Document:

<PAGE>

                                                                     EXHIBIT 4.2

This Warrant and any shares acquired upon the exercise of this Warrant have not
been registered under the Securities Act of 1933, as amended, or any applicable
state securities laws and may not be transferred, sold or otherwise disposed of
without compliance with the registration or qualification provisions of
applicable federal or state securities laws or applicable exemptions therefrom.

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO
CERTAIN RIGHTS SPECIFIED IN THAT CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF
AUGUST 30, 2000, A COPY OF WHICH WILL BE MAILED TO ANY REQUESTING HOLDER WITHIN
FIVE (5) DAYS OF WRITTEN REQUEST THEREFOR.

                           IPG PHOTONICS CORPORATION

                         Common Stock Purchase Warrant

                                                       Sturbridge, Massachusetts
                                                              ____________, 2000
No. ___

Warrant Coverage Amount: $_______________

     IPG PHOTONICS CORPORATION, a Delaware corporation (the "Company"), for
value received, hereby certifies that ______________________ or its registered
assigns (the "Holder"), is entitled to purchase from the Company such number of
shares of duly authorized validly issued, fully paid and non-assessable shares
of its Common Stock, $.001 per value per share ("Common Stock") as shall be
determined by dividing the Warrant Coverage Amount specified herein by the
Warrant Price (as defined in Section 11 hereof) at a purchase price per share
                             ----------
equal to the Warrant Price at any time or at any time after an Exercise Date (as
defined in Section 11 hereof); provided that such Exercise Date must occur prior
           ----------
to 5:00 P.M., Eastern Standard Time, on August 30, 2007 (the "Expiration Date"),
all subject to the terms, conditions and adjustments set forth below in this
Warrant.  As used herein, the term "Common Stock" shall mean the Common Stock
and any other shares of stock issued or issuable with respect thereto.

     This Warrant is one of the Common Stock Purchase Warrants (each a "Warrant"
and collectively, the "Warrants," such term to include any such warrants issued
in substitution therefor) originally issued pursuant to Section 1.1 of that
certain Stock and Purchase Agreement dated as of August 30, 2000 (as from time
to time in effect, the "Purchase Agreement") by and

                                       1
<PAGE>

among the Company and the Investors named therein, including in any supplement
thereto executed in connection which any supplemental closing thereunder (the
"Investors"). Certain capitalized terms used in this Warrant are defined in
Section 14 hereof.
----------

1.   EXERCISE OR CONVERSION OF WARRANT

     1.1  Manner of Exercise or Conversion; Payment.
          -----------------------------------------

          1.1.1  Exercise.  From and after the occurrence of an Exercise Date,
                 --------
this Warrant may be exercised by the holder hereof, in whole or in part, by
surrender of this Warrant to the Company at its principal office during normal
business hours on any date on or prior to the Expiration Date, accompanied by a
subscription in substantially the form attached to this Warrant (or a facsimile
thereof) duly executed by such holder and accompanied by payment (i) in cash,
(ii) by certified check payable to the order of the Company or (iii) by wire
transfer, or by any combination of any of the foregoing methods, in the amount
required to be paid in accordance with the introductory paragraph hereof to
acquire the shares being acquired upon such exercise, and such holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities) so
purchased.

          1.1.2  Conversion.  If instead of exercising this Warrant pursuant to
                 ----------
the terms of Section 1.1.1 above, the holder hereof elects to convert this
             -------------
Warrant, in whole or in part, into shares of Common Stock, then such holder
shall surrender this Warrant to the Company at its principal office during
normal business hours on any date on or prior to the Expiration Date,
accompanied by a conversion notice in substantially the form attached to this
Warrant (or a facsimile thereof) duly executed by such holder, and such holder
shall thereupon be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) as is computed using the following formula:

                                 X =  Y (A-B)
                                     --------
                                          A

     where X = the number of shares of Common Stock to be issued to such holder
     pursuant to this Section 1.1.2.
                      -------------

          Y = the number of shares of Common Stock to be issued upon exercise
     and in respect of which the conversion election is made pursuant to this
     Section 1.1.2.
     -------------

          A = the Current Market Price of one share of Common Stock.

          B = the Warrant Price then in effect under this Warrant at the time
     the conversion election is made pursuant to this Section 1.1.2.
                                                      -------------

                                       2
<PAGE>

For all purposes of this Warrant (other than this Section 1.1), any reference
                                                  -----------
herein to the exercise of this Warrant shall be deemed to include a reference to
the conversion of this Warrant into Common Stock (or Other Securities) in
accordance with the terms of this Section 1.1.2.
                                  -------------

     1.2  When Exercise Effective.  Each exercise of this Warrant shall be
          -----------------------
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1 hereof, and at such time the Person or Persons in whose
            -----------
name or names any certificate or certificates for shares of Common Stock (or
Other Securities) shall be issuable upon such exercise as provided in Section
                                                                      -------
1.3 hereof shall be deemed to have become the holder or holders of record
---
thereof.

     1.3  Delivery of Stock Certificates, etc.  As soon as practicable after
          ------------------------------------
each exercise of this Warrant, in whole or in part, and in any event within five
Business Days thereafter, the Company at its sole expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or as such holder (upon payment by such holder of
any applicable transfer taxes) may direct:

               (a)  a certificate or certificates for the number of duly
          authorized, validly issued, fully paid and nonassessable shares of
          Common Stock (or Other Securities) to which such holder shall be
          entitled upon such exercise plus, in lieu of any fractional share to
          which such holder would otherwise be entitled, cash in an amount equal
          to the same fraction of the Market Price per share calculated on the
          Business Day preceding the date of such exercise; and

               (b)  in case such exercise is in part only, a new Warrant or
          Warrants of like tenor, dated the date hereof and calling in the
          aggregate on the face or faces thereof for the number of shares of
          Common Stock equal to the number of shares with respect to which this
          Warrant shall not then have been exercised (without giving effect to
          any adjustment thereof).

     1.4  Company to Reaffirm Obligations.  The Company will, at the time of
          -------------------------------
each exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder all
rights (including, without limitation, any rights to registration pursuant to
the Registration Rights Agreement referred to in Section 8 hereof of the shares
                                                 ---------
of Common Stock or Other Securities issued upon such exercise) to which such
holder shall continue to be entitled after such exercise in accordance with the
terms of this Warrant; provided, however, that if the holder of this Warrant
                       --------  -------
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such rights to such holder.

                                       3
<PAGE>

2.   CONSOLIDATION, MERGER, ETC.

     2.1  Adjustments for Consolidation, Merger, Sale of Assets,
          ------------------------------------------------------
Reorganizations, etc. In the event the Company after the date hereof (a) shall
--------------------
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger or (b) shall permit any
other Person to consolidate with or merge into the Company and the Company shall
be the continuing or surviving Person but, in connection with such consolidation
or merger, the Common Stock or Other Securities shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property or (c) shall transfer all or substantially all of its properties or
assets to any other Person or (d) shall effect a capital reorganization or
reclassification of the Common Stock or Other Securities then, and in the case
of each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the holder of this
Warrant, upon the exercise hereof at any time after the consummation of such
transaction, shall be entitled to receive (at the aggregate Warrant Price
effective at the time of such consummation but with appropriate adjustments to
reflect the terms of such transaction in lieu of the Common Stock or Other
Securities issuable upon such exercise prior to such consummation, the greatest
amount of securities, cash or other property to which such holder would actually
have been entitled as a shareholder upon such consummation if such holder had
exercised the rights represented by this Warrant for the full Warrant Coverage
Amount immediately prior thereto in accordance with  the terms hereof, subject
to adjustments (subsequent to such consummation) as nearly equivalent as
possible to the adjustments provided for in this Section; provided, however,
                                                          --------  -------
that if a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock, and if the holder of such Warrants so designates in a notice given to the
Company on or before the date immediately preceding the date of the consummation
of such transaction, then the holder of such Warrants shall be entitled to
receive the greatest amount of securities, cash or other property to which such
holder would actually have been entitled as a shareholder if the holder of such
Warrants had exercised such Warrants prior to the expiration of such purchase,
tender or exchange offer and accepted such offer, subject to adjustments (from
and after the consummation of such purchase, tender or exchange offer) as nearly
equivalent as possible to the adjustments provided for in this Section.

     2.2  Assumption of Obligations.  Notwithstanding anything contained in the
          -------------------------
Warrants or in the Purchase Agreement to the contrary, the Company will not
effect any of the transactions described in clauses (a) through (d) of Section
                                            -----------         ---    -------
2.1 hereof unless, prior to the consummation thereof, each Person (other than
---
the Company) which may be required to deliver any stock, securities, cash or
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the holder of
this Warrant, (a) the obligations of the Company under this Warrant (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant) and (b) the obligation to deliver
to such holder such shares of stock, securities, cash or property

                                       4
<PAGE>

as, in accordance with the foregoing provisions of this Section 3, such holder
                                                        ---------
may be entitled to receive. Nothing in this Section shall be deemed to authorize
the Company to enter into any transaction not otherwise permitted by the
Purchase Agreement.

3.   IMPAIRMENT.  The Company will not, by amendment of its Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment.  Without limiting the generality of the foregoing,
the Company (a) will not permit the par value of any shares of stock receivable
upon the exercise of this Warrant to exceed the amount payable therefor upon
such exercise, (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrants from time to time
outstanding and (c) will not take any action which results in any adjustment of
the Warrant Price if the total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise of all of the Warrants
would exceed the total number of shares of Common Stock (or Other Securities)
then authorized by the Company's Certificate of Incorporation and available for
the purpose of issuance upon such exercise.

4.   NOTICES OF CORPORATE ACTION.  In the event of

               (a)  any capital reorganization of the Company, any
          reclassification or recapitalization of the capital stock of the
          Company or any consolidation or merger involving the Company and any
          other Person or any transfer of all or substantially all the assets of
          the Company to any other Person,

               (b)  any Sale Event, or any voluntary or involuntary dissolution,
          liquidation or winding-up, or

               (c)  any IPO,

the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such reorganization, reclassification,
recapitalization, Sale Event or IPO is to take place, (ii) the time, if any such
time is to be fixed, as of which the holders of record of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for the securities or other property deliverable upon such
transaction and a description in reasonable detail of the transaction and (iii)
if applicable, a description of the securities to be issued  in such transaction
and the consideration received by the Company therefor.  Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.

                                       5
<PAGE>

5.   REGISTRATION OF COMMON STOCK.  If any shares of Common Stock required to be
reserved for purposes of exercise of this Warrant require registration with or
approval of any governmental authority under any federal or state law (other
than the Securities Act) before such shares may be issued upon exercise, the
Company will, at its sole expense and as expeditiously as possible, use all
reasonable efforts to cause such shares to be duly registered or approved, as
the case may be.  The shares of Common Stock (and Other Securities) issuable
upon exercise of this Warrant constitute Registrable Securities (as such term is
defined in the Registration Rights Agreement).  Each holder of this Warrant
shall be entitled to all of the benefits afforded to a holder of any such
Registrable Securities under the Registration Rights Agreement and such holder,
by its acceptance of this Warrant, agrees to be bound by and to comply with the
terms and conditions of the Registration Rights Agreement applicable to such
holder as a holder of such Registrable Securities.  At any such time as Common
Stock is listed on any national securities exchange or is quoted in the over-
the-counter market, the Company will, at its sole expense, obtain promptly and
maintain the approval for listing or quotation on each such exchange or market,
upon official notice of issuance, the shares of Common Stock issuable upon
exercise of the then outstanding Warrants and maintain the listing or quotation
of such shares after their issuance; and the Company will also list on such
national securities exchange or provide for the quotation in such over-the-
counter market, will register under the Exchange Act and will maintain such
listing or quotation of, any Other Securities that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the same
class shall be listed on such national securities exchange or over-the-counter
market by the Company.

6.   CONTEST AND APPRAISAL RIGHTS.

     6.1  Dispute.  If the Warrant Majority Holders shall, for any reason
          -------
whatsoever, disagree with the Company's determination of the Market Price for
the Common Stock, then the Company and the Warrant Majority Holders shall
negotiate in good faith in an effort to reach an agreement upon the Market Price
for a period of ten (10) days beginning at any time following notice by the
Warrant Majority Holders of such disagreement.  If the Company and the Warrant
Majority Holders are unable to reach agreement as so provided, such dispute
shall be resolved as set forth in Section 6.2 below.
                                  -----------

     6.2  Appointment of Appraiser.  The Company and the Warrant Majority
          ------------------------
Holders shall within thirty (30 days) after the expiration of the ten-day period
referenced in Section 6.1 above, engage an Appraiser to make an independent
              -----------
determination of the Market Price for the Common Stock (the "Appraiser's
Determination").  In determining the Market Price for the Common Stock, the
Appraiser shall base any valuation upon the fair market value of the Company
assuming that the Company were sold as a going concern, without regard to the
existence of any control block, the anticipated impact upon current market
prices of any such sale, the lack or depth of a market for the Common Stock, the
Warrants or other securities of the Company, or any other factors concerning the
liquidity or marketability of the Common Stock,

                                       6
<PAGE>

the Warrants or other securities of the Company. The Appraiser's Determination
shall be final and binding on the Company and all holders of Warrants.

     6.3  Appraiser's Determination.  If the Company's determination of the
          -------------------------
Market Price for the Common Stock and the Appraiser's Determination differ by an
amount of 10% or less, then the costs of conducting the appraisal shall be borne
equally by the Company and the holders of the Warrants; if the Company's
determination of the Market Price for the Common Stock is greater than the
Appraiser's Determination by more than 10%, then the costs of conducting the
appraisal shall be borne entirely by the holders of the Warrants; and if the
Appraiser's Determination is greater than the Company's determination of the
Market Price for the Common Stock by more than 10%, then the costs of conducting
the appraisal shall be borne entirely by the Company; provided that in each case
                                                      --------
costs separately incurred by the Company and any holder of Warrants shall be
separately and respectively borne by them.

7.   RESERVATION OF STOCK, ETC.  The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock (or Other Securities) from time to time
issuable upon exercise of all Warrants at the time outstanding.  All shares of
Common Stock (or Other Securities) issuable upon exercise of any Warrants shall
be duly authorized and, when issued upon such exercise, shall be validly issued
and fully paid and nonassessable with no liability on the part of the holders
thereof.

8.   OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.

     8.1  Ownership of Warrants.  The Company may treat the person in whose name
          ---------------------
any Warrant is registered on the register kept at the principal office of the
Company as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary.  A Warrant, if properly assigned, may be exercised
by a new holder without a new Warrant first having been issued.

     8.2  Transfer and Exchange of Warrants.
          ---------------------------------

               (a)  The Company shall cause to be kept at its principal office a
          register for the registration and transfer of the Warrants.  The names
          and addresses of holder of Warrants, the transfer thereof and the
          names and addresses of transferees of Warrants shall be registered in
          such register.  The Person in whose name any Warrant shall be so
          registered shall be deemed and treated as the owner and holder thereof
          for all purposes of this Warrant, and the Company shall not be
          affected by any notice or knowledge to the contrary.  Any transferee
          of Warrants shall be required to execute the Stockholders Agreement
          then in effect prior to the transfer of Warrants.

                                       7
<PAGE>

               (b)  Upon the surrender of any Warrant, properly endorsed, for
          registration of transfer or for exchange at the principal office of
          the Company, the Company at its expense will execute and deliver to or
          upon the order of the holder thereof a new Warrant or Warrants of like
          tenor, in the name of such holder or as such holder (upon payment by
          such holder of any applicable transfer taxes) may direct, calling in
          the aggregate on the face or faces therefor for the number of shares
          of Common Stock called for on the face or faces of the Warrant or
          Warrants so surrendered.

     8.3  Replacement of Warrants.  Upon receipt of evidence reasonably
          -----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than an Investor or any institutional investor, upon
delivery of an indemnity reasonably satisfactory to the Company in form and
amount or, in the case of any such mutilation, upon surrender of such Warrant
for cancellation at the principal office of the Company, the Company at its sole
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor
and dated the date hereof.

9.   RESTRICTIONS ON TRANSFERABILITY.

     (a)  In General. This Warrant and the Common Stock issued upon the exercise
hereof shall not be transferable except upon the conditions hereinafter
specified and specified the Stockholders Agreement.

     The Holder of each share of Common Stock issued upon the exercise of this
Warrant (evidenced by a certificate required to bear the legend specified in
this Warrant), by its acceptance thereof, agrees to sell or otherwise transfer
such Common Stock, in compliance with applicable law and in compliance with the
Stockholders Agreement.

     (b)  Restrictive Legends. The Warrant shall bear on the face thereof a
legend substantially in the form of the notice endorsed on the first page of
this Warrant.

     Each certificate for shares of Common Stock initially issued upon the
exercise of this Warrant and each certificate for shares of Common Stock issued
to a subsequent transferee of such certificate shall, unless otherwise permitted
by the provisions of this Section 9, bear on the face thereof a legend reading
substantially as follows:

          "The securities represented by this certificate were issued in a
     private placement, without registration under the Securities Act of 1933,
     as amended (the "Securities Act"), and may not be sold, assigned, pledged
     or otherwise transferred in the absence of an effective registration under
     the Securities Act or qualification or an exemption therefrom."

                                       8
<PAGE>

          "The securities represented by this certificate are subject to
     restrictions on transfer and requirements of sale and the provisions as set
     forth in the Stockholders Agreement dated as of August 30, 2000, as amended
     and in effect from time to time, and constitute Shares as defined in such
     Stockholders Agreement.  The Company will furnish a copy of such agreement
     to the holder of this certificate without charge upon written request."

     In the event that a registration statement covering the shares of Common
Stock issued upon the exercise of this Warrant shall become effective under the
Securities Act and under any applicable state securities laws or in the event
that the Company shall receive an opinion of counsel to the Holder (which may be
internal counsel to such Holder) that, in the opinion of such counsel, such
legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemption afforded by Rule 144 of
the General Rules and Regulations of the Commission), the Company shall, or
shall instruct its transfer agents and registrars to, remove such legend from
the certificates evidencing the shares of Common Stock issued upon the exercise
of this Warrant or issue new certificates without such legend in lieu thereof.

10.  AVAILABILITY OF INFORMATION.  If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company will comply with the reporting requirements of
Section 13 and 15(d) of the Exchange Act and will comply with all public
information reporting requirements of the Commission (including Rule 144
promulgated by the Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from the Securities Act
for the sale of any Restricted Securities.  The Company will also cooperate with
each holder of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities.  The Company furnish to each holder of any Warrants,
promptly upon their becoming available, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by the
Company to its stockholders, and copies of all regular and periodic reports and
all registration statements and prospectuses filed by the Company with any
securities exchange or with the Commission.

11.  DEFINITIONS.  As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:

     "Business Day" means any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in New York, New York are authorized or
obligated by law or

                                       9
<PAGE>

executive order to be closed. Any reference to "days" (unless Business Days are
specified) shall mean calendar days.

     "Certificate of Incorporation" means the Amended and Restated Certificate
of Incorporation of the Company, as amended from time to time.

     "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

     "Company" shall have the meaning given to such term in the introduction to
this Warrant, such term to include any corporation which shall succeed to or
assume the obligations of the Company in compliance with Section 2 hereof.
                                                         ---------

     "Current Market Price" means on any date specified herein, the average
daily Market Price during the period of the most recent 20 days, ending on such
date, on which the national securities exchanges were open for trading, except
that if no class of the Common Stock is then listed or admitted to trading on
any national securities exchange or quoted in the over-counter market, the
Current Market Price shall be the Market Price on such date.

     "Exchange Act" means the Securities Exchange Act of 1934, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

     "Exercise Date"  means (i) in the case of an IPO,  the closing date of the
IPO or (ii) in the case of a Sale Event, the closing or completion date of such
Sale Event.

     "Expiration Date" shall have the meaning given to such term in the
introduction to this Warrant.

     "Investors" shall have the meaning given to such term in the introduction
to this Warrant.

     "IPO" means the Company's first underwritten offering to the public
pursuant to an effective registration statement under the Securities Act
covering the offer and sale of shares of the Common Stock.

     "Liquidity Event" means an IPO or a Sale Event.

     "Liquidity Event Price" means, (i) in the case of an IPO, the price to be
public as specified in the definitive prospectus in such IPO, (ii) in the case
of  a Sale Event, the amount per share of Common Stock to be paid in any such
transaction

                                       10
<PAGE>

     "Market Price" means on any date specified herein, the amount per share of
Common Stock equal to (a) the last sale price of Common Stock, regular way, on
such date or, if no such sale takes place on such date, the average of the
closing bid and asked prices thereof on such date, in each case as officially
reported on the principal national securities exchange on which Common Stock is
then listed or admitted to trading, or (b) if Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of Common
Stock on such date, or (c) if there shall have been no trading on such date or
if Common Stock is not so designated, the average of the closing bid and asked
prices of Common Stock on such date as shown by the NASD automated quotation
system, or (d) if Common Stock is not then listed or admitted to trading on any
national exchange or quoted in the over-the-counter market, or if the asset to
be valued is property, then the fair value thereof determined in good faith by
the Board of Directors of the Company as of a date which is within 15 days of
the date as of which the determination is to be made.

     "NASD" means the National Association of Securities Dealers, Inc. and any
successor organization thereto.

     "Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of Warrants, in lieu of or in addition to Common
Stock, which at any time shall be issuable or shall have been issued in exchange
for or in replacement of Common Stock or Other Securities pursuant to Section 3
                                                                      ---------
hereof or otherwise.

     "Person" means any individual, corporation, partnership, company,
association, limited liability company, joint venture, estate, trust,
unincorporated organization, entity or division or government, governmental
department or any agency or political subdivision thereof.

     "Purchase Agreement" shall have the meaning given to such term in the
introduction to this Warrant.

     "Registration Rights Agreement" means that Registration Rights Agreement
dated as of August 30, 2000 by and among the Company and the Investors named
therein.

     For purposes of valuing any securities or other noncash or consideration to
be delivered to the holders of the Common Stock in any Sale Event, the following
shall apply:

               (i)  If traded on a nationally recognized securities exchange or
     inter-dealer quotation system, the value shall be deemed to be the average
     of the closing prices of the securities on such exchange or system over the
     30-day period ending three (3) business days prior to the closing;

                                       11
<PAGE>

               (ii)   If traded over-the-counter, the value shall be deemed to
     be the average of the closing bid prices over the 30-day period ending
     three (3) business days prior to the closing; and

               (iii)  If there is no active public market, the value shall be
     the fair market value thereof, as mutually determined by the Company and
     the holders of not less than a Majority Warrant Majority Holders, provided
     that if the Company and the Warrant Majority Holders are unable to reach
     agreement, then by independent appraisal by a mutually agreed to investment
     banker, the fees of which shall be paid by the Company.

     "Sale Event" means a transaction of the type specified in Article IV,
Section B.3(a) and (c) of the Certificate of Incorporation.

     "Securities Act" means the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be amended and in effect at the time.

     "Stockholders Agreement" means that certain Stockholders Agreement dated as
of August 30, 2000 by and among the Company, IP Fiber Devices Ltd., a UK
corporation, the Founders (as defined therein) and the Investors (as defined
therein), as from time to time in effect.

     "Warrant Majority Holders" means the holders of Warrants entitling such
holders to purchase a majority of the Common Stock subject to purchase upon the
exercise of Warrants at the time outstanding.

     "Warrant Coverage Amount" means $____________ provided that such amount
shall be reduced from time to time by the amount paid in connection with any
partial exercise hereunder (or deemed paid in connection with any cashless
exercise under Section 1.12).

     "Warrant Price" means the dollar amount equal to the product obtained by
multiplying the Liquidity Event Price by .5.

     "Warrants" shall have the meaning given to such term in the introduction of
this Warrant.

                                       12
<PAGE>

12.  GENERAL
     -------

     12.1  Amendments, Waivers and Consents.  No course of dealing between or
           --------------------------------
among any of the parties hereto and no delay on the part of any party hereto in
exercising any rights hereunder shall operate as a waiver of the rights hereof.
This Warrant may not be amended or modified or any provision hereof waived
without the written consent of the Company and the holders of Warrants entitling
such holders to purchase eighty percent (80%) of the Common Stock subject to
purchase upon the exercise of Warrants at the time outstanding provided, that
                                                               --------
any party may waive any provision hereof intended for its benefit by written
consent.

     12.2  Governing Law.  This Warrant shall be construed in accordance with
           -------------
the laws of Delaware without giving effect to conflict of laws principles
thereof.

     12.3  Section Headings.  The descriptive headings in this Warrant have been
           ----------------
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provision hereof.

     12.4  Notices and Demands.  Any notice or demand which is required or
           -------------------
provided to be given under this Warrant shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy, telex or other method of facsimile, or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, or two days after being sent by overnight delivery providing receipt
of delivery, to the following addresses:  if to the Company, at its address set
forth on the signature page hereto, or at any other address designated by the
Company to the holder of this Warrant in writing; and if to the holder of this
Warrant, at the mailing address designated by such holder to the Company in
writing.

     12.5  Remedies; Severability.  It is specifically understood and agreed
           ----------------------
that any breach of the provisions of this Warrant by any Person subject hereto
will result in irreparable injury to the other parties hereto, that the remedy
at law alone will be an inadequate remedy for such breach, and that, in addition
to any other remedies which they may have, such other parties may enforce their
respective rights by actions for specific performance (to the extent permitted
by law).  Whenever possible, each provision of this Warrant shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be deemed prohibited or invalid under such
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of this
Warrant.

                                       13
<PAGE>

     12.6  No Rights as Stockholder.  Except as otherwise provided in the
           ------------------------
Stockholders Agreement, prior to the exercise of this Warrant, no holder of this
Warrant shall be entitled to any rights of a stockholder of the Company with
respect to the shares of Common Stock for which this Warrant shall be
exercisable, including the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

                           [SIGNATURE PAGE FOLLOWS]

                                       14
<PAGE>

     IN WITNESS WHEREOF, the Company hereby executes this Warrant as of the date
first written above.

                            IPG PHOTONICS CORPORATION

                            By:
                               Name:
                               Title:

                            Address:

                               660 Main Street, Box 519
                               Sturbridge, MA 01566

                                       15
<PAGE>

                             FORM OF SUBSCRIPTION

                [To be executed only upon exercise of Warrant]

To IPG PHOTONICS CORPORATION

     The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _________ shares of the
Voting Common Stock and herewith makes payment of $__________  therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to _____________________, whose address
is_____________________________________.

Dated:_______________         __________________________________________________
                              (Signature must conform in all respects to name of
                              holder as specified on the face of Warrant)

                              --------------------------------------------------
                              (Street Address)

                              __________________________________________________
                              (City)          (State)      (Zip Code)

                                       16
<PAGE>

                           FORM OF CONVERSION NOTICE

                [To be executed only upon exercise of Warrant]

To IPG PHOTONICS CORPORATION

     The undersigned registered holder of the within Warrant hereby irrevocably
converts such Warrant  with respect to _________ shares of the Common Stock
which such holder would be entitled to receive upon the exercise hereof, and
requests that the certificates for such shares be issued in the name of, and
delivered to ________________________, whose address is
__________________________________.

Dated:____________            __________________________________________________
                              (Signature must conform in all respects to name of
                              holder as specified on the face of Warrant)

                              __________________________________________________
                              (Street Address)

                              __________________________________________________
                              (City)            (State)    (Zip Code)

                                       17
<PAGE>

                              FORM OF ASSIGNMENT

                [To be executed only upon transfer of Warrant]

     For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _______________________ the rights
represented by such Warrant to purchase _______ shares of Common Stock of IPG
PHOTONICS CORPORATION to which and such Warrant relates, and appoints
_______________________ Attorney to make such transfer on the books of IPG
PHOTONICS CORPORATION maintained for such purpose, with full power of
substitution in the premises.

Dated:___________             __________________________________________________
                              (Signature must conform in all respects to name of
                              holder as specified on the face of Warrant)

                              __________________________________________________
                              (Street Address)

                              __________________________________________________
                              (City)           (State)       (Zip Code)

Signed in the presence of:

______________________

                                       18<PAGE>

                                                                     Exhibit 4.3

           SERIES A PREFERRED SHAREHOLDERS AGREEMENT, dated as of March 31,
2000, among IPG PHOTONICS CORPORATION, a Delaware corporation (the "Company"),
                                                                    -------
and the owners of Series A Preferred Stock of the Company listed on Schedule I
attached hereto, as amended from time to time (the "Investors").
                                                    ---------

           WHEREAS, each of the Investors has subscribed for or will subscribe
for shares of Series A Preferred Stock, $.0001 par value per share (the "Series
                                                                         ------
A Preferred Stock"), of the Company; and
-----------------

           WHEREAS, it is a condition to the Company's acceptance of the
Investor's subscription for the Series A Preferred Stock pursuant to their
respective Subscription Agreements that each Investor enter into this Agreement
with the Company and the other Investors.

           NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and the investment by the Investors under their
respective Subscription Agreements, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1  Right of First Offer; Co-Sale Right

     1.1.  Restrictions on Transfer.  Without limiting any other restriction
           ------------------------
contained in this Agreement, no Investor may sell, assign, transfer, pledge,
bequeath, hypothecate, mortgage, grant any proxy with respect to, or in any
other way encumber or otherwise dispose of, directly or indirectly (including
any sale of the equity in an entity owning any shares of Series A Preferred
Stock) (collectively, a "Transfer") any shares of Series A Preferred Stock or
                         --------
the shares of Common Stock, $.0001 par value per share ("Common Stock"), of the
                                                         ------------
Company issuable upon conversion of the Series A Preferred Stock (such Series A
Preferred Stock together with the Common Stock, the "Shares") for a period of
                                                     ------
two years from the date of this Agreement (the "Restricted Period"), except
                                                -----------------
pursuant to a Permitted Transfer, as defined in Section 1.3 hereof.

     1.2.  Right of First Offer.
           ---------------------

           (a)  Except pursuant to a Permitted Transfer, if at any time after
the Restricted Period any Investor desires to Transfer all or any of the Shares
beneficially owned by such Investor (the "Subject Shares"), to any proposed
                                          --------------
third party purchaser, the Investor shall first offer such Subject Shares for
sale to the Company. The Subject Shares proposed to be sold shall be offered by
written notice (the "Offer Notice") delivered by the Investor to the Company
                     ------------
specifying the price and other terms on which such Subject Shares may be
purchased.

           (b)  If within a period of 15 days after the delivery of the Offer
Notice the Company does not agree to purchase all of the offered Subject Shares
on the terms set forth in the Offer Notice, then for a period of 180 days
thereafter the Investor may sell all or any part of such Subject Shares to one
or more third parties, provided, that such sales are made at prices and upon
                       ---------
terms no less favorable in any material respect than those set forth in the
Offer Notice. It shall be a condition to such sale to a third party that such
third party execute and deliver a counterpart signature page agreeing to be
bound by the terms of this Agreement. No sales may
<PAGE>

be made by the offering Investor after the expiration of such 180-day period
without the Investor again first offering the Shares to be sold to the Company
pursuant to this Section 1.2. If the Company elects to purchase all the Shares
offered, the closing of such purchase shall take place within 10 days after the
delivery of the Offer Notice, on the terms provided therein.

     1.3.  Permitted Transfer.  The terms and conditions of Sections 1.1 and 1.2
           ------------------
hereof shall not apply to any Permitted Transfer by any Investor.  For purposes
of this Agreement, "Permitted Transfer" means (a) any transfer by any Investor
                    ------------------
who is a natural person (i) to or for the benefit of any parent, spouse, child
or grandchild of such Investor, to a trust for the benefit of such Investor, to
a trust for the benefit of any of the foregoing or to a corporation, partnership
or limited liability company controlled at all times by the Investor or any of
the foregoing, (ii) by will or the laws of descent and distribution or (iii) to
an Investor, or (b) any transfer by any Investor which is not a natural person
to any of its Affiliates, shareholders, members or partners (any person to whom
a Permitted Transfer is made being defined as a "Permitted Transferee");
                                                 --------------------
provided, that it shall be a condition of each such Transfer (A) that the
--------
Permitted Transferee agree to be bound by the terms and conditions of this
Agreement as an Investor, and execute a counterpart signature page of this
Agreement (in which case such Permitted Transferee shall be deemed an Investor
hereunder), and (B) voting control over the Shares to be transferred shall be
retained by the transferring Investor (to the extent possible).  For purposes of
this Agreement, an "Affiliate" of an Investor shall mean a person that directly,
                    ---------
or indirectly through one or more intermediaries, controls, or its controlled
by, or is under common control with, such Investor.

SECTION 2  Restrictions on Transfer.

     2.1.  General.  The Shares may not be Transferred except after compliance
           -------
with the conditions specified in Sections 1 and 2 hereof. Any attempt by any
Investor to transfer any Shares in violation of any provision of this Agreement
will be void. The Company will not be required (a) to transfer on its books any
Shares that have been transferred in violation of this Agreement, or (b) to
treat as owner of such Shares, or to accord the right to vote or pay dividends
to any purchaser, donee or other transferee to whom such Shares may have been so
transferred.

     2.2.  Legend.
           ------

           (a)  Each certificate representing Shares shall (unless otherwise
     permitted by the provisions of Section 2.4 hereof) be stamped or otherwise
     imprinted with a legend in substantially the following form:

                "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
                ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
                SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
                LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
                ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
                SUCH ACT AND APPLICABLE STATE SECURITIES LAWS."

                                       2
<PAGE>

           (b)  Each certificate representing Shares shall (unless otherwise
permitted by the provisions of Sections 2.4 hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:

                "THE TRANSFER AND OTHER MATTERS PERTAINING TO THESE SECURITIES
                ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE SERIES A
                PREFERRED SHAREHOLDERS AGREEMENT, DATED AS OF MARCH 31, 2000,
                AMONG IPG PHOTONICS CORPORATION (THE "COMPANY"), AND THE SERIES
                A PREFERRED STOCKHOLDERS OF THE COMPANY, AS AMENDED FROM TIME TO
                TIME, AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR
                EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF
                SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
                MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
                SECRETARY OF THE COMPANY."

     2.3.  Procedures for Transferring.  Upon request by the Company, any
           ---------------------------
Investor desiring to Transfer Shares shall deliver a written opinion of counsel
for such Investor, addressed to the Company, stating that in the opinion of such
counsel (which opinion and counsel must be satisfactory to the Company in its
sole discretion), the proposed Transfer that does not involve a transaction
requiring registration or qualification of such Shares under the Securities Act
of 1933, as amended (the "Securities Act"), or the securities or "blue sky" laws
                          --------------
of any state of the United States. Subject to Sections 1 and 2 hereof, such
Investor shall be entitled to Transfer such Shares if the Company does not
reasonably object to such Transfer and request such opinion within fifteen days
after delivery of such notice, or, if it requests such opinion, after it has
received such opinion. Each certificate or other instrument evidencing the
securities issued upon the Transfer of any Shares (and each certificate or other
instrument evidencing any untransferred balance of such Shares) shall bear the
legends set forth in Section 2.2 hereof.

     2.4.  Termination of Restrictions.
           ---------------------------

           (a)  If (i) any Shares are Transferred pursuant to an effective
registration statement under the Securities Act or in a transaction contemplated
by Section 2.3 hereof which does not require that the Shares so transferred bear
the legend set forth in Section 2.2(a) hereof or (ii) the holder of Shares has
met the requirements for Transfer of such Registrable Shares under Rule 144(k)
under the Securities Act (subject to the delivery of opinions as set forth
above), then the holder of such Shares shall be entitled to receive from the
Company, without expense, a new certificate in the name of the Investor not
bearing the restrictive legend set forth in Section 2.2(a) hereof.

           (b) In accordance with Section 8.1 hereof, the holders of Shares
shall be entitled to receive from the Company, without expense, new certificates
in the name of the Investor not bearing the restrictive legend set forth in
Section 2.2(b) hereof.

                                       3
<PAGE>

SECTION 3  Holdback Agreement.

     3.1.  If the Company at any time shall register shares of its capital stock
under the Securities Act for sale to the public in an initial public offering of
the Company's securities, the Investors shall not sell publicly, make any short
sale of, grant any option for the purchase of, or otherwise dispose publicly of,
any Shares (other than those shares of Common Stock included in such
registration pursuant to Section 5) without the prior written consent of the
Company, for a period designated by the Company in writing to the Investors,
which period shall begin not more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made and
shall not last more than 180 days after the effective date of such registration
statement.

     3.2.  (a)  In connection with any initial public offering by the Company,
each Investor irrevocably appoints the Company (and any officer designated by
the Company) ("Attorney") to act as his or its true and lawful agent and
               --------
attorney-in-fact, with full power of substitution, (i) to negotiate with the
managing underwriter(s) for the Company's initial public offering the terms and
conditions of the holdback agreements of the Investors and any other
restrictions on the right of such holder to sell his or its shares of Common
Stock which shall be imposed by the managing underwriter(s) for such offering
(including, without limitation, the length of the holdback period, subject to
Section 3.1 hereof), and (ii) to execute and deliver any and all documents,
agreements and instruments and to take any and all actions, in the name of and
on behalf of the Investor, as may be necessary or appropriate to effectuate the
foregoing on such terms and conditions as the Attorney approves in its sole
judgment.

     (b)   No person to whom this Power of Attorney is presented, as authority
for Attorney to take any action or actions contemplated hereby, shall inquire
into or seek confirmation from the Investor as to the authority of Attorney to
take any action or actions described above, or as to the existence of or
fulfillment of any condition to this Power of Attorney, which is intended to
grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and the Investor irrevocably waives any right to commence
any suit or action, in law or equity, against any person or entity which acts in
reliance upon or acknowledges the authority granted under this Power of
Attorney. The Power of Attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by the Investor without Attorney's written
consent. The Investor hereby ratifies, to the extent permitted by law, all that
said Attorney shall lawfully do or cause to be done by virtue hereof.

SECTION 4  Tag-Along Right.

     4.1.  Valentin P. Gapontsev ("Dr. Gapontsev") shall not directly or
                                   -------------
indirectly sell, transfer or otherwise dispose of capital stock of the Company
(or securities convertible into or exercisable for capital stock) that exceeds
10% of Dr. Gapontsev's ownership of such capital stock on the date of this
Agreement and only to the extent that such capital stock exceeds 10%
(collectively, "Tag-Along Stock"), in a single transaction or related series of
                ---------------
transactions to any person or entity which is not an Affiliate of Dr. Gapontsev
or which is not a person or entity described in Section 1.3(a) hereof, unless
the terms and conditions of such sale, transfer or other disposition (the "Third
                                                                           -----
Party Disposition") to such third party shall contain an offer to each Investor
-----------------
to include in such Third Party Disposition such number of Shares as is
determined in

                                       4
<PAGE>

accordance with Section 4.2 below.   At least 30 days prior to effecting any
Third Party Disposition, Dr. Gapontsev shall promptly cause the terms and
conditions of the Third Party Disposition to be reduced to a reasonably detailed
writing (which writing shall identify the third-party purchaser and shall
include the offer to each Investor to purchase or otherwise acquire their Shares
according to the terms and subject to the conditions of this Section 4), and
shall deliver, or cause the third party to deliver, written notice (the "Tag-
                                                                         ---
Along Notice") of the terms of such Third Party Disposition to each Investor.
------------
The Tag-Along Notice shall be accompanied by a true and correct copy of the
agreement, if any, embodying the terms and conditions of the proposed Third
Party Disposition or such written summary thereof if there is no written
agreement.  At any time after receipt of the Tag-Along Notice (but in no event
later than 10 business days after receipt), each Investor may accept the offer
included in the Tag-Along Notice for up to such number of its Shares as
determined in accordance with the provisions of Section 4.2 hereof, by
furnishing irrevocable written notice of such acceptance to the third party.

     4.2.  In the event that any Investor elects to accept the offer included in
the Tag-Along Notice described in Section 4.1 hereof, such Investor (the
"Included Purchaser") shall have the right to sell, transfer or otherwise
-------------------
dispose of such number of its Shares pursuant to, and upon consummation of, the
Third Party Disposition which is equal to the product of (a) the total number of
shares of Common Stock owned by the Included Purchaser (assuming for the purpose
of this calculation, the conversion of all of the Series A Preferred Stock) and
(b) a fraction, the numerator of which shall equal the total number of shares of
Common Stock (calculated on an as-converted basis) to be sold to the third
party, and the denominator of which shall equal the total number of shares of
Common Stock (calculated on an as converted basis) owned by Dr. Gapontsev and
all Included Purchasers. If the third-party purchaser is not willing to purchase
such additional shares, the number of shares to be sold by Dr. Gapontsev and the
Included Purchasers shall be proportionately reduced.

     4.3.  The purchase of Shares pursuant to this Section 4 shall be made on
the same terms (including, without limitation, the per share consideration and
method of payment, and the date of sale, transfer or other disposition), and
subject to the same conditions, if any, as are stated in the Tag-Along Notice.

     4.4.  Upon the consummation of the disposition of capital stock of the
Company to the third party pursuant to the Third Party Disposition, the Tag-
Along Seller shall cause the third party to (a) remit directly to each Included
Purchaser the sales price of its Shares disposed of pursuant thereto, and (b)
furnish such other evidence of the completion and time of completion of such
disposition and the terms thereof as may reasonably be requested by such
Included Purchaser.

     4.5.  If an Investor has not delivered to the Company and to the third
party written notice of its acceptance of the offer contained in the Tag-Along
Notice within 10 business days after the receipt of the Tag-Along Notice, such
Investor shall be deemed to have waived any and all rights pursuant to this
Section 4 with respect to the disposition of its Shares described in the Tag-
Along Notice, and Dr. Gapontsev shall have 120 calendar days (calculated from
the first day next succeeding the expiration of the 30-calendar day period
described above in Section 4.1 hereof), in which to dispose of the aggregate
amount of Tag-Along Stock described in the Tag-

                                       5
<PAGE>

Along Notice to the third party identified in the Tag-Along Notice, on terms not
more favorable to the Company than those which were set forth in the Tag-Along
Notice.

SECTION 5  Registration.

     5.1.  If the Company shall not have any of its securities registered under
the Securities Act by the third anniversary of the date of this Agreement and
the Company shall be requested by the Investors holding a majority of the shares
of Common Stock held by such Investors which constitute Registrable Shares (as
defined in Section 5.1(d) below) then owned by the Investors to effect a
registration under the Securities Act of Registrable Shares in accordance with
this Section, then the Company shall promptly give written notice of such
proposed registration to all holders of Registrable Shares and shall offer to
include in such proposed registration any Registrable Shares requested to be
included in such proposed registration by such holders who respond in writing to
the Company's notice within 30 days after delivery of such notice (which
response shall specify the number of Registrable Shares proposed to be included
in such registration). The Company shall promptly use its commercially
reasonable efforts to effect such registration on any appropriate form under the
Securities Act of the Registrable Shares which the Company has been so requested
to register; provided, that the Company shall not be obligated to effect any
             --------
registration under the Securities Act except in accordance with the following
provisions:

           (a)  the Company shall not be obligated to file (i) more than one
registration statement in total under this Section 5.1; or (ii) any registration
statement pursuant to this Section 5 or Section 6 hereof during any period when
the disposition of any Registrable Shares is limited pursuant to Section 3.1
hereof;

           (b)  with respect to any registration pursuant to this Section 5.1,
the Company may include in such registration any authorized but unissued shares
of Common Stock or shares of Common Stock held by the Company in its treasury
(the "Primary Shares") or shares of Common Stock which do not constitute Primary
      --------------
Shares or Registrable Shares (the "Other Shares"); provided, that if the
                                   --------------  --------
managing underwriter advises the Company that the inclusion of all Registrable
Shares, Primary Shares or Other Shares proposed to be included in such
registration would interfere with the successful marketing (including pricing)
of all such securities, then the number of Registrable Shares, Primary Shares
and Other Shares proposed to be included in such registration shall be included
in the following order:

                (i)    first, the Registrable Shares, pro rata based upon the
     number of Registrable Shares (based upon Common Stock equivalents) owned by
     each Investor at the time of such registration;

                (ii)   second, the Primary Shares; and

                (iii)  third, the Other Shares.

           (c)  The Company shall bear the expense of the registration effected
under this Section, but excluding any underwriters' or brokers' discounts or
commissions and the fees of any counsel to the selling Investors. A requested
registration under this Section 5.1 may be rescinded by written notice to the
Company by the Investors requesting such registration; such rescinded
registration shall not count as a registration statement initiated pursuant to
this Section

                                       6
<PAGE>

5.1 for purposes of paragraph (a) above if such registration statement is
rescinded prior to the effective date thereof and if the Investors initiating
such request shall have reimbursed the Company for all out-of-pocket expenses
incurred by the Company in connection with such rescinded registration.

           (d)  "Registrable Shares" shall mean, with respect to any Investor,
                 ------------------
shares of Common Stock issued or issuable upon conversion of the Series A
Preferred Stock and which have not previously been sold to the public pursuant
to a registration statement under the Securities Act, or pursuant to Rule 144 of
the Securities Act; provided, that after the date of initial public offering of
                    --------
the Company's securities, shares of Common Stock shall not be deemed to be
Registrable Shares if the Investor shall be able to resell the Common Stock
under Rule 144 or any successor rule thereto without limitation on the volume of
shares to be resold pursuant to Rule 144(e).

     5.2.  If the Company at any time proposes for any reason to register
Primary Shares or Other Shares under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor forms thereto
or other than in connection with an initial public offering of the Company's
securities, an exchange offer or offering solely to the Company's Investors ),
it shall promptly give written notice to each Investor of its intention to so
register the Primary Shares or Other Shares and, upon the written request, given
within 10 days after delivery of any such notice by the Company, of any Investor
to include in such registration Registrable Shares held by such Investor (which
request shall specify the number of Registrable Shares proposed to be included
in such registration), the Company shall use its commercially reasonable efforts
to cause all such Registrable Shares to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such
registration; provided, that if the managing underwriter advises the Company
              --------
that the inclusion of all Registrable Shares or Other Shares proposed to be
included in such registration would interfere with the successful marketing
(including pricing) of the Primary Shares proposed to be registered by the
Company or the Other Shares which the Company is required to register, then the
number of Primary Shares, Registrable Shares and Other Shares proposed to be
included in such registration shall be included in the following order:

           (a)  first, the Primary Shares;

           (b)  second, the Other Shares; and

           (c)  third, the Registrable Shares, pro rata based upon the number of
Registrable Shares (based upon Common Stock equivalents) owned by each Investor
at the time of such registration.

     The Investors may exercise their rights under this Section 5.2 on an
unlimited number of occasions. The Company shall bear the expense of any
registration effected under this Section 5.2 including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
NASD), fees and expenses of complying with securities and blue sky laws,
printing expenses, and fees and expenses of the Company's counsel and
accountants.

SECTION 6  Registration Procedures.

                                       7
<PAGE>

     6.1. In connection with the registration of Registrable Shares pursuant to
Section 5 hereof, the Company shall as expeditiously as is reasonable:

          (a)  prepare and file with the Securities and Exchange Commission (the
"SEC") on any appropriate form a registration statement with respect to such
 ---
Registrable Shares and use its reasonable commercial efforts to cause such
registration statement to become effective;

          (b)  prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Shares and
other securities covered by such registration statement for a period of 90 days
or until the Investor or Investors have completed the distribution described in
such registration statement, whichever occurs first;

          (c)  furnish to each seller of such Registrable Shares such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act;

          (d)  use its reasonable commercial efforts to register or qualify all
Registrable Shares and other securities covered by such registration statement
under such other securities or "blue sky" laws of such jurisdictions as the
underwriter shall reasonably request, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, or to subject
itself to taxation in respect of doing business in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;

          (e)  immediately notify each seller of Registrable Shares, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing or if it is
necessary, in the opinion of counsel to the Company, to amend or supplement such
prospectus to comply with law, and at the request of any such seller prepare and
furnish to any such seller a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary;

          (f)  otherwise use its reasonable commercial efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, beginning with the first month of the
first fiscal quarter after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and

                                       8
<PAGE>

          (g)  use its reasonable commercial efforts to list such securities on
each securities exchange or over-the-counter market on which shares of Common
Stock are then listed, if such securities are not already so listed and if such
listing is then permitted under the rules of such exchange and, if shares of
Common Stock are not then listed on a securities exchange or over-the-counter
market, to use is reasonable commercial efforts to cause such securities to be
listed on such securities exchange or over-the-counter market as the managing or
lead managing underwriter shall reasonably request.

     6.2. The holders of Registrable Shares included in any registration shall
furnish to the Company such information regarding such Investors, the
Registrable Shares held by them and the distribution proposed by such Investor
or Investors as the Company may from time to time reasonably request and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement.

     6.3. (a)  The Company will indemnify each Investor with respect to which a
registration has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against any and all losses, claims, damages,
liabilities or expenses (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement or prospectus, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading; provided, that the Company will not be liable in any such
                      --------
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Investor or underwriter.

          (b)  Each Investor will, if Registrable Shares held by such Investor
are included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and each other such Investor of securities
included in the registration against any and all losses, claims, damages,
liabilities and expenses (or actions in respect thereof), arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement or prospectus, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statement therein, in the light of the circumstances
under which they were made, not misleading, and will reimburse the Company, such
Investors, underwriters or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus in reliance upon and in conformity with
information furnished to the Company by such Investor.

                                       9
<PAGE>

          (c)  Each party entitled to indemnification under this Section 6.3
(the "Indemnified Party") shall give notice to the party required to provide
      -----------------
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
                      ------------------
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claims or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
                                --------
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (which approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense; provided, that the failure of any Indemnified Party
                             --------
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to
assume the defense for matters as to which there is, in the opinion of counsel
to the Indemnifying Party, a conflict of interest or separate and different
defenses. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and the litigation resulting therefrom.

     6.4. (a)  If the indemnification provided for in Section 6.3 hereof is
unavailable to the Indemnified Parties in respect of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred to
therein, then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other in connection with the statement or omission which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations.  The relative
fault shall be determined by reference to, among other things, whether the
untrue statement (or alleged untrue statement), of a material fact or the
omission (or alleged omission) to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  The Company and each Investor agree that it
would not be just and equitable if contribution pursuant to this Section 6.4
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to above in this Section shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.

          (b)  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

                                       10
<PAGE>

Section 7   Information Rights.  The Issuer shall furnish to each Investor,
within 120 days after the end of each fiscal year ending December 31, 2000 and
thereafter, copies of consolidated and consolidating statements of income,
retained earnings and cash flows of the Company for such year, and consolidated
and consolidating balance sheets of the Company as of the end of such year,
audited by independent certified public accountants selected by the Company,
prepared in accordance with generally accepted accounting principles and
generally accepted auditing standards.

Section 8   Miscellaneous.

     8.1.   Termination.  Sections 1, 2 (other than Sections 2.2(a) and 2.4
            -----------
hereof), 4 and 7 shall terminate and be of no further force or effect from and
after the consummation of the sale of the Common Stock to the public in a firm
commitment public offering pursuant to an effective registration statement under
the Securities Act that generates gross proceeds to the Company (before
deducting underwriting discounts and other customary offering expenses) in an
aggregate amount equal to at least $35,000,000 at a pre-money valuation of at
least $500,000,000.

     8.2.   Injunctive Relief.  It is acknowledged that it will be impossible to
            -----------------
measure the damages that would be suffered by the Investors if an Investor fails
to comply with the provisions of this Agreement and that in the event of any
such failure, the Investors will not have an adequate remedy at law.  The
Investors and the Company shall, therefore, be entitled to obtain specific
performance of such Investor's obligations hereunder and to obtain immediate
injunctive relief.  The Investor shall not argue, as a defense to any proceeding
for such specific performance or injunctive relief, that the Investors have an
adequate remedy at law.

     8.3.   Assignment.
            ----------

            (a)  The Company and each Investor shall cause any person or entity
who acquires Series A Preferred Stock to become an Investor hereunder.

            (b)  Execution of a counterpart of this Agreement by any person or
entity who acquires Series A Preferred Stock and an amendment adding the name of
such person or entity shall be a condition of any acquisition of such shares by
such person or entity.

     8.4.   Successors and Assigns.  This Agreement shall bind and inure to the
            ----------------------
benefit of the Company and the Investors and, subject to Section 8.3, their
respective successors and assigns.

     8.5.   Entire Agreement.  This Agreement contains the entire agreement
            ----------------
among the parties with respect to the subject matter hereof and supersedes all
prior arrangements or understandings with respect hereto.

     8.6.   Notices.  All notices, requests, consents and other communications
            -------
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person by a nationally-recognized overnight courier, or by first class
registered or certified mail, postage prepaid, addressed to such party at the
address previously provided or such other address as may hereafter be designated
in writing by the addressee as follows:  (a) if to an Investor, at the address
and telecopier numbers previously provided and (b) if to the Company, at the
address previously provided.  All such

                                       11
<PAGE>

notices, requests, consents and other communications shall be deemed to have
been delivered (a) in the case of personal delivery or delivery by telecopy, on
the date of such delivery, (b) in the case of nationally-recognized overnight
courier, on the next business day and (c) in the case of mailing, on the third
business day following such mailing if sent by certified mail, return receipt
requested.

     8.7.  Modifications; Amendments; Waivers.  The terms and provisions of this
           ----------------------------------
Agreement may not be modified, waived or amended, except pursuant to a writing
signed by the Company and the Investors holding at least 50% of the outstanding
shares of Series A Preferred Stock (on an as-converted basis) and Dr. Gapontsev
with respect to Sections 4 and 8 hereof only.

     8.8.  Counterparts.  This Agreement may be executed in any number of
           ------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

     8.9.  Headings.  The headings of the various sections of this Agreement
           --------
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.

     8.10. Severability.  It is the desire and intent of the parties that the
           ------------
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought.  Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

     8.11. Governing Law.  This Agreement shall be governed by and construed in
           -------------
accordance with the laws of the State of Delaware, without giving effect to
principles governing conflicts of laws.

                     [Signature Page Immediately Follows]

                                       12
<PAGE>

     IN WITNESS WHEREOF, the parties have executed and delivered this Series A
Preferred Shareholders Agreement on the date first above written.

                                             IPG PHOTONICS CORPORATION

                                             By: /s/ Paolo Sinni
                                                 ------------------------------
                                                 Name:  Paolo Sinni
                                                 Title: Controller

                                             __________________________________
                                             Print Name of Investor

Agreed to (only with respect to Section 4);

/s/ Valentin P. Gapontsev
-------------------------------------------
Valentin P. Gapontsev

                                       13
<PAGE>

                                  Schedule I

     Name

Daniel Prouty
Melvin Glickman
Eleanor Glickman
Howard and Jeanne
Borggaard
David Masiello
Aho Construction,
Raymond Aho
Brett Mann
Michael Ciesla
Andrew Unanue
Ronald Nation
Sujay Shetty

Gary T Melia
James J Gribouski
Eileen Kneeland
Lyle Hislop
Sharon Maguire
Robert P Miller
Mike Brown
R Douglas Hall
Richard Seder
Kevin Giblin

James P Carney
Gary Oldenberg
Lee F Oldenberg
Richard M Lees
Badger Partners
Alfred J Galiani
John Galiani
Mark Galiani
George M Blair
Charnell W Blair
David R Boyd

Kimberly A Cox
John H Dalton

Kluge Investments Ltd

Pearl B Harrell

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}]]