been registered.  Such
Non-Voting Shareholders shall exercise their Piggy-Back Rights by giving written
notice within twenty (20) days of the receipt of the Corporation's notice of
intention to file a registration statement.

       9.2  Restrictive Covenants.

       (a)  Each of the Non-Voting Shareholders agree that during the Non-Voting
Shareholder's employment and for a period of three (3) years after the
termination of his employment for any reason whatsoever or for no reason,
whether voluntary or involuntary, the Non-Voting Shareholder will not, except on
behalf of the Corporation:

       (i)  directly or indirectly, contact, solicit or direct any person, firm
or corporation to contact or solicit any of the Corporation's customers or
prospective customers (as hereinafter defined) for the purpose of selling or
attempting to sell, any products and/or services that are the same as or similar
to the products and services provided by the Corporation to its customers.  In
addition, each Non-Voting Shareholder will not disclose the identity of any such
customers or prospective customers to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever; and

       (ii) directly or indirectly, whether as an investor (excluding
investments representing less than one percent (1%) of the common stock of a
public company), lender, owner, stockholder, officer, director, consultant,
employee, agent, salesperson or in any other capacity, whether part-time or
full-time, become associated with any business involved in the design,
manufacture, marketing, sale, or servicing of products then constituting one
percent (1%) or more of the annual sales of the Corporation; and

                                       13
<PAGE>
 
       (iii) solicit or accept if offered to him, with or without solicitation,
on his own behalf or on behalf of any other person, the services of any person
who is an employee of the Corporation, nor solicit any of the Corporation's
employees to terminate employment with the Corporation; and

       (iv)  act as a consultant, advisor, officer, manager, agent, director,
partner, independent contractor, owner, or employee for or on behalf of any of
the Corporation's customers or prospective customers (as hereinafter defined),
with respect to or with regard to any aspect of the Corporation's business
and/or any other business activities in which the Corporation engages during the
term of the Non-Voting Shareholder's employment with the Corporation.

       (b)   As used herein, "customer" shall be defined as any person, firm or
entity that purchased any type of product and/or service from the Corporation or
is or was doing business with the Corporation within the twelve (12) month
period immediately preceding termination of the Non-Voting Shareholder's
employment; and "prospective customer" shall be defined as any person, firm or
entity contacted or solicited by the Corporation or the Non-Voting Shareholder
(whether directly or indirectly) or who contacted the Corporation or the Non-
Voting Shareholder (whether directly or indirectly) within the twelve (12) month
period immediately preceding termination of the Non-Voting Shareholder's
employment for the purpose of having such persons, firms, or entities become a
customer of the Corporation.

       (c)   Each of the Non-Voting Shareholders acknowledges and agrees that
any violation of the terms of the Confidentiality Agreement between him and the
Corporation, including, without limitation, such Non-Voting Shareholder's
divulging or imparting any confidential information of the Corporation to any
competitor of the Corporation or any third party, or using such confidential
information for himself, shall afford the Corporation all of the rights and
remedies set forth in paragraph 9.2(d) hereof.

       (d).  It is agreed that any breach or anticipated or threatened breach of
any of the Non-Voting Shareholder's covenants contained in this paragraph 9.2
will result in irreparable harm and continuing damages to the Corporation and
its business and that the Corporation's remedy at law for any such breach or
anticipated or threatened breach will be inadequate and, accordingly, in
addition to any and all other remedies that may be available to the Corporation
at law or in equity in such event, any court of competent jurisdiction may issue
a decree of specific performance or issue a temporary and permanent injunction,
without the necessity of the Corporation posting bond or furnishing other
security and without proving special damages or irreparable injury, enjoining
and restricting the breach, or threatened breach, of any such covenant.  In
addition to, and not in lieu of, the foregoing rights and remedies, the
Corporation shall be entitled to receive from the breaching Non-Voting
Shareholder an amount equal to the unpaid balance, if any, of the Purchase Price
due to the breaching Non-Voting Shareholder (as of the date such breach first
occurred) with respect to the purchase of his Shares, and such amount may be set
off from any monies due such breaching Non-Voting Shareholder by the

                                       14
<PAGE>
 
Corporation, which amount shall constitute liquidated damages and not a penalty.
In the event the maker of the Note is someone other than the Corporation, the
breaching Non-Voting Shareholder shall be deemed to have irrevocably assigned to
the Corporation all of his right, title and interest in and to the Note,
including, without limitation, the balance of any and all amounts remaining
unpaid thereunder, and no additional amounts shall be owed to such breaching
Non-Voting Shareholder under the Note.

       (e)  Anything contained in this paragraph 9.2 to the contrary
notwithstanding, a Terminating Shareholder whose employment terminates
(including, without limitation, upon his resignation) on or after January 1,
2002 other than for Cause, shall have the right and option to be free of the
restrictive covenants imposed by paragraph 9.2(a) of this Agreement following
his employment, provided such Terminating Shareholder elects to receive, in lieu
of the Purchase Price, an amount for his Shares equal to the amount the
Terminating Shareholder paid to acquire such Shares.  The Terminating
Shareholder shall irrevocably make such election by giving written notice
thereof to the Voting Shareholders and the Corporation within thirty (30) days
following the last date of such Terminating Shareholder's employment , which
notice must expressly state that the Terminating Shareholder has irrevocably
elected to receive an amount for his Shares equal to the amount such Terminating
Shareholder paid to acquire same in lieu of the Purchase Price.  In such event,
such Terminating Shareholder shall be deemed to be released from the restrictive
covenants set forth in paragraph 9.2 hereof, provided that such Terminating
Shareholder proceeds to sell his Shares in strict accordance with the other
terms of this Agreement.  The Non-Voting Shareholders acknowledge that the
foregoing right and option shall not be available to any Non-Voting Shareholder
whose employment terminates (i) due to his resignation or termination without
Cause prior to January 1, 2002, or (ii) at any time for Cause.

       9.3  Effect of Improper Transfer.   If a transfer or attempted transfer
            ---------------------------                                       
violates any provision of this Agreement or if the transferor, after the
transfer, reacquires all or any portion of the transferred Shares, such
transfers or attempted transfers shall be null and void and the Shares
transferred or attempted to be transferred shall remain subject to this
Agreement as if no transfer had been made.

       9.4  Entire Agreement.   The terms, conditions and covenants contained
            ----------------                                                 
herein are the full and complete terms of the agreement between the parties
hereto regarding the subject matter hereof and supersede any and all prior
agreements by and among the Corporation and the Shareholders concerning the
ownership, sale or other disposition of the Shares.  No alterations, amendments
or modifications of such terms shall be binding on the parties hereto unless
reduced to writing and approved by the Board of Directors of the Corporation
without the need for approval of the Shareholders.

       9.5  Binding Effect.  This Agreement binding upon and inures to the
            --------------                                                
benefit of the Corporation, its successors, transferees and assigns and to the
Shareholders and their  respective heirs, personal representatives, successors,
permitted transferees and permitted assigns.  All persons bound hereby shall
execute such instruments and perform such acts 

                                       15
<PAGE>
 
as may be reasonably necessary or desirable to effectuate the terms and
provisions of this Agreement. Wherever used in this Agreement, Non-Voting
Shareholder shall refer to the Non-Voting Shareholders originally named above
and any persons who subsequently acquire the Shares for so long as they shall
have any interest in the Shares, and thereafter to his or their respective
heirs, personal representatives, successors, transferees and assigns.

       9.6  Adoption by Corporation.  The Voting Shareholders will cause the
            -----------------------                                         
Board of Directors to adopt appropriate minutes and resolutions recognizing,
confirming, ratifying and adopting the terms of this Agreement and any
amendments to the By-Laws consistent with the provisions herein.

       9.7  Reference in Will.  Each Non-Voting Shareholder shall make reference
            -----------------                                                   
to this Agreement in any will or codicil that he may hereafter execute and shall
direct the executor therein to comply with all of its terms and provisions.

       9.8  Notices.   Any and all notices given in connection with this
            -------                                                     
Agreement shall be deemed adequately given only if in writing and personally
delivered, sent by first class registered or certified mail, postage prepaid,
return receipt requested; sent by facsimile, provided a hard copy is mailed on
that date to the party for whom such notices are intended or sent by other means
at least as fast and reliable as first class mail.  A written notice shall be
deemed to have been given to the recipient party on the earlier of (i) the date
it shall be delivered to the address required by this Agreement; (ii) the date
delivery shall have been refused at the address required by this Agreement;
(iii) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undelivered at the address
required by this Agreement, or (iv) with respect to telefacsimile, the date on
which the telefacsimile is sent.  Any and all notices referred to in this
Agreement, or which any party desires to give to the other, shall be addressed
as follows:

       Name                             Address

       To the Corporation               The GSI Group, Inc.
                                        P.O. Box 20
                                        Assumption, IL  62510
                                        Attn:  John C. Sloan, CEO

                                        with a copy to John Funk, Executive Vice
                                        President and General Counsel

       To Sloan:                        John C. Sloan
                                        #10 DuClaire
                                        Decatur, Il  62521

       To Andrade:                      Jorge Andrade

                                       16
<PAGE>
 
                                        3209 Falcon Point
                                        Springfield, IL  62707

       To Funk:                         John Funk
                                        152 Southmoreland Place
                                        Decatur, IL  62521

       To Buffett:                      Howard Buffett
                                        407 Southmoreland Place
                                        Decatur, IL  62521

       To the Non-Voting Shareholders:  at their respective addresses as set
                                        forth on Exhibit A attached hereto

or to such other address as the person to whom notice is to be given may have
furnished to the other in writing in accordance herewith.  A communication given
by any other means shall be deemed duly given when actually received by the
addressee.

       9.9  Specific Performance.   The Shares cannot be readily purchased or
            --------------------                                             
sold in the open market, and for that reason, among others, the parties will be
irreparably damaged in the event that this Agreement is not specifically
enforced.  Should any dispute arise concerning whether a proposed sale or
disposition of the Shares would violate this Agreement, the parties agree that
an injunction may be issued restraining any sale or disposition pending the
determination of such controversy.  In the event of any controversy concerning
the right or obligation to purchase or sell any of the Shares, such right or
obligation shall be enforceable in a court of equity by a decree of specific
performance.  Such remedy shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the parties may have at law, in
equity or otherwise.

       9.10  Construction of Terms.  Unless otherwise specifically provided, a
             ---------------------                                            
reference to a particular "section", "Section", or "Article" shall mean the
section, Section or Article in this Agreement.

       9.11  Governing Law.  This Agreement shall be interpreted, governed and
             -------------                                                    
construed in all respects by the internal laws of the State of Illinois, and any
action commenced to enforce any of the provisions hereof shall have as its venue
Christian County, Illinois.

       9.12  Payment of Legal Costs and Expenses.  In the event any action is
             -----------------------------------                             
commenced to challenge or enforce the terms and provisions hereof, the party who
is successful in such action based upon a final, unappealable court order, shall
be reimbursed by the unsuccessful party for his fee, costs and expenses
(including without limitation reasonable attorneys' and accountants' fees, costs
and expenses) incurred in connection with the legal proceeding.

                                       17
<PAGE>
 
       9.13  Gender.  Unless the context otherwise requires, any pronouns,
             ------                                                       
wherever used herein, shall include the corresponding masculine, feminine or
neuter pronouns and the plural shall include the singular, and vice versa.

       9.14  Headings.  Article and paragraph headings are included herein
             --------                                                     
solely for convenience and shall not be construed to modify or explain any of
the substantive provisions hereof.

       9.15  Counterparts.  This Agreement may be executed and delivered in two
             ------------                                                      
or more substantially identical counterparts, each of which shall be an original
document as to the person or persons signing it and all of which together shall
constitute a single binding agreement.

       9.16  Invalid Provision.  If any provision of this Agreement is finally
             -----------------                                                
determined by any court of competent jurisdiction to be effective only if said
provision is modified to limit its duration, area, scope or applicability and if
such determination is upheld on appeal or no appeal from such determination is
taken, then the parties hereto agree that they shall amend and modify such
provisions to restrict the duration, area, scope, or applicability thereof to
the minimum extent required to make such provision enforceable, and they further
hereby consent to the entry by a court of an order to so restrict such
provision.  If any provision of this Agreement shall be held invalid, the
remainder of this Agreement shall continue in full force and effect.

       9.17  No Right to Continued Employment.  Nothing contained herein or by
             --------------------------------                                 
virtue of the ownership of Shares by any or all of the Non-Voting Shareholders
shall create, or be deemed to create, any right of employment in any Non-Voting
Shareholder, limit or restrict the Corporation's or any given Non-Voting
Shareholder's right to terminate such Non-Voting Shareholder's employment or
evidence any agreement or understanding that any given Non-Voting Shareholder
will remain employed by the Corporation for any particular length of time.

 
       IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and attested by its duly authorized officer, and the Shareholders have
signed their names, all on the day and year first above written.

                                               THE GSI GROUP, INC.
                                              
                                               BY_______________________________
                                               ITS  CHIEF EXECUTIVE OFFICER
                                              
                                               ______________________________
                                               JORGE ANDRADE

                                       18
<PAGE>
 
                                       ______________________________
                                       HOWARD G. BUFFETT
      
                                       ______________________________
                                       JOHN W. FUNK
      
                                       ______________________________
                                       CRAIG SLOAN
      
                                       ______________________________
                                       GENE WISEMAN
      
                                       ______________________________
                                       AL DEUTSCH
      
                                       ______________________________
                                       CHRIS VAN ROSSEM
      
                                       ______________________________
                                       DAVID VETTEL
      
                                       ______________________________
                                       DONALD GALVIN
      
                                       ______________________________
                                       RUSS MELLO
      
                                       ______________________________
                                       KEVIN SLOAN
      
                                       ______________________________
                                       DALE COLEE
      
                                       ______________________________
                                       STEVE BASHAM
      
                                       ______________________________
                                       DOUG MEYER
      
                                       ______________________________
                                       GENE POLLOCK
      
                                       ______________________________
                                       DAVE ANDRICKS

                                       19