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                                                                   EXHIBIT 10.16

                                OPTION AGREEMENT

OPTIONEE:                                GRANT DATE: ___________________________
                                         SHARES GRANTED: _______________________
                                         PRICE PER SHARE: ______________________
                                         OPTION TYPE: NON-QUALIFIED STOCK OPTION
                                         OPTION PLAN: DIRECTORS PLAN-PLAN 4
                                         OPTION ID: DIRECTORS PLAN-PLAN 4-______

IPG Photonics Corporation is pleased to report that the IPG Board of Directors
has granted to you (the "Optionee") a stock option (the "Option") to purchase
shares of IPG Common Stock, $00001 par value, according to the terms in this
Option Agreement:

Shares will vest in accordance with the following schedule:

SHARES   AVAILABILITY   VEST DATE   EXPIRE DATE
------   ------------   ---------   -----------

     By signing this Option Agreement, you agree that (I) this Option is granted
under the IPG Photonics Corporation Non-Employee Directors Plan (the "Plan"), as
amended, and (2) you will be bound by the terms of the Plan attached as Exhibit
A and the IPG Photonics Corporation Non-Qualified Stock Option Agreement Plan
Terms & Conditions (revision 6_06) attached as Exhibit B (the "Option Terms and
Conditions"), the terms of which are incorporated by reference in their entirety
into this Option Agreement. You acknowledge that you have received a copy of the
Plan and the Option Terms & Conditions.

     Nothing in this Option Agreement, the Plan, or Option Terms and Conditions
shall confer on the Optionee any right to continue any service provider
relationship for any period of specific duration. This Option Agreement shall be
governed by the substantive laws of Delaware, and this Option Agreement shall
not be modified except in writing signed by Optionee and IPO.


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IPG Photonics Corporation               Date


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                                        Date

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                               NON-QUALIFIED STOCK
                   OPTION AGREEMENT TERMS AND CONDITIONS UNDER
           IPG PHOTONICS CORPORATION NON-EMPLOYEE DIRECTORS STOCK PLAN

1. Definitions; Section References. All terms used in this Agreement that are
not otherwise defined shall have the meanings ascribed to them in the IPG
Photonics Corporation Non-Employee Directors Stock Plan, as amended from time to
time (the "Plan") or the Option Agreement ("Option Agreement") executed by the
Optionee and IPG Photonics Corporation, a Delaware corporation (the "Company").
Unless otherwise indicated, all section references are to sections of this
Agreement.

2. Term and Exercise of Option Shares. The term and exercise of the Option shall
be as follows:

(a) The term of the Option granted shall commence as of Grant Date and shall end
on the tenth (10th) anniversary of the Grant Date (the "Expiration Date"),
unless earlier terminated in accordance with Section 5. No option may be
exercised after the Expiration Date.

(b) The Option shall only be exercised to the extent the Option has Vested and
has not been previously exercised. The Option granted shall be exercised by the
Optionee by delivering the following to the Secretary of the Company or to any
other person as may be designated by the Company from time to time, on any
business day prior to or on the Expiration Date:

(i)  A signed Notice of Exercise of Stock Option in the form prescribed by the
     Company from time to time specifying the number of Shares the Optionee
     desires to purchase;

(ii) A signed Stock Option Purchase Agreement in the form prescribed by the
     Company from time to time (The Notice of Exercise of Stock Option and Stock
     Purchase Agreement are available from the Secretary of the Company);

(iii) Payment in full of the exercise price, subject to the requirements of
     Section 4; and

Such other documents or agreements requested by the Secretary or the Committee.

(c) For the first six months following the first date that the Common Stock is
registered under the Exchange Act and offered for sale to the public, Optionee
agrees that Optionee may not sell, exchange, transfer, or otherwise dispose of
any Shares acquired upon exercise of the Option without the consent of the
Company, which consent may be withheld in the Company's absolute and sole
discretion.

4. Exercise Price.

(a) The price per Share at which the Option shall be exercisable shall be the
Exercise Price as defined in the Notice.

(b) The exercise price of the Shares subject to this Agreement may be paid by
(i) certified or bank check; (ii) the tender of unrestricted Shares already
owned by the Optionee; or (iii) such other means the Committee determines are
consistent with the purpose of the Award and applicable law.

(c) Shares or other securities of the Company may, subject to compliance with
Section 16 of the Securities Exchange Act of 1934 and the rules promulgated
thereunder, if applicable, be delivered to the Company or deducted from the
number of Shares to be delivered to the Optionee to satisfy the obligation in
full or in part as long as such withholding of Shares does not violate any
applicable laws, rules, or regulations of federal, state, or local authorities.
The number of Shares or other securities of the Company to be deducted shall be
determined by reference to the Fair Market Value of such Shares or Fair Market
Value of such other securities as determined by the Committee on the applicable
date. The Optionee may also satisfy the applicable withholding tax obligations
by paying the amount of any taxes in cash within thirty (30) days of the date of
exercise.

5. Termination of Option.

(a) Death, Disability or Retirement. In the event of termination of the
Optionee's Service due to death, Disability or Retirement, all non-Vested
portions of this Options shall immediately become vested, and all Vested
portions of this Option shall remain exercisable until the earlier of (i) the
end of the 12-month period following the date of the Optionee's death or the
date of the termination of his or her Service for disability or Retirement, as
the case may be, or (ii) the date the Options would otherwise expire.

(b) Separation from Service for Cause. If Optionee's Service with the Company
terminates for Cause, any unexercised Option held by Optionee and not in fact
exercised prior to termination shall immediately expire and all rights under
such Option shall immediately be forfeited.

  BY SIGNING THE OPTION AGREEMENT, YOU AGREE TO THESE TERMS & CONDITIONS. READ
                                 THEM CAREFULLY.

<PAGE>

(c) Other Terminations of Service. If the Optionee's Service is terminated for
any reason other than for Cause, death, Disability or Retirement:

(i)  all non-Vested portions of Options held by the Optionee on the date of the
     termination of his or her Service shall immediately be forfeited by the
     Optionee as of such date; and

(ii) all Vested portions of Options held by the Optionee on the date of the
     termination of his or her Service shall remain exercisable until the
     earlier of (i) the end of the 90-day period following the date of the
     termination of the Optionee's Service, or (ii) the date the Options would
     otherwise expire.

6. Rights as a Stockholder; Effect of Option. The Optionee shall have no rights
as a stockholder of the Company with respect to any Shares covered by this
Option until the issuance of a stock certificate for those Shares. Once this
Option or any portion thereof is exercised and Shares are transferred to the
Optionee, any shareholder agreements that apply to the Shares shall be binding
on the Optionee. This Option shall not be deemed to confer upon the Optionee any
rights to continue in the Service of the Company. Neither the Optionee nor his
or her transferee is or will be obligated by the grant of the Option to exercise
it.

7. Changes in Capitalization.

(a) The grant of an Option pursuant to this Agreement shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.

(b) If, while this Option is outstanding, the outstanding Shares have increased,
decreased, changed into, or been exchanged for a different number or kind of
shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, or similar transaction, appropriate and proportionate adjustments
shall be made by the Committee to the number and/or kind of Shares which are
subject to purchase under this Option and for the Option exercise price or
prices applicable to this Option. Such adjustments will be made so that the same
proportion of the Company's issued and outstanding Shares in each instance shall
remain subject to purchase at the same aggregate exercise price.

(c) In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of all its authorized shares with par
value into the same number of shares with a different par value or without par
value, the Shares resulting from any such change shall be deemed to be Shares
within the meaning of this Agreement.

(d) In the event of a merger, consolidation, or acquisition of substantially all
of the Company's Shares or assets, the Committee may take such actions with
respect to outstanding Options as the Committee deems appropriate.

(e) If any fractional share would result from any such adjustment under this
Section 7, the Company shall not issue such fractional share, but shall round
any portion of a share equal to .500 or greater up, and any portion of a share
equal to less than .500 down, in each case to the nearest whole number.

8. Investment Representations. The Committee or the Secretary may require the
Optionee to furnish to the Company, prior to the issuance of any Shares upon the
exercise of all or any part of this Option, an agreement in which the Optionee
represents that the Shares acquired upon exercise thereof are being acquired for
investment and not with a view to the sale or distribution thereof, and which
provides for certain share transfer restrictions and other related matters.

9. Compliance with Securities Laws. Anything in this Agreement to the contrary
notwithstanding, if, at any time specified herein for the issue of Shares to the
Optionee, any law, or any regulation or requirement of the Securities and
Exchange Commission or any other governmental authority having jurisdiction
shall require either the Company or the Optionee to take any action in
connection with the Shares then to be issued, the issue of the Shares shall be
deferred until the action shall have been taken; however, the Company shall have
no liability whatsoever as a result of the non-issuance of the Shares, except to
refund to the Optionee any consideration tendered in respect of the exercise
price.

10. Governing Law: Consent to Jurisdiction. This Agreement shall be construed
by, enforced in accordance with and governed by the substantive laws of the
State of Delaware without giving effect to its conflict of laws provisions
thereof. The Company and the Optionee hereby irrevocably and unconditionally (i)
agree that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court of the State of Delaware
(the "Delaware Court"), and not in any other state or federal court in the
United States of America or any court in any other

  BY SIGNING THE OPTION AGREEMENT, YOU AGREE TO THESE TERMS & CONDITIONS. READ
                                 THEM CAREFULLY.


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<PAGE>

country, and (ii) consent to submit to the exclusive jurisdiction of the
Delaware Court for purposes of any action or proceeding arising out of or in
connection with this Agreement.

11. Notice. Any notice which either party hereto may be required or permitted to
give to the other shall be in writing, and may be delivered personally or by
mail, postage prepaid, if to the Company, addressed to the Company at the
following address: IPG Photonics Corporation, 50 Old Webster Road, Oxford, MA
01540, USA, Attention: Secretary, or at any other address as the Company, by
notice to the Optionee, may designate in writing from time to time; and, if to
the Optionee, to the last know address of the Optionee or at any other address
as the Optionee, by notice to the Company, may designate in writing from time to
time.

12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs, beneficiaries, legal representatives and successors of the
parties. Any successors to the parties to this Agreement shall be entitled to
all of the rights of and obligated to abide by all provisions of any shareholder
agreements that apply to the Shares held by such successors.

13. Severability. In the event that any one or more of the provisions or portion
thereof contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, the same shall not invalidate or
otherwise affect any other provisions of this Agreement and this Agreement shall
be construed as if the invalid, illegal, or unenforceable provision or portion
thereof had never been contained herein.

14. Entire Agreement. This Agreement, the Notice and the Plan constitute and
contain the entire Agreement and understanding between the parties with respect
to the subject matter hereof and supersede any and all prior agreements, if any,
understandings and negotiations relating thereto. No promise, understanding,
representation, inducement, condition or warranty not set forth herein has been
made or relied upon by any party hereto.

15. Waiver. No waiver by either party of the application of any term, provision
or condition of this Agreement, or a breach thereof by the other party, shall
constitute a waiver of any succeeding breach of the same or any other provision
hereof. No such waiver shall be valid unless executed in writing by the party
making the waiver.

16. Transferability. The Optionee shall not transfer, sell, assign or otherwise
dispose of the Option other than by his or her will or the laws of descent and
distribution. Any attempted transfer, sale, assignment or other disposition of
the Option, or of Optionee's rights and obligations under this Agreement,
contrary to the provisions of this Agreement shall be null and void.

17. Subject to Plan. This Option is granted under and subject to the terms of
the Plan. In the event of any conflict between the terms of this Agreement and
the terms of the Plan, the terms of the Plan shall control.

18. Plan and Agreement Not a Contract of Employment or Service. Neither the Plan
nor this Agreement is a contract of employment or Service, and no terms of the
Optionee's Service will be affected in any way by the Plan, this Agreement or
related instruments, except to the extent specifically expressed therein.
Neither the Plan nor this Agreement will be construed as conferring any legal
rights of the Optionee to continue to remain in Service with the Company, nor
will it interfere with the right of the Company to remove the Optionee or to
deal with him or her regardless of the existence of the Plan, this Agreement or
the Option.

19. Counterparts. The parties may execute this Agreement in one or more
counterparts, all of which together shall constitute but one Agreement.

                                [END OF DOCUMENT]

  BY SIGNING THE OPTION AGREEMENT, YOU AGREE TO THESE TERMS & CONDITIONS. READ
                                 THEM CAREFULLY.


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