Document:

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                                                                   EXHIBIT 10.22

INVESTMENT AGREEMENT dated as of March 1, 2001 between 000 NTO IRE-POLUS, a
limited liability company organized under the laws of the Russian Federation
(the "Company"), and IPG Laser GmbH, a corporation organized under the laws of
Germany (the "Investor").

                                   WITNESSETH

     WHEREAS, in consideration of the obligations of the Company hereunder, the
Investor has agreed, on and subject to the terms of this Agreement, to acquire a
share in the Company by contributing cash in the amount equal to 51% of the
charter capital of the Company;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                    ARTICLE I. DEFINITIONS AND INTERPRETATION

1.01 Definitions

     As used herein, the following terms shall have the following meanings:

     "Actions or Proceedings" shall mean any action, suit, proceeding or
arbitration commenced, brought, conducted or heard by or before any Governmental
or Regulatory Authority.

     "Affiliate" shall mean, with respect to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any relative or
spouse of such individual, or any relative of such spouse, any one of whom has
the same home as such individual, and any trust or estate for which such
individual serves as a trustee or in a similar capacity or in which such
individual has a substantial beneficial interest and any Person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of any other Person, provided that, in any event, any Person which
owns, directly or indirectly, a twenty-five percent plus one share Equity
Interest in any other Person (other than as a limited partner of such other
Person) will be deemed to control such other Person.

     "Agreement" shall mean this Investment Agreement and the Exhibits and the
Schedules hereto.

     "Amendments to the Charter" shall have the meaning specified in Section
5.03.

     "Assets and Properties" shall mean, with respect to any Person, all assets
and properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, used, operated, owned or leased by

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such Person, including, without limitation, cash, cash equivalents, Investments,
accounts and notes receivable, charter paper, documents, instruments, general
intangibles, real estate, equipment, inventory, goods and Intellectual Property.

     "Audited Consolidated Financial Statements" shall mean the financial
statements prepared in accordance with generally accepted accounting standards
in the U.S.A., for the fiscal year ended December 31, 1999, the most recent
fiscal year of the Company, delivered to the Investor pursuant to Section
3.07(a).

     "Business Combination" shall mean, with respect to the Company, any merger,
consolidation or combination to which the Company is a party, the issuance or
disposition or acquisition of any shares to or from, as applicable, any third
party, any sale, dividend, split or other disposition or acquisition of Equity
Interests of the Company, any sale, dividend or other disposition or acquisition
of all or substantially all of the Assets and Properties of the Company.

     "Business Day" shall mean a day other than a Saturday, a Sunday or any day
on which banks located in Moscow, Russia, or Frankfurt, Germany are authorized
or obliged to close.

     "Business or Condition of the Company" shall mean the business, condition
(financial or otherwise), results of operations, prospects and Assets and
Properties of the Company taken as a whole.

     "CBR" shall mean the Central Bank of Russia (Tsentralniy bank Rossli or TsB
Rossii), including any applicable territorial agent thereof, or any successor
thereto.

     "Charter" shall mean the most recent version of the charter (ustav) of the
Company, as registered with the Friazino Administration on February 9, 1996.

     "Charter Capital" (ustavniy kapital) shall mean the aggregate value of the
ownership interests of Shareholders of the Company as indicated in its Charter.
As of the date hereof the Charter Capital of the Company equals 20,000 rubles.

     "Closing" shall mean closing of the transaction contemplated by Section
2.03.

     "Closing Date" shall mean date on which the Closing occurs.

     "Company" shall have the meaning specified in the preamble hereto.

     "Contract" shall mean any agreement, letter of intent, lease, license,
evidence of Indebtedness, mortgage, indenture, security agreement or other
contract (whether written or oral).

     "Environmental Law" shall mean any Law or Order relating to the regulation
or protection of human health and safety, the environment or hazardous or toxic
substances, wastes, pollutants or contaminants.

     "Equity Interest" in a Person shall mean any share of stock of such Person,
or any partnership share or other ownership interest in such Person.

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     "Financial Statements" shall mean the financial statements of the Company,
delivered to the Investor pursuant to Section 3.07 or Section 5.01.

     "General Shareholders Meeting" shall mean the highest management body of
the Company as provided for under the LLC Law.

     "Governmental or Regulatory Authority" shall mean any court, tribunal,
arbitrator, legislature, government, ministry, committee, inspectorate,
authority, agency, commission, official or other competent authority of the
Russian Federation, any other country or any state, as well as any county, city
or other political subdivision of any of the foregoing.

     "Indebtedness" shall mean, with respect to any Person, all obligations of
such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (d) under capital leases or (e) in the nature of a guarantee of any
obligation described in clauses (a) through (d) above to any other Person.

     "Intellectual Property" shall mean patents and patent rights, licenses,
inventions, copyrights and copyright rights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks and trademark rights, service
marks and service mark rights, trade names and trade name rights, service names
and service name rights, brand names, processes formulae, trade dress, business
and product names, logos, slogans, industrial models, processes, designs,
methodologies, software programs (including all source codes) and related
documentation, technical information, manufacturing, engineering and technical
drawings and all pending applications for and registrations of patents,
trademarks, service marks and copyrights.

     "Investment" shall have the meaning specified in Section 2.02(b) hereof.

     "Investor" shall have the meaning specified in the preamble hereto.

     "LLC Law" shall mean the RF Law No. 14-FZ "On Limited Liability Companies",
dated February 8, 1998, as amended on July 11, 1998 and December 31, 1998.

     "Laws" shall mean all laws, decrees, resolutions, instructions, statutes,
rules, regulations, acts, ordinances and other pronouncements having the effect
of law or regulation of the Russian Federation, any other country or any state,
as well as any county, city or other political subdivision of any of the
foregoing.

     "Liabilities" shall mean all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).

     "Licenses" shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.

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     "Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.

     "Loss" shall mean any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including, without limitation, interest,
court costs, fees of attorneys, accountants and other experts or other expenses
of litigation or other similar proceedings or of any claim, default or
assessment).

     "MAP" shall mean the Ministry for Antimonopoly Policy and Support for
Entrepreneurship of the Russian Federation (Ministerstvo po Antimonopolnoy
politike i podderzhke predprinirnatelstva Rossiiskoi Federatsii or "GAK
Rossii"), or any successor thereto, including any applicable territorial agent
thereof

     "Material Adverse Effect" shall mean, with respect to the Company, a
material adverse effect on or with respect to the business, assets, financial
condition, results of operations or prospects of the Company, or upon the
Company's ability to perform its obligations under this Agreement.

     "Option" shall mean, with respect to any Person, any security, right,
subscription, warrant, option, phantom stock right or other Contract that gives
the right to (a) purchase or otherwise receive or be issued any Equity Interest
in such Person or any security of any kind convertible into or exchangeable or
exercisable for any Equity Interest in such Person or (b) receive or exercise
any benefits or rights similar to any rights enjoyed by or accruing to the
holder of any Equity Interest in such Person, including any rights to
participate in the equity or income of such Person or to participate in or
direct the election of any directors or officers of such Person or the manner in
which any Equity Interest in such Person is voted.

     "Order" shall mean any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority.

     "Permitted Lien" shall mean (a) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting standards in the U.S.A., (b) any statutory Lien arising in the
ordinary course of business by operation of Law with respect to a Liability that
is not yet due or delinquent, and (c) any mechanic's, materialman's or other
similar Lien arising by operation of Law or any minor imperfection of title or
similar Lien, none of which individually or in the aggregate with other such
Liens materially impairs the value of the property subject to such Lien or the
use of such property in the conduct of the business of the Company.

     "Person" shall mean any natural person, company, general partnership,
simple partnership, limited partnership, proprietorship, corporation, limited
liability company, other business organization, trust, union, association or
Governmental or Regulatory Authority, whether incorporated or unincorporated.

     "Purchase Price" shall have the meaning specified in Section 2.02(a).

     "Representatives" shall mean, with respect to any Person, its officers,
directors, Shareholders, employees, agents, counsel, accountants, financial

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advisors, consultants and other representatives.

     "Shareholders" shall mean those persons holding Shares in the Company on
the date of this Agreement.

     "Shareholders Agreement" shall mean the Foundation Agreement of the Company
dated November 28, 1995.

     "Share" shall have the meaning specified in Section 2.01 hereof

     "SRC" shall mean the State Registration Chamber under the Ministry of
Justice of the Russian Federation (Gosudarstvennaya registratsionnaya palata pri
Ministerstve iustitsii Rossiiskoi Federatsii), or any successor thereto.

     "Tax Document" shall mean any return, declaration, report, claim for
refund, assessment, demand, act, or information return, statement or other
document relating to Taxes, including any Schedule or attachment thereto, and
including any amendment thereof, whether prepared by the taxpayer, a tax
preparer or a Governmental or Regulatory Authority.

     "Taxes" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital, stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added alternative or add-on minimum, estimated, or other
tax, duty, governmental fee or charge of any kind whatsoever, including any
interest, penalty, or addition thereto.

     "US Dollars" and "US$" shall mean the lawful currency of the United States.

1.02 Interpretations

     Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:

     (a) the singular shall include the plural, and the plural shall include the
singular;

     (b) words of any gender shall include each other gender;

     (c) the words "hereof", "herein", "hereby", "hereto" and similar words
refer to this entire Agreement and not to any particular Section or any other
subdivision of this Agreement;

     (d) a reference to any Article, Section, Schedule or Exhibit is a reference
to a specific Article or Section of, or Schedule or Exhibit to, this Agreement;

     (e) a reference to any law, statute, regulation, notification or statutory
provision shall include any amendment, modification or re-enactment thereof, any
regulations promulgated thereunder from time to lime, and any interpretations
thereof from time to time by any regulatory or administrative authority; and

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     (f) the word "pending" shall mean, with respect to a particular matter, the
service of process or delivery of written notice to the Person to whom such
manner relates.

                       ARTICLE II. INVESTMENT AND CLOSING

2.01 Subject Matter

     Subject to the terms and conditions contained in this Agreement and on the
basis of the representations and warranties contained herein, the Investor
agrees: (a) to acquire a share in the Company by contributing cash in the amount
equal to 51% of the charter capital of the Company after the increase thereof as
described below, and (b) to fulfill other obligations as provided herein, and
the Company agrees to increase its Charter Capital to the total amount equal to
40,816.33 rubles and to transfer to the Investor the 51% share of the increased
charter capital (the "Share").

2.02 Amount and Structure of Investment.

     (a) Subject to the terms and conditions hereof, the Investor shall
contribute to the Charter Capital an amount equal to 20,816.33 rubles (the
"Purchase Price") which shall constitute 51% of the nominal value of the Charter
Capital upon increase of the latter as provided in Section 2.01, and shall
become a holder of the Share in the Company with corresponding voting rights as
provided in the amended version of the Shareholders Agreement to be approved by
the Shareholders at their general meeting which shall approve the admission of
the Investor as a new Shareholder in the Company.

     (b) Subject to the terms and conditions hereof, upon the Charter Capital
increase as further described in Section 5.03, the Investor may invest into the
Company an amount which shall not exceed USS 5,000,000 and which may be in cash
and/or in kind at the option of the Investor (the "Investment"), provided that
no income tax is levied on the amount of the investment. Such Investment shall
be based on a business plan(s) of the Company to be approved by the general
meeting of Shareholders by simple majority vote of the total number of Shares
outstanding (which majority shall include the vote of the Investor) and by the
General Director of the Company. The Investment shall be used by the Company
solely for purchase of equipment for the production of fiber amplifiers, fiber
lasers and related components, obtaining a long term land lease and the
construction of a building thereon. Such investments, if made, shall not be
diluting the Shareholders until the total amount of Investment, including the
capital contribution, reaches $5,000,000.

     (c) The Company shall not distribute to Shareholders any of the funds
transferred by the Investor whether in form of dividends, bonuses or any other
distribution. The Company shall not engage into purchasing or redemption of any
of the shares of its existing Shareholder or any other transactions with
Shareholders other than those conducted in the course of the ordinary business
activity, and consistent with past practice.

2.03 Pre-Closing Closing

     (a) The Closing shall take place on the date of the General meeting of
Shareholders of the Company, which shall (a) increase the charter capital to
40,816.33 rubles, (b) approve the admission of the Investor into the Company,
(c) approve new versions of the Charter, and (d) at which the existing

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Shareholders and the Investor sign a new Shareholders Agreement. On a date which
is three (3) Business Days prior to the Closing date, (i) the Company shall
attend a pre-closing meeting at the offices of the Investor's counsel, located
on the date hereof at Ulitsa Gasheka 7, Moscow, Russia (or at such other place
as the Investor and the Company mutually agree) at 10:00 am local time, and (ii)
the Investor shall review the documents to be delivered at the Closing to
determine whether the conditions precedent specified in Article VI have been, or
will on such Closing date be capable of being, fulfilled by the Company.

     (b) The Closing will take place at the offices of the Company, located on
the date hereof at I Academician Vvedensky Sq., Friazino, Moscow Oblast, Russia
(or at such other place as the Investor and the Company mutually agree) at 10:00
am local time on the Closing Date. At the Closing, if the conditions precedent
specified in Article VI have been fulfilled by the Company, then (i) the
Investor shall pay to the Company the Purchase Price by wire transfer of
immediately available funds to the Company's account.

           ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to the Investor that, as of the date of
this Agreement and as of the Closing Date:

3.01 Organization of the Company

     The Company is a limited liability company and has been duly organized, is
validly existing as a legal entity properly organized, registered and existing
under the laws of the Russian Federation, with corporate power and authority to
carry on its business as it is currently being conducted and to own, lease and
operate its Assets and Properties.

3.02 Authority

     (a) The Company has full power and authority to execute and deliver this
Agreement.

     (b) This Agreement and the other agreements to which the Company is a party
have been duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company.

     (c) Subject only to the decision of the General Shareholders Meeting, the
Company has full power and authority to perform the Company's obligations
hereunder, and to consummate the transactions contemplated hereby, including,
without limitation, to increase its Charter Capital and sell to the Investor
pursuant to this Agreement the Share specified herein.

3.03 Charter Capital of the Company

     (a) On the date hereof, the Charter Capital of the Company consists solely
of 20,000 (twenty thousand) rubles.

     (b) The Charter Capital has been fully paid and is non-assessable and all
of the outstanding Equity Interests of the Company (i) have been duly
authorized, (ii) are fully paid and non-assessable, (iii) are not subject to any
preemptive or similar rights with respect to the Company and (iv) have

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been properly registered.

     (c) Upon the contribution to the Company's account by the Investor of 51%
of the increased charter capital which increase is described in section 2.01,
the Investor's shareholding with respect to such Share shall be recorded
properly in the corporate documents of the Company.

     (d) There are no outstanding Options related to or entitling any Person to
purchase or otherwise acquire from the Company any Equity Interest in the
Company.

3.04 No Conflicts

     The execution, delivery and performance by the Company of this Agreement,
the compliance by the Company with all of the provisions hereof and the
consummation by the Company of the transactions contemplated hereby:

     (a) will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the Charter or Shareholders Agreement (after
giving effect to the amendments described in Section 5.03);

     (b) will not violate or conflict with any Orders or Laws applicable to the
Company or any of its respective Assets and Properties.

3.05 Governmental Approvals and Filings

     Except for a MAP approval which is described in Section 4.01, the
execution, delivery and performance by the Company of this Agreement, the
compliance by the Company with all of the provisions hereof and the consummation
by the Company of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any Governmental or
Regulatory Authority.

3.06 Books and Records

     The Company makes and keeps accurate books and records and maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (a) transactions are executed in accordance with management's
general or specific authorizations; (b) transactions are recorded as necessary
to permit preparation of the Financial Statements in conformity with Russian
accounting standards and to maintain asset accountability; (c) access to assets
is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

3.07 Financial Statements

     (a) Prior to the execution of this Agreement, the Company has delivered to
the Investor true and complete copies of the Audited Consolidated Financial
Statements of the Company and unaudited financial statements as of October 1,
2000 for the 9-month period ended September 30, 2000;

     (b) Except as disclosed therein, all such financial statements:

          (i) were prepared in accordance with Russian accounting

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standards; and

          (ii) present fairly the financial position, results of operations, and
changes in financial position of the Company at the respective dates for the
respective periods to which they apply; and

          (iii) were compiled from the Books and Records of the Company
regularly maintained by management and used to prepare the financial statements
of the Company in accordance with the principles stated therein.

3.08 Absence of Changes

     Except for the Company's execution and delivery of this Agreement and the
transactions contemplated hereby, there has not occurred between the date of the
last financial statement delivered to the Investor and the date hereof

     (a) any material change in the Business or Condition of the Company;

     (b) any dividend or distribution of any kind declared, paid or made, or any
direct or indirect redemption, purchase or other acquisition by the Company, out
of the ordinary course of business;

     (c) any insolvency of, or bankruptcy or administrative proceeding
(nabludenie) declared or commenced by a Governmental or Regulatory Authority of
competent jurisdiction with respect to, the Company;

     (d) any incurrence by the Company of Indebtedness, or any Lien securing
Indebtedness in an aggregate principal amount exceeding US$ 50,000 or waiver of
any right of the Company under any Indebtedness of or owing to the Company,
other than a loan from the Investor in the Company;

     (e) any physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any movable or immovable property or equipment
owned, leased or used by the Company;

     (f) any amendment to the Charter, or any recapitalization, reorganization,
liquidation or dissolution, in each case, as such terms are defined under the
laws of the Russian Federation, of the Company;

3.09 Taxes

     The Company has duly filed with all appropriate taxing authorities (or has
received an extension for filing with respect to) all Tax Documents required to
be filed by it, and each such Tax Document was, when filed, accurate and
complete, and the Company has duly paid on time, or has made adequate reserves
for, or has contested in good faith, all Taxes required to be paid or remitted
by it or levied against it, and except as disclosed in writing by the Company to
the Investor in Schedule 3.09 hereto, no material Tax deficiency is currently
asserted against the Company by any Governmental or Regulatory Authority.

3.10 Legal Proceedings; Liability

     (a) There is no Action or Proceeding pending or threatened against the
Company or any of its Assets and Properties which will result in, or could be
expected to result in, the issuance of an Order which (i) questions the validity
of this Agreement or any action taken or to be taken pursuant

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hereto, or (ii) restrains, enjoins or otherwise prohibits or makes illegal
consummation of any of the transactions contemplated by this Agreement, or (iii)
otherwise results in an impairment of the Investor's rights under this
Agreement, or (iv) if determined adversely to the Company, could be expected to
result in (A) any injunction or other equitable relief against such Person that
would interfere with its business or operations or (B) losses by such Person,
individually or in the aggregate, in excess of US$ 10,000; and

     (b) There are no Orders outstanding against the Company.

3.11 Compliance With Laws and Orders

     (a) The Company is not in violation of or in default under any Law or Order
applicable to the Company or any of its Assets and Properties.

     (b) Neither the Company nor any director, officer, agent, employee or other
Person associated with or acting on behalf of the Company (i) has used any
corporate funds of the Company for any unlawful contributions, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any governmental official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act or any corresponding national
legislation; or (iv) made any bribe, unlawful rebate, payoff, influence payment,
kickback or other unlawful payment in connection with the business of the
Company.

3.12 Real Property

     (a) Schedule 3.12 contains a true and correct list of all buildings and
other real property owned or leased by the Company. The Company has good and
valid title and leasehold rights to such buildings;

     (b) No default has occurred or is continuing in respect of any lease of a
building or portion thereof to which the Company is a party as lessee and the
Company enjoys peaceful and undisturbed possession under such leases to which it
is a party as lessee.

3.13 Intellectual Property Rights

     The Company possess all Intellectual Property employed by it in connection
with its business as it is currently being conducted and as it is proposed to be
conducted, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to the foregoing. Without
limitation to the generality of the foregoing:

     (a) The Company has the exclusive right to use the its name.

     (b) The Company has taken reasonable security and enforcement measures to
protect the value of its intellectual property and to prevent its use by
unauthorized Persons.

     (c) The Company is not, nor has the Company received any written notice
that the Company is in default (or with the giving of notice or lapse of time or
both, would be in default) in any material respect under any license agreement,
patent or trademark protection arrangement and similar agreements with respect
to the intellectual property it uses, or infringing the intellectual property
rights of any third person.

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3.14 Contracts; No Default

     (a) Schedule 3.14(a) contains a true and complete list of all Contracts
with a value of US$ 50,000 or more (true and complete copies or, if none exist,
reasonably complete and accurate written descriptions of such, which, together
with all amendments and supplements thereto and all waivers of any terms
thereof, have been delivered to the Investor prior to the execution of this
Agreement) to which the Company is a party or by which any of its Assets and
Properties is bound.

     (b) Each Contract described in Schedule 3.14(a) is in full force and effect
and constitutes a legal, valid and binding agreement, enforceable in accordance
with its terms, and the Company has not received notice that it is in violation
or breach of, or default under, any such Contract (or with notice or lapse of
time or both, would be in violation or breach of, or default under, any such
Contract).

3.15 Licenses

     (a) Schedule 3.15 contains a true and complete list of all Licenses used in
the business or operations of the Company. Each such License is valid, binding
and in full force and effect.

     (b) The Company has all Licenses necessary to conduct its business and
operations or to own, lease, and operate its Assets and Properties.

     (c) The Company has fulfilled and performed all of its obligations with
respect to such Licenses and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or would result
in any impairment of the rights of the Company under any such License.

3.16 Environmental Matters

     The Company has not violated any applicable environmental laws or
regulations the effect of which would have a Materially Adverse Effect upon the
Company.

3.17 Disclosure

     The Company has disclosed all material facts relating to the Business or
Condition of the Company to the Investor in or in connection with this
Agreement. No representation or warranty contained in this Agreement, and no
statement contained in the attached Schedules or in the certificate of the
General Director delivered to the Investor in connection with the execution of
this Agreement on the date thereof, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.

             ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF INVESTOR

     The Investor hereby represents and warrants to the Company that:

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4.01 Organization; Ability to Consummate Transactions

     The Investor is a corporation duly organized and validly existing under the
Laws of Germany. The Investor has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
provided that the Investor must obtain the approval of the MAP to consummate the
acquisition of the Share.

4.02 Authority

     The execution and delivery by the Investor of this Agreement, and the
performance by the Investor of its obligations hereunder, have been duly and
validly authorized by the Board of Directors of the Investor, no other corporate
action on the part of the Investor or its stockholder being necessary. This
Agreement has been duly and validly executed and delivered by the Investor and
constitutes, the legal, valid and binding obligation of the Investor.

                       ARTICLE V. COVENANTS OF THE COMPANY

     The Company covenants and agrees with the Investor that, at all times from
and after the date hereof until the registration of the Charter of the Company
with the local registration authorities and inclusion of the Company into the
register of the companies with foreign investments of the SRC, as further
specified in Section 5.03 below, the Company will comply with all of its
undertakings in this Article V.

5.01 Financial Statements and Reports

     Commencing on the date of this Agreement, the Company shall deliver to the
Investor as promptly as practicable and in any event no later than thirty (30)
days after the end of each fiscal quarter ending after the date hereof, true and
complete copies of the balance sheet and financial statements of the Company
prepared in accordance with generally accepted accounting principles in the
U.S.A.

5.02 Certain Restrictions

     Except as contemplated herein, without the prior written consent of the
Investor, the Company shall refrain from:

     (a) amending the Charter or taking any action with respect to any such
amendment or any recapitalization, reorganization, liquidation or dissolution of
the Company;

     (b) declaring, setting aside or paying any dividend or other distribution
in respect of the Equity of the Company, or directly or indirectly redeeming,
purchasing or otherwise acquiring any Equity Interest in or any Option with
respect to the Company out of the ordinary course of business;

     (c) engaging in any Business Combination;

     (d) paying any dividends or distributions to the Shareholders, redeem or
repurchase their shares or to increase any of the benefits, including salary, of
the Shareholders or employees;

                                       12

<PAGE>

     The Company shall request approval from the Investor for any of the
foregoing transactions by sending written notice to the Investor in accordance
with Section 10.01 hereof.

5.03 Charter Amendments

     Within 30 days from the date when the Purchase Price is received by the
Company whether in cash or in kind, the Company shall have the amendments to its
Charter described below (the "Amendments to the Charter") registered with the
local registration chamber and be included into the register of entities with
foreign investments of the SRC:

     (a) increasing the Charter Capital for the amount of the Purchase Price,
listing the Investor as a Shareholder, and reflecting adequately changes in the
shareholdings of the existing Shareholders caused by the increase of the Charter
Capital;

     (b) providing for the right of first refusal for the Investor to buy any
share in the Company if any of the existing Shareholders wishes to sell his
share or a part thereof;

     (c) providing for the right of the holders of the majority of the shares to
designate the General Director and the scientific council or any other executive
or managerial body of the Company.

               ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF
                                    INVESTOR

6.01 Conditions Precedent to Closing

     The obligation of the Investor to pay or deliver the relevant Purchase
Price to the Company is subject to the fulfillment, on or before the Closing, of
each of the conditions precedent specified in this Article VI.

6.02 Corporate Actions

     The Company shall have delivered to the Investor true and correct copies of
resolutions of the General Shareholders Meeting approved by a unanimous vote of
the existing Shareholders (a) approving all balance sheets and financial reports
of the Company for 1997, 1998, and 1999; (b) electing all chief executive
officers of the Company, including the General Director and Directors of the
Management Board; (c) approving all major and interested party transactions
executed by the Company since November 1, 2000; (c) approving enrollment of the
Investor as a new Shareholder; (d) approving a revised and restated version of
the Charter and Shareholders Agreement of the Company with substance
satisfactory to the Investor.

6.03 Regulatory Consents and Approvals

         Approval of the MAP for the acquisition of the Share by the Investor
shall have been obtained as well as all other consents, approvals and actions
of, filings with, and notices to, any Governmental or Regulatory Authority,
which are required to have been obtained, made or given (as applicable) by the
Company pursuant to applicable Law as necessary for the performance of the
obligations of the Company under this Agreement to be performed on or before the
Closing Date (a) shall have been duly obtained, made or given, (b) shall not be
subject to the satisfaction of any condition that has not been

                                       13

<PAGE>

satisfied or waived (unless any such condition relates to reporting or other
requirements which by the terms of such consents, approvals, actions, filings or
notices can only be effected on or after such Closing) and (c) shall be in full
force and effect, and all terminations or expirations of waiting periods imposed
by any Governmental or Regulatory Authority shall have occurred.

6.04 Representations and Warranties

     The representations and warranties made by the Company in Article III shall
have been true and correct on and as of the date of this Agreement and shall be
true and correct on and as of the Closing date.

6.05 Performance

     The Company shall have performed and complied with each of its obligations
under Article V of this Agreement except for those set forth in Section 5.03
hereof.

6.06 Orders and Laws

     There shall not be in effect on the Closing date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or which
could be expected to otherwise result in an impairment of the Investor's rights
under this Agreement and there shall not be pending on such Closing Date any
Action or Proceeding or any other action in, before or by any Governmental or
Regulatory Authority which could be expected to result in the issuance if any
such Order or the enactment or promulgation of any such Law or the deemed
applicability of any such Law to the Investor or the Company or the transactions
contemplated by this Agreement.

6.05 Wire Instruction

     If the Purchase Price payable at the Closing is payable in cash, the
Company shall have delivered to the Investor the Company's instruction for the
wire transfer of such Purchase Price to the Company's Bank account.

6.07 Legal Opinion

     The Investor shall have received an opinion of Mr. Andrianov, special
Russian counsel to the Company, acceptable to the Investor.

              ARTICLE VII. SURVIVAL OF REPRESENTATIONS, WARRANTIES,
                            COVENANTS AND AGREEMENTS

     The Investor has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this Agreement.
All representations, warranties, covenants and agreements of the Company
contained in this Agreement will survive the Closing and, unless agreed
otherwise, remain in effect indefinitely; and provided further that any such
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with the terms hereof will continue to survive if a written claim
for indemnity shall have been made under Section 8.01 on or prior to such
termination date, until such claim has been satisfied or otherwise resolved.

                                       14

<PAGE>

                         ARTICLE VIII. INDEMNIFICATION

8.01 Indemnification

     (a) The Company shall indemnify the Investor in respect of, and hold the
Investor harmless from and against, any and all Losses suffered, incurred or
sustained by the Investor resulting from, arising out of or relating to any
misrepresentation, breach of warranty or non-fulfillment of or failure to
perform any covenant or agreement contained in this Agreement on the part of the
Company, provided that the Investor shall have made a written claim for
indemnification against the Company pursuant to Section 10.01 within the
survival period specified in Article VII.

     (b) If any claim is asserted against the Investor, or the Investor is made
a party defendant in any Action or Proceeding, and such claim, Action or
Proceeding involves a matter which is the subject of a claim for indemnification
under Section 8.01(a), then the Investor shall (i) promptly give written notice
to the Company of such claim, Action or Proceeding pursuant to Section 10.01,
and (ii) not make any admission of liability, agreement or compromise with any
Person in relation to such claim without prior written notice to the Company;
and the Company shall have the right to join in the defense of said claim,
Action or Proceeding at the Company's own cost and expense and, if the Company
agrees in writing to be bound by and to promptly pay the full amount of any
final judgment from which no further appeal may be taken to the extent such
judgment involves an indemnifiable claim under this Section 8.01, and if the
Investor is reasonably assured of the Company's ability to satisfy such
agreement, then, at the option of the Investor, the Company may take over the
defense of such claim, Action or Proceeding, except that, in such case, the
Investor shall have the right to join in the defense of said claim, Action or
Proceeding at its own cost and expense.

8.02 Other Indemnification Provisions

     The foregoing indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy the Investor may
have for any misrepresentation made by the Company in connection with the
transactions contemplated by this Agreement or any breach of warranty or
non-fulfillment by the Company or failure by the Company to perform any covenant
or agreement.

                          ARTICLE IX. EARLY TERMINATION

9.01 Early Termination

     This Agreement shall terminate and the transactions contemplated hereby
shall be abandoned on the earliest to transpire of any of the following:

     (a) the mutual written agreement, at any time prior to the Closing, of the
Company and the Investor;

     (b) April 30 2001, if the parties' respective Boards and, if required by
applicable law, their respective General Shareholders Meetings (or their
equivalent) have not approved this Agreement and the transactions contemplated
hereby, unless the parties have otherwise agreed in writing.

                                       15

<PAGE>

9.02 Effect of Early Termination

     If this Agreement is validly terminated pursuant to Section 9.01, this
Agreement will forthwith become null and void, and there will be no liability or
obligation on the part of the Company or the Investor (or any of their
respective officers, directors, employees, agents or other representatives or
Affiliates), except that Sections 10.03 and 10.04 shall survive and shall
continue to apply following any such termination.

                            ARTICLE X. MISCELLANEOUS

10.01 Notices

     All notices, requests and other communications hereunder must be in writing
and will be deemed to have been duly given only if delivered personally or by
facsimile transmission or sent by courier to the parties at the following
addresses or facsimile numbers:

     If to the Investor, to:
     IPG Laser GmbH
     SiemensstaBe 7, Burbach, Germany, D-57299
     Facsimile No.: 011-49-27-36-44-20-25
     Attn: Dr. Eugene Shcherbakov

     with a copy to:
     IPG Photonics Corporation
     660 Main Street
     Sturbridge, MA
     Facsimile No.: +1(508) 347-6800
     Attn: General Counsel

     If to the Company, to:
     000 NTO "IRE-Polus"
     I Academician Vvedensky Sq.
     Friazino, Moscow Oblast, 141190, Russia
     Facsimile No.: +7(095) 526-9083
     Attn: Valentin Gapontsev

     All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 10.01, be deemed given
upon delivery, (b) if delivered by facsimile transmission to the facsimile
number as provided in this Section 10.01, be deemed given upon

                                       16

<PAGE>

receipt, and (c) if delivered by courier in the manner described above to the
address as provided in this Section 10.01, be deemed given upon confirmed
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 10.01). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving written notice specifying such change to the
other party hereto.

10.02 Entire Agreement

     This Agreement supersedes all prior discussions and agreements between the
parties with respect to the subject matter hereof and thereof and contain the
sole and entire agreement between the parties hereto and thereto with respect to
the subject matter hereof and thereof.

10.03 Expenses

     Except as otherwise expressly provided in this Agreement whether or not the
transactions contemplated hereby are consummated, each of the parties will pay
its own costs and expenses, including, without limitation, legal fees, incurred
in connection with the negotiation, execution and closing of this Agreement and
the transactions contemplated hereby.

10.04 Confidentiality

     Each party hereto will hold in strict confidence from any Person, unless
(a) compelled to disclose by judicial or administrative process (including,
without limitation, in connection with obtaining the necessary approval of this
Agreement and the transactions contemplated hereby from Governmental or
Regulatory Authorities) or by other requirements of Law or (b) disclosed in an
Action or Proceeding brought by a party hereto in pursuit of its rights or in
the exercise of its remedies hereunder, all documents and information concerning
the other party hereto in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (i) previously known by the party receiving such documents
or information, (ii) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (iii) later acquired by the receiving party from another
source if the receiving party is not aware that such source is under an
obligation to another party hereto to keep such documents and information
confidential; provided that following the Closing the foregoing restrictions
will not apply to the Investor's use of documents and information concerning the
Company.

10.05 Amendment

     This Agreement may be amended, supplemented, waived or modified only by a
written instrument duly executed by or on behalf of each party hereto.

10.06 No Third Party Beneficiary

     The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third party
beneficiary rights upon any other Person.

                                       17

<PAGE>

10.07 No Assignment; Binding Effect

     Neither this Agreement nor any right, interest or obligation hereunder may
be assigned by any party hereto without the prior written consent of the other
party hereto and any attempt to do so will be void, except (a) for assignments
and transfers by operation of Law and (b) that the Investor may assign any or
all of its rights, interests and obligations hereunder to a wholly owned
Subsidiary, provided that any such Subsidiary agrees in writing to be bound by
all of the terms, conditions and provisions contained herein. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.

10.08 Headings

     The headings used in this Agreement have been inserted for convenience of
reference only and do not define or limit the provisions hereof

10.09 Governing law

     This Agreement shall be governed by and construed in accordance with the
laws of the Russian Federation, without giving effect to any conflicts of laws
principles thereof which would result in the application of the laws of another
jurisdiction.

10.11 Invalid Provisions

     If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.

10.12 Counterparts

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

     IN WITNESS WHEREOF, this Investment Agreement has been duly executed and
delivered by each party hereto on the day and year first above written.

                                       18

<PAGE>

                                                                       Exhibit A
                                                     to the Investment Agreement
                                                       dated as of March 1, 2001

Form of Certificate of General Director of Company to be Delivered at Closing

                            LIMITED LIABILITY COMPANY
                                  NTO IRE-POLUS

                         Certificate of General Director

     I, Valentin P. Gapontzev, the General Director of Limited Liability Company
"NTO IRE-POLUS", a limited liability company organized and existing under the
laws of the Russian Federation (the "Company"), pursuant to Section 3.17 of the
Investment Agreement dated as of March 1, 2001 (the "Investment Agreement", with
capitalized terms used herein but not herein defined having the meanings
ascribed to such terms therein) between the Company and IPG Laser GmbH, a
company organized and existing under the laws of Germany (the "Investor"), do
hereby certify on behalf of the Company that:

     (a) Each of the representations and warranties made by the Company in
Article III of the Investment Agreement was true and correct on and as of the
date of the Investment Agreement and is true and correct on and as of the date
hereof.

     (b) The Company has performed and complied with each of its obligations
under Article V of the Investment Agreement, except for obligations set forth in
Section 5.03 thereof.

     (c) There is not in effect on the date hereof any Order or Law restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by the Investment Agreement or which could
reasonably be expected to otherwise result in a material impairment of the
Investor's rights under the Investment Agreement, and there is not pending on
the date hereof any Action or Proceeding or any other action in, before or by
any Governmental or Regulatory Authority which could reasonably be expected to
result in the issuance of any such Order or the enactment, promulgation or
deemed applicability to the Investor or the Company or the transactions
contemplated by the Investment Agreement of any such Law.

     (d) All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority described in Sections 3.05, 4.01, and 6.03
of the Investment Agreement which are required to have been obtained, made or
given (as applicable) by the Company pursuant to applicable Law as necessary for
the performance of the obligations of the Company under the Investment Agreement
to be performed on or before the date hereof (i) have been duly obtained, made
or given, (ii) are not subject to the satisfaction of any condition that has not
been satisfied or waived (unless any such condition relates to reporting or
other requirements which by the terms of such consents, approvals, actions,
filings or notices can only be effected on or after the Closing) and (iii) are
in full force and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority have occurred.

                                       1

<PAGE>

     (e) All corporate actions (or in lieu thereof waivers) described in Section
6.02 of the Investment Agreement (i) have been carried out, (ii) are not subject
to the satisfaction of any condition that has not been satisfied or waived
(unless any such condition relates to reporting or other requirements which by
the terms of such consents can only be effected on or after the Closing) and
(iii) are in full force and effect.

     (f) The Company obtained legal opinion from Mr. Andrianov as set forth in
Section 6.07 of the Investment Agreement.

     IN WITNESS WHEREOF, I have executed this Certificate for and on behalf of
the Company on and as of the 1st day of March, 2001.

                                        LIMITED LIABILITY COMPANY
                                        "NTO IRE-POLUS"

                                        By /s/ Valentin P. Gapontsev
                                           -------------------------------------
                                           V.P. Gapontsev
                                           General Director

[Seal of Limited Liability Company
NTO IRE-POLUS"]

                                       2<PAGE>

                                                                   EXHIBIT 10.23

                           LOAN AND SECURITY AGREEMENT
                                  [as Amended]

     THIS LOAN AND SECURITY AGREEMENT is entered into as of August 23, 2002, by
and between IPG Photonics Corporation, a Delaware corporation ("Borrower"), and
IP Fibre Devices (UK) Ltd., a United Kingdom limited liability company
("Lender").

                                    RECITALS

     Borrower has requested that Lender extend or continue credit to Borrower as
described below, and Lender has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender and Borrower hereby agree as follows:

                                    ARTICLE I
                                  CREDIT TERMS

     SECTION 1.1. LINE OF CREDIT.

     (a) Subject to the terms and conditions of this Agreement, Lender hereby
agrees to make advances to Borrower ("Loans") from time to time up to but
excluding March 31, 2006 (the "Commitment Period"), not to exceed at any time
the aggregate principal amount of Four Million Six Hundred Dollars
($4,600,000.00) ("Line of Credit"), the proceeds of which shall be used for
working capital and general corporate purposes. The Lender shall remain
committed to provide Loans to Borrower under this Agreement during the
Commitment Period subject to the conditions set forth below.

     (b) "Borrower may from time to time during the Commitment Period borrow,
partially or wholly repay its outstanding Loans, and reborrow, subject to all of
the limitations, terms and conditions contained herein; provided, however, that
the total outstanding Loans under the Line of Credit shall not at any time
exceed the maximum principal amount available under as set forth in Section
1.1(a). After the Commitment Period, the outstanding principal amount of the
Loans together with accrued and unpaid interest shall amortize in twenty-four
equal monthly installments, due no later than the first calendar day of each
month starting December 31, 2006; provided, however, that the entire outstanding
principal amount of Loans together with accrued interest shall become
immediately due and payable earlier upon the consummation of an initial public
offering of securities of the Borrower or a Change in Control (as defined in
Section 6.1 below)."

     (c) The Loans made by the Lender shall be evidenced by one or more accounts
or records maintained by the Lender in the ordinary course of business. The
accounts or records maintained by the Lender shall govern absent demonstrable
error of the amount of the Loans made by the Lender to the Borrower and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Loans.

<PAGE>

     (d) All payments to be made by Borrower shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly provided herein, all
payments by the Borrower shall be made to Lender at the Lender's office or agent
for payment, and shall be made in dollars and in immediately available funds, no
later than 2:00 p.m. (New York City time) on the date specified herein. Any
payment received by Lender later than 2:00 p.m. (New York City time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.

     (e) Whenever any payment is due on a day other than a business day, such
payment shall be made on the following business day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.

     SECTION 1.2. INTEREST/FEES.

     (a) Interest. The outstanding principal balance of the Loans shall bear
interest at the rate of interest at a rate per annum equal to LIBOR in effect
from time to time plus 2%. Each determination of an interest rate by Lender
shall be conclusive and binding on the Borrower in the absence of manifest
error. Prior to the end of the Commitment Period, interest only on each Loan
shall be paid in arrears at the end of each three-month period. Interest shall
also be paid on the date of any prepayment of Loans for the portion of the Loans
so prepaid and upon payment (including prepayment) in full thereof and, during
the existence of any Event of Default (as defined below), interest shall be paid
on demand of Lender. After the Commitment Period, interest together with
principal shall be paid on a monthly basis, on a date to be agreed between
Borrower and Lender.

     (b) LIBOR. The term "LIBOR" means the rate of interest per annum determined
by Lender as the rate of interest at which dollar deposits in the approximate
amount of the amount of the Loan to be made and for a period of three months as
quoted on the Telerate Page 3750 as of 11:00 a.m. (London time) on the day two
business days before the commencement of such loan advancement. If Telerate Page
3750 is not available, such rate of interest shall be that quoted by an
appropriate reference bank selected by Lender and having a maturity comparable
to such interest period as would be offered to major banks in the London
interbank market at their request at approximately 11:00 a.m. (London time) two
business days prior to the disbursement of the Loan proceeds.

     (c) Default Interest. Notwithstanding subsection (a) of this Section, while
any Event of Default exists or after acceleration, Borrower shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Loans, at a rate per annum which
is determined by adding 2% per annum to the applicable interest then in effect
for such Loans.

     (d) Anything herein to the contrary notwithstanding, the obligations of
Borrower to Lender hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by Lender would be contrary to the provisions of any law
applicable to Lender limiting the highest rate of interest that may be lawfully
contracted for, charged or received by Lender,

                                        2

<PAGE>

and in such event the Borrower shall pay Lender interest at the highest rate
permitted by applicable law.

     (e) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in Section 1.1(d).

     SECTION 1.3 SECURITY

     1.3.1 GRANT OF SECURITY INTEREST. The Borrower, to secure the Obligations
(as defined below), hereby assigns, pledges and grants to the Lender a
continuing first priority security interest in the collateral consisting of all
of the Borrower's right, title and interest in and to the property and interests
in property, whether now owned or existing or hereafter acquired or arising and
regardless of where located and all products, proceeds, substitutions,
additions, accessions and replacements thereof (all of the same being herein
referred to as the "Collateral"):

          (a) all inventory, finished goods, raw materials, work in process,
     equipment, chattel, licenses and other goods listed on Schedule 1 hereto
     (collectively, "Inventory");

          (b) all rights now or hereafter accruing to the Borrower under
     contracts, agreements or other instruments to hold, use and enforce all
     rights thereunder related to the Inventory;

          (c) all books and records relating to any of the Inventory (including,
     without limitation, data, printouts, and other computer materials and
     records of the Borrower pertaining to any of the foregoing); and

          (d) all accessions and additions to, substitutions for and all
     replacements, products and proceeds of the foregoing, including, without
     limitation, proceeds of insurance policies insuring the Inventory; it being
     agreed that Borrower may substitute new Collateral with the consent of the
     Lender by amending and both signing Schedule 1.

     1.3.2 SECURITY FOR OBLIGATIONS. This Section 1.3 secures the full and
prompt payment and performance of (i) all obligations of the Borrower to pay, as
and when due and payable (by scheduled maturity or otherwise), all amounts from
time to time owing by it in respect of this Agreement, whether for principal,
interest (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to bankruptcy,
insolvency or reorganization of the Borrower), fees or otherwise (collectively,
the "Obligations").

     1.3.3 DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) the Borrower shall remain fully liable under any contracts
and agreements included in the Collateral to perform all of its duties and
obligations thereunder, (ii) the exercise by the Lender of any of the rights
hereunder shall not release the Borrower from any of its duties or obligations
under any such Collateral, and (iii) the Lender is not obligated or liable under
any such Collateral by reason of this Agreement, nor is the Lender obligated to
perform any obligations or duties of the Borrower thereunder or to take any
action hereunder.

                                        3

<PAGE>

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Lender,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to
Lender subject to this Agreement.

     SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

     SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Lender in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

     SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

     SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Lender in
writing prior to the date hereof.

     SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENTS. The audited consolidated
financial statements of Borrower dated December 31, 2001 and the unaudited
consolidated financial statements dated March 31, 2002, true copies of which
have been delivered by Borrower to Lender prior to the date hereof, (a) are
complete and correct and presents fairly the financial condition of Borrower,
(b) disclose all liabilities of Borrower that are required to be reflected or
reserved against under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent, and (c) have been prepared in
accordance with generally accepted accounting principles consistently applied,
except for the absence of financial footnotes and subject to year-end
adjustments on the unaudited March 31, 2002 financial statements. Since the date
of the unaudited financial statement there has been no material adverse change
in the financial condition of Borrower, nor has Borrower mortgaged, pledged,
granted a security interest in or otherwise encumbered any of its assets or
properties except in favor of Lender or as otherwise permitted by Lender in
writing.

                                       4

<PAGE>

     SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
material assessments or adjustments of its income tax payable with respect to
any year.

     SECTION 2.7. NO SUBORDINATION. Except as otherwise permitted pursuant to
Section 5.2, there is no agreement, indenture, contract or instrument to which
Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower's obligations subject to
this Agreement to any other obligation of Borrower.

     SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

     SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

     SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation; except as set
forth on Schedule 2.

     SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Lender in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal or state environmental, hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

     SECTION 2.12. REPRESENTATIONS AND WARRANTIES: GENERAL. The Borrower hereby
represents and warrants that (i) the principal place of business and chief
executive office of the Borrower are located at the address of the Borrower
identified in Section 7.2 hereof, (ii) the Borrower has good, indefeasible and
merchantable title to the Collateral, and it owns the Collateral free and clear
of any lien, security interest, charge or encumbrance except for: (a) the
security interests in favor of the Lender

                                       5

<PAGE>

created by this Agreement; or (b) other liens expressly permitted by Section 5.7
("Permitted Liens"); (iii) except such as may have been filed in favor of the
Lender, no effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording office;
and (iv) this Agreement, together with actions heretofore taken or concurrently
undertaken, creates a valid and first perfected priority lien (subject to
Permitted Liens) in the Collateral, securing the payment of the Obligations, and
all filings and other actions necessary to create, evidence, perfect and
preserve such security interest (save for the timely filing of continuation
statements or other statements required by applicable law) have been, or are
being concurrently undertaken with the execution hereof, duly taken.

                                   ARTICLE III
                                   CONDITIONS

     SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Lender to extend any credit contemplated by this Agreement is subject to the
fulfillment to Lender's satisfaction of all of the following conditions:

     (a) Approval of Lender Counsel. All legal matters incidental to the
extension of credit by Lender shall be satisfactory to Lender's counsel.

     (b) Documentation. Lender shall have received, in form and substance
satisfactory to Lender, each of the following, duly executed:

          (i)  This Agreement;

          (ii) Corporate Resolution: Borrowing;

          (iii) UCC Financing Statement; and

          (iv) Such other documents as Lender may require under any other
               Section of this Agreement.

     (c) Financial Condition. There shall have been no material adverse change,
as determined by Lender, in the financial condition or business of Borrower, nor
any material decline, as determined by Lender, in the market value of a
substantial or material portion of the assets of Borrower.

     (d) Insurance. Borrower shall have delivered to Lender evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Lender, and where
required by Lender, with loss payable endorsements in favor of Lender.

     SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Lender to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Lender's satisfaction of each of the following
conditions:

     (a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Lender
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

                                       6

<PAGE>

     (b) Documentation. Lender shall have received all additional documents that
may be required in connection with such extension of credit.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Lender remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Lender otherwise consents in
writing:

     SECTION 4.1. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Lender, at any reasonable time, to inspect,
audit and examine such books and records, to make copies of the same, and to
inspect the properties of Borrower.

     SECTION 4.2. FINANCIAL STATEMENTS. Provide to Lender all of the following,
in form and detail satisfactory to Lender:

     (a) not later than 120 days after and as of the end of each fiscal year, an
audited consolidated financial statement of Borrower, prepared by a certified
public accountant acceptable to Lender, to include a balance sheet, income
statement, statement of cash flows and footnotes;

     (b) not later than 45 days after and as of the end of each quarter, a
consolidated financial statement of Borrower, prepared by Borrower, to include a
balance sheet and income statement;

     (c) not later than 30 days after and as of the end of each calendar month,
a consolidated financial statement of Borrower, prepared by Borrower, to include
a balance sheet and income statement; and

     (d) from time to time such other information as Lender may reasonably
request.

     SECTION 4.3. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.

     SECTION 4.4. INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Lender, and
deliver to Lender from time to time at Lender's request schedules setting forth
all insurance then in effect.

     SECTION 4.5. FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time

                                       7

<PAGE>

make necessary repairs, renewals and replacements thereto so that such
properties shall be fully and efficiently preserved and maintained.

     SECTION 4.6. TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Lender's satisfaction, for eventual payment thereof in
the event Borrower is obligated to make such payment.

     SECTION 4.7. LITIGATION. Promptly give notice in writing to Lender of any
litigation pending or threatened against Borrower in excess of $500,000.00.

     SECTION 4.8. NOTICE TO LENDER. Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Lender in reasonable detail of: (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's property.

     SECTION 4.9. COLLATERAL.

     (a) The Borrower hereby covenants and agrees with the Lender that (i) the
Borrower shall preserve and maintain the lien created by this Agreement and will
protect and defend its title to the Collateral so that the lien so granted shall
be and remain a continuing first priority security interest (subject to
Permitted Liens) in the Collateral, (ii) the Borrower will not create, assume or
suffer to exist any other lien in the Collateral except Permitted Liens, (iii)
the Borrower shall maintain books and records pertaining to the Collateral in
such detail, form and scope as the Lender may reasonably require, and (iv) the
Borrower shall pay all taxes, assessments and other charges lawfully levied or
assessed upon its properties or upon any of the Collateral when due. If, in the
Lender's sole opinion any lien (other than Permitted Liens) may create an
obligation having priority over the lien granted hereby, the Lender may pay such
lien and the amount of such payment shall be charged to the Borrower and be
secured by the lien granted hereby.

     (b) The Borrower shall comply with the following covenants regarding the
Collateral, (i) to the extent that the Borrower shall retain possession of the
Collateral, the Borrower shall keep the collateral at the places specified in
Section 2.12(i); provided, however, that the Borrower may establish any other
location, on written notice delivered to the Secured Party not less than thirty
(30) days prior to establishing any such other location, if the Borrower has
complied with Section 5 hereof, and (ii) the Borrower shall cause the Collateral
to be maintained and preserved in good condition, repair and working order,
excepting ordinary wear and tear. The Borrower shall, on demand therefor by the
Lender, deliver to the Lender any

                                       8

<PAGE>

and all evidence of ownership of any of the Collateral (including, without
limitation, certificates of title and applications for title).

     SECTION 4.10. FURTHER ASSURANCES.

     (a) The Borrower agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or appropriate, or that the Lender may
request, in order to create, evidence, perfect or preserve any security interest
granted or purported to be granted hereby or to enable the Lender to exercise
and enforce its rights and remedies hereunder with respect to any Collateral,
including, without limitation, executing and filing financing or continuation
statements, or amendments thereto, as the Lender may request, without the
signature of the Borrower where permitted by law. The Borrower hereby agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement where
permitted by law.

     (b) The Borrower will furnish to the Lender from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Lender may reasonably request,
all in reasonable detail, and will permit the Lender, and/or its designated
agents, at any time during the Borrower's usual business hours, to inspect
and/or conduct audits with respect to the Collateral.

                                    ARTICLE V
                               NEGATIVE COVENANTS

     Borrower further covenants that so long as Lender remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Lender's prior written
consent:

     SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.

     SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Lender, (b) any
other liabilities of Borrower existing as of, and disclosed to Lender prior to,
the date hereof, (c) purchase money indebtedness up to $2,500,000 secured only
by the assets purchased, (d) equipment leases up to $10,000,000 incurred after
the date hereof and (e) other lines of credit up to $5,000,000 incurred after
the date hereof; provided, however, that at the request of the Borrower, Lender
shall enter into subordination agreements and/or intercreditor arrangements with
the obligors of any indebtedness incurred pursuant to this clause (e) (such
agreement and/or arrangement to be reasonably satisfactory to the Lender)
subordinating any unsecured claim Lender may have against Borrower under this
Agreement.

     SECTION 5.3. CHANGE, TRANSFER OF ASSETS. Make any substantial change in the
nature of Borrower's business as conducted as of the date hereof; nor sell,
lease, transfer or otherwise dispose of all or a

                                       9

<PAGE>

substantial or material portion of Borrower's assets except in the ordinary
course of its business.

     SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity, except any of the
foregoing in favor of Lender and except in favor of Borrower's subsidiaries.

     SECTION 5.5. LOANS AND ADVANCES. Make any loans or advances to any person
or entity, except any of the foregoing existing as of, and disclosed to Lender
prior to, the date hereof, and except for loans to subsidiaries.

     SECTION 5.6. ACQUISITIONS AND MERGERS. Acquire (i) all or substantially all
of the assets of, or (ii) any equity securities in, any other entity, or merge
into or consolidate with any other entity, without the prior written consent of
Lender if the aggregate consideration to be paid by Borrower (whether in cash,
stock or otherwise) in connection with any such acquisition or merger (or series
of related acquisitions and/or mergers) exceeds $35,000,000.00; provided,
however, that (x) Borrower shall be the surviving entity in any merger or
consolidation, (y) each entity whose assets or equity securities are acquired by
Borrower, or which merges into or consolidates with Borrower, shall be engaged,
at the time of the applicable transaction, in substantially the same business as
Borrower, and (c) the consent of Lender, when required hereunder, shall not be
unreasonably withheld or delayed.

     SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest or lien (collectively, a "Lien") in or upon, all or any
portion of Borrower's assets now owned or hereafter acquired, except any of the
foregoing (collectively, "Permitted Liens"):

     (a)  any Lien created under this Agreement;

     (b)  Liens for taxes, fees, assessments or other governmental charges which
          are not delinquent or remain payable without penalty, or to the extent
          that non-payment thereof is permitted by Section 4.6; provided, that
          no notice of lien has been filed or recorded with respect thereto;

     (c)  suppliers', carriers', warehousemen's, mechanics', landlords',
          materialmen's, repairmen's or other similar Liens arising in the
          ordinary course of business which are not delinquent for a period of
          more than thirty days or which are being contested in good faith and
          by appropriate proceedings, which proceedings have the effect of
          preventing the forfeiture or sale of the property subject thereto;

     (d)  Liens incurred in connection with the indebtedness permitted under
          Section 5.2 hereof;

     (e)  Liens (other than any Lien imposed by ERISA) consisting of pledges or
          deposits required in the ordinary course of business

                                       10

<PAGE>

          in connection with workers' compensation, unemployment insurance and
          other social security legislation;

     (f)  Liens on the property securing (i) the non-delinquent performance of
          bids, trade contracts (other than for borrowed money), leases,
          statutory obligations, (ii) contingent obligations on surety and
          appeal bonds, and (iii) other non-delinquent obligations of a like
          nature; in each case, incurred in the ordinary course of business;

     (g)  leases, subleases, easements, rights-of-way, encroachments and other
          survey defects, restrictions and other similar encumbrances incurred
          in the ordinary course of business which do not impose material
          financial obligations on the Borrower, and which do not in any case
          materially detract from the value of the property subject thereto or
          materially interfere with the ordinary conduct of Borrower's business;

     (h)  purchase money security interests on assets acquired or held by
          Borrower securing indebtedness incurred or assumed for the purpose of
          financing all or any part of the cost of acquiring such asset;
          provided, that (i) any such Lien attaches to such equipment
          concurrently with or within 20 days after the acquisition thereof,
          (ii) such Lien attaches solely to the asset so acquired in such
          transaction, and (iii) the principal amount of the debt secured
          thereby does not exceed the cost of such asset;

     (i)  Liens securing obligations in respect of capital leases on assets
          subject to such leases;

     (j)  Liens arising solely by virtue of any statutory or common law
          provision relating to banker's liens, rights of set-off or similar
          rights and remedies as to deposit accounts or other funds maintained
          with a creditor depository institution;

     (k)  Liens assumed in connection with a business acquisition or merger;
          provided, that, such Lien was created prior to such acquisition or
          merger (and not in contemplation thereof) and if any such Lien is of a
          type not permitted under the other provisions of this Section 5.7,
          such Lien is satisfied and terminated within 30 days after such
          acquisition or merger; and

     (l)  any Lien existing on property of Borrower or any Affiliate as of the
          date hereof and set forth on Schedule 2 hereto; provided, that no such
          Lien shall be amended to cover additional property and no such Lien
          shall be amended to cover additional indebtedness.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

     SECTION 6.1. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default" under this Agreement:

                                       11

<PAGE>

     (a) Borrower shall fail to pay (i) when due, any principal or (ii) within
five (5) days after the date then due, interest, fees or other amounts, in each
case payable under any of the Loan Documents.

     (b) Any financial statement or certificate furnished to Lender in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.

     (c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue for a period of thirty (30) days from its occurrence.

     (d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower or any of its
subsidiaries has incurred any debt or other liability to any person or entity,
including Lender, and, if the debt or liability is owed to a party other than
Lender, the amount thereof exceeds $3,000,000.00.

     (e) The filing of a notice of judgment lien against Borrower; or the
recording of any abstract of judgment against Borrower in any county in which
Borrower has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any of its subsidiaries; or the entry of a judgment
against Borrower or any of its subsidiaries, and with respect to any of the
foregoing, the amount thereof exceeds $3,000,000.00 individually or in the
aggregate.

     (f) Borrower shall become insolvent, or shall suffer or consent to or apply
for the appointment of a receiver, trustee, custodian or liquidator of itself or
any of its property, or shall generally fail to pay its debts as they become
due, or shall make a general assignment for the benefit of creditors; Borrower
shall file a voluntary petition in bankruptcy, or seeking reorganization, in
order to effect a plan or other arrangement with creditors or any other relief
under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended
or recodified from time to time ("Bankruptcy Code"), or under any state or
federal law granting relief to debtors, whether now or hereafter in effect; or
any involuntary petition or proceeding pursuant to the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or
other relief for debtors is filed or commenced against Borrower, or Borrower
shall file an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition, and such proceedings shall continue for
more than 60 days, or Borrower shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower by any court of competent jurisdiction
under the Bankruptcy Code or any other applicable state or federal law relating
to bankruptcy, reorganization or other relief for debtors.

     (g) There shall exist or occur any event or condition which Lender in good
faith believes impairs, or is substantially likely to impair, the prospect of
payment or performance by Borrower of its obligations under any of the Loan
Documents.

                                       12

<PAGE>

     (h) The dissolution or liquidation of Borrower or any of its subsidiaries;
or Borrower, or any of its subsidiaries or any of its stockholders or creditors,
shall take action seeking to effect the dissolution or liquidation of Borrower
or any of its subsidiaries.

     (i) Any change in ownership during the term of this Agreement of an
aggregate of twenty-five percent (25%) or more of the voting stock of Borrower
in a single or in a series of affiliated transaction, including but not limited
to the issuance of new shares or the implementation of any anti-dilution
adjustments ("Change in Control").

     SECTION 6.2. REMEDIES. (a) Upon the occurrence of any Event of Default: (i)
all indebtedness of Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Lender's option and without notice
become immediately due and payable without presentment, demand, protest or
notice of dishonor, all of which are hereby expressly waived by each Borrower;
(ii) the obligation, if any, of Lender to extend any further credit under any of
the Loan Documents shall immediately cease and terminate; and (iii) Lender shall
have all rights, powers and remedies available under each of the Loan Documents,
or accorded by law, including without limitation the right to resort to any or
all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or Lender pursuant to applicable law. All rights, powers
and remedies of Lender may be exercised at any time by Lender and from time to
time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.

     (b) In addition to other rights and remedies provided for herein or
otherwise available to it, the Lender may exercise all the rights and remedies
of a Lender under applicable law and may also (i) in the name of the Lender, the
Borrower or otherwise, demand, sue for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for, or make any
compromise or settlement deemed desirable with respect to, any of the
Collateral, and the Lender may modify the terms of payment or of a release, all
without incurring responsibility to, or discharging or otherwise affecting any
liability to the Lender of, the Borrower, (ii) sell the Collateral in possession
of the Lender or enter upon the premises, or wherever the Collateral is, and
take possession thereof, and maintain such possession on the Borrower's
premises, or demand and receive such possession from any person who has
possession thereof, or remove the Collateral or any part thereof, to such other
places as the Lender may desire, all without any obligation, (iii) require the
Borrower to, at its expense, assemble all or part of the Collateral as directed
by the Lender and make it available to the Lender at a place to be designated by
the Lender which is reasonably convenient to both parties, (iv) without notice
(except as specified below) and with or without taking the possession thereof,
sell, lease, assign, grant options to purchase or otherwise dispose of the
Collateral or any part thereof in one or more parcels at public or private sale,
at any location chosen by the Lender, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Lender
may deem commercially reasonable. The Borrower agrees that, to the extent notice
of sale shall be required by law, at least five days' notice to the Borrower of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Lender shall not be
obligated to make any sale of Collateral regardless of

                                       13

<PAGE>

notice of sale having been given. The Lender may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. The Borrower agrees that the Lender shall have no obligation
to preserve rights in the Collateral against prior parties or to marshal any
Collateral for the benefit of any Person, and (v) apply, without notice, any
cash or cash items constituting Collateral in the possession of the Lender to
payment of any of the Obligations. The Borrower waives, to the extent permitted
by applicable law, all rights of the Borrower to prior notice and hearing under
any other applicable statute or constitution.

     (c) All cash proceeds received by the Lender in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
will, after payment of any amounts payable to the Lender pursuant to Section 1.1
and 1.2 hereof, be applied against the Obligations in such order as the Lender
shall elect, and any balance left thereafter returned to Borrower.

                                   ARTICLE VII
                                  MISCELLANEOUS

     SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Lender in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Lender of any breach of or default under any of the Loan Documents must
be in writing.

     SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

     BORROWER:   IPG Photonics Corporation
                 50 Old Webster Road
                 Oxford, MA 01540
                 Attn: Chief Financial Officer

     LENDER:     IP Fibre Devices (UK) Ltd.
                 22 Buckingham Gate
                 London SW1E 6LB
                 United Kingdom
                 Attn: Managing Director

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

                                       14

<PAGE>

     SECTION 7.3. COSTS. Borrower shall pay to Lender immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees, expended or incurred by Lender in
connection with (a) the negotiation and preparation of this Agreement and the
other Loan Documents (up to $10,000), Lender's continued administration hereof
and thereof, (b) the enforcement of Lender's rights and/or the collection of any
amounts which become due under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to any Borrower or any other person or entity.

     SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Lender's
prior written consent. Lender reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Lender's rights and benefits under each of the Loan Documents.

     SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Lender with
respect to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.

     SECTION 7.6. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

     SECTION 7.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

     SECTION 7.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Massachusetts without
regard to its conflict of laws principles.

     SECTION 7.9. LENDER APPOINTED ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints the Lender the Borrower's attorney-in-fact, with full
authority to take any action and to execute any instrument that the Lender may
deem necessary to carry-out the provisions of Section 1.3 of this Agreement,
including without limitation to execute and file any UCC financing statements
the Lender deems necessary or appropriate.

                                       15

<PAGE>

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

IPG PHOTONICS CORPORATION               IP FIBRE DEVICES (UK) LTD.

By: /s/ John H. Dalton                  By: /s/ Valentin P. Gapontsev
    ---------------------------------       ------------------------------------
    John H. Dalton                          Valentin P. Gaponstev
    President                               Managing Director

Location of Collateral:

IPG Photonics Corporation
50 Old Webster Road
Oxford, MA 01540

                                       16

<PAGE>

                                   SCHEDULE 1

                               LIST OF COLLATERAL

P40-000392                           SDL 63-00030 / 63-S9937 6360-A-962nm Diodes

<TABLE>
<S>    <C>
1800      109418
1800      112065
1800      115607
3400   14549-004
3400      108757
</TABLE>

     Total 12,200 @ 135.00 = $1,647,000.00

P40-000393                           SDL 63-00058 6350-A-962um Diodes on A-Block

<TABLE>
<S>    <C>
1200      109345
1200      112646
1200      115555
1200      119172
1200      126732
1300      128609
1000   14550-005
850    12306-003
900    12306-004
</TABLE>

     Total 10,050 @ 135.00 = $1,356,750.00

     Grand Total $3,003,750.00

                                        1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]