Exhibit 10.6
SERVICE AGREEMENT
This Service Agreement (“Agreement”), executed on this 30th day of May 2019 (the
“Effective Date”), by and between IPG Laser GmbH, a German limited liability
company having an office at Siemensstrasse 7, D-57299 Burbach, Germany (the
“Company”), and Evgeny Scherbakov, residing at Auf der Bracht 7, D-57299
Burbach, Germany (“Executive”). The Company and Executive are referred to
jointly below as the “Parties.”
WHEREAS, the Company and Executive previously entered into a service agreement
dated October 7, 2013, which the Company and Executive have amended from time to
time (the “Prior Agreement”);
WHEREAS, the Company and Executive desire to amend and restate the Prior
Agreement; and
WHEREAS, the Company desires to continue to retain Executive and Executive
desires to continue his services on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the services to be provided by Executive,
the mutual terms and conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. Service. Executive will provide service to the Company in the position of
Managing Director of the Company and Chief Operating Officer of IPG Photonics
Corporation (“Parent”). Executive will report to the Company’s sole shareholder
and to Parent’s Chief Executive Officer. Executive’s primary responsibility will
be managing the general business and affairs of the Company and performing
related administrative duties, and executing chief operating officer management
responsibilities for Parent. Executive will carry such duties as shall be
assigned from time to time by the Company’s sole shareholder and Parent’s Chief
Executive Officer, subject to applicable laws, and ethical duties. During the
Term (as defined below), Executive shall devote Executive’s reasonable best
efforts, energies and abilities and Executive’s full business time, skill and
attention to the business and affairs of Parent and its Affiliates (as defined
below), and shall act at all times according to the highest professional
standards, for the purpose of advancing the business of Parent and its
Affiliates. For purposes of this Agreement, an “Affiliate” shall mean a
corporation that, for purposes of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), is a Parent or Subsidiary of the Company within
the meaning of Code Sections 424(e) and 424(f).
2. Term. This Agreement shall commence on the Effective Date and shall expire on
5:00 pm E.S.T. on December 31, 2020 (the “Initial Term”), unless terminated
earlier pursuant to the provisions of Sections 6, 7, 8, 9 or 10 hereof. The term
of service shall be renewed automatically for successive periods of one (1) year
each (a “Renewal Term”) after the expiration of the Initial Term, unless the
Company provides Executive, or Executive provides the Company, with written
notice to the contrary at least one hundred eighty (180) days prior to the end
of the Initial Term or any Renewal Term. The Initial Term and any Renewal Terms
are collectively referred to herein as the “Term.” If either the Company or
Executive elect not to

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renew the Term of this Agreement in accordance with this Section 2 and Executive
thereafter continues to provide services to the Company or its Affiliates,
Executive shall be retained on an at-will basis and the terms of such service
and any subsequent termination of service shall be subject solely to the
Company’s general practices and policies. In the event of a “Change in Control”
of the Company (as such term is defined in the IPG Photonics Corporation 2006
Incentive Compensation Plan, as amended (the “Equity Plan”)) during the Term,
the Term automatically will be extended until the later of (i) the second
anniversary of the Change in Control, or (ii) the scheduled expiration of the
then-current Term.
3. Compensation.
(i) Salary. The Company shall pay to Executive a salary at a monthly rate of
€39,350 on the basis of a 14-month year for a gross annual base salary (“Base
Salary”) of Five Hundred, Fifty Thousand, Nine Hundred Euros (€550,900)
effective as of January 1, 2019. The Company will pay Executive’s Base Salary in
equal installments in accordance with the Company’s standard payroll policies
and schedule, subject to tax and elective withholding and deductions.
Thereafter, the Board of Directors of the Company’s shareholder (the “Board”),
or such committee of the Board as is responsible for setting the compensation of
senior executive officers, shall review Executive’s performance and Base Salary
annually in January of each year, in light of competitive data, the Company’s
performance, and Executive’s performance, and such other factors as the Board
deems appropriate, and determine whether to adjust Executive’s Base Salary,
retroactive to January 1 of the year. The first review shall be in January 2020.
Such adjusted annual salary then shall become Executive’s “Base Salary” for
purposes of this Agreement.
(ii) Annual Bonus. Executive will be eligible for an annual cash bonus (the
“Bonus”), based on performance, and calculated as a percentage of Executive’s
Base Salary. The Bonus will be paid at the time payment is made to other
similarly situated executives of the Company, but in no event later than two and
a half of the close of the calendar year in which Executive’s right to the Bonus
is no longer subject to a substantial risk of forfeiture.
(iii) Equity Compensation. Executive will be eligible to participate in any
long-term incentive plans, and/or equity-based compensation plans established or
maintained by the Company’s shareholder for its senior executive officers or
employees, including, but not limited to, the Equity Plan.
4. Benefits.
(i) Executive shall be entitled to the extent eligible to participate in any
benefit plans as may be adopted and modified by the Company from time to time,
including without limitation health, dental and medical plans, life and
disability insurance, paid vacation, holiday, and retirement plans. The benefits
available to Executive shall be no less favorable than those available to other
executives at similar levels within the organization or to the employees of the
Company at the location where Executive works. Benefits provided under this
Agreement shall be subject to the terms

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and conditions of any applicable benefit plan, including any eligibility and
vesting requirements, as such plans may be in effect from time to time, and to
Parent and its affiliates ability to amend, modify, or terminate such plan(s) at
any time and from time to time.
(ii) Executive shall be entitled to five weeks of paid vacation each year. The
maximum number of accrued vacation hours that Executive can have at any point in
time is equal to the total vacation hours earned in the last twelve (12) months,
plus one week of vacation carried over from the prior twelve (12) months of
service.
(iii) Executive shall have the right to a luxury class car which may be also
used for personal purposes.
5. Other Activities. The retention of Executive shall be on a full-time basis,
but Executive may be an investor or otherwise have an interest in or serve on
the board of directors or advisory board to other businesses, partnerships and
entities so long as the other activities of Executive (a) do not materially
interfere with the performance of Executive’s duties to the Company, (b) violate
the other provisions of either this agreement or the Company’s Code of Conduct,
or (c) cause Executive to violate the Restrictive Covenants defined and
incorporated herein in Section 12 of this Agreement and Executive discloses all
such activities to the Chief Executive Officer of Parent and the Chair of
Parent’s Compensation Committee of the Board in writing, provided that,
Executive may not serve on the board of directors of a private or publicly
traded company (other than Parent or a not-for-profit organization) without the
Compensation Committee’s written consent and Executive may not serve as chairman
of another publicly traded company without the Board’s written consent. Nothing
in this provision or this Agreement limits or restricts Executive’s duties and
obligations, including the duty of loyalty, that arise under the law.
6. Termination by the Company. The Company may terminate Executive’s service
during the Term:
(i) without Cause (as defined below) by giving Executive thirty (30) calendar
days’ prior written notice, or
(ii) for Cause (as defined below) by delivering to Executive a copy of a
resolution duly adopted by the affirmative vote of a majority of the independent
directors of the Board then in office at a meeting of the Board called and held
for such purpose, finding that, Executive has committed an act or omission set
forth below in this Section 6. Nothing herein shall limit Executive’s right or
Executive’s beneficiaries’ right to contest the validity or propriety of any
such determination, in accordance with Section 23 of this Agreement. For
purposes of this Agreement, “Cause” shall mean: (A) an act of fraud,
embezzlement or theft by Executive in connection with Executive’s duties or in
the course of Executive’s service to the Company or an Affiliate; (B)
Executive’s intentional wrongful damage to the property of the Company or its
Affiliates; (C) Executive’s intentional breach of Section 12 hereof while
Executive remains in the employ of the Company or an Affiliate; (D) an act of
Gross Misconduct (as defined below); (E) Executive’s material violation of
Parent’s Code of Conduct, as amended from time to

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time; or (F) Executive’s conviction of a misdemeanor involving moral turpitude
or a felony; and, in each case, the reasonable, good faith determination by the
Board as hereafter provided that any such act or omission shall have been
materially harmful to Parent or an Affiliate financially, reputationally or
otherwise. For purposes of this Agreement, “Gross Misconduct” shall mean a
willful or grossly negligent act or omission that has or will have a material
and adverse impact on the business or reputation of Parent or its Affiliates, or
on the business of the customers or suppliers of Parent or its Affiliates as
such relate to Parent. For purposes of this Agreement, no act or failure to act
on Executive’s part shall be considered “willful” unless it is done, or omitted
to be done, by Executive in bad faith or without reasonable belief that
Executive’s action or omission was in the best interests of Parent or an
Affiliate. Any act or failure to act based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
Parent or an Affiliate shall be conclusively presumed to be done, or omitted to
be done, in good faith and in the best interests of Parent or an Affiliate. In
addition, Executive’s service shall be deemed to have terminated for Cause if,
based on facts and circumstances discovered after Executive’s service has
terminated, the Board of Parent determines in reasonable good faith, within one
year after Executive’s service terminated, and after appropriate investigation
and an opportunity for Executive to be interviewed (with or without counsel as
Executive may determine) by a subcommittee of the independent Board members or
its representative, that Executive committed an act during the Term that would
have justified a termination for Cause.
7. Termination by Executive. Executive may terminate his service during the Term
by giving the Company sixty (60) calendar days’ prior written notice; provided
that, if Executive purports to terminate his service during the Term for Good
Reason (as defined below), Executive must give the Company written notice of
Executive’s intent to terminate for Good Reason within sixty (60) days of the
occurrence of the event that allegedly constitutes Good Reason. The Company
shall have a right to cure the event alleged to constitute Good Reason for a
period of thirty (30) calendar days after notice from Executive of intention to
terminate for Good Reason. In the event of termination by notice under the first
sentence of this Section 7, the Company in its discretion may elect a
termination date that is earlier than the conclusion of the sixty (60) calendar
day notice period, but the termination shall still be deemed a voluntary
termination by Executive with Good Reason under this Section. “Good Reason”
means the occurrence of any of the following events without Executive’s express
written consent:
(i) The material reduction of Executive’s authorities, duties, or
responsibilities with the Company;
(ii) A material reduction by the Company of Executive’s Base Salary, other than
a reduction approved by the Board that similarly applies to all executive
officers of the Company, provided that such a reduction in Base Salary shall not
exceed more than twenty percent (20%) of Executive’s then Base Salary;
(iii) A relocation of the offices of Executive to a place greater than (A) fifty
(50) miles in distance from the current executive offices of the Company in
Oxford, MA,

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and (B) the current distance of Executive’s commute from Executive’s home
residence to the current executive offices of the Company in Burbach, Germany;
or
(iv) Any action or inaction that constitutes a material breach by the Company of
this Agreement.
The Company shall have no obligations to Executive after Executive’s last day of
service following termination of service under this Section, except as
specifically set forth in this Agreement or under any applicable plans, programs
or arrangements of the Company including, without limitation, its Articles of
Association or similar organizational documents, or Parent’s Certificate of
Incorporation or By-Laws, as either may be amended from time to time, the Equity
Plan and any agreements thereunder, and the indemnification agreement described
in Section 14.
8. Automatic Termination. Notwithstanding the provisions of Section 2,
Executive’s service shall automatically terminate upon Executive’s death or
Disability (as defined below). Executive shall be deemed to have a “Disability”
for purposes of this Agreement if Executive is unable to perform substantially,
by reason of physical or mental incapacity, Executive’s duties or obligations
under this Agreement, with or without reasonable accommodation as defined in the
Americans with Disabilities Act and implementing regulations, for a period of
one hundred and eighty (180) consecutive calendar days in any 360-calendar day
period. The Board shall determine, in the good faith exercise of its reasonable
discretion, according to the facts then available, whether and when the
Disability of Executive has occurred.
9. Term of Agreement. Any termination of Executive’s service shall also end the
Term. For purposes of this Agreement, Executive’s service with the Company and
its Affiliates shall be deemed to be terminated when Executive has a “separation
from service” within the meaning of Code Section 409A, and references in this
Agreement to termination of service shall be deemed to refer to such a
separation from service. Upon Executive’s separation from service for any
reason, Executive shall be deemed to have resigned as of the date of Executive’s
separation from service from all offices, directorships and fiduciary positions
with the Company, its Affiliates, and employee benefit plans of the Company and
its Affiliates unless Executive is affirmatively re-appointed or re-elected to
such position as of the date of Executive’s separation from service.
10. Certain Obligations of the Company Following Termination of Executive’s
Service. Following termination of Executive’s service during the Term under the
circumstances described below, the Company will pay to Executive the following
compensation and provide the following benefits in addition to any benefits to
which Executive may be entitled by law in full satisfaction and final settlement
of any and all claims and demands that Executive or the Company may have against
the other under this Agreement:
(i) Termination of Service for Any Reason. In the event of Executive’s
termination of service for any reason, the Company shall pay or provide
Executive (a) any unpaid Base Salary through the date of termination and (b) any
benefits (including, without limitation, any unused vacation accrued in
accordance with Section 4(ii)) accrued, earned or vested, and any unreimbursed
expenses incurred, up to and including

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the effective date of such termination to which Executive may be entitled under
the terms of any applicable arrangement, plan or program (collectively, the
“Accrued Amounts”).
(ii) Without Cause by the Company or for Good Reason by Executive. If, during
the Term, the Company terminates Executive’s service without Cause under Section
6(i) hereof or Executive terminates his service for Good Reason under Section 7
hereof, Executive shall be entitled to the following payments and benefits,
subject to Section 13:
(a) The Accrued Amounts, as soon as reasonably practicable following the date of
termination;
(b) Any Bonus that has been actually earned as of or prior to the termination
date, but has not been paid, payable at the time payment is made to other
similarly-situated executives of Company or its Affiliates, but in no event
later than two and a half (2½) months after the close of the calendar year in
which Executive’s right to the Bonus is no longer subject to a substantial risk
of forfeiture;
(c) A pro rata portion of the amount of Bonus, if any, Executive would have
received pursuant to Section 3(ii) for the year in which Executive’s service
terminated. The Company shall determine what annual Bonus, if any, Executive
would have earned had he been providing services through the end of the
applicable period (the “Base Incentive Amount”), in accordance with the methods
used to calculate the annual Bonus for the Company’s other similarly-situated
executives; provided that, with respect to the personal performance evaluation
element of the annual Bonus calculation, if all financial metric components meet
or exceed the “target” level of performance, Executive shall be deemed awarded
one hundred percent (100%) of the potential personal performance evaluation
bonus; if no financial metric bonus is awarded, no personal performance
evaluation bonus will be deemed awarded, and amounts in between the threshold,
target and maximum levels of performance will be determined by linear
interpolation. The pro rata portion to be paid pursuant to this paragraph shall
be determined by multiplying the Base Incentive Amount by a fraction, the
numerator of which is the number of calendar days from the beginning of the
applicable annual period in which the termination occurred through the date of
termination and the denominator of which is 365. Any payment due under this
paragraph shall be paid at the time payment is made to other similarly-situated
executives of the Company, but in no event later than two and a half (2½) months
after the close of the calendar year in which Executive would have become vested
in such Bonus;
(d) Continuing payments of Base Salary, payable in accordance with regular
payroll practices of the Company, for eighteen (18) months following the date of
termination; and

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(e) Cash reimbursement of amounts paid by Executive (sufficient to cover full
family health care premiums) for a period of eighteen (18) months following the
termination of Executive’s service if Executive elects continuation of coverage.
The foregoing notwithstanding, the Company’s obligation to reimburse described
in the preceding sentence shall cease on the date Executive becomes eligible for
coverage under another group health plan offered by a new employer of Executive
or covered under a group health plan of the employer of Executive’s spouse, in
either case, which does not impose pre-existing condition limitations on
Executive’s coverage. Nothing herein shall be construed to extend the period of
time over which health care premium continuation coverage shall be provided to
Executive or his dependents beyond that mandated by law.
If, during the Term, the Company terminates Executive’s service without Cause
under Section 6(i) hereof or Executive terminates his service for Good Reason
under Section 7 hereof, for purposes of determining the vested portions of
Executive’s stock options and any other equity compensation awards then
outstanding, Executive shall be deemed to have terminated service twelve (12)
months following the date of Executive’s actual termination of service.
(iii) Termination by Executive Without Good Reason or by the Company for Cause.
If, during the Term, Executive terminates his service under Section 7(i) hereof
without Good Reason or the Company terminates Executive’s service under Section
6(ii) hereof for Cause, Executive shall be entitled to no further compensation
or other benefits under this Agreement except for the Accrued Amounts, payable
in a single lump sum as soon as practicable following the date of termination.
(iv) Death; Disability. If Executive’s service is terminated during the Term by
reason of Executive’s death or for Disability, Executive or Executive’s estate,
as the case may be, shall be entitled to the following payments:
(a) The Accrued Amounts, as soon as reasonably practicable following the date of
termination;
(b) Any Bonus that has been actually earned as of or prior to the termination
date, but has not been paid, payable at the time payment is made to other
similarly-situated executives of the Company or its Affiliates, but in no event
later than two and a half (2½) months after the close of the calendar year in
which Executive becomes vested in such Bonus; and
(c) The amount payable, if any, as determined pursuant to Section 10(ii)(c),
payable at the time payment is made to other similarly-situated executives of
the Company or its Affiliates, but in no event later than two and a half (2½)
months after the close of the calendar year in which Executive’s right to the
Bonus is no longer subject to a substantial risk of forfeiture, Executive
becomes vested in such Bonus.

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If Executive’s service is terminated during the Term by reason of Executive’s
death or for Disability, the treatment of any equity compensation awards held by
Executive shall be governed by the terms of the plan or agreement under which
such awards were granted.
(v) Termination on or After a Change in Control. If, within twenty-four (24)
months following a Change in Control (as defined in the Equity Plan), the
Company terminates Executive’s service without Cause under Section 6(i) hereof
or Executive terminates his service for Good Reason under Section 7 hereof,
Executive shall be entitled to the following payments, subject to Section 13:
(a) The Accrued Amounts, as soon as reasonably practicable following the date of
termination;
(b) Any Bonus that has been actually earned as of or prior to the termination
date, but has not been paid, payable at the time payment is made to other
similarly-situated executives of the Company or its Affiliates, but in no event
later than two and a half (2½) months after the close of the calendar year in
which Executive’s right to the Bonus is no longer subject to a substantial risk
of forfeiture;
(c) The amount payable, if any, as determined pursuant to Section 10(ii)(c),
payable at the time payment is made to other similarly-situated executives of
the Company or its Affiliates, but in no event later than two and a half (2½)
months after the close of the calendar year in which Executive would have become
vested in such Bonus;
(d) Continuing payments of Base Salary, payable in accordance with regular
payroll practices of the Company, for twenty-four (24) months following the date
of termination;
(e) Cash reimbursement of amounts paid by Executive (sufficient to cover full
family health care premiums) for a period of twenty-four (24) months following
the termination of Executive’s service if Executive elects continuation of
coverage. The foregoing notwithstanding, the Company’s obligation to reimburse
described in the preceding sentence shall cease on the date Executive becomes
eligible for coverage under another group health plan offered by a new employer
of Executive or covered under a group health plan of the employer of Executive’s
spouse, in either case, which does not impose pre-existing condition limitations
on Executive’s coverage. Nothing herein shall be construed to extend the period
of time over which health care premium continuation coverage shall be provided
to Executive or his dependents beyond that mandated by law;
(f) A lump sum cash amount equal to two (2) times Executive’s average annual
Bonus over the three (3) completed years immediately preceding the date of the
Change in Control, payable as soon as reasonably practicable after the date of
termination; and

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(g) All equity (including options, RSUs and other stock) awards outstanding as
of the Change in Control and held by Executive on the date of termination shall
immediately vest and become non-forfeitable.
(vi) Expiration. If the Term of this Agreement expires due to either the Company
or Executive electing not to renew the Term in accordance with Section 2, and
the Company does not offer Executive continued service in the same or a
substantially similar position as, or in a higher position than, his position on
the date of the expiration of the Term, and at a compensation level that is the
same or substantially similar to that in effect on the date of the expiration of
the Term, Executive shall be entitled to resign from service with the Company
and receive the following payments:
(a) The Accrued Amounts, as soon as reasonably practicable following the date of
termination;
(b) Any Bonus that has been actually earned as of or prior to the termination
date, but has not been paid, payable at the time payment is made to other
similarly-situated executives of the Corporation, but in no event later than two
and a half (2½) months after the close of the calendar year in which Executive’s
right to the Bonus is no longer subject to a substantial risk of forfeiture;
(c) The amount payable, if any, as determined pursuant to Section 10(ii)(c),
payable at the time payment is made to other similarly-situated executives of
the Corporation, but in no event later than two and a half (2½) months after the
close of the calendar year in which Executive would have become vested in such
Bonus;
(d) Continuing payments of Base Salary, payable in accordance with regular
payroll practices of the Company, for twelve (12) months following the date of
termination; and
(e) Cash reimbursement of amounts paid by Executive (sufficient to cover full
family health care premiums) for a period of eighteen (18) months following the
termination of Executive’s service if Executive elects continuation of coverage.
The foregoing notwithstanding, the Company’s obligation to reimburse described
in the preceding sentence shall cease on the date Executive becomes eligible for
coverage under another group health plan offered by a new employer of Executive
or covered under a group health plan of the employer of Executive’s spouse, in
either case, which does not impose pre-existing condition limitations on
Executive’s coverage. Nothing herein shall be construed to extend the period of
time over which health care premium continuation coverage shall be provided to
Executive or his dependents beyond that mandated by law. The foregoing
notwithstanding, the Company’s obligation to such health care premiums described
in the preceding sentence shall cease on the date Executive becomes eligible for
coverage under another group health plan offered by a new employer of Executive
or covered under a group health plan of the employer of

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Executive’s spouse, in either case, which does not impose pre-existing condition
limitations on Executive’s coverage. Nothing herein shall be construed to extend
the period of time over which health care premium continuation coverage shall be
provided to Executive or Executive’s dependents beyond that mandated by law.
Except as provided in Section 10(i), Executive shall not be entitled to payment
of the amounts described in this subsection (vi) if the Company offers Executive
continued service in the same or a substantially similar position as, or in a
higher position than, his position on the date of expiration of the Term, and at
a compensation level that is the same or a substantially similar to that in
effect on the date of the expiration of the Term, and Executive declines the
offer.
(vii) No Duplication of Benefits. Executive shall only be eligible for
termination payments and benefits, if any, under one of the provisions of this
Section 10. For example, if Executive receives payments and benefits under
Section 10(ii) of this Agreement, Executive shall not be eligible to receive
payments or benefits under Sections 10(iv), 10(v), or 10(vi). Any termination
payments made and benefits provided to Executive under this Agreement shall be
in lieu of any other severance payments or benefits for which Executive may be
eligible under the IPG Photonics Corporation Executive Severance Plan, as
amended, or any similar or successor plan or under the Worker Adjustment
Retraining Notification Act of 1988 or any similar state statute or regulation.
(viii) No Mitigation or Offset. In the event of any termination of Executive’s
service under this Section 10, Executive shall be under no obligation to seek
other employment or assignments or otherwise mitigate his damages, and there
shall be no offset against amounts due to Executive under this Agreement on
account of any remuneration or benefit attributable to any subsequent employment
or assignment obtained by Executive, except as provided in Sections 10(ii)(e),
10(v)(e) and 10(vi)(e).
(viii) Compensation Recovery Policy. Notwithstanding any provision in this
Agreement to the contrary, payments under this Agreement will be subject to any
Compensation Recovery Policy established by the Company and amended from time to
time.
11. Nature of Payments. Upon termination of service pursuant to Sections 6, 7, 8
or 9, Executive will be released from any duties and obligations to the Company
set forth in this Agreement (except the duties and obligations under the
Restrictive Covenants and as set forth in Section 12 hereof and the obligation
under Sections 13 and 23) and the obligations of the Company to Executive under
this Agreement will be as set forth in Section 10.
12. Restrictive Covenants. Executive has executed and delivered a
Confidentiality, Non-Competition and Confirmatory Assignment Agreement prior to
or contemporaneous with the date of this Agreement (together with any similar or
successor agreements, referred to herein as the “Restrictive Covenants”), and
Executive agrees that, as part of this Agreement, Executive shall comply with
the terms of the Restrictive Covenants. Notwithstanding Section 10(iii) of this
Agreement, if (a) Executive terminates service other than for Good Reason and,
thus, is not

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entitled to the payments and benefits under Section 10(ii) of this Agreement,
and (b) (i) Executive receives a written offer of employment during the
Non-Competition Period set forth in Section 2(a) of the Restrictive Covenant, or
(ii) Executive is not able to find suitable employment in his field in relation
to his skills, position and base salary, which employment would not contravene
Section 2(a) of the Restrictive Covenant, after a good faith effort by Executive
to search for such employment, and (iii) the Company notifies Executive that it
intends to enforce the non-compete provisions of such Section 2(a) against
Executive, then the Company shall pay to Executive an amount equal to the
semi-monthly amount of Executive’s Base Salary for each semi-monthly payroll
period beginning (A) on the effective date of the written offer of employment
referred to above or (B) during the period in which Executive is not able to
find suitable employment, and ending on the earliest to occur of (I) the end of
the Non-Competition Period set forth in such Section 2(a), or (II) the date as
of which Executive begins new employment with an employer, which employment
would not contravene Section 2(a) of the Restrictive Covenant. For the avoidance
of doubt, the non-competition and other provisions of the Restrictive Covenants
in all events shall continue to apply until the end of the Non-Competition
Period set forth in Section 2(a) of the Restrictive Covenant, regardless of
Executive’s new employment with an employer that would not contravene Section
2(a) of the Restrictive Covenant, the subsequent termination of such employment
or any other event.
13. Release. Any and all amounts payable and benefits or additional rights
provided pursuant to this Agreement beyond Accrued Amounts shall only be payable
if Executive delivers to the Company an original, signed release of claims of
Executive occurring up to the release date, in a form substantially the same as
attached hereto as Exhibit A (the “Release”). The Company shall deliver the
Release to Executive within ten (10) calendar days of the date Executive’s
service terminates and Executive must deliver to the Company and not revoke an
executed and enforceable Release no later than sixty (60) calendar days after
the date Executive’s service terminates (the “Release Deadline”). Payment of the
amounts described in Section 10 shall commence no earlier than the date on which
Executive delivers to the Corporation and does not revoke an executed and
enforceable release as described herein. As part of the Release, Executive shall
affirm that Executive (i) has advised the Company in writing, of any facts that
Executive is aware of that constitute or might constitute a violation of any
ethical, legal or contractual standards or obligations of the Company or any
Affiliate, and (ii) is not aware of any existing or threatened claims, charges,
or lawsuits that Executive has not disclosed to the Company.
14. Indemnification. IPG Photonics Corporation shall maintain a directors’ and
officers’ liability insurance policy covering Executive on the same basis as in
effect for other senior executive employees, and shall provide indemnity to
Executive by a separate, written indemnification agreement.
15. Notices. Any and all notices, requests, demands, and other communications
provided for herein shall be sufficient if in writing and shall be deemed to
have been duly given if delivered by hand or if sent by registered or certified
mail, return receipt requested, sent by a nationally recognized overnight
courier for delivery, or sent by other electronic means generating a receipt
confirming delivery of the notice. Notice shall be deemed to have been given
when notice is received by the party on whom the notice was served. Notice to
the Company shall be

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addressed to the Company at its principal office, with attention to the General
Counsel, and notice to Executive shall be addressed to Executive at Executive’s
last address as shown on the records of the Company.
16. Governing Law. This Agreement shall be governed by, construed and enforced
in accordance with the substantive laws of the Commonwealth of Massachusetts
except that the social security insurance and mandatory statutory provisions set
forth under company law shall be governed by the laws of the Federal Republic of
Germany, without regard to its internal conflicts of law provisions.
17. Severability. In the event that any provision of this Agreement shall be
determined to be invalid, illegal or otherwise unenforceable or contrary to law
or public policy, the enforceability of the other provisions in this Agreement
shall not be affected thereby.
18. Assignment; Successors. Executive recognizes that this is an agreement for
personal services and that Executive may not assign this Agreement. The
Agreement shall inure to the benefit of and be binding upon the Company’s
successors and assigns.
19. Entire Agreement/Amendment. This Agreement and the Confidentiality,
Non-Competition and Confirmatory Assignment Agreement referred to in Section 12
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersedes any and all other agreements, either oral or in
writing (including the Prior Agreement), among the Parties hereto with respect
to the subject matter hereof. This Agreement may not be amended except by
written agreement signed by both Parties. Executive hereby acknowledges and
agrees that, during the Term, Executive shall have no rights or benefits under
the IPG Photonics Corporation Executive Severance Plan, as amended, or any
similar or successor plan.
20. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement (and all signatures need not appear on any
one counterpart), and this Agreement shall become effective when one or more
counterparts has been signed by each of the Parties hereto and delivered to each
of the other Parties hereto. A copy of this Agreement that is executed by a
Party and transmitted by that Party to the other Party by facsimile or as an
attachment (e.g., in “.tif” or “.pdf” format) to an email shall be binding upon
the signatory to the same extent as a copy hereof containing that Party’s
original signature.
21. Waiver. The failure of either of the Parties to at any time enforce any of
the provisions of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way affect the validity of this Agreement
or any provision hereof or the right of either of the Parties to enforce each
and every provision of this Agreement. No waiver of any breach of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party against whom or which enforcement of such
waiver is sought, and no waiver of any such breach shall be construed or deemed
to be a waiver of any other or subsequent breach.

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22. Capacity. Executive and the Company hereby represent and warrant to the
other that: (i) Executive or the Company has full power, authority and capacity
to execute and deliver this Agreement, and to perform Executive’s or the
Company’s obligations hereunder; (ii) such execution, delivery and performance
will not (and with the giving of notice or lapse of time or both would not)
result in the breach of any agreements or other obligations to which Executive
or the Company is a party or Executive or the Company is otherwise bound; and
(iii) this Agreement is Executive’s or the Company’s valid and binding
obligation in accordance with its terms.
23. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof or otherwise arising out of Executive's service
or the termination of that service (including, without limitation, any claims of
unlawful service discrimination whether based on age or otherwise) shall, to the
fullest extent permitted by law, be settled by a single arbitrator in any forum
and form agreed upon by the parties or, in the absence of such an agreement,
under the auspices of the International Arbitration Association ("IAA") in
Frankfurt/Main, Germany in accordance with the rules of the IAA governing
dispute resolution of personal services, including, but not limited to, the
rules and procedures applicable to the selection of arbitrators. In the event
that any person or entity other than Executive or the Company may be a party
with regard to any such controversy or claim, such controversy or claim shall be
submitted to arbitration subject to such other person or entity’s agreement.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This Section 23 shall be specifically enforceable.
Neither Executive, the Corporation, nor the arbitrator shall disclose the
existence, content, or results of any arbitration hereunder without the prior
written consent of all Parties. Notwithstanding the foregoing, this Section 23
shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate; provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Section 23. Punitive and consequential damages shall not be permitted as an
award and each party shall bear the fees and expenses of its own counsel and
expert witnesses.
24. Consent to Jurisdiction. To the extent that any court action is permitted
consistent with or to enforce Section 23 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts, Worcester Division. Accordingly, with respect to any such court
action, Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
25. Survival. All Sections of this Agreement survive beyond the Term, except
those in Section 1 through 5, and as otherwise specifically stated.
26. German Civil Code. Executive shall be exempt from the restrictions of §181
of the German Civil Code, provided that Executive shall first obtain the prior
written consent of IPG Photonics Corporation with respect to the transaction.

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IN WITNESS WHEREOF, this Service Agreement has been duly executed:
/s/ Valentin P. Gapontsev  /s/ Evgeny Scherbakov  
Valentin P. Gapontsev  Evgeny Scherbakov 
Geschaftsfuhrer, CEO   Managing Director
IPG Laser GmbH

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EXHIBIT A
RELEASE AND WAIVER AGREEMENT
This Release and Waiver Agreement (“Agreement”) is entered into this _____ day
of ______________________, _____ by and between IPG Laser GmbH, a German limited
liability company having an office at Siemensstrasse 7, D-57299 Burbach, Germany
(the “Company”), and Eugene Scherbakov, residing at Auf der Bracht 7, D-57299
Burbach, Germany Company(hereinafter “Executive”).
WHEREAS, Executive’s service with the Company is terminated effective
__________________, 20__ (“Termination Date”) and the Company and Executive have
voluntarily agreed to the terms of this Agreement in exchange for severance
benefits under the Service Agreement between the parties effective [DATE], 20__
(“Service Agreement”), to which Executive otherwise would not be entitled;
WHEREAS, accordingly the Company has determined that Executive will receive
severance pay if Executive executes and complies with the terms of this
Agreement; and
WHEREAS, Executive acknowledges that the consideration received by Executive
under the terms of this Agreement and the Service Agreement for the release and
waiver contained herein is in addition to any consideration the Company is
otherwise required to provide Executive.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements set forth below, the parties hereby acknowledge and agree as follows:
1. Severance. In consideration for Executive’s agreements contained herein and
Executive’s compliance with Executive’s continuing obligations under the Service
Agreement, including his obligations under Section 12, the Company will pay
Executive the applicable severance provided in Section 10 [Note—actual agreement
to specify the applicable subsections of Section 10(d)] of the Service
Agreement. Except as specifically provided in this Agreement, the Service
Agreement and any applicable plans, programs or arrangements of the Company or
its Affiliates including, without limitation, IPG Photonics Corporation’s (the
“Corporation”) Certificate of Incorporation or By-laws, as either may be amended
from time to time, the IPG Photonics Corporation its 2006 Incentive Compensation
Plan, as amended or any successor thereto (the “Equity Plan”) and any agreements
thereunder, and the indemnification agreement dated ___________________ between
the Corporation and Executive (the “Indemnification Agreement”), Executive shall
not be entitled to any other payment, benefits or other consideration from the
Company or its Affiliates.
2. Waiver and Release. In consideration for the payments and benefits to be
provided to Executive as set forth herein and the Service Agreement, Executive,
himself and for any person or entity that may claim by him or through him,
including Executive’s heirs, executors, administrators, successors and assigns,
hereby knowingly, irrevocably, unconditionally and voluntarily waives, releases
and forever discharges the Company and each of its individual or collective
past, present and future parent, subsidiaries, divisions and affiliates,

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its and their joint ventures and its and their respective directors, officers,
associates, employees, representatives, partners, consultants insurers,
attorneys, administrators, accountants, executors, heirs, successors, and
agents, and each of its and their respective predecessors, successors and
assigns and all persons acting by, through or in concert with any of them
(hereinafter collectively referred to as “Releasees”), from any and all claims,
causes of action or liabilities relating to Executive’s service to the Company
or the termination thereof, known or unknown, suspected or unsuspected, arising
from any omissions, acts or facts that have occurred up until and including the
date Executive executes this Agreement which have been or could be asserted
against the Releasees, including but not limited to:
(a) causes of action or liabilities relating to Executive’s service to the
Company or the termination thereof arising under Title VII of the Civil Rights
Act, the Age Discrimination in Employment Act (the “ADEA”), the Employee
Retirement Income Security Act, the Worker Adjustment and Retraining
Notification Act, the American with Disabilities Act, the Equal Pay Act, the
Family and Medical Leave Act, and the Delaware General Corporation Act as such
Acts have been amended, and/or any other foreign, federal, state, municipal, or
local employment discrimination statutes (including, but not limited to, claims
based on age, sex, attainment of benefit plan rights, race, color, religion,
national origin, marital status, sexual orientation, pregnancy, gender identity,
transgender status, genetic carrier status, ancestry, harassment, parental
status, handicap, disability, retaliation, and veteran status, any military
service or application for military service, or any other category protected
under federal or state law); and/or
(b) causes of action or liabilities related to Executive’s service with the
Company or the termination thereof arising under any other federal, state,
municipal, or local statute, law, ordinance or regulation; and/or
(c) causes of action or liabilities relating to rights to or claims for pension,
profit-sharing, wages, bonuses or other compensation or benefits; and/or
(d) any other cause of action relating to Executive’s service to the Company or
the termination thereof including, but not limited to, actions seeking severance
pay, except as provided herein, actions based upon breach of contract, wrongful
termination, defamation, intentional infliction of emotional distress, tort,
personal injury, invasion of privacy, defamation, discrimination, retaliation,
promissory estoppel, fraud, violation of public policy, negligence and/or any
other common law, or other cause of action whatsoever arising out of or relating
to service to and/or separation from service to the Company and/or any of the
other Releasees.
Nothing herein shall limit or impede Executive’s right to file or pursue an
administrative charge with, or participate in, any investigation before the
Equal Employment Opportunity Commission of the U.S., or any other local, state
or federal agency, and/or any causes of action which by law Executive may not
legally waive. Executive agrees, however, that if Executive or anyone acting on
Executive’s behalf, brings any action concerning or related to any cause of
action or liability released in this

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Agreement, Executive waives any right to, and will not accept, any payments,
monies, damages, or other relief, awarded in connection therewith.
Executive not only releases and discharges the Releasees from any and all claims
as stated above that Executive could make on Executive’s own behalf or on behalf
of others, but also those claims that might be made by any other person or
organization on Executive’s behalf, and Executive specifically waives any right
to recover any damage awards as a member of any class in a case in which any
claim(s) against the Releasees are made involving any matters.
Without in any way limiting the Release herein, Executive also specifically
releases, remises, discharges, indemnifies and holds harmless the Releasees from
any claims for back wages, salary, vacation pay, draws, incentive pay, bonuses,
stock and stock options, commissions, and any and all other forms of
compensation, attorneys’ fees, or other costs or sums that arise or may arise
under the Massachusetts Wage Act, including without limitation, M.G.L. c. 149,
§§ 105A, 148 and 150, and M.G.L. c. 151.
This Release does not apply to claims for workers’ compensation benefits,
unemployment insurance benefits or any other claim that cannot lawfully be
waived by this Agreement.
This Release does not apply to any claims arising solely after the execution of
this Agreement or to any claims arising from a breach of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall bar or prohibit
Executive from contacting, filing a charge or complaint with, seeking assistance
from or participating in any proceeding before any federal or state
administrative agency to the extent permitted by applicable federal, state
and/or local law. However, Executive nevertheless will be prohibited to the
fullest extent authorized by law from obtaining monetary damages or other
personal relief in any agency proceeding in which Executive does so participate.
Nothing herein shall constitute a waiver or release of any of Executive’s rights
under this Agreement, any other applicable plans, programs or arrangements of
IPG Photonics Corporation or its Affiliates including, without limitation, its
Certificate of Incorporation or By-laws, as either may be amended from time to
time, the Equity Plan and any agreements thereunder, or under the
Indemnification Agreement.
Executive expressly waives the benefits of any statute or rule of law that, if
applied to this Agreement, would otherwise exclude from its binding effect any
claims against the Company not now known by Executive to exist.
3. Nondisparagement. Executive agrees that, except as to statements required by
law, compelled through valid legal process, or to any local, state or federal
agency, Executive will not directly or indirectly, individually or in concert
with others, engage in any conduct or make any statement (whether oral or
written) calculated or likely to have the effect of undermining, disparaging or
otherwise reflecting poorly upon the Company or its good will,

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products or business opportunities, or in any manner detrimental to the Company.
In addition, Executive agrees not to make any disparaging remarks regarding any
related, affiliated or subsidiary organizations of the Company. The Company
agrees to use its reasonable best efforts to cause its officers and directors
not to, directly or indirectly, individually or in concert with others, except
as to statements required by law, compelled through valid legal process, or to
any local, state or federal agency, engage in any conduct or make any statement
(whether oral or written) calculated or likely to have the effect of
undermining, disparaging or otherwise reflecting poorly upon Executive or in any
manner detrimental to Executive.
4. Cause of Action. As used in this Agreement, the phrase “cause of action”
includes all claims, covenants, warranties, promises, agreements, undertakings,
actions, suits, counterclaims, causes of action, complaints, charges,
obligations, duties, demands, debts, accounts, judgments, costs, expenses,
losses, damages and liabilities, of whatsoever kind or nature, in law, equity or
otherwise.
5. No Assignment of Causes of Action. Executive represents and warrants that he
has not filed or caused to be filed against the Releasees any claims, actions or
lawsuits. Executive further represents and warrants that he has not sold,
assigned, transferred, conveyed or otherwise disposed of to any third party, by
operation of law or otherwise, any claim of any nature whatsoever relating to
any matter covered by this Agreement.
6. Representations of the Company. The Company represents that it is not
presently aware of any cause of action that it or any of the other Releasees
have against Executive as of the date hereof. The Company acknowledges that the
release granted by Executive in Paragraph 2 above will be null and void in the
event the Company subsequently seeks to treat Executive’s termination of service
as “for Cause” under the last sentence of section 6(ii) of the Service
Agreement.
7. Representations of Executive. Executive represents that Executive has been
given an adequate opportunity to advise the Company’s human resources, legal, or
other relevant management division, and has so advised such division in writing,
of any facts that Executive is aware of that constitute or might constitute a
violation of any ethical, legal or contractual standards or obligations of the
Company or any Affiliate. Executive further represents that Executive is not
aware of any existing or threatened claims, charges, or lawsuits that he/she has
not disclosed to the Company.
8. Notice to Seek Counsel, Consideration Period, Revocation Period. Executive
acknowledges that Executive has been advised in writing hereby to consult with
an attorney before signing this document and that Executive has had at least
twenty-one (21) calendar days after receipt of this document to consider whether
to accept or reject this Agreement. Executive understands that Executive may
sign this Agreement prior to the end of such twenty-one (21) calendar day
period, but is not required to do so. Under ADEA, Executive has seven (7)
calendar days after Executive signs this Agreement to revoke it. Such revocation
must be in writing and delivered either by hand or mailed and postmarked within
the seven (7) calendar day period. If sent by mail, it is requested that it be
sent by certified mail, return receipt requested to the Corporation’s General
Counsel Office at 50 Old Webster Road, Oxford, MA 01540. If

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Executive revokes this Agreement as provided herein, it shall be null and void
and Executive shall not be entitled to receive the payments as described in the
first sentence of Paragraph 1 herein. If Executive does not revoke this
Agreement within seven (7) calendar days of signing it, this Agreement shall
become enforceable and effective on the seventh (7th) day after Executive signs
this Agreement (“Effective Date”).
9. Governing Law; Disputes. Except as provided in Section 23 of the Service
Agreement, or as provided below, jurisdiction and venue over disputes with
regard to this Agreement shall be exclusively in the courts of the State of
Massachusetts or the United States District Court for the District of
Massachusetts. This Agreement shall be construed and interpreted in accordance
with and governed by the laws of the State of Massachusetts, without regard to
the choice of laws provisions of such laws. The parties agree that any action
brought by a party to enforce or interpret this Agreement shall be brought in a
State or Federal Court sitting in Boston, Massachusetts; except that an action
by the Company to enforce its rights under Section 12 the Service Agreement may
also be brought in Executive’s state of residency or any other forum in which
Executive is subject to personal jurisdiction. In addition, Executive and the
Company specifically consent to personal jurisdiction in the State of
Massachusetts for purposes of this Agreement.
10. Amendment; Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Executive and the Company. This Agreement shall be enforced in
accordance with its terms and shall not be construed against either party.
11. Severability. The parties agree that if any provision, section, subsection
or other portion of this Agreement shall be determined by any court of competent
jurisdiction to be invalid, illegal or unenforceable in whole or in part and
such determination shall become final, such provision or portion shall be deemed
to be severed or limited, but only to the extent required to render the
remaining provisions and portion of this Agreement enforceable. This Agreement
as thus amended will remain in full force and effect and will be binding on the
parties and will be enforced so as to give effect to the intention of the
parties insofar as that is possible. In addition, the parties hereby expressly
empower a court of competent jurisdiction to modify any term or provision of
this Agreement to the extent necessary to comply with existing law and to
enforce this Agreement as modified.
12. Enforcement. This Agreement may be pleaded as a full and complete defense
and may be used as the basis for an injunction against any action at law or
proceeding at equity, or any private or public judicial or non-judicial
proceeding instituted, prosecuted, maintained or continued in breach hereof.
13. No Enlargement of Rights. Executive acknowledges that, except as expressly
provided in this Agreement, any employment or contractual relationship between
him and the Company is terminated, and that he has no future employment or
contractual relationship with the Company other than the contractual
relationship created by this Agreement, the Service Agreement, any other
applicable plans, programs or arrangements of the Company including, without
limitation, the Corporation’s Certificate of Incorporation or By-laws, as either
may be

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amended from time to time, the Equity Plan and any agreements thereunder, and
the Indemnification Agreement. The Company has no obligation, contractual or
otherwise, to employ or reemploy, hire or rehire, or recall or reinstate
Executive in the future with the Company.
14. No Representations. Executive represents that he has carefully read and
understands the scope and effect of the provisions of this Agreement. Executive
has not relied upon any representations or statements made by the Company that
are not specifically set forth in this Agreement.
15. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original but both of which together will
constitute one and the same instrument.
16. Withholding. The Company shall withhold from any payments otherwise due or
payable hereunder any amounts required to be withheld in order to comply with
any federal, state, local or other income or other tax laws requiring
withholding with respect to compensation and benefits provided to Executive
pursuant to this Agreement.
17. Successors and Assigns. This Agreement binds and inures to the benefit of
Executive’s heirs, administrators, representatives, executors, successors and
assigns, and the Company’s successors and assigns.
18. Entire Agreement - Termination of Prior Agreements. This Agreement contains
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes any previous oral and written agreements or
representations relating to the subject matters herein, except for the Service
Agreement, any other applicable plans, programs or arrangements of the Company
including, without limitation, the Corporation’s Certificate of Incorporation or
By-laws, as either may be amended from time to time, the Equity Plan and any
agreements thereunder, and the Indemnification Agreement.
The undersigned hereby acknowledge and agree that Executive has carefully read
and fully understands all the provisions of this Agreement, has had an
opportunity to seek counsel regarding it and have voluntarily entered into this
Agreement by signing below as of the date(s) set forth above.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
indicated above.

IPG Laser GmbH     EXECUTIVE

By:___________________________________ ___________________________
Its:___________________________________

CHI:2749897.8

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