Document:

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                                                                    EXHIBIT 10.5

                     STOCK OPTION TERMS AND CONDITIONS UNDER
           IPG PHOTONICS CORPORATION 2000 INCENTIVE COMPENSATION PLAN

1. Definitions; Section References. All terms used in these Terms and Conditions
that are not otherwise defined shall have the meanings ascribed to them in the
IPG Photonics Corporation (the "Company") 2006 Incentive Compensation Plan, as
amended from time to time (the "Plan") or the applicable Notice of Grant
relating to the award ("Notice"). Unless otherwise indicated, all section
references are to sections of these Terms and Conditions. If the Notice states
that the Stock Option is an Incentive Stock Option, then the Stock Option is
intended to be incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, and subject to the limitations and
treatment thereof. "Optionee" means the person to whom the Stock Option has been
awarded.

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

(a) The term of the Stock Option granted shall commence as of the Grant Date and
shall end on the Expiration Date, and shall Vest as set forth in the Notice,
unless earlier terminated in accordance with Section 5. No option may be
exercised after the Expiration Date.

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

     i.   A signed Notice of Intent to Exercise Stock Options in the form
          prescribed by the Company from time to time specifying the number of
          shares the Optionee desires to purchase;

     ii.  Payment in full of the Exercise Price, subject to the requirements of
          Section 4; and

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

(c) For (i) the first six months following an IPO of the Company and (ii) the
period(s) beginning not more than ten days prior to and ending not more than
ninety days after the effective date(s) of one or more registration statements
under the Securities Act of 1933 with respect to securities of the Company,
Optionee agrees that Optionee may not sell, exchange, transfer, grant any option
to for the purchase of or otherwise dispose of any Shares acquired upon exercise
of the Option without the consent of the Company, which consent may be withheld
in the Company's absolute and sole discretion. The Optionee appoints the Company
(and any officer designated by the Company) to act as Optionee's agent and
attorney-in-fact to negotiate with, execute and deliver to the managing
underwriter in any such offering a lock-up agreement or other documents and
instruments and to take any and all actions on behalf of the Optionee as may be
appropriate to effectuate the foregoing as the attorney-in-fact approves in its
sole judgment.

4. Exercise Price.

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

(b) The Exercise Price of the shares subject to these Terms and Conditions may
be paid by (i) certified or bank check; or (ii) such other means the Committee
determines are consistent with the purpose of the Award and applicable law.

(c) The Optionee may satisfy the applicable withholding tax obligations by
paying the amount of any taxes in cash promptly following the date of exercise
(within 5 days of exercise) but in all cases prior to the delivery of the stock
certificate representing the Common Stock.

5. Termination of Stock Option.

(a) Death, Disability or Retirement. In the event of termination of the
Optionee's employment due to Disability or Retirement, this Stock Option may
thereafter be exercised by the Optionee within ninety (90) days following the
date of Disability or Retirement, to the extent it was exercisable at the time
such event occurred. The Committee may at any time and in its sole discretion
accelerate the exercisability of this Stock Option. Upon the death of an
Optionee,

    BY ACCEPTING THE AWARD, YOU AGREE TO THESE TERMS & CONDITIONS. READ THEM
                                   CAREFULLY.

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Stock Options shall be exercisable until the earlier of (i) the end of the
twelve (12) month period following the date of death or (ii) the Expiration
Date.

(b) Separation from Service for Cause. If Optionee's employment by the Company,
an Affiliate or Group Company or other service provider relationship with the
Company, an Affiliate or Group Company terminates involuntarily for Cause, any
unexercised Stock Option held by Optionee and not in fact exercised prior to
termination shall immediately expire and all rights under such Stock Option
shall immediately be forfeited.

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

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

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

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

7. Changes in Capitalization.

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

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

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

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

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

8. Nondisclosure, Noncompete, and Nonsolicit.

(a) Nondisclosure and Nonuse of Confidential Information. Optionee agrees that
Optionee will not at any time, whether during or after the Optionee's Service,
use or reveal to anyone outside the Company any of the trade secrets or
confidential information of the Company, its customers or suppliers, or any
information received in confidence from third parties by the Company, except to
the extent that such disclosure or use is directly related to and required by
Optionee's performance of duties assigned to the Optionee by the Company, an
Affiliate or Group Company. Confidential Information of the Company is any
information or material (a) generated or collected by or used in the operation
of the Company, an Affiliate or Group Company that relates to the actual or
anticipated business, marketing

                                       -2-

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and sales, strategic planning, products, services, research and development, or
production and/or manufacturing processes, of the Company, an Affiliate or Group
Company or its customers or suppliers, including its and their organization,
personnel, customers and finances; or (b) suggested by or resulting from any
task assigned to Optionee or work performed by Optionee for or on behalf of the
Company, an Affiliate or Group Company not otherwise readily available to
members of the general public.

(b) Forfeiture for Competition. Optionee acknowledges and agrees that (i) in the
course of the Optionee's Service, Optionee shall become familiar with the trade
secrets of the Company, its Affiliates and Group Companies and with other
Confidential Information concerning the Company, its Affiliates and Group
Companies, (ii) Optionee's Services to the Company, its Affiliates and Group
Companies are unique in nature and of an extraordinary value to the Company, its
Affiliates and Group Companies, and (iii) the Company, its Affiliates and Group
Companies could be irreparably damaged if Optionee were to provide similar
services to any person or entity competing with the Company, an Affiliate or
Group Company or engaged in a similar business. In connection with the issuance
to Optionee of the Stock Option hereunder, and in consideration for and as an
inducement to the Company to grant Stock Options to the Optionee, the Optionee
covenants and agrees that during the period beginning on the Grant Date and
ending on the first anniversary of the date of the termination of the Optionee's
Service, the Optionee shall not, directly or indirectly, either for himself or
for or through any other Person, without the express written consent of the
Company, anywhere in the world, engage in any activity that is, or participate
or invest in, or provide or facilitate the provision of financing to, or assist
(whether as owner, part-owner, shareholder, member, partner, director, officer,
trustee, employee, agent or consultant, or in any other capacity) any business,
organization or Person other than the Company (or any subsidiary of the
Company), and including any such business, organization or person involving, or
which is, a family member of Optionee, whose business, activities, products or
services are competitive with the products, technologies or services offered or
proposed to be offered by the Company, an Affiliate or Group Company. The
Optionee agrees that this covenant is reasonable with respect to its duration,
geographical area and scope. For purposes of these Terms and Conditions, the
term "participate in" includes having any direct or indirect interest in any
Person, whether as a sole proprietor, owner, shareholder, partner, joint
venture, creditor or otherwise, or rendering any direct or indirect service or
assistance to any Person (whether as a director, officer, manager, supervisor,
employee, agent, consultant or otherwise), other than owning up to 3% of the
outstanding stock of any class that is publicly traded.

(c) Nonsolicitation. Optionee hereby agrees that during the period commencing on
the Grant Date and ending on the date which is the later to occur of (i) two (2)
years after the Grant Date and (ii) eighteen (18) months after the date of the
termination of Optionee's Service, the Optionee will not, without the express
written consent of the Company, (w) induce or attempt to induce for or on behalf
of himself or herself or any such competitor any officer, employee or former
employee of the Company, its Affiliates or Group Companies, who was employed
during the one (1) year period immediately preceding the date on which
Optionee's Service with the Company, an Affiliate or Group Company was
terminated for any reason, (x) encourage for or on behalf of himself or any such
competitor any such officer or employee to terminate his or her Service to the
Company, an Affiliate or Group Company, (y) solicit for or on behalf of himself
or any such competitor any client or supplier of the Company, an Affiliate or
Group Company, or (z) divert to any Person any client or business opportunity of
the Company, an Affiliate or Group Company.

(d) Judicial Modification. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 8 is invalid or
unenforceable, the parties agree that (i) the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or geographic area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, (ii)
the parties shall request that the court exercise that power, and (iii) the
Notice and these Terms and Conditions shall be enforceable as so modified after
the expiration of the time within which the judgment or decision may be
appealed.

(e) Remedy for Breach. The Optionee agrees that in the event of a breach or
threatened breach of any of the covenants contained in this Section 8, in
addition to any other penalties or restrictions that may apply under any
employment agreement, state law, or otherwise, the Optionee shall forfeit:

(i) any and all Stock Options granted or transferred to him or her under the
Plan and these Terms and Conditions, including Vested Options; and

(ii) the profit the Optionee has realized on the exercise of any Stock Options,
which is the difference between the Exercise Price of the Stock Options and the
applicable Fair Market Value of the shares (the Optionee may be required to
repay such difference to the Company).

The forfeiture for competition provisions of this Section 8 shall continue to
apply, in accordance with their terms, after the noncompete provisions of any
employment or other agreement between the Company and the Optionee have lapsed.

                                       -3-

<PAGE>

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

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

11. Governing Law: Consent to Jurisdiction. This Agreement shall be construed
by, enforced in accordance with and governed by the substantive laws of the
State of Delaware without giving effect to its conflict of laws provisions
thereof. The Company and the Optionee hereby irrevocably and unconditionally (i)
agree that any action or proceeding arising out of or in connection with the
Stock Option and these Terms and Conditions shall be brought only in the courts
in the Commonwealth of Massachusetts, County of Worcester and should Federal
jurisdiction exist, the Federal Courts located in the District of Massachusetts,
and (ii) consent to submit to the exclusive jurisdiction of such court for
purposes of any action or proceeding arising out of or in connection with the
Stock Option or these Terms and Conditions.

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

13. Binding Effect. These Terms and Conditions shall be binding upon and inure
to the benefit of the heirs, beneficiaries, legal representatives and successors
of the parties. Any successors to the parties shall be entitled to all of the
rights of and obligated to abide by all provisions of any shareholder agreements
that apply to the shares held by such successors. The Company reserves the right
to make changes to these Terms and Conditions in its sole discretion.

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

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

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

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

18. Subject to Plan. This Stock Option is granted under and subject to the terms
of the Plan. In the event of any conflict between the terms of these Terms and
Conditions and the terms of the Plan, the terms of the Plan shall control.

19. Plan and Agreement Not a Contract of Employment or Service. None of the
Plan, the Notice or these Terms and Conditions is a contract of employment or
Service, and no terms of the Optionee's employment or Service will be affected
in any way by the Plan, the Notice, these Terms and Conditions or related
instruments, except to the extent

                                       -4-

<PAGE>

specifically expressed therein. The Plan, the Notice or these Terms and
Conditions will be construed as conferring any legal rights of the Optionee to
continue to be employed or remain in Service with the Company, nor will it
interfere with the right of the Company, an Affiliate or Group Company to
discharge the Optionee or to deal with him or her regardless of the existence of
the Plan, the Notice or these Terms and Conditions.

                                [END OF DOCUMENT]

                                       -5-<PAGE>

                                                                    EXHIBIT 10.6

                     STOCK OPTION TERMS AND CONDITIONS UNDER
           IPG PHOTONICS CORPORATION 2006 INCENTIVE COMPENSATION PLAN

1. Definitions; Section References. All terms used in these Terms and Conditions
that are not otherwise defined shall have the meanings ascribed to them in the
IPG Photonics Corporation (the "Company") 2006 Incentive Compensation Plan, as
amended from time to time (the "Plan") or the applicable Notice of Grant
relating to the award ("Notice"). Unless otherwise indicated, all section
references are to sections of these Terms and Conditions. If the Notice states
that the Stock Option is an Incentive Stock Option, then the Stock Option is
intended to be incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, and subject to the limitations and
treatment thereof. "Optionee" means the person to whom the Stock Option has been
awarded.

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

(a) The term of the Stock Option granted shall commence as of the Grant Date and
shall end on the Expiration Date, and shall Vest as set forth in the Notice,
unless earlier terminated in accordance with Section 5. No option may be
exercised after the Expiration Date.

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

     i.   A signed Notice of Intent to Exercise Stock Options in the form
          prescribed by the Company from time to time specifying the number of
          shares the Optionee desires to purchase;

     ii.  Payment in full of the Exercise Price, subject to the requirements of
          Section 4; and

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

(c) For (i) the first six months following an IPO of the Company and (ii) the
period(s) beginning not more than ten days prior to and ending not more than
ninety days after the effective date(s) of one or more registration statements
under the Securities Act of 1933 with respect to securities of the Company,
Optionee agrees that Optionee may not sell, exchange, transfer, grant any option
to for the purchase of or otherwise dispose of any Shares acquired upon exercise
of the Option without the consent of the Company, which consent may be withheld
in the Company's absolute and sole discretion. The Optionee appoints the Company
(and any officer designated by the Company) to act as Optionee's agent and
attorney-in-fact to negotiate with, execute and deliver to the managing
underwriter in any such offering a lock-up agreement or other documents and
instruments and to take any and all actions on behalf of the Optionee as may be
appropriate to effectuate the foregoing as the attorney-in-fact approves in its
sole judgment.

4. Exercise Price.

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

(b) The Exercise Price of the shares subject to these Terms and Conditions may
be paid by (i) certified or bank check; or (ii) such other means the Committee
determines are consistent with the purpose of the Award and applicable law.

(c) The Optionee may satisfy the applicable withholding tax obligations by
paying the amount of any taxes in cash promptly following the date of exercise
(within 5 days of exercise) but in all cases prior to the delivery of the stock
certificate representing the Common Stock.

5. Termination of Stock Option.

(a) Death, Disability or Retirement. In the event of termination of the
Optionee's employment due to Disability or Retirement, this Stock Option may
thereafter be exercised by the Optionee within ninety (90) days following the
date of Disability or Retirement, to the extent it was exercisable at the time
such event occurred. The Committee may at

    BY ACCEPTING THE AWARD, YOU AGREE TO THESE TERMS & CONDITIONS. READ THEM
                                   CAREFULLY.

<PAGE>

any time and in its sole discretion accelerate the exercisability of this Stock
Option. Upon the death of an Optionee, Stock Options shall be exercisable until
the earlier of (i) the end of the twelve (12) month period following the date of
death or (ii) the Expiration Date.

(b) Separation from Service for Cause. If Optionee's employment by the Company,
an Affiliate or Group Company or other service provider relationship with the
Company, an Affiliate or Group Company terminates involuntarily for Cause, any
unexercised Stock Option held by Optionee and not in fact exercised prior to
termination shall immediately expire and all rights under such Stock Option
shall immediately be forfeited.

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

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

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

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

7. Changes in Capitalization.

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

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

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

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

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

8. Nondisclosure, Noncompete, and Nonsolicit.

(a) Nondisclosure and Nonuse of Confidential Information. Optionee agrees that
Optionee will not at any time, whether during or after the Optionee's Service,
use or reveal to anyone outside the Company any of the trade secrets or
confidential information of the Company, its customers or suppliers, or any
information received in

                                       -2-

<PAGE>

confidence from third parties by the Company, except to the extent that such
disclosure or use is directly related to and required by Optionee's performance
of duties assigned to the Optionee by the Company, an Affiliate or Group
Company. Confidential Information of the Company is any information or material
(a) generated or collected by or used in the operation of the Company, an
Affiliate or Group Company that relates to the actual or anticipated business,
marketing and sales, strategic planning, products, services, research and
development, or production and/or manufacturing processes, of the Company, an
Affiliate or Group Company or its customers or suppliers, including its and
their organization, personnel, customers and finances; or (b) suggested by or
resulting from any task assigned to Optionee or work performed by Optionee for
or on behalf of the Company, an Affiliate or Group Company not otherwise readily
available to members of the general public.

(b) Forfeiture for Competition. Optionee acknowledges and agrees that (i) in the
course of the Optionee's Service, Optionee shall become familiar with the trade
secrets of the Company, its Affiliates and Group Companies and with other
Confidential Information concerning the Company, its Affiliates and Group
Companies, (ii) Optionee's Services to the Company, its Affiliates and Group
Companies are unique in nature and of an extraordinary value to the Company, its
Affiliates and Group Companies, and (iii) the Company, its Affiliates and Group
Companies could be irreparably damaged if Optionee were to provide similar
services to any person or entity competing with the Company, an Affiliate or
Group Company or engaged in a similar business. In connection with the issuance
to Optionee of the Stock Option hereunder, and in consideration for and as an
inducement to the Company to grant Stock Options to the Optionee, the Optionee
covenants and agrees that during the period beginning on the Grant Date and
ending on the first anniversary of the date of the termination of the Optionee's
Service, the Optionee shall not, directly or indirectly, either for himself or
for or through any other Person, without the express written consent of the
Company, anywhere in the world, engage in any activity that is, or participate
or invest in, or provide or facilitate the provision of financing to, or assist
(whether as owner, part-owner, shareholder, member, partner, director, officer,
trustee, employee, agent or consultant, or in any other capacity) any business,
organization or Person other than the Company (or any subsidiary of the
Company), and including any such business, organization or person involving, or
which is, a family member of Optionee, whose business, activities, products or
services are competitive with the products, technologies or services offered or
proposed to be offered by the Company, an Affiliate or Group Company. The
Optionee agrees that this covenant is reasonable with respect to its duration,
geographical area and scope. For purposes of these Terms and Conditions, the
term "participate in" includes having any direct or indirect interest in any
Person, whether as a sole proprietor, owner, shareholder, partner, joint
venture, creditor or otherwise, or rendering any direct or indirect service or
assistance to any Person (whether as a director, officer, manager, supervisor,
employee, agent, consultant or otherwise), other than owning up to 3% of the
outstanding stock of any class that is publicly traded.

(c) Nonsolicitation. Optionee hereby agrees that during the period commencing on
the Grant Date and ending on the date which is the later to occur of (i) two (2)
years after the Grant Date and (ii) eighteen (18) months after the date of the
termination of Optionee's Service, the Optionee will not, without the express
written consent of the Company, (w) induce or attempt to induce for or on behalf
of himself or herself or any such competitor any officer, employee or former
employee of the Company, its Affiliates or Group Companies, who was employed
during the one (1) year period immediately preceding the date on which
Optionee's Service with the Company, an Affiliate or Group Company was
terminated for any reason, (x) encourage for or on behalf of himself or any such
competitor any such officer or employee to terminate his or her Service to the
Company, an Affiliate or Group Company, (y) solicit for or on behalf of himself
or any such competitor any client or supplier of the Company, an Affiliate or
Group Company, or (z) divert to any Person any client or business opportunity of
the Company, an Affiliate or Group Company.

(d) Judicial Modification. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 8 is invalid or
unenforceable, the parties agree that (i) the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or geographic area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, (ii)
the parties shall request that the court exercise that power, and (iii) the
Notice and these Terms and Conditions shall be enforceable as so modified after
the expiration of the time within which the judgment or decision may be
appealed.

(e) Remedy for Breach. The Optionee agrees that in the event of a breach or
threatened breach of any of the covenants contained in this Section 8, in
addition to any other penalties or restrictions that may apply under any
employment agreement, state law, or otherwise, the Optionee shall forfeit:

                                       -3-

<PAGE>

(i) any and all Stock Options granted or transferred to him or her under the
Plan and these Terms and Conditions, including Vested Options; and

(ii) the profit the Optionee has realized on the exercise of any Stock Options,
which is the difference between the Exercise Price of the Stock Options and the
applicable Fair Market Value of the shares (the Optionee may be required to
repay such difference to the Company).

The forfeiture for competition provisions of this Section 8 shall continue to
apply, in accordance with their terms, after the noncompete provisions of any
employment or other agreement between the Company and the Optionee have lapsed.

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

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

11. Governing Law: Consent to Jurisdiction. This Agreement shall be construed
by, enforced in accordance with and governed by the substantive laws of the
State of Delaware without giving effect to its conflict of laws provisions
thereof. The Company and the Optionee hereby irrevocably and unconditionally (i)
agree that any action or proceeding arising out of or in connection with the
Stock Option and these Terms and Conditions shall be brought only in the courts
in the Commonwealth of Massachusetts, County of Worcester, and should Federal
jurisdiction exist, the Federal Courts located in the District of Massachusetts,
and (ii) consent to submit to the exclusive jurisdiction of such court for
purposes of any action or proceeding arising out of or in connection with the
Stock Option or these Terms and Conditions.

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

13. Binding Effect. These Terms and Conditions shall be binding upon and inure
to the benefit of the heirs, beneficiaries, legal representatives and successors
of the parties. Any successors to the parties shall be entitled to all of the
rights of and obligated to abide by all provisions of any shareholder agreements
that apply to the shares held by such successors. The Company reserves the right
to make changes to these Terms and Conditions in its sole discretion.

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

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

                                       -4-

<PAGE>

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

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

18. Subject to Plan. This Stock Option is granted under and subject to the terms
of the Plan. In the event of any conflict between the terms of these Terms and
Conditions and the terms of the Plan, the terms of the Plan shall control.

19. Plan and Agreement Not a Contract of Employment or Service. None of the
Plan, the Notice or these Terms and Conditions is a contract of employment or
Service, and no terms of the Optionee's employment or Service will be affected
in any way by the Plan, the Notice, these Terms and Conditions or related
instruments, except to the extent specifically expressed therein. The Plan, the
Notice or these Terms and Conditions will be construed as conferring any legal
rights of the Optionee to continue to be employed or remain in Service with the
Company, nor will it interfere with the right of the Company, an Affiliate or
Group Company to discharge the Optionee or to deal with him or her regardless of
the existence of the Plan, the Notice or these Terms and Conditions.

                                [END OF DOCUMENT]

                                       -5-

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