exhibit_10-1.htm


    Exhibit
10.1

    LOAN
AGREEMENT

    


    


    THIS LOAN
AGREEMENT dated as of June 4, 2008, is by and between IPG PHOTONICS CORPORATION, a
Delaware corporation with a principal place of business at 50 Old Webster Road,
Oxford, Massachusetts 01540 (the “Borrower”) and BANK OF AMERICA, N.A., a
national banking association with an office at 100 Front Street, Worcester,
Massachusetts  01608 (the “Bank”).

    


    W I T N E
S S E T H:

    


    BACKGROUND.  The
Borrower has requested the Bank to lend it (A) up to the sum of $35,000,000.00
on a revolving line of credit basis (the “Revolving Credit”)
and (B) up to the sum of $20,000,000.00 on a term loan basis (the “Term Loan”), and the
Bank is willing to do so upon the terms and conditions hereinafter set
forth.

    


    NOW,
THEREFORE, in consideration of the premises herein contained, and each intending
to be legally bound hereby, the parties agree as follows:

    


    ARTICLE
1.0  DEFINITIONS

    


    As used
herein:

    


    “Affiliate” means, as
to any Person, each other Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or under common control
with, such Person.

    


    “Agreement” means this
Loan Agreement (together with any and all schedules and exhibits attached from
time to time hereto), as the same may from time to time be amended or
supplemented in a writing signed by the parties hereto.

    


    “Automatic Payments Deposit
Account” means the Borrower’s operating account number 004605294929
established with the Bank, from which Automatic Payments may be deducted by the
Bank.

    


    “Automatic Payments”
means any and all interest or principal and interest installment payments due
under the Notes.

    


    “Bank” has the meaning
ascribed to such term in the preamble of this Agreement.

    


    “Beneficiary” means a
beneficiary of a Commercial Letter of Credit issued pursuant to Section 2.04
hereof.

    


    “Borrower” has the
meaning ascribed to such term in the preamble of this Agreement.

    


    “Business Day” means
any day other than a Saturday, Sunday or day which shall be in The Commonwealth
of Massachusetts a legal holiday or day on which banking institutions are
required or authorized to close.  If either of the Notes or any
payment thereunder or under this Agreement becomes due on a day which is not a
Business Day, the due date of such Note or payment shall be extended to the next
succeeding Business Day, and such extension of time shall be included in
computing interest and fees in connection with such payment.

    


    “Cash Flow” means, for
any applicable fiscal period, net income after income taxes, less income or plus loss from
discontinued operations and extraordinary items, plus depreciation,
depletion, amortization and other non-cash charges, plus Interest on all
Obligations, less dividends,
withdrawals and other distributions, less unfinanced
capital expenditures in excess of $15,000,000.00 per year during each of the
first two years beginning with the date of this Agreement and in excess of $0
thereafter, provided that if the Borrower shall raise additional equity from
capital markets after the date of this Agreement, an amount equal to the
quotient of 60% of the net proceeds of the primary shares offered by the
Borrower divided by the remaining fiscal periods shall be excluded from the
total of unfinanced capital expenditures.  For the purposes of this
definition, the terms “depreciation” and
“amortization”
shall have the meanings ascribed to them in accordance with
GAAP.


    
       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    “Closing” has the
meaning ascribed such term in Section 3.01.

    


    “Commercial Letter of Credit
Fee” has the meaning ascribed to such term in Section
2.04(A)(3).

    


    “Commercial Letters of
Credit” means any and all commercial or standby letters of credit or bank
guarantees that may be issued by the Bank from time to time to third parties for
the benefit of the Borrower pursuant to Section 2.04 of this
Agreement.

    


    “Debt Service Coverage
Ratio” means, for any applicable fiscal period, the ratio, calculated on
a consolidated basis, of (A) Cash Flow divided by (B) required principal
payments on long term debt, plus partial payments
of Subordinated Indebtedness that are not required or scheduled to be made,
plus Interest
paid or to be paid for such period less payments made to
fully retire Subordinated Indebtedness if paid in cash on the Borrower’s balance
sheet at such time or raised through capital market transactions or financing
furnished by the Bank.

    


    “Disbursement Authorization
Letter” means the duly authorized and executed disbursement authorization
letter from the Borrower with respect to the Term Note.

    


    “EBITDA” means, for
any applicable fiscal period, calculated on a consolidated basis, net income
less income or
plus loss from
discontinued operations and extraordinary items, plus income taxes,
plus Interest
plus
depreciation, depletion, amortization and other non-cash charges, all as
determined in accordance with GAAP.

    


    “Environmental Indemnity
Agreement” means the duly authorized and executed Environmental Indemnity
Agreement from the Borrower.

    


    “Event of Default” has
the meaning provided in Section 6.01.

    


    “Financial Statements”
means the financial statements described on Exhibit 1.0(A)
attached to this Agreement.

    


    “Foreign Borrowers”
means each and every of IPG Japan, IPG India, IPG Italy, IPG Korea and IPG
China.

    


    “Foreign Commitments”
means $12,000,000.00 of credit under each and every credit facility established
or to be established by the Bank or its affiliates for the benefit of the
Foreign Borrowers.

    


    “Funded Debt” means
the sum of all Indebtedness for borrowed money of the Borrower on a consolidated
basis (including, without limitation, all Obligations) net of inter-company
indebtedness.

    


    “GAAP” means,
generally accepted accounting principles applied consistently, with such changes
or modifications thereto as may be approved in writing by the Bank.

    


    “Guaranty” means a
Continuing Guaranty in the form of Exhibit 1.0(B)
attached hereto with respect to each of the Foreign Borrowers or a Subsidiary on
whose behalf the Bank is issuing a Commercial Letter of Credit, such Continuing
Guaranty to be executed by the Borrower and delivered to the Bank
contemporaneously with the establishment of each credit facility constituting a
part of the Foreign Commitments or issuance of the applicable Commercial Letter
of Credit.

    


    “Indebtedness” means,
as to the Borrower or any Subsidiary, all items of indebtedness, obligation or
liability whether joint or several, matured or unmatured, liquidated or
unliquidated, direct or contingent, including without limitation:

    


    (A)           All
indebtedness guarantied, directly or indirectly, in any manner, or endorsed
(other than for collection or deposit in the ordinary course of business) or
discounted with recourse;

    


    (B)           All
indebtedness in effect guarantied, directly or indirectly, through agreements,
contingent or otherwise:  (1) To purchase such indebtedness; or (2) to
purchase, sell or lease (as lessee or lessor) property, products, materials, or
supplies or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such indebtedness or to insure the owner of the
indebtedness against loss; or (3) to supply funds to, or in any other manner
invest in, the debtor;


    
       

    

    (C)           All
indebtedness secured by (or for which the holder of such indebtedness has a
right, contingent or otherwise, to be secured by) any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the liabilities secured
thereby have been assumed; and

    


    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (D)           All
indebtedness incurred as the lessee of goods or services under leases that, in
accordance with GAAP, should not be reflected on the lessee’s balance
sheet.

    


    “Intellectual
Property” means trademarks, service marks, trade names, trade styles,
logos, goodwill, trade secrets, patents, and licenses acquired under any
statutory, common law or registration process in any state or nation at any
time, or under any agreement executed with any person or entity at any
time.  The term “license” refers not
only to rights granted by agreement from the owner of patents, trade marks,
service marks and the like, but also to rights granted by a franchiser under a
franchise or similar agreement.  The foregoing enumeration is not
intended as a limitation of the meaning of the word “license.”

    


    “IPG China” shall mean
IPG (BEIJING) FIBER LASER TECHNOLOGY CO., LTD., a Chinese corporation with a
principal place of business at F28, 2 Jingyuan North Street BDA, Beijing, China
100176.

    


    “IPG Germany” shall
mean IPG LASER GmbH, a German company with a principal place of business at
Siemensstrasse 7, D-57299 Burbach, Germany.

    


    “IPG India” shall mean
IPG PHOTONICS (INDIA) PVT. LTD., an Indian corporation with a principal place of
business at Tirumala Tech Park, No. 27, 1st Cross,
2nd
Phase, Doddanekundi Industrial Area, Mahadevapura Post, Bangalore 560 048,
India.

    


    “IPG Italy” shall mean
IPG FIBERTECH S.r.l., an Italian corporation with a principal place of business
at Via Pisacane 46, 20025 Legnano (MI), Italy.

    


    “IPG Japan” shall mean
IPG PHOTONICS JAPAN LIMITED, a Japanese corporation with a principal place of
business at 7F Kanda Kajicho Chitose Bldg. 3-3-12, Kandakajicho, Chiyoda-ko,
Toyko 101-0045, Japan.

    


    “IPG Korea” shall mean
IPG PHOTONICS (KOREA) LTD., a Korean corporation with a principal place of
business at Daega Bld. 3rd Floor,
641-11 Bongmyung-Dong, Yuseong-Gu, Daejon, Korea.

    


    “IPG Russia” shall
mean IRE – POLUS CO., a Russian company with a principal place of business at
Vvedenskogo Square 1, Fryazina, Moscow 1411190, Russia.

    


    “Interest” means all
interest expense and letter of credit fees due during any fiscal period of the
Borrower, calculated in accordance with GAAP.

    


    “Laws” means all
ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees
of any government or political subdivision or agency thereof, or of any court or
similar entity established by any thereof.

    


    “Loan(s)” means
individually and collectively the Revolving Credit and the Term
Loan.

    


    “Loan Documents” means
each and every of this Agreement, the Disbursement Authorization Letter, the
Environmental Indemnity Agreement, the Mortgage, the Notes, the Title Insurance
Policy and each other document executed or delivered to the Bank in connection
with the Loans.

    


    “Maturity Date” means,
with respect to the Term Note, July 26, 2013or such later date as is agreed to
by the Bank in a written instrument executed by a duly authorized officer of the
Bank.

    


    “Mortgage” means that
certain Mortgage and Security Agreement (Including Collateral Assignment of
Rents and Leases) dated as of even date herewith, duly authorized and executed
by the Borrower, to be recorded with the Worcester District Registry of Deeds,
in the form attached hereto as Exhibit 1.01(C), as
from time to time supplemented or amended.

    


    “Mortgaged Property”
means the property owned by the Borrower and located at 50 Old Webster Road,
Oxford, Massachusetts, as such term is defined in the Mortgage.

    


    “Notes” means each and
both of the Revolving Credit Note and the Term Note.

    


    “Obligations” is
intended to be used in its most comprehensive sense and means each and every
obligation of the Borrower to the Bank of every kind and description, whether
direct or indirect, absolute or contingent, primary or secondary, joint or
several, due or to be come due, now existing or hereafter arising or acquired
and whether by way of loan, guaranty, discount, letter of credit, lease or
otherwise, including without limitation, the following obligations:

    


    
      
         

      

      
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    (A)           To
pay the principal of, and interest on, the Notes in accordance with the terms
thereof and to satisfy all other liabilities to the Bank, whether hereunder or
otherwise, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions, modifications,
renewals thereof and substitutions therefor.

    


    (B)           To
repay to the Bank all amounts advanced by the Bank hereunder or otherwise on
behalf of the Borrower, including, but without limitation, advances for
principal or interest payments to prior secured parties, mortgagees, or lienors,
or for taxes, levies, insurance, rent, or repairs to, or maintenance or storage
of, any collateral;

    


    (C)           To
perform and observe all covenants, agreements and undertakings of the Borrower
pursuant to the terms and conditions of this Agreement and the Notes or any
other agreement or instrument now or hereafter delivered to the Bank by the
Borrower;

    


    (D)           All
obligations under any interest rate swap agreement, foreign exchange contract,
any cap, floor or hedging agreement or other similar agreement, or other
financial agreement or arrangement designed to protect the Borrower against
fluctuations in any interest rate charged by the Bank under the Notes or
otherwise, including any obligations of the Borrower arising out of or in
connection with any Automated Clearing House (“ACH”) Agreement
relating to the processing of ACH transactions, together with all fees,
expenses, charges and other amounts owing by or chargeable to the Borrower under
any ACH Agreement;

    


    (E)           All
obligations to reimburse the Bank, on demand, in connection with overdrafts and
other amounts due to the Bank under any existing or future agreements relating
to cash management services; and

    


    (F)           All
obligations to reimburse the Bank, on demand, for all of the Bank’s expenses and
costs, including without limitation the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required
hereunder or related hereto, including, without limitation, any proceeding
brought, or threatened, to enforce payment of any of the obligations referred to
in the foregoing Paragraphs (A) through (E).

    


    “Permitted International
Borrowings” means up to $15,000,000.00 of credit to be extended to IPG
Germany and IPG Russia under loans made outside the United States of America by
foreign banking institutions.

    


    “Permitted Liens”
means:

    


    (A)           Liens
for taxes, assessments or similar charges, incurred in the ordinary course of
business, that are not yet due and payable;

    


    (B)           Pledges
or deposits made in the ordinary course of business to secure payment of
worker’s compensation, or to participate in any fund in connection with worker’s
compensation, unemployment insurance, old-age pensions or other social security
programs;

    


    (C)           Liens
of mechanics, materialmen, repairmen, warehousemen, carriers or other like
liens, securing obligations incurred in the ordinary course of business that are
not yet due and payable;

    


    (D)           Good
faith pledges or deposits not exceeding an aggregate amount of $500,000.00 made
in the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, not in
excess of thirty percent (30%) of the aggregate amount due thereunder, or to
secure statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;

    


    (E)           Encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
real property, none of which materially impairs the use of such property by the
Borrowers in the operation of their business, and none of which is violated in
any material respect by existing or proposed structures or land
use;

    


    (F)           Liens
in favor of the Bank;

    


    (G)           Existing
liens set forth or described on Exhibit 4.01(I),
attached hereto and made a part hereof;

     

    (H)           Purchase
money security interests granted to secure the purchase price of assets, the
purchase of which does not violate this Agreement or any instrument required
hereunder; and

    


    
      
         

      

      
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    (I)           Liens
securing Indebtedness permitted by this Agreement; and

    


    (J)           The
following, if the validity or amount thereof is being contested in good faith by
appropriate and lawful proceedings, so long as levy and execution thereon have
been stayed and continue to be stayed and they do not, in the aggregate,
materially detract from the value of the property of the Borrower or any
Subsidiary, or materially impair the use thereof in the operation of its
business:

    


    (1)           Claims
or liens for taxes, assessments or charges due and payable and subject to
interest or penalty;

    


    (2)           Claims,
liens and encumbrances upon, and defects of title to, real or personal property,
including any attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;

    


    (3)           Claims
or liens of mechanics, materialmen, warehousemen, carriers or other like liens;
and

     

    (4)    Adverse judgments on
appeal.

    


    “Person” means any
individual, corporation, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, court or government, or political
subdivision or agency thereof.

    


    “Records” means
correspondence, memoranda, tapes, discs, papers, books and other documents, or
transcribed information of any type, whether expressed in ordinary or machine
readable language.

    


    “Restructuring Fees”
means, collectively, a fee of $25,000.00 with respect to the Revolving Credit
and a fee of $50,000.00 with respect to the Term Loan, both to be paid to the
Bank by the Borrower at Closing.

    


    “Revolving Credit”
shall have the meaning ascribed to such term in the preamble of this
Agreement.

    


    “Revolving Credit Facility
Fee” has the meaning ascribed to such term in Section 2.07.

    


    “Revolving Credit Loan
Commitment” means a revolving line of credit facility up to
$35,000,000.00, less the Foreign Commitments.

    


    “Revolving Credit
Note” means the Revolving Credit Note referred to in Section 2.03, as may
be supplemented, amended or replaced.

    


    “Revolving Credit
Outstandings” means, at any time, the sum of (i) the aggregate
outstanding principal balance of the Loan at such time plus (ii) the aggregate
maximum amount that Beneficiaries may draw on Commercial Letters of Credit at
such time.

    


    “Revolving Credit Termination
Date” means, with respect to the Revolving Credit Note, July 26, 2011 or
such other date as is agreed to by the Bank in a written instrument executed by
a duly authorized officer of the Bank, provided that the Borrower may elect to
terminate this Agreement upon at least fifteen (15) days prior written notice to
the Bank and full, final and indefeasible payment of all the then outstanding
Obligations.

    


    “Subordinated
Indebtedness” means all Indebtedness incurred at any time by the Borrower
or any Subsidiary, the repayment of which is subordinated to the Loans in form
and manner satisfactory to the Bank.

    


    “Subsidiary” means any
Affiliate that is directly, or indirectly through one or more intermediaries,
controlled by the Borrower or not less than 50% of the voting capital stock of
which is owned, directly or through one or more intermediaries, by the
Borrower.

    


    “Swap Contract” means
an interest rate swap agreement to be entered into by the Borrower within five
(5) days from Closing, with respect to the Term Note, in a form and with a
counterparty acceptable to the Bank in its sole discretion.

    


    “Term Loan” shall have
the meaning ascribed to such term in the preamble of this
Agreement.

    


     “Term Note” means the
Term Note referred to in Section 2.03, as may be supplemented, amended or
replaced.

    


    
      
         

      

      
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    “Title Insurance
Policy” means a mortgagee’s title insurance policy (Standard American
Land Title Association (ALTA) Form) with respect to the Mortgaged Property,
issued to the Bank by a title insurance company satisfactory to the Bank and in
the amount of the Term Loan, deleting all standard exceptions, containing
language with respect to taxes not yet due and payable only, including
endorsements as may be required by the Bank, and referencing title matters
satisfactory to the Bank.

    


     “$” or “dollars” denotes
lawful currency of the United States of America.

    


    Accounting.  Accounting
terms used and not otherwise defined in this Agreement have the meanings
determined by, and all calculations with respect to accounting or financial
matters unless otherwise provided herein shall be computed in accordance with,
GAAP.

    


    


    ARTICLE
2.0  THE CREDIT FACILITIES

    


    2.01           Advances
on the Loans.

    


    (A)           All
advances to or for the benefit of the Borrower with respect to the Revolving
Credit Note will be charged to loan accounts established in the name of the
Borrower on the Bank’s books.

    


    (B)           The
Bank will disburse the proceeds of the Term Note in accordance with the
Disbursement Authorization Letter.

    


    2.02           General
Terms of the Revolving Credit.

    


    Subject
to the terms hereof, the Bank will lend the Borrower, from time to time until
the Revolving Credit Termination Date, such sums as the Borrower may request
(but in the case of LIBOR Rate Loans, at least $100,000.00) by reasonable same
day notice to the Bank, received by the Bank not later than 11:00 A.M. of such
day. The Borrower may borrow, repay without penalty or premium and reborrow
hereunder, from the date of this Agreement until the Revolving Credit
Termination Date, either the full amount of the Revolving Credit Loan Commitment
or any lesser sum which is at least $100,000.00.  The Revolving Credit
Outstandings shall at no time exceed the Revolving Credit Loan Commitment, and
if, at any time, an excess shall for any reason exist, the full amount of such
excess, together with accrued and unpaid interest thereon as herein provided,
shall be immediately due and payable in full.

    


    2.03           The
Notes.

    


    (A)           The
Revolving Credit Loan Commitment shall be evidenced by a Revolving Credit Note
due and payable on the Revolving Credit Termination Date, in the form attached
hereto as Exhibit
2.03A.

    


    (B)           The
Term Loan shall be evidenced by a Term Note due and payable on the Maturity
Date, in the form attached hereto as Exhibit
2.03B.  The Borrower shall enter into the Swap Contract within
five (5) days of issuance of the Term Note.

    


    2.04 Commercial
Letters of Credit

    


    (A)           From
time to time prior to the Revolving Credit Termination Date, the Bank shall
issue Commercial Letters of Credit on account of the Borrower or a Subsidiary
subject to the following conditions:

    


    (1)           Any
such Commercial Letters of Credit shall be issued as a trade letter of credit,
standby letter of credit or bank guarantee only to (i) a supplier or to a seller
of goods which purchased goods will become a part of the Inventory or other
assets of the Borrower, (ii) governmental authorities or bonding companies to
secure statutory obligations of the Borrower, including, without limitation,
worker’s compensation, disability, unemployment compensation or environmental
Laws, or (iii) a customer who is purchasing goods or services from the Borrower
or a Subsidiary;

    


    (2)           No
Beneficiary shall be an Affiliate (excluding a Subsidiary);

    


    (3)           The
Borrower agrees to pay to the Bank a quarterly fee with respect to each
Commercial Letter of Credit payable at the end of each calendar quarter (in each
case, a “Commercial
Letter of Credit Fee”) in accordance with Exhibit 2.04(A)(3)
attached hereto.  Whenever an Event of Default exists and is
outstanding, the Commercial Letter of Credit Fee hereunder shall, at the option
of the Bank, be increased to a per annum fee which is two percent (2%) per annum
greater that that fee which would otherwise be applicable
hereunder;

    


    
      
         

      

      
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    (4)           No
such Commercial Letter of Credit shall have an expiration date that is later
than the Revolving Credit Termination Date unless otherwise agreed to by the
Bank, excepting only (a) Commercial Letters of Credit in amounts aggregating no
more than $250,000.00 which may have expiration date(s) no later than three (3)
years beyond the Revolving Credit Termination Date, and (b) such other
Commercial Letters of Credit in amounts acceptable to the Bank, which may have
expiration date(s) no later than one (1) year beyond the Revolving Credit
Termination Date;

    


    (5)           Each
such Commercial Letter of Credit shall be issued pursuant to such agreements and
upon such terms and conditions as shall be required by the Bank;

    


    (6)           No
Event of Default shall have occurred hereunder at the time of issuance of such
Commercial Letter of Credit;

    


    (7)           The
aggregate face amount of all Commercial Letters of Credit at any time
outstanding shall not exceed the amount available under the Revolving Credit
Loan Commitment at such time; and

    


    (8)           In
the case of a Commercial Letter of Credit issued on behalf of a Subsidiary, the
Borrower has first executed and delivered to the Bank a Guaranty with respect to
such Subsidiary.

    


    (B)           The
aggregate face amount of all Commercial Letters of Credit at any time
outstanding shall be included in the amount of the Revolving Credit
Outstandings.

    


    2.05 Interest.

    


    (A)           Indebtedness
due under the Notes shall bear interest at the rates and calculated in the
manner set forth in the Notes.

    


    (B)           All
agreements between Borrower and the Bank are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to the Bank for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law.  As used herein, the term “applicable law” means
the law in effect as of the date hereof provided, however that in the event
there is a change in the law which results in a higher permissible rate of
interest, then the Notes shall be governed by such new law as of its effective
date.  In this regard, it is expressly agreed that it is the intent of
Borrower and Bank in the execution, delivery and acceptance of the Notes to
contract in strict compliance with the laws of The Commonwealth of Massachusetts
from time to time in effect.  If, under or from any circumstances
whatsoever, fulfillment of any provision hereof, of the Notes or of any of the
other Loan Documents at the time of performance of such provision shall be due,
shall involve transcending the limit of such validity prescribed by applicable
law, then the obligation to be fulfilled shall automatically be reduced to the
limits of such validity, and if under or from any circumstances whatsoever the
Bank should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal balance evidenced hereby and not to the payment
of interest.  This provision shall control every other provision of
all agreements between the Borrower and the Bank.

    


    2.06           Payment
to the Bank.

    


    The Bank
shall periodically send the Borrower statements of all amounts due on the Loans,
which statements shall be considered correct and conclusively binding on the
Borrower unless the Borrower notifies the Bank to the contrary within thirty
(30) days of its receipt of any statement that it deems to be
incorrect.  Notwithstanding the foregoing, any errors made by the Bank
shall be corrected if brought to the attention of the Bank no later than ninety
(90) days after termination of the Loans.  At its sole discretion, the
Bank may charge against any deposit or other account of the Borrower all or any
part of any amount due with respect to the Obligations.

    


    2.07           Revolving
Credit Facility Fee.

    


    The
Borrower shall pay to the Bank, quarterly in arrears, as of the last day of each
and every calendar quarter, a fee calculated at an annual rate based upon a
360-day year for the actual number of days outstanding, for each quarter, based
on a percentage of the average unused portion of the Revolving Credit Loan
Commitment (the “Revolving Credit Facility
Fee”). Notwithstanding the foregoing, the percentage to be used in
calculation of the Facility Fee shall increase or decrease based upon the ratio
of Funded Debt to EBITDA, as follows:

    


    
      
         

      

      
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    Ratio of Funded Debt to
EBITDA                                                                                 Unused Facility
Fee

    less than
1.0 to
1.0                                                                                                   
..15%

    


    equal to
or greater than 1.0 to 1.0,

    but less
than 1.5 to
1.0                                                                                                 .20%

    


    equal to
or greater than 1.5 to
1.0                                                                                   .25%

    
 

    
 

    ARTICLE
3.0  CONDITIONS PRECEDENT

    


    The
obligation of the Bank to make the Loans is subject to the following conditions
precedent:

    


    3.01           Documents
Required for the Closing.

    


    The
Borrower shall have delivered to the Bank, prior to the initial disbursement of
the Loans (the “Closing”), the
following:

    


    (A)           The
Revolving Credit Note duly executed by the Borrower in the form attached hereto
as Exhibit
2.03A;

    


    (B)           The
Term Note duly executed by the Borrower in the form attached hereto as Exhibit
2.03B;

    


    (C)           The
Mortgage duly executed by the Borrower;

    


    (D)           The
Disbursement Authorization Letter;

    


    (E)           The
Swap Contract;

    


    (F)           Environmental
Indemnity Agreement duly executed by the Borrower;

    


    (G)           The
Title Insurance Policy;

    


    (H)           A
certificate (dated the date of the Closing) of the corporate secretary or
assistant secretary, as the case may be, of the Borrower, certifying as
to:

    


    (1)           the
incumbency and signatures of the officer(s) signing this Agreement, the Notes,
the other Loan Documents and each other document to be delivered pursuant
hereto,

    


    (2)           the
resolutions of the board of directors authorizing the execution, delivery and
performance of this Agreement, the Notes, the other Loan Documents, and each
other document to be delivered pursuant hereto,

    


    (3)           the
By-Laws;

    


    (I)           With
respect to the Borrower, certificates of tax good standing and corporate good
standing and legal existence, dated as of the most recent date practicable,
issued by the Delaware Department of Revenue and Secretary of State of Delaware
as to the tax good standing and the legal existence and corporate good standing
of the Borrower and a certificate of registration as a foreign corporation with
The Commonwealth of Massachusetts;

    


    (J)           A
copy, certified as of the most recent date practicable by the Secretary of the
applicable state or nation of incorporation, of the charter documents of the
Borrower and all amendments thereto, together with a certificate (dated the date
of the Closing) of the corporate secretary or assistant secretary, as the case
may be, of the Borrower to the effect that such charter documents have not been
further amended since the date of the aforesaid certification of the Secretary
of the State of Delaware;

    


    (K)           A
written opinion or opinions of legal counsel for the Borrower, dated the date of
the Closing and addressed to the Bank, in form satisfactory to the Bank and its
counsel;

    


    
      
         

      

      
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    (L)           A
certificate, dated the date of the Closing, signed by the president, a vice
president, the treasurer or an assistant treasurer, the chief executive officer
or the chief financial officer, of the Borrower and to the effect
that:

    


    (1) The
representations and warranties set forth in Section 4.01 are true as of the date
of the Closing; and

    


    (2) No Event
of Default hereunder, and no event which, with the giving of notice or passage
of time or both, would become such an Event of Default, has occurred as of such
date; and

    


    (M)           Payment
of the Restructuring Fees.

    


    3.02           Documents
Required for Subsequent Disbursements.

    


    At the
time of, and as a condition to, any disbursement of any part of the Loans to be
made by the Bank subsequent to the Closing, the Bank may require the Borrower to
deliver to the Bank a certificate, dated the date on which any such disbursement
is to be made, signed by the president, a vice president, treasurer, chief
executive officer, chief financial officer, or other duly authorized officer of
the Borrower, or by a vice president, treasurer or other duly authorized officer
of the Borrower, and to the effect that:

    


    (A)           As
of the date thereof, no Event of Default has occurred and is continuing, and no
event has occurred and is continuing that, but for the giving of notice or
passage of time or both, would be an Event of Default; and

    


    (B)           Each
of the representations and warranties contained in Section 4.01 is true and
correct in all material respects as if made on and as of the date of such
disbursement (except for such representations and warranties made as of a
particular date).

    


    3.03           Certain
Events.

    


    At the
time of, and as a condition to, the Closing and each disbursement of any part of
the Loans to be made by the Bank at or subsequent to the Closing:

    


    (A)           No
Event of Default shall have occurred and be continuing, and no event shall have
occurred and be continuing that, with the giving of notice or passage of time or
both, would be an Event of Default; and

    


    (B)           All
of the Loan Documents shall have remained in full force and effect.

    


    3.04           Legal
Matters.

    


    At the
time of the Closing, all legal matters incidental thereto shall be satisfactory
to Bowditch & Dewey, LLP, legal counsel to the Bank.

    


    


    ARTICLE
4.0  REPRESENTATIONS AND WARRANTIES

    


    4.01           Original.

    


    To induce
the Bank to enter into this Agreement, the Borrower represents and warrants to
the Bank as follows:

    


    (A)           The
Borrower is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware; the Borrower has no Subsidiaries other
than the Subsidiaries named in Exhibit 4.01(A); each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its state or nation of incorporation, all as set
forth in Exhibit
4.01(A); the Borrower and the Subsidiaries have the lawful power to own
their properties and to engage in the businesses they conduct, and each is duly
qualified and in good standing as a foreign corporation in the jurisdictions
wherein the nature of the business transacted by it or property owned by it
makes such qualification necessary (except where failure to so qualify would not
have a material adverse effect on the business, assets or financial condition of
the Borrower and its Subsidiaries taken as a whole);

    


    (B)           Neither
the Borrower nor any Subsidiary is directly or indirectly controlled by, or
acting on behalf of, any Person which is an “Investment Company,”
within the meaning of the Investment Company Act of 1940, as
amended;

    


    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (C)           Except
as disclosed in Exhibit 4.01(C)
attached hereto, neither the Borrower nor any Subsidiary is in default with
respect to any of its existing Indebtedness in any material respect, and the
making and performance of this Agreement, the Notes and the other Loan Documents
will not (immediately or with the passage of time, the giving of notice, or
both):

    


    (1)           Violate
charter documents, or the By-Laws of the Borrower or any Subsidiary, or violate
any Laws or result in a default, in any material respect, under any contract,
agreement or instrument to which the Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary or its property is bound; or

    


    (2)           Result
in the creation or imposition of any security interest in, or lien or
encumbrance upon, any of the assets of the Borrower or any Subsidiary except in
favor of the Bank;

    


    (D)           The
Borrower has the power and authority to enter into and perform this Agreement,
the Notes and the other Loan Documents, and to incur the obligations herein and
therein provided for, and has taken all actions necessary to authorize the
execution, delivery and performance of this Agreement, the Notes and the other
Loan Documents;

    


    (E)           This
Agreement, the Notes and the other Loan Documents are, or when delivered will
be, valid, binding and enforceable under applicable law in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally and by
general equitable principles (regardless of whether considered in a proceeding
at law or in equity);

    


    (F)           Except
as disclosed in Exhibit 4.01(F)
hereto, there is no pending order, notice, claim, litigation, proceeding or
investigation known to the Borrower against or affecting the Borrower or any
Subsidiary, whether or not covered by insurance, that would in the aggregate
involve the payment of $100,000.00 or more or would otherwise materially or
adversely affect the financial condition or business prospects of the Borrower
or any Subsidiary, considered as a whole, if adversely determined;

    


    (G)           The
Borrower and each Subsidiary has good and marketable title to all of its
material assets, none of which is subject to any security interest, encumbrance
or lien, or claim of any third Person except for Permitted Liens;

    


    (H)           The
Financial Statements, including any schedules and notes pertaining thereto, and
the management prepared financial statements for the fiscal period ending March
31, 2008 have been prepared in accordance with GAAP, and fairly present the
financial condition of the Borrower and the Subsidiaries at the dates thereof
and the results of operations for the periods covered thereby, and there have
been no material adverse changes in the financial condition or business of the
Borrower and the Subsidiaries, considered as a whole, from March 31, 2008 to the
date hereof;

    


    (I)           As
of the date hereof, neither the Borrower nor any of the Subsidiaries has any
material Indebtedness of any nature, including, but without limitation,
liabilities for taxes and any interest or penalties relating thereto except to
the extent reflected (in a footnote or otherwise) and reserved against in the
consolidated balance sheet dated March 31, 2008, included in the Financial
Statements or as disclosed in, or permitted by, this Agreement; and the Borrower
does not know or have reasonable ground to know of any basis for the assertion
against any of the Borrower or any Subsidiary of any such claim or litigation
based upon such Indebtedness as of the date of the Closing except as disclosed
on Exhibit
4.01(I) or otherwise disclosed to the Bank in writing;

    


    (J)           Except
as otherwise permitted herein or as would not materially interfere with the
conduct of the business of the Borrower and its Subsidiaries, considered as a
whole, the Borrower has filed all tax returns or extensions to file tax returns
in applicable jurisdictions, and other reports required by any applicable Laws
to have been filed prior to the date hereof, have paid or caused to be paid all
taxes, assessments and other governmental charges that are due and payable prior
to the date hereof, and have made adequate provision for the payment of such
taxes, assessments or other charges accruing but not yet payable; the Borrower
has no knowledge of any deficiency or additional assessment in a materially
important amount in connection with any taxes, assessments or charges not
provided for on its books;

    


    (K)           Except
to the extent that the failure to comply would not materially interfere with the
conduct of the business of the Borrower and its Subsidiaries, considered as a
whole, each of the Borrower and the Subsidiaries have complied with all
applicable Laws with respect to (1) any restrictions, specifications or other
requirements pertaining to products that it manufactures or sells or to the
services it performs; (2) the conduct of its business; and (3) the use,
maintenance and operation of the real and personal properties owned or leased by
it in the conduct of its business;

    


    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (L)           No
representation or warranty by or with respect to the Borrower or any Subsidiary
contained herein or in any certificate or other document furnished by the
Borrower or any Subsidiary pursuant hereto contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made;

    


    (M)           Each
consent, approval or authorization of, or filing, registration or qualification
with, any Person required to be obtained or effected by the Borrower or any
Subsidiary in connection with the execution and delivery of this Agreement, the
Notes and the other Loan Documents or the undertaking or performance of any
obligation hereunder or thereunder, has been duly obtained or
effected;

    


    (N)           Except
as set forth in Exhibit 4.01(N) and
except to the extent that the failure to comply would not materially interfere
with the conduct of the business of the Borrower or any Subsidiary, considered
as a whole, to the best knowledge of the Borrower, neither the Borrower, nor any
Person for whose conduct the Borrower is responsible, owns, occupies or
operates, or has, within the fifteen (15) year period immediately preceding the
date of this Agreement, owned, occupied or operated a site or vessel on which
has been stored any hazardous material or oil, without compliance with all
statues, regulations, ordinances, directives, and orders of every federal,
state, municipal and other governmental authority which has or claims
jurisdiction relative thereto (the terms “site,” “vessel” and “hazardous material,”
respectively, as used herein include the definitions of those terms in
Massachusetts General Laws, Ch. 21E); neither the Borrower, nor any Person for
whose conduct the Borrower is responsible, has ever disposed of, transported or
arranged for the transport of any hazardous material or oil without compliance
with all such statutes, regulations, ordinances, directives and orders in all
material respects; and neither the Borrower, nor any Person for whose conduct
the Borrower is responsible, has ever been legally responsible for any releases
or threat of release of any hazardous material or oil; received notification of
any potential or known release or threat of release of any hazardous material or
oil from any site or vessel owned, occupied or operated by the Borrower, or any
Person for whose conduct the Borrower is responsible, or of the incurrence of
any expense or loss in connection with the assessment, containment or removal of
any release or threat of release of any hazardous material or oil from any such
site or vessel;

    


    (O)           The
Borrower has not made any agreement or taken any action which may cause anyone
to become entitled to a commission or finder’s fee as a result of or in
connection with the making of the Loans;

    


    (P)           The
federal tax returns of the Borrower and all Subsidiaries for all years of
operation, including the tax years of the Borrower and all Subsidiaries most
recently ended prior to the date of this Agreement, have been filed with the
Internal Revenue Service and have not been challenged or an extension for filing
has been obtained; and

    


    (Q)           Any
Employee Pension Benefit Plans, as defined in the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), of the
Borrower and each Subsidiary meet, as of the date hereof, the minimum funding
standards of 29 U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or
Prohibited Transaction, as defined in ERISA, has occurred with respect to any
Employee Benefit Plans, as defined in ERISA, of the Borrower or any
Subsidiary.

    


    4.02           Survival.

    


    All of
the representations and warranties set forth in Section 4.01 shall survive until
all Obligations are satisfied in full and there remain no outstanding
commitments hereunder.

    


    ARTICLE
5.0  COVENANTS OF THE BORROWER

    


    5.01           Affirmative
Covenants.

    


    The
Borrower does hereby covenant and agree with the Bank that, so long as any of
the Obligations remain unsatisfied or any commitments hereunder remain
outstanding, it will comply, or if appropriate cause the Subsidiaries to comply,
at all times with the following affirmative covenants:

    


    (A)           The
Borrower will use the proceeds of the Loans only for the purposes set forth in
Exhibit
5.01(A), and will furnish the Bank such evidence as it may reasonably
require with respect to such use;

    


    (B)           The
Borrower will furnish or otherwise make available to the Bank:

    


    (1)           As
soon as available, but in any event within forty-five (45) days after the close
of each quarterly accounting period in each fiscal year: (a) a consolidated
statement of cash flows of the Borrower and the Subsidiaries for such quarter;
(b) a consolidated income statement of the Borrower and the Subsidiaries for
such quarters; and (c) a consolidated balance sheet of the Borrower and the
Subsidiaries as of the end of such quarter-all in reasonable detail, subject to
normal year-end audit adjustments and
certified by the president or principal financial officer of the Borrower to
have been prepared in accordance with GAAP;

    


    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (2)           As
soon as available, but in any event within one hundred twenty (120) days after
the close of each fiscal year: (a) a consolidated statement of stockholders’
equity; (b) a consolidated statement of changes of cash flows of the Borrower
and the Subsidiaries for such fiscal year; (c) a consolidated income statement
of the Borrower and the Subsidiaries for such fiscal year; and (d) a
consolidated balance sheet of the Borrower and the Subsidiaries as of the end of
such fiscal year-all such statements to be in reasonable detail, including all
supporting schedules and comments; the consolidated statements and balance
sheets to be audited by an independent registered public accountant selected by
Borrower and acceptable to the Bank, and certified by such accountants to have
been prepared in accordance with GAAP and to present fairly the financial
position and results of operations of the Borrower and the Subsidiaries; the
Bank shall have the right, from time to time, to discuss the affairs of the
Borrower directly with such independent registered public accountants after
notice to the Borrower and opportunity of the Borrower to be represented at any
such discussions;

    


    (3)           Contemporaneously
with each quarterly and year-end financial report required by the foregoing
paragraphs (1) and (2), a certificate of the president or principal financial
officer of the Borrower stating that he has individually reviewed the provisions
of this Agreement and that a review of the activities of the Borrower during
such year or quarterly period, as the case may be, has been made by him or under
his supervision, with a view to determining whether the Borrower has fulfilled
all obligations under this Agreement, and that, to the best of his knowledge,
the Borrower has observed and performed each undertaking contained in this
Agreement and is not in default in the observance or performance of any of the
provisions hereof or, if the Borrower shall be in default, specifying all such
defaults and events of which he may have knowledge;

    


    (4)           Promptly
after the sending or making available or filing of the same, copies of all
reports, proxy statements, and financial statements that the Borrower sends or
make available to its stockholders and all registration statements and reports
that the Borrower files with the Securities and Exchange Commission or any
successor Person;

    


    (5)           Upon
the Bank’s reasonable request, copies of any and all material documents relating
to the business of the Borrower;

    


    (C)           The
Borrower will maintain its material operating physical assets in good condition
and repair (normal wear and tear excepted);

    


    (D)           The
Borrower and the Subsidiaries will maintain, or cause to be maintained, public
liability, fire and casualty insurance that are of a character usually insured
by corporations engaged in the same or similar businesses;

    


    (E)           The
Borrower and the Subsidiaries will pay or cause to be paid when due, all taxes,
assessments, charges or levies imposed upon them or on any of their property or
with respect to which any of them is required to withhold and pay except where
contested in good faith by appropriate proceedings with adequate reserves
therefor having been set aside on its books; provided, however, that the
Borrower and each Subsidiary shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
may have attached (or security therefor) appears imminent;

    


    (F)           The
Borrower will maintain:

    


    (1)           A
Debt Service Coverage Ratio of at least 1.50:1.00, to be tested on a rolling
four quarters basis at the end of each fiscal quarter; and

    


    (2)           A
ratio of Funded Debt to EBITDA not exceeding 2.00:1.00, to be tested on a
rolling four quarters basis at the end of each fiscal quarter;

    


    (G)           The
Borrower and the Subsidiaries will each, when requested to do so, make available
for inspection during normal business hours by duly authorized representatives
of the Bank any of its books and records and will furnish the Bank any
information regarding its business affairs and financial condition within a
reasonable time after written request thereof;

    


    (H)           The
Borrower and the Subsidiaries will each take all necessary steps to preserve its
corporate existence and franchises and comply in all material respects with all
present and future Laws applicable to it in the operation of its business, and
all material agreements to which it is subject;

    


    (I)           The
Borrower and the Subsidiaries will each take all necessary steps to preserve
Intellectual Property, and will keep accurate and complete Records of royalties,
patents and trademarks in connection therewith, consistent with sound business
practices;

    


    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (J)           The
Borrower and the Subsidiaries will keep accurate and complete business Records
consistent with sound business practices;

    


    (K)           The
Borrower and the Subsidiaries will give immediate notice to the Bank of (1) any
litigation or proceeding in which any of them is a party if an adverse decision
therein would require any of them to pay more than $1,000,000.00 or deliver
assets the value of which exceeds such sum (except where the claim is covered by
insurance and the insurer has acknowledged coverage); and (2) the institution of
any other suit or proceeding involving any of them that could be reasonably
likely to materially and adversely affect the operations, financial condition,
property or business of the Borrower or any Subsidiary, considered as a
whole;

    


    (L)           Upon
written request by the Bank, the Borrower will furnish the Bank with true,
correct and complete copies of federal income tax returns filed by the Borrower,
together with all schedules thereto;

    


    (M)           The
Borrower and the Subsidiaries will pay when due (or within applicable grace
periods (or in the case of trade indebtedness, no later than ninety (90) days
from the date incurred)) all of their other Indebtedness due third Persons
except when the amount thereof is being contested in good faith by appropriate
proceedings and with adequate reserves therefor being set aside on their
books;

    


    (N)           The
Borrower and the Subsidiaries will each notify the Bank immediately if any of
them becomes aware of the occurrence of any Event of Default or of any fact,
condition or event that only with the giving of notice or passage of time or
both, could become an Event of Default, or if any of them becomes aware of any
material adverse change in financial condition (including, without limitation,
proceedings in bankruptcy, insolvency, reorganization or the appointment of a
receiver or trustee), or results of operations of the Borrower or a Subsidiary,
or of the failure of the Borrower or any Subsidiary to observe any of their
respective undertakings hereunder or under the other Loan
Documents;

    


    (O)           The
Borrower and the Subsidiaries will notify the Bank thirty (30) days in advance
of any change in the location of the Borrower’s headquarters currently located
in Oxford, Massachusetts;

    


    (P)           The
Borrower and the Subsidiaries will (1) fund any Employee Pension Benefit Plans
in accordance with no less than the minimum funding standards of 29 U.S.C.A.
1082 (Section 302 of ERISA); (2) furnish the Bank, upon the Bank’s written
request, with copies of any reports or other statements filed with the United
States Department of Labor or the Internal Revenue Service with respect to any
such Plan; and (3) promptly advise the Bank of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any Employee Benefit
Plan;

    


    (Q)           The
Borrower will maintain its primary depository and operating accounts with the
Bank at all times while any Obligations to the Bank under the Revolving Credit
Note are outstanding, it being understood that this provision shall not require
the Borrower to maintain its investment account with the Bank; and

    


    (R)           Within
five (5) days of Closing, the Borrower will purchase a Swap Contract in an
amount equal to the principal amount outstanding with respect to the Term
Note.   The Swap Contract shall be for a period up to the full
term of the Term Note from the date of this Agreement through the Maturity Date
(including any extensions thereof) and shall, at all times, be in a notional
amount sufficient to cover all principal amounts outstanding from time to time,
unless otherwise agreed, under the Term Note. As additional security for the
Term Note, the economic benefits of the Swap Contract shall be collaterally
assigned to the Bank, provided, however, notwithstanding any of the foregoing to
the contrary, the Bank shall not be deemed to have assumed any of the
obligations or duties of the Borrower under the Swap Contract.  All
costs, expenses, and indemnity obligations that may be incurred by the Bank as a
result of the Borrower’s default, or termination of, the Swap Contract shall be:
(a) subject to prompt reimbursement by the Borrower; and (b) secured by this
Agreement.

    


    5.02           Negative
Covenants.

    


    The
Borrower does hereby covenant and agree with the Bank that, so long as any of
the Obligations remain unsatisfied or any commitments hereunder remain
outstanding, it will comply, or if appropriate cause the Subsidiaries to comply,
at all times with the following negative covenants, unless the Bank shall
otherwise have agreed in writing:

    


    (A)           Neither
the Borrower nor any Subsidiary will mortgage, assign as collateral security,
pledge or encumber any of its assets now owned or hereafter acquired, or permit
any of its assets to be encumbered in any way without the prior express written
consent of the Bank, except for the Mortgage, Permitted Liens and any lien in
favor of the Bank or its affiliates;

    


    (B)           Neither
the Borrower nor any Subsidiary will change its name or enter into any merger or
consolidation (other than mergers or consolidations between wholly owned
subsidiaries resulting in no change in the beneficial ownership of such
subsidiaries);

    


    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (C)           Neither
the Borrower nor any Subsidiary will sell or otherwise dispose of, or for any
reason cease operating, any of its divisions, franchises, or lines of business,
in each case, comprising more than twenty percent (20%) of the assets of the
Borrower and its Subsidiaries, considered as a whole, without first providing
the Bank with thirty (30) days advance written notice of its intention to do
so;

    


    (D)           Neither
the Borrower nor any Subsidiary will become liable, directly or indirectly, as
guarantor or otherwise for any obligation of any other Person exceeding
$15,000,000.00 in the aggregate at any time outstanding, without notifying the
Bank in writing in advance, except for (i) the endorsement of commercial paper
for deposit or collection in the ordinary course of business, and (ii) unsecured
guarantees of obligations of foreign Subsidiaries of the Borrower;

    


    (E)           Neither
the Borrower nor any Subsidiary will incur, create, assume, or permit to exist
any Indebtedness except:  (1) the Loans; (2) existing Indebtedness
listed on Exhibit
4.01(I) permitted to exist after the date of this Agreement; (3) trade
indebtedness incurred in the ordinary course of business, (4) contingent
Indebtedness permitted by Section 5.02(D); (5) Indebtedness secured by Permitted
Liens; (6) Subordinated Indebtedness; (7) Permitted International Indebtedness;
(8) capital leases or purchase money Indebtedness permitted by this Agreement;
and (9) other Indebtedness exceeding $15,000,000.00 in the aggregate at any time
outstanding;

    


    (F)           Neither
the Borrower nor any Subsidiary (other than a wholly owned Subsidiary of the
Borrower) will declare or pay any dividends, or make any other payment or
distribution on account of its capital stock (other than shares of stock of, or
other instruments issued by, the Borrower convertible into stock of the
Borrower);

    


    (G)           Neither
the Borrower nor any Subsidiary will form any subsidiary, make any investment in
(including any assignment of Inventory or other property), or make any loan in
the nature of an investment to, any Person, other than investments of the
Borrower in the Subsidiaries listed on Exhibit 4.01(A) or an
investment not exceeding $5,000,000.00, without first providing the Bank within
fifteen (15) days advance written notice of its intention to do so;

    


    (H)           Neither
the Borrower nor any Subsidiary will make any loan or advance to any officer,
shareholder, director, or employee of the Borrower or any Subsidiary, except for
(i) business travel, educational or relocation and similar temporary advances in
the ordinary course of business, or (ii) loans not exceeding $100,000.00 to any
one such individual up to $400,000.00 in the aggregate at any one time
outstanding;

    


    (I)           The
Borrower will not make any payments on the Subordinated Notes or any other
Subordinated Indebtedness, except as permitted by the subordination provisions
applicable thereto;

    


    (J)           Neither
the Borrower nor any Subsidiary will acquire or agree to acquire any stock in,
or all or substantially all of the assets of, any Person for a cost in excess of
$5,000,000.00 without first providing the Bank with fifteen (15) days advance
written notice of its intention to do so;

    


    (K)           Neither
the Borrower nor any Subsidiary will furnish the Bank any certificate or other
document that will contain any untrue statement of material fact or that will
omit to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished; and

    


    (L)           Neither
the Borrower nor any Subsidiary will directly or indirectly apply any part of
the proceeds of the Loans to the purchasing or carrying of any “margin stock” within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations, or rulings thereunder.

    


    ARTICLE
6.0  DEFAULT

    


    6.01           Events
of Default.

    


    The
occurrence of any one or more of the following events shall constitute an Event
of Default hereunder:

    


    (A)           The
Borrower or the Subsidiaries shall fail to pay when due any Obligations to the
Bank within ten (10) days of an applicable due date;

    


    (B)           The
Borrower or the Subsidiaries shall fail to observe or perform any other
obligation to be observed or performed by it hereunder or under any of the other
Loan Documents, and such failure shall continue for thirty (30) days after (1)
notice of such failure from the Bank; or (2) the Bank is notified of such
failure or should have been so notified pursuant to the provisions of Section
5.01(O), whichever is earlier;

    


    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (C)           The
Borrower or the Subsidiaries shall fail to pay any Indebtedness other than the
Obligations exceeding $250,000.00, and such failure shall continue beyond any
applicable grace period (or, with respect to trade Indebtedness which is not
subject to a grace period, within ninety (90) days of the date such trade
Indebtedness is incurred);

    


    (D)           Any
financial statement, representation, warranty or certificate made or furnished
by or with respect to the Borrower or any of the Subsidiaries to the Bank in
connection with this Agreement, or as an inducement to the Bank to enter into
this Agreement, or in any separate statement or document to be delivered to the
Bank hereunder, shall be materially false, incorrect or incomplete when
made;

    


    (E)           The
Borrower shall admit its inability to pay its debts as they mature or shall make
an assignment for the benefit of itself or any of its creditors;

    


    (F)           Proceedings
in bankruptcy, or for reorganization of the Borrower or any of the Subsidiaries,
or for the readjustment of any of their respective debts under the United States
Bankruptcy Code, as amended, or any part thereof, or under any other Laws,
whether state or federal, for the relief of debtors, now or hereafter existing,
shall be commenced against or by the Borrower or any of the Subsidiaries and,
except with respect to any such proceedings instituted by the Borrower or any of
the Subsidiaries, shall not be discharged within sixty (60) days of said
commencement;

    


    (G)           A
receiver or trustee shall be appointed for the Borrower or any of the
Subsidiaries or for any substantial part of their respective assets, or any
proceedings shall be instituted for the dissolution or the full or partial
liquidation of the Borrower or any of the Subsidiaries, and except with respect
to any such appointments requested or instituted by the Borrower or any of the
Subsidiaries, such receiver or trustee shall not be discharged within sixty (60)
days of his appointment, and except with respect to any such proceedings
instituted by the Borrower or any of the Subsidiaries, such proceedings shall
not be discharged within sixty (60) days of commencement, or the Borrower shall
discontinue business or materially change the nature of its
business;

    


    (H)           The
Borrower or any of the Subsidiaries shall suffer final judgments (which are not
covered by insurance where the insurer has acknowledged coverage) for payment of money
aggregating in excess of $250,000.00 and shall not discharge the same within a
period of forty-five (45) days unless, pending further proceedings, execution
has not been commenced or, if commenced, has been effectively stayed;
or

    


    (I)           Failure
by the Borrower to pay any amount of money or to observe exceeding $250,000.00
or perform any other material covenant, condition or agreement which is the
obligation of the Borrower to the Bank under any other existing or future note,
mortgage or other document or instrument.

    


    6.02           Acceleration.

    


    At its
option, and at any time, whether immediately or otherwise, the Bank may, upon
the occurrence of any Event of Default, declare all Obligations of the Borrower
to the Bank immediately due and payable without further action of any kind
including, without limitation, notice, demand or presentment.

    


    ARTICLE
7.0  THE BANK’S RIGHTS AND REMEDIES

    


    7.01           The
Bank’s Rights Upon Default

    


    Upon the
occurrence of an Event of Default and at any time thereafter, the Bank, without
presentment, demand, notice, protest or advertisement of any kind, will have the
rights set forth in this Agreement and under applicable law.

    


    7.02           Right
of Set-Off.

    


    The
Borrower hereby grants to the Bank a continuing lien, security interest and
right of set-off as security for all liabilities and obligations to the Bank,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the control of Bank of
America Corporation and its successors and assigns, or in transit to any of
them.  At any time, upon notice of an Event of Default, the Bank may
set off the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured.

    


    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    7.03           Cumulative
Rights and Remedies

    


    All
rights and remedies of the Bank, whether provided for herein or in other
agreements, instruments or documents or conferred by law, are cumulative and may
be exercised alone or simultaneously.

    


    7.04           Additional
Rights and Remedies

    


    (A)           Upon
the occurrence of an Event of Default, all obligations on the part of the Bank
to make advances under the Revolving Credit Note, if the Bank so elects upon
written notice to the Borrower, shall cease and terminate, and, at the option of
the Bank, both of the Notes shall become immediately due and payable, but the
Bank may make any advances or portions of advances under the Revolving Credit
Note, after the occurrence of any such Event of Default, without thereby waiving
its right to demand payment of the Obligations and without becoming liable to
make any other or further advances as hereinabove contemplated by this
Agreement.

    


    (B)           Upon
the occurrence of an Event of Default, the rights, powers and privileges
provided in this Section 7.04, and all other remedies available to the Bank
under this Agreement or at law or in equity, may be exercised by the Bank at any
time and from time to time, whether or not the Obligations shall be due and
payable, and whether or not the Bank shall have instituted any foreclosure
proceedings or other action for the enforcement of its rights hereunder or under
the Notes or any of the other Loan Documents.

    


    ARTICLE
8.0  MISCELLANEOUS

    


    8.01           Construction.

    


    The
provisions of this Agreement shall be in addition to those of any pledge or
security agreement, note or other evidence of liability now or hereafter held by
the Bank, all of which shall be construed as complementary to each
other.  Nothing herein contained shall prevent the Bank from enforcing
any or all other pledge or security agreements, notes or other evidences of
liability in accordance with their respective terms.

    


    8.02           Further
Assurance.

    


    From time
to time, the Borrower will execute and deliver to the Bank such additional
documents and will provide such additional information as the Bank may
reasonably require to carry out the terms of this Agreement and be informed of
the status and affairs of the Borrower.

    


    8.03           Enforcement
and Waiver by the Bank.

    


    The Bank
shall have the right at all times to enforce the provisions of this Agreement
and the other Loan Documents in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Bank in
refraining from so doing at any time or times.  The failure of the
Bank at any time or times to enforce its rights under such provisions, strictly
in accordance with the same, shall not be construed as having created a custom
in any way or manner contrary to specific provisions of this Agreement or as
having in any way or manner modified or waived the same.  All rights
and remedies of the Bank are cumulative and concurrent and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or
remedy.

    


    8.04           Expenses
of the Bank.

    


    The
Borrower shall pay on demand all expenses of the Bank in connection with the
preparation, administration, default, collection, waiver or amendment of loan
terms, or in connection with the Bank’s exercise, preservation or enforcement of
any of its rights, remedies or options hereunder, including, without limitation,
reasonable fees of outside legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with this Agreement, the Notes, the other Loan Documents or any
other collateral therefor, and the amount of all such expenses shall, until
paid, bear interest at the rate applicable to principal under the Notes
(including any default rate) and be an Obligation.

    


    8.05           Notices.

    


    Any
notices or consents required or permitted by this Agreement shall be in writing
and shall be deemed delivered if delivered in person or if sent by certified
mail, postage prepaid, return receipt requested, facsimile or telegraph, as
follows, unless such address is changed by written notice
hereunder:

    


    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (A)           If
to the
Borrower:              IPG
Photonics Corporation

    50 Old Webster Road

    Oxford, MA 01540

    Attention:  Chief
Financial Officer

    


    With a
copy
to:                    IPG
Photonics Corporation

    50 Old
Webster Road

    Oxford,
MA 01540

    Attention:  General
Counsel

    


    (B)           If
to the
Bank:                       Bank
of America, N.A.

    100 Front Street

    Worcester,
MA  01608

    Attention:
Credit Products Officer

    


    With a
copy
to:                    George
W. Tetler III, Esquire

    Bowditch
& Dewey, LLP

    P.O. Box
15156

    311 Main
Street

    Worcester,
MA  01615-0156

    


    Any party
may change the address to which notices are to be sent to it by giving written
notice of such change of address to the other party in the manner herein
provided for giving notice.  Any such notice, demand, request or other
communication shall be deemed given when mailed as aforesaid.

    


    8.06           Waiver
and Indemnification by the Borrower.

    


    To the
maximum extent permitted by applicable Laws, the Borrower:

    


    (A)           Waives
(1) protest of all commercial paper at any time held by the Bank for which the
Borrower is in any way liable; (2) except as the same may herein be specifically
granted, notice of acceleration and of intention to accelerate; and (3) notice
and opportunity to be heard, after acceleration in the manner provided in
Section 6.02, before exercise by the Bank of the remedies of self-help, set-off
or of other summary procedures permitted by any applicable Laws or by any
agreement with the Borrower, and, except where required hereby or by any
applicable Laws, notice of any other action taken by the Bank; and

    


    (B)           Indemnifies
the Bank and its officers, attorneys, agents and employees from all claims for
loss or damage caused by any act or omission on the part of any of them except
willful misconduct or gross negligence.

    


    8.07           Participation;
Right to Sell and/or Assign.

    


    The Bank
shall have the unrestricted right at any time and from time to time, and without
the consent of the Borrower, to grant to one or more banks or other financial
institutions (each, a “Participant”)
participating interests, in minimum amounts of $1,000,000.00 each, in the Bank’s
obligation to lend hereunder and any or all of the loans held by the Bank
hereunder.  In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower, the Bank shall remain responsible for the performance of its
obligations hereunder and the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank’s rights and obligations
hereunder.  The Bank may furnish any information concerning the
Borrower in its possession from time to time to prospective Participants,
provided that the Bank shall require any such prospective Participant to agree
in writing to maintain the confidentiality of such information.

    


    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    The Bank
shall have the unrestricted right at any time or from time to time, upon
Borrower’s consent, which consent shall not be unreasonably withheld, to assign
all or any portion of its rights and obligations hereunder to one or more banks
or other financial institutions (each, an “Assignee”), and the
Borrower agrees that it shall execute, or cause to be executed, such documents,
including without limitation amendments to this Agreement and to any other
documents, instruments and agreements executed in connection herewith as the
Bank shall deem reasonably necessary to effect the foregoing.  In
addition, at the request of the Bank and any such Assignee, the Borrower shall
issue one or more new promissory note(s), as applicable, to any such Assignee
and, if the Bank has retained any of its rights and obligations hereunder
following such assignment, to the Bank, which new promissory note(s) shall be
issued in replacement of, but not in discharge of, the liability evidenced by
the promissory note held by the Bank prior to such assignment and shall reflect
the amount of the respective commitments and loans held by such Assignee and the
Bank after giving effect to such assignment.  Upon the execution and
delivery of appropriate assignment documentation, amendments and any other
documentation required by the Bank in connection with such assignment, and the
payment by Assignee of the purchase price agreed to by the Bank and such
Assignee, such Assignee shall be a party to this Agreement and shall have all of
the rights and obligations of the Bank hereunder (and under any and all other
documents, instruments and agreements executed in connection herewith) to the
extent that such rights and obligations have been assigned by the Bank pursuant
to the assignment documentation between the Bank and such Assignee, and the Bank
shall be released from its obligations hereunder and thereunder to a
corresponding extent.  The Bank may furnish any information concerning
the Borrower in its possession from time to time to prospective Assignees,
provided that the Bank shall require any such prospective Assignees to agree in
writing to maintain the confidentiality of such information.

    


    8.08           WAIVER
OF JURY TRIAL.

    


    THE
BORROWER AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE
ADMINISTRATION OF THE LOANS OR ANY OTHER OBLIGATIONS OR ENFORCEMENT OF THE LOAN
DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED.  EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES.  THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO
ENTER INTO THIS AGREEMENT AND MAKE THE LOANS EVIDENCED BY THE
NOTES.

    


    8.09           Applicable
Law.

    


    This
Agreement, and the rights and obligations of the parties hereunder shall be
construed and interpreted in accordance with the laws of The Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or choice of
law).

    


    8.10           Binding
Effect, Assignment, and Entire Agreement.

    


    This
Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties
hereto.  The Borrower has no right to assign any of its rights or
obligations hereunder without the prior written consent of the Bank. This
Agreement, including the Exhibits hereto, all of which are hereby incorporated
herein by reference, and the documents executed and delivered pursuant hereto,
are intended by the parties as the final, complete and exclusive statement of
the transaction evidenced by this Agreement.  All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Agreement, and no party is relying
on any promise, agreement or understanding not set forth in this
Agreement.  This Agreement may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrower and the Bank.

    


    8.11           Severability.

    


    If any
provision of this Agreement shall be held invalid under any applicable Laws,
such invalidity shall not affect any other provision of this Agreement that can
be given effect without the invalid provision, and, to this end, the provisions
hereof are severable.

    


    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    8.12           Counterparts.

    


    This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute but one and
the same instrument.

    


    8.13           Replacement
Notes.

    


    Upon receipt of (i) an affidavit of
an officer of the Bank as to the loss, theft, destruction or mutilation of
either of the Notes or any other Loan Document which is not of public record,
and (ii) an indemnity by the Bank in favor of the Borrower with respect to
losses, claims or damage resulting therefrom and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of such Note or other Loan
Document, the Borrower will issue, in lieu thereof, a replacement Note or other
Loan Document in the same principal amount thereof and otherwise of like
tenor.

     

    8.14           Return
of Prior Note.  The Bank shall return to the Borrower in due course
after the Closing, the Revolving Credit Note dated July 26, 2007, issued by the
Borrower to the Bank in the face amount of $20,000,000.00.

    


    8.15           Use
of Proceeds

    


    No
portion of the proceeds of the Loans shall be used, in whole or in part, for the
purpose of purchasing or carrying any “margin stock” as such
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System.

    


    8.16           Integration

    


    This
Agreement is intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by this Agreement. All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Agreement, and no party is relying
on any promise, agreement or understanding not set forth in this
Agreement.  This Agreement may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrower and the Bank.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    


    IN
WITNESS WHEREOF, each of the parties hereto have duly caused this Agreement to
be executed by its duly authorized representative as a sealed instrument as of
the day and year first above written.

    


    IPG
PHOTONICS CORPORATION

    


    
      	
              /s/ TARA PINKOS             

              Witness

            	
              By:       /s/
      TIMOTHY  P.V. MAMMEN    

              Name:  Timothy
      P.V. Mammen

              Title:    Vice
      President and Chief Financial
Officer

            


    

    


    


    


    


    


    BANK OF AMERICA, N. A.

    


    
      	
              /s/ VALERIE J.
      SAMPSON        

              Witness

            	
              By:       /s/ THOMAS P. MCGREGOR      

              Name:  Thomas
      P. McGregor

              Title:    Senior
      Vice President

            


    

    


    


    


    


    



    
      
         


      

      
        20

        
          

        

      

      
         


      

    


     Exhibit
2.04(A)(3)

    


    COMMERCIAL
LETTER OF CREDIT FEE

    


    


    If the
ratio of Funded Debt to EBITDA is <1.0:1.0, then the Commercial Letter of
Credit issuance fee shall be .80%.

    


    If the
ratio of Funded Debt to EBITDA is ≥1.0:1.0 but <1.5:1.0, then the Commercial
Letter of Credit issuance fee shall be 1.00%.

    


    If the
ratio of Funded Debt to EBITDA is ≥1.5:1.0 but <2.0:1.0, then the Commercial
Letter of Credit issuance fee shall be 1.20%.