Document:

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
                 ----------------------------------------------

     AMENDMENT  NO. 3 TO LOAN AND SECURITY AGREEMENT (this "AMENDMENT") dated as
of  February  2,  2005  by and among The GSI Group, Inc., a Delaware corporation
("BORROWER"),  Assumption  Leasing  Company,  Inc.,  an Illinois corporation the
"GUARANTOR"),  the  lenders  ("LENDERS")  from  time  to  time party to the Loan
Agreement  (as  defined  below) and Congress Financial Corporation (Central), an
Illinois  corporation,  in  its capacity as agent for Lenders (in such capacity,
"AGENT").
                                R E C I T A L S:

     WHEREAS,  Agent,  the  Lenders,  Borrower and Guarantor are parties to that
certain  Loan  and  Security Agreement dated as of October 31, 2003 (as amended,
the  "Loan  Agreement"; capitalized terms used and not defined herein shall have
the  meanings  assigned  to  them  in  the  Loan  Agreement, as amended hereby);
WHEREAS, Borrower and Guarantors have requested that the Agent and Lenders agree
to  a  certain  amendment  as  set forth herein to permit the Borrower to make a
dividend  to  its  shareholders;  and
WHEREAS,  Agent  and  the  Lenders have granted their approval to such amendment
upon  the  terms  and  conditions  contained  herein,
     NOW,  THEREFORE, in consideration of the premises contained herein, and for
other  good and valuable consideration, the receipt and sufficiency of which are
hereby  acknowledged,  the  parties  hereto  hereby  agree  as  follows:
Section  1.     Amendment  to Loan Agreement.  Immediately upon the satisfaction
                ----------------------------
of  each  of  the applicable conditions precedent set forth in Section 2 of this
Amendment,  the following amendment to the Loan Agreement shall become effective
as  of  the  date  hereof:
     (a)     Section  9.11  of  the Loan Amendment is hereby amended by amending
and  restating  clause  (d)  of  Section  9.11  to  read  as  follows:
     "(d)     Borrower  may  (i) make a one time repurchase of 948,052 shares of
its  common  stock  from  Craig Sloan on or prior to July 31, 2004 with proceeds
from  the  Term Loan as described in Section 2.3(a); provided, that with respect
                                                     --------
to  this  clause  (i),  (A)  no  Event of Default has occurred and is continuing
immediately  before, and immediately after giving effect to, such repurchase and
(B)  Borrower  is  in compliance with Section 10.12 of the Indenture at the time
of,  and  after  giving  effect  to,  such  dividend,  (ii) pay dividends in any
calendar  month  (other  than  in  respect of any calendar month during the 2005
calendar  year),  to  the  extent  permitted  by applicable law, in an aggregate
amount  of  up  to $83,333 in any calendar month; provided, that with respect to
                                                  --------
this  clause  (ii),  (A)  no  Event  of  Default  has occurred and is continuing
immediately  before,  and  immediately after giving effect to, such dividend and
(B)  Borrower  is  in compliance with Section 10.12 of the Indenture at the time
of,  and  after  giving  effect  to,  such  dividend,  (iii)  in addition to any
dividends  permitted under clause (ii) above, pay additional dividends once each
calendar  year  (other  than the 2005 calendar year), to the extent permitted by
applicable  law, in an aggregate amount of up to $1,000,000 in any such calendar
year;  provided,  that  with  respect to this clause (iii), (A) such dividend is
       --------
payable only once per calendar year, commencing on December 15, 2004 and on each
anniversary thereof (other than the 2005 calendar year), (B) no Event of Default
has  occurred and is continuing immediately before, and immediately after giving
effect  to,  such  dividend, (C) Borrower is in compliance with Section 10.12 of
the  Indenture at the time of, and after giving effect to, such dividend and (D)
Borrower  has Excess Availability of at least $10,000,000 after giving effect to
such dividend and (iv) pay dividends in an amount not to exceed $2,000,000 on or
about  February  4,  2005,  to the extent permitted by applicable law; provided,
                                                                       --------
that  with respect to this clause (iv), (A) no Event of Default has occurred and
is  continuing  immediately before, and immediately after giving effect to, such
dividend,  (B)  Borrower is in compliance with Section 10.12 of the Indenture at
the  time  of,  and  after  giving effect to, such dividend and (C) Borrower has
Excess  Availability  of  at  least  $10,000,000  after  giving  effect  to such
dividend.  Upon  the  making  of  any dividend under clause (iii) or clause (iv)
above, Borrower shall maintain Excess Availability of at least $10,000,000 for a
period of thirty (30) consecutive days commencing on the date of such dividend."
Section  2.     Conditions  to Effectiveness of Amendment.  This Amendment shall
                -----------------------------------------
be  effective  upon  satisfaction  of  the  following  conditions  precedent:
     2.1.     This  Amendment  shall  have been executed and delivered by Agent,
the  Lenders,  Borrower  and  Guarantor;
2.2.     The  representations  and warranties contained herein shall be true and
correct  in  all  respects;
2.3.     Agent  shall  have  received a duly executed Acknowledgment and Consent
from  the  Guarantor;  and
2.4.     Agent  shall  have  received  a  certificate  from  the chief financial
officer  of  the Borrower certifying, and setting forth appropriate calculations
reflecting,  that  the payment of the $2,000,000 dividend on February 4, 2005 as
contemplated  by Section 9.11 of the Loan Agreement (as amended hereby) complies
with  the  requirements  of  Section  10.12  of  the  Indenture.
Section 3.     Representations and Warranties.  In order to induce the Agent and
               ------------------------------
Lenders  to enter into this Amendment, each of Borrower and Guarantor represents
and warrants to Agent and the Lenders, upon the effectiveness of this Amendment,
which representations and warranties shall survive the execution and delivery of
this  Amendment  that:
     3.1.     No  Default;  etc.  No  Event of Default and no event or condition
              -----------------
which,  merely  with  notice or the passage of time or both, would constitute an
Event  of  Default,  has  occurred and is continuing after giving effect to this
Amendment  or  would  result from the execution or delivery of this Amendment or
the  consummation  of  the  transactions  contemplated  hereby.
3.2.     Corporate  Power  and  Authority:  Authorization.  Each of Borrower and
         ------------------------------------------------
Guarantor  has  the  corporate  power  and authority to execute and deliver this
Amendment  and  the  execution  and  delivery  by Borrower and Guarantor of this
Amendment has been duly authorized by all requisite corporate action by Borrower
or  such  Guarantor.
3.3.     Execution  and  Delivery.  Each  of  Borrower  and  Guarantor  has duly
         ------------------------
executed  and  delivered  this  Amendment.
3.4.     Enforceability.  This  Amendment  constitutes  the  legal,  valid  and
         --------------
binding  obligation  of Borrower and Guarantor, enforceable against Borrower and
Guarantor  in accordance with its respective terms, except as enforcement may be
limited  by  bankruptcy,  insolvency, reorganization, moratorium or similar laws
affecting  the  enforcement  of  creditors'  right  generally,  and  by  general
principles  of  equity.
3.5.     Representations  and  Warranties.  All  of  the  representations  and
         --------------------------------
warranties contained in the Loan Agreement and in the other Financing Agreements
(other  than  those  which speak expressly only as of a different date) are true
and  correct  as  of  the  date  hereof  after  giving effect to this Amendment.
Section  4.     Miscellaneous.
                -------------
     4.1.     Effect; Ratification.  Each of Borrower and Guarantor acknowledges
              --------------------
that  all  of  the  reasonable  legal  expenses incurred by Agent and Lenders in
connection  herewith  shall  be  reimbursable  under  Section  9.20  of the Loan
                                                      -------------
Agreement.  The  amendments  set  forth  herein  are  effective  solely  for the
purposes  set  forth herein and shall be limited precisely as written, and shall
not  be  deemed  to (i) be a consent to any amendment, waiver or modification of
any  other  term  or  condition  of the Loan Agreement or of any other Financing
Agreement  except  as provided herein or (ii) prejudice any right or rights that
Agent  or  any  Lender  may  now  have  or  may  have  in the future under or in
connection  with  the  Loan  Agreement  or  any other Financing Agreement.  Each
reference  in  the  Loan  Agreement  to "this Agreement," "herein," "hereof" and
words of like import and each reference in the other Financing Agreements to the
"Loan  Agreement"  shall  mean  the  Loan  Agreement  as  amended  hereby.  This
Amendment  shall  be  construed  in  connection  with  and  as  part of the Loan
Agreement  and all terms, conditions, representations, warranties, covenants and
agreements  set  forth in the Loan Agreement and each other Financing Agreement,
except  as  waived  herein are hereby ratified and confirmed and shall remain in
full  force  and  effect.
4.2.     Counterparts.  This  Amendment  may  be  executed  in  any  number  of
         ------------
counterparts,  each  such  counterpart constituting an original but all together
one  and  the  same  instrument.
     4.3.     Governing Law.  This Amendment shall be governed by, and construed
              -------------
and  interpreted in accordance with, the internal laws of the State of Illinois.
                            [Signature Page Follows]
                            -                      -

<PAGE>
       [Signature Page to Amendment No. 3 to Loan and Security Agreement]

     IN  WITNESS  WHEREOF, the parties hereto have executed this Amendment No. 3
to  Loan  and  Security  Agreement  as  of  the  date  first  above  written.
BORROWER:
--------

THE  GSI  GROUP,  INC.

By:
Name:
Title

GUARANTOR:
---------

ASSUMPTION  LEASING  COMPANY,  INC.

By:
Name:
Title

AGENT:
-----

CONGRESS  FINANCIAL  CORPORATION  (CENTRAL)

By:
Name:
Title

<PAGE>
------
REVOLVING  LENDERS:
------------------

CONGRESS  FINANCIAL  CORPORATION  (CENTRAL)

By:
Name:
Title

FLEET  CAPITAL  CORPORATION

By:
Name:
                              Title

                              TERM  LENDERS:
                              -------------

                              ABLECO  FINANCE  LLC,  on  behalf  of  itself
                              and  its  affiliate  assigns

By:
Name:
Title

<PAGE>
------

                           Acknowledgement and Consent
                           ---------------------------

     The  undersigned  has  heretofore  executed  and delivered to Agent and the
Lenders  that  certain  Guaranty  Agreement  dated  as  of October 31, 2003 (the
"Guaranty")  in  favor  of  Agent  for  the benefit of Lenders.  The undersigned
      ---
hereby  consents to the Amendment No. 3 to the Loan and Security Agreement dated
as  of  February  __,  2005  set forth above ("Amendment") and confirms that the
                                               ---------
Financing  Agreements executed and delivered by it and all of the obligations of
such  undersigned  thereunder  remain in full force and effect.  The undersigned
acknowledges  and agrees that, notwithstanding the execution and delivery of the
Amendment,  the Guaranty executed and delivered by such undersigned to the Agent
remains  in  full  force and effect and the rights and remedies of the Agent and
the Lenders thereunder and the obligations of such undersigned thereunder remain
in  full  force  and  effect  and  shall not be affected, impaired or discharged
hereby.  The  undersigned  acknowledges  and  agrees  that  the  consent of such
undersigned to any further waivers, consents or amendments to the Loan Agreement
shall  not  be  required  as  a result of this waiver having been obtained.  The
undersigned  further  acknowledges that the Agent and the Lenders are relying on
the  assurance  set forth herein in extending and maintaining credit outstanding
to  the  Borrower.

GUARANTOR:
---------

ASSUMPTION  LEASING  COMPANY,  INC.

By:
Name:
TitleAFFIRMATIVE PLEDGE OF ASSIGNMENT OF QUOTAS AND OTHER PROVISIONS
         ---------------------------------------------------------------

The  parties  below:

THE  GSI  GROUP,  INC.,  a  company organized and existing under the Laws of the
State  of  Delaware,  USA,  with  its  head  offices at 1004 E. Illinois Street,
Assumption,  Illinois,  in  this  act  represented by its attorney-in-fact, Luis
Fernando  Ayres de Mello Pacheco, Brazilian citizen, lawyer, registered with the
OAB/RJ  under  No.  58.898,  and  at  the Taxpayer's Registry (CPF/MF) under No.
800.912.107-04, resident at the city and State of Rio de Janeiro, at Avenida Rio
Branco  n  1,  19  andar,  setor  B,  herein  after  referred  to  as "GSI"; and

LEONARDO  SEGATT,  Brazilian  citizen, married, businessman, registered with the
SSP  under  No.  202137899  and  at  the  Taxpayer  Registry  (CPF/MF) under No.
374.013.430-53,  resident  at Marau, State of Rio Grande do Sul, at rua Duque de
Caxias,  n  444-ZIP  99.150-000,  herein  after  referred to as "Assignee"; both
jointly  referred  to  as  "Parties";

And,  as  intervening  party,

ASSUMPTION  LEASING  COMPANY,  INC.,  a company organized and existing under the
laws  of  the  State of Delaware, USA, with its head offices at 1004 E. Illinois
Street,  Assumption,  Illinois, in this act represented by its attorney-in-fact,
Luis  Fernando Ayres De Mello Pacheco, qualified above, herein after referred to
as  "Assumption  Leasing".

                                    RECITALS

     WHEREAS  GSI  is  the  majority  quotaholder of the limited liability quota
company  AGROMARAU  INDUSTRIA E COMERCIO LTDA., with its head offices at Rodovia
RS  324,  Km 74, in the city of Marau, State of Rio Grande do Sul, registered at
the  Taxpayer's  Registry  (CNPJ)  under  No.  01.770.039/0001-50,  herein after
referred  to  as  "Company",  holding 99.99% of the Company's corporate capital,
which  currently  corresponds  to  31.019.129  quotas,  in the total value of RS
31,019,129.00;

     WHEREAS  Assumption  Leasing  is  the  minority quotaholder of the Company,
holding  00,01%  of the Company's corporate capital, which currently corresponds
to  3,735  quotas,  in  the  total  amount  of  RS  3,735.00;

     WHEREAS  the  Company's  Articles of Organization provide, in its Clause 5,
that  the  quotas may be assigned, sold or transferred upon the affirmative vote
of  the  quotaholders  holding  the majority of the Company's corporate capital;

     WHEREAS  GSI  wishes  to  assign  to the Assignee certain percentage of its
quotas  in  the  Company,  to  be  transferred  in  a certain period of time and
according  to  the criteria and conditions set forth in this instrument, and the
Assignee  accepts to acquire such quotas from GSI according to the same criteria
and  conditions;

     WHEREAS  in  the event that the Assignee wishes to assign, sell or transfer
the  totality or part of its quotas, after he acquires title to such quotas, the
Assignee agrees to grant GSI or a designee of GSI, at GSI's sole discretion, the
right  of  first  refusal  in  regard  to  the  purchase  of  such  quotas.

The  parties  hereto  decide to execute this Affirmative Pledge of Assignment of
Quotas  and  Other  Provisions  to  be  governed  by  the  following  terms  and
conditions:

1.     ASSIGNMENT  OF  QUOTAS
--     ----------------------

1.     GSI  agrees  to  assign  title  of  5%  of  its quotas in the Company  to
Assignee, for free, and Assignee agrees to accept such quotas, to be transferred
in  the  following  manner,  independent of the implementation of any condition:
(i)     2%  of  the  quotas  held  by  GSI  in the Company, representing 620,382
quotas,  in the total amount of R$620,382.00, are hereby transferred to Assignee
on  the  date  hereof,  when  the  14th  Amendment  to the Company's Articles of
Organization  shall  be  amended  to  effective  the  transfer  thereof.

(ii)     1%  of the quotas held by GSI in the Company on January 1, 2003 will be
transferred  to  Assignee  on  such  date.

(iii)     1% of the quotas held by GSI in the Company on January 1, 2004 will be
transferred  to  Assignee  on  such  date.

(iv)     1%  of the quotas held by GSI in the Company on January 1, 2005 will be
transferred  to  Assignee  on  such  date.

2.     GSI  agrees  to  award Assignee and therefore to assign to Assignee up to
the  maximum  amount of 10% of its quotas in the Company, and Assignee agrees to
accept  such  quotas,  to  be  transferred  in  the  following  manner  upon the
implementation  of  the  condition  described  below:

2.a     For  every R$6.00 (six) reais of cash this is either (i) returned to the
US  through  reduction  of inter-company payable or dividend on capital; or (ii)
invested in the Company at GSI management's own discretion, the Assignee will be
awarded  01  (one)  quota of GSI's participation in the corporate capital of the
Company.

2.b.     The  awarding  of quotas as ascribed in this Article 2 will be based on
audited  results  and  on  the  annual  balance  sheet of the Company, and shall
consider  that  any  inter-company  payable should be reduced to zero before any
dividend  is  paid.

2.c.     Any  existing  negative balances drawn up during a certain fiscal year,
after  the  execution of this instrument, must be recovered within the following
fiscal  year,  before  quotas  can  be  earned  as  per  this  Article  2.

3.     The  threshold of 10% of shares set forth in Article 2 hereof shall never
be  altered and Assignee shall never be entitled to a percentage higher than 15%
in  the corporate capital of the Company, considering also the shares awarded as
set forth in Article 1 hereof.  The shares to be awarded in accordance with this
Article  2  may  be  so  awarded  during  an  undetermined  period  of  time.

4.     It  is hereby agreed that Assignee shall have no claim of title as to the
percentage  of  the quotas described in Article 2 above if he does not implement
the  condition  imposed  for  the  awarding  of  such  quotas.

5.     GSI,  Assumption  Leasing  and  the Assignee, as of the moment the latter
becomes  a  quotaholders  of  the  Company,  mutually  agree that upon a capital
increased  by one of the quotaholders, they shall give each other the preemptive
right to subscribe capital in such amount so that they maintain their proportion
in  the  Company's  corporate  capital.  The  quotaholders  shall  have until 30
(thirty)  days  as  of the deliberation of the capital increase to exercise such
preemptive  right.

6.     The  Assignee  hereby agrees to adhere to all provisions in the Company's
Articles  of Organization as well as to the amendments to be made thereto agreed
upon  herein.

II.     RIGHT  OF  FIRST  REFUSAL  AND  CALL  OPTION
---     --------------------------------------------

7.     As  soon  as  Assignee acquires title to the Company's quotas as provided
for  herein,  the  Assignee agrees that it may only assign, transfer or encumber
the totality or part of its quotas upon the affirmative vote of the quotaholders
holding  more  than  one  quarter  of  the  Company's  corporate  capital.

8.     In  case  Assignee is dismissed from the Company for theft, fraud, or any
other  crime  committed  against the Company, Assignee shall assign and transfer
the  quotas  he owns at that moment for GSI, for free, within 7 business days as
of  the  leaving  of Assignee.  The Assignee hereby grants irrevocable powers to
Luis  Fernando  Ayres de Mello Pacheco, attorney-in-law of GSI, for the specific
purpose  of  executing,  on  his  behalf,  the  amendment  to  the  Articles  of
Organization of the Company to effectuate the transfer of such shares to GSI, in
such  specific  situations.

9.     In  case Assignee is dismissed from the Company for any reason other than
the reasons set forth in Article 8 above, Assignee shall assign and transfer the
quotas  he owns at that moment for GSI, within 7 business days as of the leaving
of  Assignee.  The  parties  agree  that  the  price  for such quota(s) shall be
calculated  as  set  forth  in  Article  12  herein.

10.     In  case Assignee wished to leave the Company by his own, Assignee shall
assign and transfer the quotas he owns at that moment for GSI, within 7 business
days  as  of the leaving of Assignee.  The parties agree that the price for such
quota(s) shall be calculated as set forth in Article 12 herein. In this case, if
the Assignee decides to leave the Company between the dates specified below, the
value  to  be  paid  by  GSI  for  his  quotas, shall be ascertained as follows:
10.a. From January 1, 2002- To December 31, 2002, he will be paid for his quotas
at  25%  of  the  book  value  attributed  to  each  quota;

10.b.  From January 1, 2003-To December 31, 2003, he will be paid for his quotas
at  50%  of  the  book  value  attributed  to  each  quota;

10.c.  From January 1, 2004-To December 31, 2004, he will be paid for his quotas
at  75%  of  the  book  value  attributed  to  each  quota;

10.d. Beyond January 1, 2005, he will be paid for his quotas at 100% of the book
value  attributed  to  each  quota.

11.     In  case  Assignee  whishes  to  assign  or transfer its quotas to third
parties  it  shall  always  give  GSI the right of first refusal to acquire such
quotas upon the same price and conditions offered to third parties.  The Parties
agree  that the price for such quota(s) shall not supersede, in any way, the net
value  of  the  quotas, as calculated as set forth in Article 12 below.  For the
full exercise of GSI's right of first refusal, it is hereby agreed that Assignee
shall  give GSI a prior written notice, in which it shall be indicated the offer
of  transfer  of  quotas, the amount of quotas offered, the price to be paid for
such quotas, the conditions of payment, as well as any other relevant condition,
provided  that  such  offer  shall  be made in the exact terms and conditions as
those  agreed  upon  with  the  third  party.

12.     The  net  value  of  the  quotas  shall be based on the net worth of the
Company,  after presentation of the financial statements, which shall calculated
the  net  worth  with  the  total  assets,  less  intangible  assets,  and  less
liabilities.  As  a  result of this calculation, the amount of the Company's net
worth  shall then be divided upon the number of the Company's existing quotas on
the  time  of  the  referred  transfer, so as to calculate the net value of each
quota.

13.     GSI  shall  have  sixty  (60)  days, as of receipt of the written notice
mentioned in Article 11, above, to indicate its interest in acquiring the quotas
offered  by  Assignee.

14.     GSI's  failure  to  declare  acceptance  of  the offer within the 60-day
period  above  mentioned shall be understood as its waiver to exercise the right
of  first  refusal.

15.     In case GSI declines the offer or waives its right of first refusal, per
Article 14, above, Assignee may transfer its quotas to the third party, provided
that  the  sale  of  such  quotas  shall be made according to the same price and
conditions  offered  to  GSI,  referred  to  in  Article  11.
III.     CALL  OPTION  UPON  THE  CHANGE  IN  GSI'S  CORPORATE  STRUCTURE
----     ----------------------------------------------------------------

16.     In  the  event of merger, acquisition, spin off or the change of control
in  GSI's  corporate  structure,  GSI  or  whichever company succeeds GSI in its
position  of a quotaholder of the Company shall have the option to purchase from
Assignee  all,  and  not  a  portion,  of  its  quotas  in  the  Company.

17.     The  amount  to  be  agreed  for the sale of the quotas, as mentioned in
Article  16,  above,  shall  be  calculated  by  the net value of the quotas, as
established  in  Article  12, except if the Company is sold out separately, when
the  amount  shall  be  calculated  by the market value of the quotas, whichever
amount  is  higher.

IV.     FINAL  PROVISIONS
---     -----------------

18.     The Parties and Assumption Leasing hereby agree to execute the necessary
amendments  to  the  Company's  Articles  of  Organization,  which shall be duly
registered  before  the appropriate Commercial Board, formalizing the assignment
of  quotas  hereby  agreed  upon, as they become due to Assignee, as well as the
other  provisions  agreed  upon  herein,  regardless  of  the  powers granted by
Assignee  to  Luis  Fernando  Ayres  de  Mello Pacheco, as per Article 8 hereof.

19.     This instrument shall be governed by the Laws of Republica Federative do
Brasil.

20.     The Parties elect the Central Court of the city of Rio de Janeiro as the
competent venue for any disputes that may arise from this agreement, waiving the
right  to  claim  any  other  venue,  irrespective  of how privileged it may be.

IN  WITNESS  WHEREOF,  the  parties hereunder execute this Affirmative Pledge of
Assignment  of  Quotas  and  Other Provisions in four (4) identical counterparts
both in English and in Portuguese.  The Portuguese version shall prevail, should
any  dispute  arise  from  the  interpretation  of  both  versions.

                         Rio de Janeiro, January 1, 2002

                   __________________________________________
                   ------------------------------------------
                               THE GSI GROUP, INC.

                                 LEONARDO SEGATT

                        ASSUMPTION LEASING COMPANY, INC.

Witnesses:

1.________________          2.________________
Name:                    Name:

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