<PAGE>

     THIS AGREEMENT made this 26th  day of  October, 1999.

BETWEEN:

                                GSI LUMONICS INC.
                                 (the "Company")


                                     - and -

                                WARREN SCOTT NIX
                                     ("Nix")

     WHEREAS the parties have mutually agreed for Nix to resign from the Company
on the terms and conditions herein set out:

     NOW THEREFORE THIS AGREEMENT WITNESSETH that for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by each
party, the parties hereto agree as follows:

1.   Nix agrees:

     (a)  to resign, and does hereby resign, as a director and as an officer of
          the Company, as may be applicable, effective immediately and as an
          employee of the Company effective January 1, 2000 (the "Effective
          Date");

     (b)  until the Effective Date, to devote sufficient time and attention to
          accomplish the business tasks assigned to him by Chuck Winston and to
          use his best efforts in assisting with the transfer of his
          responsibilities to other employees. For greater certainty, it is
          agreed that Nix may, at his cost, work from premises other than his
          office at the Company;

     (c)  on the Effective Date to purge from his personal computers any
          information relating to the business and affairs of the Company;

     (d)  on or before the Effective Date to return to the Company all written
          material relating to the business and affairs of the Company that is
          in his possession whether or not such material was prepared by him or
          by any other person, including, without limiting the foregoing, all
          manuals, documents, reports and working papers;

     (e)  that for and during the period of twelve (12) months from the
          Effective Date he will not directly or indirectly engage in or carry
          on individually or in partnership or in conjunction with any one or
          more persons or firms or bodies corporate, as principal, agent, or
          shareholder of any body corporate, any business that competes with the
<PAGE>

                                      -2-


          laser marking, laser industrial materials processing, medical
          diagnostic equipment manufacturing and optics manufacturing business
          (the "Business") of the Company in any area of the world in which any
          part of the Business is being carried on at the date hereof;

     (f)  that for a period of twelve (12) months from the end of the Effective
          Date he will not solicit or induce or attempt to induce any employee
          of the Company engaged in any part of the Business to terminate their
          employment with the Company and he will not directly or indirectly
          hire any such employee of the Company;

     (g)  that for the purpose of this Agreement, the term the "Company" shall
          include GSI Lumonics Inc. and each subsidiary and affiliate of GSI
          Lumonics Inc.

2.   Nix agrees that neither his resignation as provided for herein nor anything
     in this Agreement shall operate so as to release him from any provisions of
     any patent release agreement previously entered into by him with the
     Company.

3.   Nix hereby releases and forever discharges the Company and all of its
     officers, directors, agents, employees and other representatives from any
     and all claims, howsoever arising and of whatsoever nature or kind which to
     date may have been or may in future be sustained by Nix in consequence of
     his employment by the Company and the termination of that employment.
     Without limiting the generality of the foregoing, Nix releases and
     discharges the Company from any claims by Nix under a Change of Control
     Agreement dated April 13, 1998, entered into between the Company and Nix.
     Notwithstanding anything in this paragraph to the contrary, nothing herein
     shall disentitle Nix from seeking indemnity from the Company in respect of
     any claim made by any third party against Nix for actions taken in good
     faith in the course of his employment with the Company. Moreover, the
     Company on behalf of its officers, directors, agents, employees and other
     representatives, releases all claims against Nix of whatsoever nature or
     kind which to date may have been or may in future be sustained by the
     Company in consequence of Nix's employment save and except for claims
     arising out of any fraudulent act by Nix.

4.   Nix agrees to keep the contents of this agreement confidential and not to
     disclose the provisions of same to persons other than his immediate family
     and professional advisors.

5.   The Company agrees:

     (a)  to pay Nix for a period of 12 months from the Effective Date (the
          "Severance Period") an amount equal to his base salary as of the date
          hereof. Such payments shall be made at the same times as they would
          have been made had Nix's employment by the Company continued during
          the Severance Period. Such payments shall be subject to withholding
          tax and any other deduction that the Company is required, by law, to
          make;
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                                      -3-

     (b)  on January 1, 2001 to pay to Nix a bonus of US$60,000 less any
          withholding tax and any other deductions that the Company is required
          by law to make;

     (c)  to continue in force until the end of the Severance Period or until
          the date on which Nix becomes re-employed, whichever occurs first, all
          health and medical benefits to which Nix is entitled at the date
          hereof except for sick leave, short-term disability and long-term
          disability coverage;

     (d)  to continue in force until the end of the Severance Period Nix's 401K
          benefit plan;

     (e)  to continue in force until the end of the Severance Period the car
          lease arrangement entered into for the benefit of Nix. Nix's use of
          such leased vehicle shall be subject to the Company's current policy
          respecting leased vehicles for executives. At the end of the Severance
          Period, or on the date Nix becomes re-employed, whichever occurs
          first, Nix shall return the vehicle to the Company in good condition
          and with no greater mileage than is allowed for under the terms of the
          car lease pro-rated to the length of time the lease has been in force;

     (f)  to pay Nix on January 1, 2001 vacation pay for 200 hours based on
          Nix's annual base salary for 1999 less any withholding tax and any
          other deductions that the Company is required by law to make. For
          greater certainty, Nix acknowledges that no vacation time shall accrue
          during the Severance Period;

     (g)  to contract with a third party selected by Nix and acceptable to
          Company acting reasonably, to provide Nix with outplacement services
          and re-employment counseling up to a maximum cost to the Company of
          US$25,000;

     (h)  to reimburse Nix up to US$5,000 for legal and accounting advice
          pertaining to his resignation from the Company;

     (i)  to allow Nix to permanently keep his current laptop computer.

6.   Nix agrees to surrender, and does thereby surrender all of his options to
     purchase shares of the Company that are shown on Schedule "A" to this
     Agreement. The Company agrees that all other options belonging to Nix to
     purchase shares of the Company that are now exercisable or that become
     exercisable on or before March 31, 2000 may be exercised by Nix up to, but
     not after March 31, 2000. Nix further agrees to consult with the Company's
     Chief Financial Officer prior to selling more than 5,000 shares of the
     Company acquired by the exercise of his options in any period of 30
     consecutive days with a view to minimizing the impact of such sales on the
     market price of the Company's shares.
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                                      -4-


7.   In the event of the death of Nix prior to the payment of any amounts due
     under this Agreement, such amounts will be paid directly to Nix's Estate.

8.   The Company will prepare a public announcement of Nix's resignation from
     the Company and will consult Nix with respect to the timing and wording of
     such public announcement. In the event of any disagreement, the Company
     shall have the right to make such public disclosure of Nix's resignation as
     is required to satisfy any applicable statutory requirement.

9.   Nix agrees that at the request of the Company he will execute such further
     or other instruments in writing as may reasonably be required to give full
     force and effect to this Agreement.

10.  The making, execution and delivery of this Agreement by Nix have been
     induced by no representations, statements or agreements other than those
     herein expressed. This Agreement embodies the entire understanding of the
     parties and there are no further agreements or understandings, written or
     oral, in effect between the parties, relating to the subject matter hereof.
     This Agreement may be amended or modified only by an instrument in writing
     signed by the parties.

11.  If any provision of this Agreement is held to be unenforceable, the
     remaining provisions shall remain in full force and effect.

12.  This Agreement shall be read with all changes in gender and/or number that
     may reasonably be required by the context.

13.  This Agreement shall be interpreted in accordance with the laws of the
     Province of Ontario.

     IN WITNESS WHEREOF the parties have executed this Agreement.

                                    GSI LUMONICS INC.

                              Per:   /s/ Robert J. Atkinson
                                    ----------------------------------
                                         Robert J. Atkinson

                                     /s/ Warren Scott Nix
                                    ----------------------------------
                                         Warren Scott Nix
<PAGE>

                                      -5-


                                  SCHEDULE "A"


                   Date of Grant              No. of Shares
                   -------------              -------------

                   January 1997                  100,000
                   February 1997                  50,000
                   December 1997                  90,000
                   August 1999                   140,000