<PAGE>

                                                                    EXHIBIT 10.2

                          CONSTRUCTION LOAN AGREEMENT
                          ---------------------------

     This AGREEMENT made as of the 28/th/ day of April, 2000 by and between IPG
PHOTONICS CORPORATION, a Delaware corporation with its principal place of
business at 660 Main Street, Sturbridge, Massachusetts  01566 (the "Borrower")
and FAMILY BANK, FSB, a federal savings bank, at its office at 370 Main Street,
Worcester, Massachusetts 01608 (the "Lender").

                              W I T N E S S E T H:
                              - - - - - - - - - -

     In consideration of the mutual covenants herein contained and other good
and valuable consideration, receipt whereof is hereby acknowledged, the parties
hereto hereby agree as follows:

1.   RECITALS
     --------

     1.1  Borrower owns certain real estate located on Old Webster Road, Oxford,
Massachusetts (hereinafter referred to as the "Premises") and more particularly
described in Exhibit A annexed hereto, and proposes to incur certain costs and
             ---------
expenses in connection with the construction of two office/assembly buildings on
the Premises (hereinafter called the "Improvements") in accordance with (i) the
plans, drawings, and specifications described in Exhibit B annexed hereto, and
                                                 ---------
(ii) plans, drawings and specifications to be developed and prepared after the
date hereof which future plans, drawings and specifications and all amendments
must be approved in writing by Lender prior to the use thereof by Borrower (all
such existing and future plans, drawings and specifications being hereinafter
collectively referred to as the "Plans"); and

     1.2  Borrower simultaneously herewith is executing or causing to be
executed and delivering to Lender:

          1.2.1  a Promissory Note dated of even date herewith by Borrower in
the principal amount of $6,500,000.00 (the "Note");

          1.2.2  a Mortgage and Security Agreement dated of even date herewith
by Borrower with respect to the Premises (the "Mortgage");

          1.2.3  a Collateral Assignment of Construction Contract dated of even
date herewith by Borrower (the "Construction Assignment");

          1.2.4  a Collateral Assignment of Architect's Contract and Plans and
Specifications dated of even date herewith by Borrower (the "Architect and Plans
and Specifications Assignment");

          1.2.5  a Collateral Assignment of Licenses, Permits and Agreements
dated of even date herewith by Borrower (the "Permits Assignment");
<PAGE>

          1.2.6  UCC Financing Statements against Borrower to be filed with the
Massachusetts Secretary of State, the Clerks of the Towns of Oxford and
Sturbridge, and the Worcester District Registry of Deeds (the "Financing
Statements");

          1.2.7  Unlimited Guaranty dated of even date herewith with respect to
the obligations of Borrower to Lender by IP Fibre Devices (UK) Limited (the
"Corporate Guaranty");

          1.2.8  Unlimited Guaranty dated of even date herewith with respect to
the obligations of Borrower to Lender by Valentin P. Gapontsev (the "Individual
Guaranty"); and

          1.2.9  an Assignment of Life Insurance Policy as Collateral with
respect to a life insurance policy on the life of Valentin P. Gapontsev in the
minimum amount of $3,000,000.00 (the "Life Insurance Assignment").

(The Note, the Mortgage, the Construction Assignment, the Architect and Plans
and Specifications Assignment, the Permits Assignment, the Financing Statements,
the Corporate Guaranty, the Individual Guaranty and the Life Insurance
Assignment are hereinafter collectively referred to as the "Security
Instruments".)

     1.3  Borrower has entered into an agreement dated March 10, 2000
(hereinafter referred to as the "Construction Contract") with Aho Construction,
Inc. (hereinafter referred to as the "Contractor") to construct the Improvements
(including all development and site work) on the Premises; and

     1.4  Lender is willing to lend to Borrower sums of money to be evidenced by
the Note of Borrower (the "Loan") upon the terms and covenants and subject to
the conditions hereinafter set forth.

2.   AGREEMENTS
     ----------

     2.1  Lender's Agreement to Advance Proceeds
          --------------------------------------

          Lender agrees (provided the terms, conditions, covenants and
agreements hereof shall be observed and performed, and subject to the conditions
hereinafter set forth) to make advances to Borrower of the proceeds of the Note
from time to time up to a total amount not exceeding the principal amount
thereof, such proceeds being hereinafter referred to as the "Loan Proceeds."
The Loan Proceeds shall be advanced to finance construction of the Improvements.

     2.2  Conditions Precedent
          --------------------

          As conditions precedent to Lender's obligation to make advances from
time to time of the Loan Proceeds, Borrower shall, at the time of the advance in
question:

          2.2.1  hold marketable title to the Premises in fee simple and full
possession thereof, free and clear of all liens and encumbrances except such as
are approved by Lender in writing and except such permitted exceptions as are
set forth in Exhibit C annexed hereto;
             ---------

                                      -2-
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          2.2.2  have granted to Lender a fully perfected first mortgage on the
Premises and Improvements, a fully perfected first security interest in
accordance with the Uniform Commercial Code in the accounts receivable and
inventory of the Borrower and the fixtures of the Borrower located or to be
located on the Premises, an assignment of licenses, permits, agreement, plans
and specifications pertaining to the Improvements and an assignment of leases
and rents with respect to the Premises to secure the Note of Borrower and the
obligations of Borrower under this Agreement;

          2.2.3  have delivered to Lender a mortgagee's title insurance policy
in the face amount of Six Million Five Hundred Thousand and 00/100 Dollars
($6,500,000.00) issued by First American Title Insurance Company (hereinafter
referred to as the "Title Insurance Company") in the form of the American Land
Title Association's standard form of mortgagee title insurance policy (or in
such other form as may be required by statute); said policy to show no prior
liens or encumbrances except and particularly approved in writing by Lender; to
contain only standard exceptions, excluding, without limitation, any exceptions
for lack of a survey or mechanics' and materialmen's liens, and to be in all
respects satisfactory to Lender;

          2.2.4  have entered into and delivered to Lender a written
Construction Contract with Contractor, which Contract and Contractor first shall
have been approved in writing by Lender, a collateral assignment of the
Construction Contract in a form acceptable to Lender, and a performance bond
issued by a surety acceptable to Lender and naming Lender as loss payee,
securing performance of the Construction Contract;

          2.2.5  have delivered to Lender evidence in form and substance
satisfactory to Lender, that all public utilities necessary for the construction
and operation of the Improvements upon the Premises for their intended purposes
are available at the boundaries of the Premises and there is no impediment or
restriction to connecting any of such facilities to the Improvements;

          2.2.6  have delivered to Lender a certified survey showing the
location and dimensions of the proposed Improvements, utilities, parking areas,
rights-of-way and all easements affecting the Premises, and the points of access
to the main road upon which the Premises front and including a certification
that all proposed Improvements, if constructed in accordance with the Plans,
will be in full compliance with all zoning laws and regulations applicable
thereto;

          2.2.7  have delivered to Lender an opinion of Borrower's counsel, in
form and substance satisfactory to Lender, that the Loan has been duly
authorized by Borrower; that the Note and the Security Instruments are binding
obligations of Borrower or the guarantors, as applicable; that construction and
operation of the Improvements, as contemplated hereunder, will not violate any
applicable zoning or building code, law, ordinance or other governmental
regulation; that all necessary action required by federal, state and/or local
law to be taken pursuant to the construction and completion of the Improvements
has been taken; and containing such other opinions as Lender may request;

          2.2.8  have delivered to Lender written assurances satisfactory to
Lender from Borrower's engineer, and Contractor that Lender shall have the same
rights as Borrower to the

                                      -3-
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continued use of the Plans and all services related thereto for the construction
of the Improvements;

          2.2.9  not be in default with respect to any of the provisions of this
Agreement to be performed or observed;

          2.2.10 have submitted to Lender all subcontractors' subcontracts
requested by Lender; Lender reserving the right at any time to require
submission of subcontracts from (i) each and every subcontractor and material
supplier whose bid represents ten percent (10%) or more of the total
construction costs and (ii) a sufficient number of subcontractors and material
suppliers whose bids collectively represent not less than seventy percent (70%)
of the total costs of construction, and Lender reserving the right to approve or
disapprove of each such subcontractor and subcontract;

          2.2.11 have qualified for a first advance hereunder within thirty (30)
days from the date hereof or such other date as may be agreed upon in writing by
the parties hereto; and

          2.2.12 have delivered to Lender copies of all partial waiver and
subordination forms, releases, notices of contract, notices of identification,
statements of account, statements of claim and other documents relating to the
Improvements or the Premises by whomsoever filed.

     2.3  Representations of Borrower
          ---------------------------

          Borrower represents and warrants to Lender:

          2.3.1  that at least one copy of the Plans has been deposited with
Lender;

          2.3.2  that the Plans have been filed with all governmental
authorities having jurisdiction, that it has obtained all necessary approvals
thereof and all necessary building, zoning, parking, street opening, access, and
other permits from said authorities, and that construction and operation of the
Improvements on the Premises will not violate (i) any zoning, building code,
subdivision, or land use ordinance, regulation or law promulgated by any
governmental agency, department or subdivision, including without limiting the
generality of the foregoing, the United States Environmental Protection Agency
and the Massachusetts Department of Environmental Protection or (ii) any
restrictions of any kind affecting the Premises;

          2.3.3  that all utilities and services necessary for the operation of
the Improvements for their intended purpose (including, without limitation,
water, gas, electricity, telephone, and storm and sanitary sewer facilities) are
available at the boundary of the Premises, can be tapped into or installed by
Borrower, and are of sufficient capacity to adequately meet all needs and
requirements necessary for the operation of the Improvements for their intended
purposes;

          2.3.4  that there is unrestricted access for the passage of motor
vehicles to and from the Premises to and from the main road upon which the
Premises fronts and all required curb cut or access permits (if any) have been
obtained;

                                      -4-
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          2.3.5  that no part of the Premises is located in a designated flood
hazard area (as defined in the Flood Disaster Protection Act of 1973, as amended
by the National Flood Insurance Reform Act of 1994);

          2.3.6  that all test borings and other engineering studies normally
performed by prudent developers of similar projects on similar type land have
been performed and have yielded results normally considered favorable to permit
the utilization and development of the Premises for the purpose herein referred
to;

          2.3.7  that there are no easements across or affecting the Premises
which will have any adverse effect upon the operation of the Improvements for
their intended purpose, nor which will in any way interfere with the
construction of the Improvements on the Premises;

          2.3.8  that Borrower is the true, sole and lawful owner of the
Premises, is lawfully seized and possessed of the same in fee simple, and has
good right, full power and lawful authority to mortgage, grant, bargain, sell
and convey the same and the Security Instruments, when properly filed and
recorded, will all create valid liens on the Premises;

          2.3.9  that the execution and delivery of, and the performance by
Borrower of its obligations under this Agreement, the Note, and the Security
Instruments have been authorized by all appropriate action; and that said
instruments, upon delivery, will be the valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, and will not
violate or conflict with any other agreements or instruments to which Borrower
is a party or by which Borrower is bound;

          2.3.10 that no litigation or proceedings are pending or threatened
against Borrower or the Premises, or any properties adjacent to the Premises,
which would or might affect the validity or priority of the lien of the Mortgage
or other security for the Note on the Premises or which could or might
materially affect Borrower's ability to perform this Agreement;

          2.3.11 that the making of the Loan or Lender's acquisition of the Note
or any of the Security Instruments will not subject Lender to any claim for a
brokerage commission;

          2.3.12 that all financial statements and other information furnished
to the Lender by the Borrower and the guarantors in connection with the Loan,
the Premises and the Improvements are true, accurate and complete in all
material respects and fairly present the financial condition of the Borrower and
the guarantors as of the respective dates of such statements;

          2.3.13 that neither the Borrower nor any of the guarantors is subject
to any contingent liabilities or obligations (whether for taxes, long-term
commitments or otherwise) which are not accurately reflected in financial
information furnished to the Lender in connection with the Loan; and

          2.3.14 that each Borrower and guarantor has filed all required tax
returns and paid all applicable federal, state and local taxes.

                                      -5-
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     Each of the foregoing representations and warranties shall survive the
making of the Loan and each advance of the Loan Proceeds hereunder, and Borrower
shall indemnify and hold harmless Lender from and against any loss, damage or
liability attributable to the breach thereof, including all fees and expenses
incurred in the defense or settlement of any claim arising therefrom against
Lender.

     2.4  Covenants of Borrower
          ---------------------

          Until payment in full of the Note and all other sums required to be
paid by Borrower under the Security Instruments and this Agreement, Borrower
shall:

          2.4.1  cause the Improvements to be constructed, equipped and
completed, diligently and continuously and with all reasonable dispatch, in
accordance with all laws, rules, regulations and requirements of all
governmental authorities having jurisdiction with respect to the Improvements,
the appropriate Board of Fire Underwriters, and the Plans and any modifications
and additions to the Plans which may be deemed necessary or desirable by Lender
and/or Lender's construction representative, which modifications and additions
to the Plans, Borrower agrees to provide within ten (10) days after Lender's
request therefor;

          2.4.2  in any event, cause the Improvements to be completed and ready
for operation and occupancy on or before April 28, 2001 (the "Construction
Completion Date");

          2.4.3  make no material changes or amendments to the Plans and make no
change orders without the prior written approval of Lender;

          2.4.4  with respect to any amendments or supplements to the Plans, to
which Lender shall have given its prior written approval, file all such
amendments and supplements with, and obtain all necessary approvals from, all
governmental authorities having jurisdiction thereof and promptly deliver true
copies thereof to Lender;

          2.4.5  permit Lender and its representatives to enter upon the
Premises and inspect the Improvements at all times during normal business hours
and examine all detailed plans, shop drawings, specifications and other books
and records relating to the Premises and the Improvements;

          2.4.6  not enter into any lease with respect to the Premises
(excepting equipment leases) without first having submitted to the Lender a copy
of said lease together with a duly executed subordination of lease agreement;

          2.4.7  within five (5) days after construction of the foundation has
been completed, deliver a certificate from an engineer or surveyor satisfactory
to Lender to the effect that no part of the foundation or Improvements
encroaches on any adjoining parcel of land, that the foundation is located on
the Premises in accordance with the Plans, and that all Improvements then
constructed are contained within the boundaries of the Premises and are in
compliance with all applicable setback (front, side, and rear) requirements;

                                      -6-
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          2.4.8  permit Lender to erect an appropriate sign on the Premises at
such location as Lender, in its discretion, may determine, indicating that the
Improvements are being financed by Lender;

          2.4.9  furnish or cause to be furnished to Lender:

                 2.4.9.1 as soon as available, but in any event upon filing with
applicable taxing authorities, a copy of each federal and state tax return of
Borrower and any guarantors;

                 2.4.9.2 as soon as available, but in any event within fifteen
(15) days after the close of each fiscal month: (a) a statement of stockholders'
equity and a statement of changes in cash flow of Borrower for such fiscal
month; (b) income statement of Borrower for such fiscal month; and (c) balance
sheets of Borrower as of the end of such fiscal month-all such statements to be
in reasonable detail, including all supporting schedules and comments and any
management letters issued with respect to Borrower; the statements and balance
sheets to be certified as accurate and complete by the President or chief
financial officer of Borrower and acceptable to Lender in accordance with
generally accepted accounting principles, such statement to present fairly the
financial position and results of operations of Borrower;

                 2.4.9.3 as soon as available, but in any event within forty-
five (45) days after the close of each fiscal quarter: (a) a statement of
stockholders' equity and a statement of changes in cash flow of IP Fibre Devices
(UK) Limited for such fiscal quarter; (b) income statement of 113 Fibre Devices
(UK) Limited for such fiscal quarter; and (c) balance sheets of IP Fibre Devices
(CK) Limited as of the end of such fiscal quarter - all such statements to be in
reasonable detail, including all supporting schedules and comments and any
management letters issued with respect to IP Fibre Devices (UK) Limited; the
statements and balance sheets to be certified as accurate and complete by the
President or chief financial officer of IP Fibre Devices (UK) Limited and
acceptable to Lender in accordance with generally accepted accounting
principles, such statement to present fairly the financial position and results
of operations of IP Fibre Devices (UK) Limited and to be stated in United States
dollars;

                 2.4.9.4 as soon as available, but in any event within ninety
(90) days after the close of each fiscal year: (a) a statement of stockholders'
equity and a statement of changes in cash flow of each of Borrower and IP Fibre
Devices (UK) Limited for such fiscal year: (b) income statement of each of
Borrower and IP Fibre Devices (UK) Limited for such fiscal year; and (c) balance
sheets of each of Borrower and IP Fibre Devices (UK) Limited as of the end of
such fiscal year-all such statements to be in reasonable detail, including all
supporting schedules and comments and any management letters issued with respect
to each of Borrower and IP Fibre Devices (UK) Limited; the statements and
balance sheets to be prepared upon audit by an independent certified public
accountant selected by each of Borrower and IP Fibre Devices (UK) Limited and
acceptable to Lender in accordance with generally accepted accounting
principles, such statement to present fairly the financial position and results
of operations of each of Borrower and IP Fibre Devices (UK) Limited and, in the
case of IP Fibre Devices (UK) Limited, to be stated in United States dollars;

                 2.4.9.5 if Borrower becomes a public company, quarterly
financial statements required to be filed with the Securities and Exchange
Commission in lieu of the

                                      -7-
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monthly statements required by Section 2.4.9.2 above and, promptly after the
sending or making available or filing of the same, copies of all reports, proxy
statements, and financial statements that Borrower sends or makes available to
its stockholders and all registration statements and reports that the Borrower
or any guarantor files with the Securities and Exchange Commission or any
regulatory agency; and

                 2.4.9.6 as soon as available, but in any event within ninety
(90) days after the end of each calendar year, complete, accurate, signed
personal financial statements of Valentin P. Gapontsev, in form satisfactory to
Lender;

          2.4.10 furnish Lender such budgets and revisions of budgets as Lender
may require in order to show the estimated cost of construction of Improvements
and the amount of funds required, at any given time, to pay for the completion
thereof;

          2.4.11 in the event that any of the Improvements shall be damaged or
destroyed by fire or any other casualty exceeding $250,000.00 as determined by
an independent insurance adjuster, and Lender shall have agreed in its business
judgment, after reviewing the delay, if any, caused by such casualty loss and
the impact upon Borrower's business plans and prospects and financial condition,
to make the proceeds of any fire insurance available, proceed with the
restoration thereof and diligently prosecute the work of restoration to
completion. No part of the cost of such restoration shall be made the basis of
any application for advances of Loan Proceeds under this Agreement unless all
proceeds of insurance shall be first exhausted in the restoration of the damage
to the Improvements;

          2.4.12 cooperate fully with Lender with respect to any proceedings
before any court, board or governmental agency which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
Security Instruments and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings;

          2.4.13 make no changes in ownership beyond those permitted by Section
2.4.18 below, or in the nature of business of the Borrower or the active
involvement of Valentin P. Gapontsev in the operations of the Borrower, without
the prior written consent of the Lender, which consent shall not be unreasonably
withheld or conditioned;

          2.4.14 maintain its principal depository accounts with the Lender;

          2.4.15 establish and maintain with the Lender a construction fund
account for all funds used by Borrower for construction of the Improvements,
including, without limitation, Loan Proceeds;

          2.4.16 establish and maintain with Lender a segregated account into
which shall be deposited all first round equity funds raised by Borrower through
private placements during the term of the Loan;

          2.4.17 maintain, at all times, a Debt Service Coverage Ratio of not
less than 1.20:1.00, to be tested as of the end of each fiscal year of Borrower.
For purposes of this Section 2.4.17, "Debt Service Coverage Ratio" means, for
any applicable fiscal period, the ratio equal to

                                      -8-
<PAGE>

(i) net profit of Borrower plus depreciation and amortization divided by (ii)
(a) current maturities of long term debt and capital leases, plus (b) interest
expense of Borrower;

          2.4.18 not permit any transfer, sale, redemption, retirement, or other
change in the ownership of more than twenty percent (20%) of the outstanding
capital stock of Borrower, without Lender's prior written consent, which consent
shall not be unreasonably withheld or conditioned;

          2.4.19 permit the Lender to conduct quarterly field examination of
Borrower at Borrower's cost and expense not exceeding $1,000.00 per examination;
and

          2.4.20 pay, perform and observe all obligations now existing, or
arising in the future, to Massachusetts Capital Resource Company ("MCRC") or any
other subordinated lender pertaining to financing provided with respect to the
construction of the Improvements.

     2.5  Total Project Budget
          --------------------

          2.5.1  Borrower represents and warrants that Exhibit D attached hereto
                                                       ---------
contains a complete and full enumeration of all costs (hard, soft, and land
costs) which Borrower anticipates will be incurred in connection with the
construction and development of the Improvements and in connection with the
starting up of the operation of the Improvements; Exhibit D being hereinafter
                                                  ---------
referred to as the "Total Project Budget."

          2.5.2  The Total Project Budget will be financed in accordance with
Exhibit D and this Agreement by:

                 2.5.2.1 $5,500,000.00 in equity funds or subordinated debt from
MCRC, or binding commitments acceptable to Lender for equity injections or
subordinated debt from MCRC in such amounts, to be provided by Borrower; and

                 2.5.2.2 the balance (not to exceed $6,500,000.00) from the Loan
Proceeds.

          2.5.3  It is understood and agreed that:

                 2.5.3.1 initial equity funds required to be provided by
Borrower shall be fully expended in payment of items listed in the Total Project
Budget prior to the disbursement of any of the Loan Proceeds by Lender, and any
subordinated loans from MCRC shall be disbursed pari passu with Loan Proceeds
disbursed by Lender;

                 2.5.3.2 the undistributed Loan Proceeds and subordinated loans
to be disbursed by MCRC at all times shall equal or exceed the amount necessary
to pay for the completion of the Improvements, including (i) all items set forth
in the Total Project Budget; (ii) all incurred cost overruns and incurred costs
for items not included in the Total Project Budget; and (iii) all cost overruns
and costs not included in the Total Project Budget which Lender deems likely to
be incurred;

                                      -9-
<PAGE>

               2.5.3.3 the undistributed portion of the Loan Proceeds allocated
to each item in the Total Project Budget at all times shall equal or exceed the
amount necessary to pay for such items;

               2.5.3.4 if for any reason the amount of such undistributed Loan
Proceeds with respect to the Improvements or any of the individually budgeted
items set forth in Exhibit D shall at any time be, or become, or in the judgment
                   ---------
of Lender appear reasonably likely to become, insufficient for the purpose
described in Subsections 2.5.3.2 or 2.5.3.3 (regardless of how such condition
may be caused), Borrower will, within five (5) days after written request by
Lender, deposit an amount equal to the deficiency with Lender, which deposit
first shall be exhausted before any further disbursement of the Loan Proceeds
shall be made; and

               2.5.3.5 the amount of the outstanding indebtedness of Borrower to
Lender shall not exceed 80% of the fair market value of the Premises as
determined from time to time by appraisals acceptable to Lender.

     2.6  Advances of Loan Proceeds
          -------------------------

          2.6.1 Provided Borrower shall have first expended $2,500,000.00 of its
initial equity funds in the payment of hard costs listed in the Total Project
Budget as certified to by Lender's construction representative or in the payment
of soft costs listed in the Total Project Budget as verified by proof
satisfactory to Lender; provided Borrower shall not be in default under, and
there shall exist no event of default under, this Agreement or the Note, or any
of the Security Instruments, or any other agreement or instrument executed in
connection herewith, nor shall there exist any condition or event which, with
the giving of notice or lapse of time, or both, would constitute such an event
of default; provided Borrower shall have complied with the provisions of Section
2.2 hereof; and provided Borrower shall have paid all interest charges then due,
and all fees of Lender's construction representative and legal fees incurred in
connection with the construction of the Improvements or the Note or the Loan
evidenced thereby, and subject to the provisions of Section 2.5 hereof, Lender,
upon written application by Borrower (made not less than seven (7) business days
prior to the date of the requested advance under this Section 2.6 and made not
more often than every thirty (30) days), shall make advances from the Loan
Proceeds pari passu with any subordinated loans from MCRC or equity funds in
excess of the first $2,500,000.00 of equity as hereinafter specified.

          2.6.2 The amount of each such advance, together with advances from
MCRC, shall represent:

                2.6.2.1 ninety-five percent (95%) of the total "hard costs"
incurred by Borrower (i.e., costs incurred under the Construction Contract) and
approved by Lender in conformance with the budgeted expenses enumerated in
Exhibit D in connection with the construction of the Improvements as of the date
---------
of the advance application in excess of funds required to be provided and
expended by Borrower under the terms hereof as of the date of said advance
application, less any amounts previously advanced by Lender from the Loan
Proceeds but in no event more that the amount certified by Lender's construction
representative (whose costs and fees shall be borne by the Borrower) as then
being due and payable; and

                                      -10-
<PAGE>

                2.6.2.2 such portion of the "soft costs" enumerated in Exhibit D
                                                                       ---------
incurred by Borrower in connection with the construction of the Improvements as
of the date of the advance application, as Lender in its uncontrolled discretion
shall deem reasonable in relation to the hard costs incurred as of the date of
the advance application, provided that the Lender agrees that it shall advance
Loan Proceeds to pay the architect's fees included in the Construction Contract.

          2.6.3 Each application for advances pursuant to this Section 2.6.
must be accompanied by the following:

                2.6.3.1 a completed itemized request for payment, signed by
Contractor and Borrower on a standard AIA Requisition Form or in such other form
approved by Lender;

                2.6.3.2 the written report of the Title Insurance Company as of
the date of the making of such advance, affirmatively insuring such advance and
that there are no liens or other encumbrances on the Premises (other than real
estate taxes for the then current year, payment of which is not in default, the
Security Instruments and such other liens and encumbrances as appeared in the
policy of title insurance delivered prior thereto to Lender) and no notice of
contract or other notice of intention to file liens thereon in any public
office; unless released, subordinated or waived as provided in subparagraph
2.6.3.4 of this Section 2.6;

                2.6.3.3 Lender's inspection and verification that, or (at
Lender's option) a certificate of the construction representative of Lender, as
selected by Lender in its sole discretion (who will make monthly inspections of
the Premises and Improvements on Lender's behalf, the cost of each such
inspection to be borne by Borrower), that all work performed at the site of
construction when the advance is requested has been performed in good and
workmanlike manner, that all materials and fixtures usually furnished and
installed at that time have been furnished and installed, all in accordance with
the Plans, and that sufficient hard cost Loan Proceeds remain undisbursed to
complete the Improvements in accordance with the Plans and the Total Project
Budget set forth in Exhibit D;
                    ---------

                2.6.3.4 such fully executed lien releases, waivers, partial
waiver and subordination forms, and affidavits from, or the submission of other
appropriate forms by, Borrower, Contractor, subcontractors and materialmen as
Lender may require; and

                2.6.3.5 an affidavit of Borrower that as of the date of the
advance application, Borrower knows of no material or substantive fact which
will or could in any way impair completion of the Improvements in accordance
with the Plans or impair the timely repayment of the Loan or interfere with the
operation of the Improvements for their intended purpose.

          2.6.4 The making of any advance or any part of an advance shall not be
deemed an approval or acceptance by Lender of the work theretofore done or of
materials theretofore furnished.

          2.6.5 Advances of the Loan Proceeds made pursuant to this Section 2.6
shall, at the option of Lender, be made (i) directly to Borrower by check or
wire transfer, or by depositing same in Borrower's checking account with Lender,
(ii) by check payable to Borrower and

                                      -11-
<PAGE>

Contractor jointly and delivered either to Borrower or Contractor, (iii) by
check or wire transfer payable to Contractor or, after the occurrence of an
Event of Default or if the Lender determines it is necessary to protect its lien
upon the Premises, directly to other subcontractors, materialmen, and creditors
of the Improvements, (iv) to the Title Insurance Company by check or wire
transfer for disbursement in accordance with Lender's directions, or (v) by any
combination of the above. Lender reserves the right to condition each and every
advance pursuant to this Section 2.6.5 upon Borrower's certification that such
advance(s) has or have been made within such time as necessary to grant and/or
preserve the priority of Lender's lien on the Premises.

          2.6.6 Lender shall advance to Borrower the balance of the funds to be
loaned hereunder for which Borrower has qualified (but not earlier than thirty
(30) days after the last advance of funds provided under this Section 2.6) as
soon as Borrower shall have delivered to Lender the following:

                2.6.6.1 a written certificate of the construction representative
selected by Lender, that the construction of the Improvements and the
installation of the equipment to be installed therein has been completed in a
good workmanlike manner in accordance with the Plans;

                2.6.6.2 a duly executed, notarized and recorded Notice of
Substantial Completion;

                2.6.6.3 a written report of the Title Insurance Company that
there are no liens or other encumbrances on the Premises (other than real estate
taxes for the then current year, payment of which is not in default, the
Mortgage and such other liens and encumbrances as appear in the policy of title
insurance delivered prior thereto to Lender) and no notices of contract or other
notice of intention to file liens thereon in any public office; if not
previously submitted to and accepted by Lender in a format acceptable to Lender,
a certificate by Borrower in form and substance satisfactory to Lender, listing
all categories of Improvements costs and the amount paid by Borrower with
respect to each;

                2.6.6.4 the written certificates of Borrower and the Contractor
that they, and each of them, have received no affidavits, notices of
identification, or other notices in connection with the obtaining of a
mechanic's lien by any contractor, subcontractor, subsubcontractor, materialman
or laborer;

                2.6.6.5 such lien releases, notices of dissolution of lien,
waivers, subordinations and affidavits from, or the submission of other
appropriate forms by Borrower, Contractor, any architect, subcontractors and
materialmen as Lender may require;

                2.6.6.6 an affidavit of Borrower that as of the date of the
final advance application Borrower knows of no material or substantive fact
which will or could in any way negatively impact the Improvements, repayment of
the Loan, or operation of the Premises for their intended purpose;

                2.6.6.7 a copy of the original permanent certificate of
occupancy and all other applicable certificates, licenses, consents and
approvals issued or required to be issued by

                                      -12-
<PAGE>

the various governmental authorities having jurisdiction with respect to the
Improvements and by the appropriate Board of Fire Underwriters, or other similar
bodies; and

                    2.6.6.8  true, correct and complete copies of "as built"
plans including the location of foundations, underground utilities, septic
systems, retention and detention ponds, irrigation wells, drains, and irrigation
system components.

          2.6.7     Lender, in its sole discretion, may advance parts or the
whole of any advances before the requirements in Section 2.6.3 or 2.6.6 are
complied with, and all such advances or payments shall be deemed to have been
made pursuant to this Agreement, provided Lender will consult with Borrower
prior to doing so except in cases of emergency.

          2.6.8     Borrower agrees that Lender shall assume no duty with
respect to disbursement of the Loan Proceeds and that any sums disbursed by
Lender in good faith and in reliance upon this Agreement, or the Security
Instruments, shall be secured by the lien of the Security Instruments, and that
Lender, in its discretion, may make such changes in the method of disbursing the
Loan Proceeds and the conditions precedent thereto as Lender may deem
reasonable.

          2.6.9     With the exception of change orders of $10,000.00 or less in
each instance up to an aggregate sum of $100,000.00, at no time shall Lender be
under any obligation to make advances of the Loan Proceeds for any costs or
expenses not specifically provided for in the Total Project Budget or for any
costs or expenses in excess of the specific amount budgeted for such cost or
expense in the Total Project Budget, all of which costs and expenses shall be
promptly paid for by Borrower from Borrower's equity funds.

          2.6.10    All interest payments due under the Note shall be paid by
Borrower. Borrower shall not be reimbursed for interest payments allocable to
periods prior to the commencement of construction of the Improvements. After the
commencement of construction of the Improvements, advances from the Loan
Proceeds for reimbursement of interest paid under the Note and for payment of
other soft costs shall be made (i) only in conjunction with approved advances
for hard construction costs and shall not be the basis for separate advances,
(ii) only to the extent provided for in the Total Project Budget, and (iii) only
if agreed to by Lender in accordance with Section 2.6.2.2 hereof.

          2.6.11    Borrower shall promptly pay when due from Borrower's own
funds, any costs for which Lender makes no advance pursuant to the terms of this
Agreement.


          2.6.12    Any sum which, in accordance with any provision of this
Agreement, shall be payable by Borrower to Lender, at the election of Lender,
shall be deemed an advance by Lender to Borrower pursuant to the provisions of
this Agreement.

          2.6.13    If Borrower shall fail to promptly pay (i) any installment
of interest due under the Note, (ii) any construction supervisory fee incurred
by Lender pursuant to Section 2.6.3.3 hereof, (iii) any expenses incurred by
Lender as set forth in Section 2.10 hereof (including without limiting the
generality of the foregoing, legal fees) or (iv) any other sums due to Lender
under the Note, this Agreement or any of the Security Instruments, Lender shall
be

                                      -13-
<PAGE>

authorized to charge Borrower's checking account with Lender for the amount so
due without the further approval of Borrower.

          2.6.14    Lender reserves the right to refuse to make any advance(s)
of the Loan (i) if, in Lender's sole determination, to do so would result in the
advance being made more than twenty-five (25) days after the last day of the
period stated in an accurate, duly executed partial waiver and subordination of
lien form in substantially the form provided by M.G.L. c.254, (S)32; (ii) if, in
Lender's sole determination, to do so would jeopardize the priority of the liens
granted to Lender pursuant to the Security Instruments; (iii) if, following
Lender's request, Borrower fails to record, or to cause to be recorded, a bond
pursuant to M.G.L. c.254, (S) 14 sufficient in form, substance and amount to
dissolve any lien which may encumber the Premises; or (iv) if, in Lender's
discretion, reasonably exercised, the Borrower's ability to repay the Loan is
impaired; or (v) if there shall have been filed or recorded documents claiming a
lien pursuant to M.G.L. c.254, (S)4, which lien or claim of lien is not
dissolved or waived prior to or contemporaneously with said advance.

     2.7  Insurance
          ---------

          Borrower shall maintain insurance at its own expense in the form, type
(including without limitation, fire, extended coverage, liability, builder's
risk. collapse, earthquake and workers' compensation) and amounts reasonably
required by Lender, which insurance shall name Lender as an additional insured
party and loss payee and shall (to the extent obtainable) provide that (i) such
insurance may not be cancelled or amended without at least thirty (30) days
prior written notice to Lender, and (ii) no act or omission or negligence of
Borrower, its agents or employees, shall in any way affect the validity of such
insurance insofar as Lender is concerned. Borrower has the right of free choice
in the selection of the agent and insurer through or by which insurance required
hereunder is to be placed; provided, however, that all such insurance coverage
shall be written by a company with a general policyholder's rating of A or A+ in
Best's latest Rating Guide. Certificates evidencing such insurance coverage
shall be promptly delivered to Lender.  If Borrower shall fail to provide the
insurance herein required, Lender may procure same at Borrower's expense, and
such expenditure shall be secured by the Security Instruments and be considered
an advance by Lender to Borrower pursuant to the provisions of this Agreement.

     2.8  Events of Default
          -----------------

          The occurrence of any one of the following events shall constitute an
Event of Default under this Agreement:

          2.8.1     if Borrower fails to pay any principal, interest or late
charge under the Note within ten (10) days of the date due or at stated maturity
or by acceleration or pursuant to any prepayment requirements;

          2.8.2     if Borrower fails to observe or perform any other covenant,
condition or agreement on its part to be observed or performed under the
provisions of the Note, this Agreement or any of the Security Instruments within
thirty (30) days after the earlier of (a) the

                                      -14-
<PAGE>

date of written notice of default to Borrower from Lender, or (b) the date on
which Borrower knew or should have known of the existence of such failure;

          2.8.3     if Borrower fails to pay any amount of money within ten (10)
days of the date any such sum becomes due or fails to observe or perform any
other covenant, condition or agreement which is the obligation of Borrower to
the Lender under any other existing or future note, mortgage, agreement or
obligation within thirty (30) days after the earlier of (a) the date of written
notice of default to Borrower from Lender, or (b) the date on which Borrower
knew or should have known of the existence of such failure;

          2.8.4     if Borrower is unable to pay its debts generally as they
become due; an involuntary petition against (if the same is not removed within
thirty (30) days), or a voluntary petition by, Borrower under any bankruptcy,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or insolvency law; if the Borrower makes any general assignment for the benefit
of creditors; or if any trustee, custodian, receiver or liquidator appointed for
the Borrower or of all or any part of the Premises or any or all of the rents or
income thereof and such appointment remains in effect for more than thirty (30)
days;

          2.8.5     if at any time title to the Premises and the Improvements is
not satisfactory to Lender by reason of any lien, charge, encumbrance, title
condition, or exception (other than exceptions contained in the said title
insurance policy to be issued to Lender);

          2.8.6     if the Title Insurance Company shall refuse to insure any
advance made hereunder to be secured by the Mortgage as a valid second priority
lien on the Premises and the Improvements (to the extent constructed and
equipped);

          2.8.7     if Borrower assigns or attempts to assign this Agreement, or
any advance made or to be made hereunder, or any interest herein or therein, or
if the Premises are conveyed or encumbered (except for the execution of leases
consented to by Lender), in any way without the written consent of Lender;

          2.8.8     if any survey, report, or examination, discloses that the
Improvements, or any portion thereof, encroach upon or project over a street, or
upon or over adjoining property, or violate any setback or other restriction,
however created, or any zoning regulations, or any building restriction of any
governmental authority having jurisdiction;

          2.8.9     if, for any reason, construction of the Improvements had not
been commenced within thirty (30) days of the date of this Agreement;

          2.8.10    if the Improvements are materially damaged or destroyed by
fire or otherwise in an amount exceeding $250,000.00 as determined by an
independent insurance adjuster acceptable to Lender, and adequate insurance is
not available to restore such damage within thirty (30) days of the occurrence
of such damage or destruction (as a result of a determination of Lender pursuant
to Section 2.4.11 not to make insurance proceeds available or for any other
reason);

          2.8.11    if Borrower or Contractor does not construct any of the
Improvements substantially in accordance with the Plans previously furnished to
and approved in writing by

                                      -15-
<PAGE>

Lender, as the same may be amended and supplemented with the approval of Lender,
and which have been. filed with and approved by all governmental authorities
having jurisdiction with respect to the Premises;

          2.8.12    if any representation or warranty herein, or in any report,
certificate, financial statement, or other instrument furnished in connection
with this Agreement or the advances made hereunder by or on behalf of Borrower
shall prove to be false, misleading, or incomplete in any material respect;

          2.8.13    if any mechanics', laborers', materialmen's, or similar
statutory liens or any notice thereof shall be filed against the Premises and/or
the Improvements and shall not be discharged, subordinated or dissolved within
twenty (20) days of such filing;

          2.8.14    if Borrower shall default in the due observance or
performance of any covenant, condition or agreement contained in this Agreement
on its part to be paid. performed, or observed beyond any applicable grace or
cure period;

          2.8.15    if any Event of Default described in the Note or any of the
Security Instruments shall occur or any breach or default in the observance or
performance of any condition, term, agreement, or covenant contained in the Note
or the Security Instruments, or any of them, or any other instrument securing
the Note after giving effect to any grace or cure period contained therein shall
occur;

          2.8.16    if any voucher is submitted at any time which Borrower knows
or has reason to know has not been earned by the payee for services performed or
for materials used in or furnished with respect to the Improvements;

          2.8.17    if any cessation occurs at any time in construction of the
Improvements for more than two (2) weeks except for strikes, riots, or other
causes beyond Borrower's control, or if any substantial change is made in the
schedule for the construction thereof from that provided in the Plans or this
Agreement;

          2.8.18    if the cost to complete the Improvements, as estimated by
Lender in good faith, at any time appears likely to exceed the balance of funds
retained by Lender after deducting from the amount hereof the total of unpaid
vouchers outstanding, and Borrower fails to pay the deficiency as required by
Section 2.5.3.4 hereof;

          2.8.19    if Borrower requests a termination of the Loan or confesses
inability to continue performance in accordance with this Agreement; or

          2.8.20    if at any time Borrower permits any transfer, sale,
redemption, retirement, or other change in the ownership of more than forty-nine
percent (49%) of the outstanding voting stock of Borrower.

          2.8.21    if IP Fibre Devices (UK) Limited defaults on its obligations
under, or terminates or attempts to terminate, the Corporate Guaranty;

                                      -16-
<PAGE>

          2.8.22    if Dr. Valentin P. Gapontsev defaults on his obligations
under, or terminates or attempts to terminate, the Individual Guaranty; or

          2.8.23    the occurrence of a default or event of default under any of
the Security Instruments beyond any applicable grace period.

     2.9  Lender's Rights and Remedies Upon Default
          -----------------------------------------

          2.9.1     Upon the occurrence of any Event of Default as hereinabove
referred to in Section 2.8, all obligations on the part of Lender to make
advances under this Agreement, if Lender so elects, shall cease and terminate,
and, at the option of Lender, the Note shall become immediately due and payable,
and Lender shall thereupon be authorized and empowered to exercise any rights of
foreclosure or as otherwise provided for the realization of any security for the
Note covered by any of the Security Instruments; but Lender may make any
advances or portions of advances, after the occurrence of any such Event of
Default, without thereby waiving its right to demand payment of Borrower's
indebtedness evidenced by the Note and secured by the Security Instruments, and
without becoming liable to make any other or further advances as hereinabove
contemplated by this Agreement.

          2.9.2     In addition to the remedies hereinabove provided, upon the
occurrence of any one or more of the Events of Default, Lender shall be
authorized and empowered, at its election, (i) to enter upon the Premises and
construct, equip and/or complete the Improvements in accordance with the Plans,
with such changes therein as Lender may from time to time, in its sole
discretion, deem appropriate, and to appoint watchmen to protect the
Improvements, all at the risk, cost and expense of Borrower; (ii) to
discontinue, at any time, any work with respect to the Improvements commenced by
it or change any course of action undertaken by it in connection therewith, and
shall not be bound by any limitations or requirements of time, whether set forth
herein or otherwise; and/or (iii) to assume any construction contract or related
agreement made by Borrower in any way pertaining to the Improvements and to take
over and use all or any part or parts of the labor, materials, supplies, and
equipment contracted for by Borrower, whether or not previously incorporated
into the Improvements, all in the sole discretion of Lender.

          2.9.3     In connection with any construction, equipping, and/or
completion of the Improvements undertaken by Lender pursuant to the provisions
of Subsection 2.9.2 (but without intending hereby to limit the powers and
discretions conferred by said subsection), Lender may engage builders,
contractors, architects, engineers, and others for the purpose of furnishing
labor, materials, and equipment for the Improvements; pay, settle, or compromise
all bills or claims which may become liens against the Improvements and the
Premises or which have been or shall be incurred in any manner in connection
with such construction, equipping, and/or completion of the Improvements; and
take such action or refrain from acting hereunder as Lender may, in its sole
discretion, from time to time determine, without limitation, to carry out the
intent of this Section 2.9.

          2.9.4     Borrower shall be liable to Lender for all costs paid or
incurred for the construction, completion, and/or equipping of the Improvements,
whether the same shall be paid or incurred pursuant to the provisions of
Subsections 2.9.2 or 2.9.3, or otherwise, and all

                                      -17-
<PAGE>

payments made or liabilities incurred by Lender hereunder of any kind whatsoever
shall be paid by Borrower to Lender on demand, with interest to the date of
payment at the rate set forth in the Note and shall be secured by the Security
Instruments.

          2.9.5     Upon the occurrence of any of the Events of Default, the
rights, powers, and privileges provided in this Section 2.9 and all other
remedies available to Lender under this Agreement or at law or in equity may be
exercised by Lender at any time and from time to time, whether or not the
indebtedness evidenced and secured by the Note and the Security Instruments
shall be due and payable, and whether or not Lender shall have instituted any
foreclosure proceedings or other action for the enforcement of its rights under
the Note or any of the Security Instruments.

          2.9.6     For the purpose of carrying out the provisions and
exercising the rights, powers and privileges granted by this Section 2.9,
Borrower hereby irrevocably constitutes and appoints Lender its true and lawful
attorney-in-fact, and with full power of substitution, to execute, acknowledge,
and deliver any instruments, and do and perform any acts which are referred to
in this Section 2.9 in the name and behalf of Borrower. The power vested in said
attorney-in-fact is, and shall be deemed to be, coupled with an interest and
cannot be revoked.

     2.10 Expenses of Lender
          ------------------

          Borrower shall pay Lender, on demand, any and all expenses incurred or
paid by Lender which relates to this loan transaction, this Agreement, the Note,
and any Security Instruments, including (without limitation) the examination of
title to the Premises, the cost of title insurance, charges for examining public
records in connection with advances from the Loan Proceeds, inspections, drawing
of papers, recording and filing fees, revenue stamps, if any, and the reasonable
fees and disbursements of counsel and Lender's construction representative. At
Lender's election all of such fees or expenses may be paid from the Loan
Proceeds hereunder and in such event, shall constitute additional indebtedness
of Borrower evidenced by the Note and secured by the Security Instruments.

     2.11 Assignment of This Agreement
          ----------------------------

          Lender may assign, negotiate, or pledge all or any portion of its
rights under this Agreement or any of its rights or security with respect to the
Note and the Security Instruments, and, in case of such assignment, Borrower
shall accord full recognition thereto.  Borrower shall not assign or attempt to
assign directly or indirectly, any of its rights under this Agreement or under
any instrument referred to herein without the prior written consent of Lender.

     2.12 General Provisions
          ------------------

          2.12.1    The captions in this instrument are for convenience and
reference only and do not define, limit, or describe the scope of the provisions
hereof.

          2.12.2    The terms, covenants, agreements, and conditions contained
herein shall extend to, include and inure to the benefit of, and be binding upon
Borrower and Lender and their respective heirs, executors, administrators,
successors and assigns, and may not be terminated, changed, or amended orally.

                                      -18-
<PAGE>

          2.12.3    Any notice, demand, request, instruction, document, or other
communication to be given hereunder or in connection herewith shall be in
writing and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

          If to Lender:            FAMILY BANK, FSB
                                   370 Main Street
                                   Worcester, MA  01608
                                   Attention:  Senior Commercial Loan Officer

          with a copy to:          George W. Tetler III, Esquire
                                   Bowditch & Dewey, LLP
                                   311 Main Street
                                   Worcester, MA  01608

          If to Borrower:          IPG PHOTONICS CORPORATION
                                   660 Main Street
                                   Sturbridge Business Park
                                   P.O. Box 519
                                   Sturbridge, MA 01566
                                   Attention:  Controller

          with a copy to:          Joel P. Greene, Esquire
                                   Lane, Greene, Murtha & Edwards, LLP
                                   446 Main Street, Suite 1500
                                   Worcester, MA  01608


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.

          2.12.4    BORROWER AND LENDER MUTUALLY WAIVE ANY RIGHTS TO A TRIAL BY
JURY, WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR
COUNTERCLAIM, BROUGHT OR INSTITUTED BY ANY PARTY TO THIS AGREEMENT OR ANY OF
THEIR SUCCESSORS AND ASSIGNS, WHICH RELATES DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE SECURITY INSTRUMENTS, THE OBLIGATIONS, OR THE RELATIONSHIP BY AND
AMONG BORROWER, ANY CO-OBLIGOR OR GUARANTOR, LENDER AND/OR ANY OR ALL OF THEM.

          2.12.5    This Agreement has been made in the Commonwealth of
Massachusetts, and the provisions thereof shall be governed by and construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.

                                      -19-
<PAGE>

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

                                    FAMILY BANK, FSB


                                    By /s/ Douglas J. G. MacLean
-------------------------------        ---------------------------------------
Witness                                Douglas J. G. MacLean, Vice President


                                    IPG PHOTONICS CORPORATION


/s/  Joel P. Greene                 By /s/ Valentin P. Gapontsev
-------------------------------        ---------------------------------------
Witness                                Valentin P. Gapontsev, Its President

                                      -20-
<PAGE>

                                   EXHIBIT A

The land in Oxford, Worcester County, Massachusetts situated on the easterly
side of Old Webster Road and being shown as two (2) parcels of land on a plan
entitled "Boundary Plan prepared to Elmar Realty Trust, by CME Associates, Inc.,
Engineers & Planners, Southbridge, Massachusetts, Scale 1" = 100, dated October
1, 1999", recorded with the Worcester Registry of Deeds in Plan Book 748, Plan
89, and shown as "N/F Elmar Realty Trust, area = 2.4 acres" and "N/F Elmar
Realty Trust, area = 34.0 Acres, more or less".

Together with all rights of the Borrower, if any, in and to the French River.

BEING the same premises conveyed to the Borrower by deed of Elmar Realty Trust
dated November 11, 1999 and recorded with the Worcester Registry of Deeds in
Book 22042, Page 324.
<PAGE>

                                   EXHIBIT B

                            PLANS AND SPECIFICATIONS

                       DELIVERED DIRECTLY TO THE LENDER
<PAGE>

                                   EXHIBIT C

                              PERMITTED EXCEPTIONS

                                      NONE
<PAGE>

                                   EXHIBIT D

                              TOTAL PROJECT BUDGET

                        DELIVERED DIRECTLY TO THE LENDER