Exhibit 10.1
AGREEMENT AND PLAN OF REORGANIZATION
     THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”), dated as of
August 5, 2008, among IPG Photonics Corporation, a Delaware corporation (the
“Company”), IPG Laser GmbH, a German company (“IPGL”), and Dr. Valentin
Gapontsev (“Gapontsev”) and Igor Samartsev (“Samartsev” together with Gapontsev,
“Sellers” and each a “Seller”).

  I.   The Company owns 100% of IPGL, and IPGL owns a 66.0% participation
interest in “Scientific and Technical Association” “IRE-Polus”, a Russian
limited liability company (“IRE”).     II.   Gapontsev and Samartsev own
respectively 26.7% and 4.9% participation interests (“Interests”) in IRE.    
III.   IPGL wants to acquire all of Sellers’ Interests in IRE, and Sellers
desire to exchange all of their respective Interests in IRE in exchange solely
for voting shares (“Photonics Common Stock”) of the Company in a transaction
(‘Transaction”) that the parties intend qualifies as a reorganization within the
meaning Section 368(a)(1)(B) of the U.S. Internal Code of 1986, as amended
(“Code”).         Accordingly, each of the parties agrees as follows:

1.   TRANSFER OF INTERESTS AND ISSUANCE OF PHOTONICS COMMON STOCK

     1.1 Closing. Subject to the satisfaction or waiver of the conditions in
Section 4 below, the exchange of Interests in IRE and the Photonics Common Stock
shall take place in Moscow, Russia, at a place to be determined, at 4:00 p.m.,
on September 25, 2008 or at such other time and place as the Company and the
Sellers mutually agree upon (which time and place are designated as the
“Closing”). The purchase price for the Interests to be sold by Gapontsev and
Samartsev are $5,169,300 and $948,673 respectively (“Purchase Price”), which
shall be paid in the form of validly issued, non-assessable unregistered shares
of Photonics Common Stock, valued at the closing price of the Photonics Common
Stock on the third trading day after the date of this Agreement. At the Closing,
each Seller shall sell and sign over to IPGL all Interests in IRE then held by
him and IPGL shall cause to be delivered to each Seller a certificate
representing the Photonics Common Stock being issued to each Seller in
consideration for their respective Interests (collectively, the “Exchange”). The
date of the Exchange is referred to herein as the “Closing Date.”
     1.2 U.S. Tax. The parties intend that (i) the Transaction qualifies as a
Section 368(a)(1)(B) reorganization, and (ii) the exchange of each of the
Seller’s respective Interests for Photonics Common Stock of equivalent fair
market value qualifies for tax-free treatment to each Seller under Section 354
of the Code. The parties agree that they will take no U.S. tax position
inconsistent with such intended treatment. The parties agree to prepare, execute
and file all

 

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required notices and forms with the U.S. Internal Revenue Service (“IRS”) as may
be necessary or advisable to order to effectuate the intent of this Section 1.2,
including but not limited to forms, agreements and notices under Sections 368
and 367 of the Code and IRS regulations thereunder.

2.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND IPGL       Each of the
Company and IPGL hereby represents and warrants to each Seller as follows:

     2.1 Organization, Good Standing And Qualification. Each of the Company and
IPGL is a company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has all requisite corporate
power and authority to carry on its business as now conducted and as proposed to
be conducted. Each of the Company and IPGL is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business or properties.
     2.2 Authorization and Enforceability. All corporate action on the part of
the Company and IPGL, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company and IPGL hereunder and the authorization, issuance
and delivery of the Photonics Common Stock has been taken or will be taken prior
to the Closing, and this Agreement constitutes a valid and legally binding
obligation of the Company and IPGL, enforceable against each in accordance with
its respective terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditor’s rights generally, and except as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
     2.3 Validity of Shares. The Photonics Common Stock, when issued in
compliance with the provisions of this Agreement, will be validly issued and
will be fully paid and non-assessable and will be free of any liens or
encumbrances other than those created by or imposed upon the holders thereof
through no action of the Company, and the Photonics Common Sock will be free of
restrictions on transfer, other than the restrictions on transfer under this
Agreement and under applicable state and federal securities laws.
     2.4 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company or
IPGL is required in connection with the consummation of the transactions
contemplated by this Agreement, except such filings as may be required under
applicable Russian anti-trust laws and applicable U.S. state and federal
securities laws, which filings will be timely filed within the applicable
periods therefor.

3.   REPRESENTATIONS AND WARRANTIES OF EACH SELLER

     Each Seller hereby severally, but not jointly, represents and warrants to
the Company and IPGL that:
     3.1 Authorization And Enforceability. This Agreement, when executed and
delivered by such Seller, will constitute a valid and legally binding obligation
of such Seller,

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enforceable against each in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditor’s rights generally, and except as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
     3.2 Validity Of Interests. The IRE participation interests owned by such
Seller are validly issued and fully paid and non-assessable and are free of any
liens or encumbrances other than those created by or imposed upon the holders
thereof through no action of such Seller.
     3.3 Securities Laws.
          (a) Such Seller understands that the Photonics Common Stock is not
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or any state securities laws. Such Seller understands that the offering and sale
of the Photonics Common Stock is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) thereof and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements of the Seller contained in this Agreement. Each Seller
acknowledges that the Company has no obligation to register the Photonics Common
Stock under the Securities Act or any state securities laws.
          (b) Such Seller understands that neither the Securities and Exchange
Commission, any state securities commission nor any other regulatory authority
has approved the Photonics Common Stock or reviewed or passed upon or endorsed
the merits of an offering of the Photonics Common Stock or confirmed the
accuracy or determined the adequacy of any materials of the Company submitted to
him.
          (c) Each Seller is aware that an investment in the Photonics Common
Stock involves a number of significant risks, including industry, economic,
operating, financial, liquidity, supply, intellectual property and other risks.
Each Seller has reviewed the Form 10-K for the year ended December 31, 2007 (the
“Form 10-K”) filed by the Company with the Securities and Exchange Commission,
including the risk factors set forth therein.
          (d) Each Seller has received the audited financial statements of the
Company as of and for the period ended December 31, 2007 contained in the Form
10-K and the unaudited interim financial statements as of and for the period
ended March 31, 2008, and all other documents requested by such Seller, has
carefully reviewed them and understands the information contained therein. Each
Seller has had a reasonable opportunity to ask questions of, receive answers and
obtain any additional information from a person or persons acting on behalf of
the Company concerning the offering of the Photonics Common Stock and the
business, financial condition, results of operations, litigation, and prospects
of the Company, and all such questions have been answered to the full
satisfaction of such Seller. Each Seller has had the opportunity to obtain any
additional information to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense and has
had the opportunity to have representatives of the Company provide him with such
additional information regarding the terms and conditions of this investment and
the financial condition,

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results of operations, business and prospects of the Company deemed relevant by
such Seller. Each Seller has had access to the same kinds of information about
the Company that would be contained in a registration statement filed by the
Company under the Securities Act. All documents, records, and books pertaining
to the investment in the Photonics Common Stock have been made available for
inspection by each Seller.
          (e) The Sellers are unaware of, are in no way relying on, and did not
become aware of the offering of the Photonics Common Stock through or as a
result of any form of general solicitation or general advertising.
          (f) Each Seller has such knowledge and experience in financial, tax,
and business matters, and, in particular, investments in securities, so as to
enable such Seller to utilize the information made available to such Seller in
connection with the offering of the Photonics Common Stock to evaluate the
merits and risks of an investment in the Photonics Common Stock and the Company
and to make an informed investment decision with respect thereto.
          (g) Each Seller is acquiring the Photonics Common Stock solely for
such Seller’s own account for investment and not with a view to resale or
distribution thereof, in whole or in part. Neither Seller has any agreement or
arrangement, formal or informal, with any person to sell or transfer all or any
part of the Photonics Common Stock and neither Seller has any plans to enter
into any such agreement or arrangement.
          (h) Each Seller is willing and able to bear the substantial economic
risks of the investment in the Photonics Common Stock, including the risk of
loss of such Seller’s entire investment, indefinitely because none of the
Photonics Common Stock may be sold, hypothecated or otherwise disposed of unless
subsequently registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available. Each Seller
understands that legends will be placed on the Photonics Common Stock to the
effect that it has not been registered under the Securities Act or applicable
state securities laws and appropriate notations thereof will be made in the
Company’s stock books. Stop transfer instructions will be placed with the
transfer agent of the securities constituting the Photonics Common Stock.
          (i) Each Seller has adequate means of providing for such Seller’s
current financial needs and foreseeable contingencies and has no need for
liquidity of such Seller’s investment in the Photonics Common Stock for an
indefinite period of time.
          (j) Each Seller is a member of the Board of Directors of the Company,
has had access to books and records of the Company and has had the opportunity
to ask and receive answers to questions regarding an investment in the Photonics
Common Stock. Each Seller meets the requirements of at least one of the
suitability standards for an “accredited investor” as set forth on the
Accredited Investor Certification attached hereto.

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4.   CLOSING

     4.1 Company’s AND IPGL’s Conditions. The Company’s and IPGL’s obligations
to consummate the Exchange shall be subject to the fulfillment or waiver at the
Closing of the following conditions:
          (a) All required notices to and permits and approvals from the Russian
government to effectuate the Exchange shall have been made or obtained.
          (b) The Company’s Board of Directors shall have approved the Exchange
and all related transactions and agreements.
     4.2 Sellers’ Conditions. Each Seller’s obligation to consummate the
Exchange shall be subject to the fulfillment or waiver at the Closing of the
following conditions:
          (a) The Company shall have delivered to each of Gapontsev and
Samartsev certificates representing shares of Photonics Common Stock to be
issued to such Seller in payment of the Purchase Price.
          (b) All required notices to and permits and approvals from the Russian
government to effectuate the Exchange shall have been made or obtained.
          (c) The Company’s Board of Directors shall have approved the Exchange
and all related transactions and agreements.
5. MISCELLANEOUS
     5.1 Transfer; Successors And Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
     5.2 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
     5.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     5.4 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
     5.5 Amendments and Waivers. Any term of this Agreement may be amended with
the written consent of the Company and each of the Sellers.

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     5.6 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
     5.7 Waivers. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
     5.8 Further Cooperation. The parties hereto agree to execute and deliver
any and all additional papers, documents and other assurances, and shall do any
and all other acts or things reasonably necessary to implement the purpose and
provisions of this Agreement, provided that nothing requested shall modify the
fundamental economic rights and obligations provided for in this Agreement.
     IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement as of the date first above written.

            IPG PHOTONICS CORPORATION
      By:   /s/ Timothy P.V. Mammen         Name:   Timothy P.V. Mammen       
Title:   Chief Financial Officer     

            IPG Laser GmbH
      By:   /s/ Evgeny Shcherbakov         Name:   Evgeny Shcherbakov       
Title:   Managing Director     

            SELLERS:
      /s/ Valentin P. Gapontsev       Valentin P. Gapontsev   

                  /s/ Igor Samartsev       Igor Samartsev           

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ACCREDITED INVESTOR CERTIFICATION
YOU MUST BE ABLE TO CHECK OFF AT LEAST ONE OF THE BOXES BELOW IN ORDER TO
PURCHASE SHARES

o   The Seller is a natural person who had individual income of more than
$200,000 in each of the two most recent years or joint income with his spouse in
excess of $300,000 in each of the most recent two years and reasonably expects
to reach that same income level for the current year (“income,” for purposes
hereof, should be computed as follows: individual adjusted gross income, as
reported (or to be reported) on a federal income tax return, increased by
(a) any deduction of long-term capital gains under Section 1202 of the Internal
Revenue Code of 1986 (the “Code”), (b) any deduction for depletion under
Section 611 et seq. of the Code, (c) any exclusion for interest under
Section 103 of the Code and (d) any losses of a partnership as reported on
Schedule E of Form 1040);   o   The Seller is a natural person whose individual
net worth (i.e., total assets in excess of total liabilities), or joint net
worth with his/her spouse, will at the time of purchase of the Photonics Common
Stock be in excess of $1,000,000;   o   The Seller is a corporation,
Massachusetts or similar business trust, partnership, or limited liability
company, or any organization described in Section 501(c)(3) of the Internal
Revenue Code, not formed for the specific purpose of acquiring the Photonics
Common Stock, with total assets in excess of $5,000,000;   o   The Seller is a
trust (other than a revocable grantor trust), which trust has total assets in
excess of $5,000,000, which is not formed for the specific purpose of acquiring
the Photonics Common Stock and whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of Regulation D and who has such
knowledge and experience in financial and business matters that he is capable of
evaluating the risks and merits of an investment in the Photonics Common Stock;
  o   The Seller is (i) any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary
capacity; (ii) any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; (iii) any insurance company as defined in
Section 2(a)(13) of the Securities Act; (iv) any investment company registered
under the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of the Securities Act; (v) any Small Business
Investment Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; (vi) any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;
or (vii) an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, and either (a) the investment decision
will be made by a plan fiduciary, as defined in Section 3(21) of such Act, which
is either a bank, savings and loan association, insurance company, or a
registered investment adviser; or (b) the employee benefit plan has total assets
in excess of $5,000,000; or (c) the employee benefit plan is a self-directed
plan,

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including an Individual Retirement Account, with the meaning of Title I of such
act, and the person directing the purchase is an Accredited Investor**;

**NOTE.   If the Seller is relying solely on this item (c) for its Accredited
Investor status, please print the name of the person directing the purchase in
the following space and furnish a completed and signed Accredited Investor
Certification for such person.

o   The Seller is a private business development company as defined in
Section 202 (a)(22) of the Investment Advisors Act of 1940;   o   The Seller is
a member of the Board of Directors or an executive officer of the Company; or  
o   The Seller is an entity (including an IRA or revocable grantor trust but
other than a conventional trust) in which all of the equity owners meet the
requirements of at least one of the above subparagraphs.

     
 
Initial

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