COHERENT INC, S-8, 1999-06-09

COHERENT INC
S-8, 1999-06-09
LABORATORY ANALYTICAL INSTRUMENTS

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As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

----------------------

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------------

COHERENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

----------------------

DELAWARE 94-1622541
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

5100 PATRICK HENRY DRIVE
SANTA CLARA, CALIFORNIA 95056
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

----------------------

1998 DIRECTOR OPTION PLAN
1995 STOCK PLAN
EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF THE PLANS)

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ROBERT J. QUILLINAN
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
COHERENT, INC.
5100 PATRICK HENRY DRIVE
SANTA CLARA, CALIFORNIA 95056
(408) 764-4000

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

----------------------

COPY TO:

JUDITH M. O'BRIEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050

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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.01 par value........................ 4,850,000 $15.25 $73,962,500 $20,562
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) and (h) under the Securities
Act of 1933, as amended (the "Securities Act") solely for the purpose
of calculating the registration fee, based on the closing price of the
Registrant's Common Stock as reported by Nasdaq NMS on June 3, 1999.

(2) Amount of registration fee was calculated pursuant to Section 6(b) of
the Securities Act which provides that the fee shall be 0.000278
multiplied by the maximum aggregate offering price at which such
securities are proposed to be offered.

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- -------------------------------------------------------------------------------

<PAGE>

COHERENT, INC.
REGISTRATION STATEMENT ON FORM S-8

PART II

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following documents and information previously filed with the
Securities and Exchange Commission (the "Commission") by the Registrant are
hereby incorporated by reference into this Registration Statement:

(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended September 26, 1998, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act");

(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended December 26, 1998 and April 3, 1999, filed pursuant to Section
13(a) of the Exchange Act; and

(c) The Registrant's Current Reports on Form 8-K, filed on December
18, 1998 and May 4, 1999 pursuant to Section 13(a) of the Exchange Act.

(d) The description of the Registrant's Common Stock contained in
the Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act, including any amendment or report filed for the purpose of
updating any such description.

All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to
the filing of a post-effective amendment, which indicates that all securities
offered hereunder have been sold or which deregisters all securities then
remaining unsold under this registration statement, shall be deemed to be
incorporated by reference herein and to be part hereof from the date of
filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporations Law authorizes a
court to award, or a corporation's Board of Directors to grant,
indemnification to directors and officers in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Act. The
Registrant's Bylaws provides for the mandatory indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent permitted by Delaware General Corporation Law.
The Registrant has entered into an indemnification agreement with each of its
officers and directors that provides the Registrant's officers and directors
with indemnification to the maximum extent permitted by the Delaware General
Corporation Law. In addition, the Registrant's Certificate of Incorporation
provides that, pursuant to Delaware law, its directors shall not be liable
for monetary damages for a breach of the directors' fiduciary duty as a
director to the Registrant and its

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<PAGE>

stockholders, provided that such liability does not arise from certain
proscribed conduct. The Registrant also currently maintains officer and
director liability insurance.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not applicable.

ITEM 8. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- -------------- ----------------------------------------------------------------------------
<C> <S>
4.1 1998 Director Option Plan and form of option agreement
thereunder.

4.2 1995 Stock Plan, as amended, and form of option agreement
thereunder.

4.3 Employee Stock Purchase Plan, as amended, and form of subscription agreement
thereunder.

5.1 Opinion of Counsel as to legality of securities being
registered.

23.1 Consent of Independent Auditors.

23.2 Consent of Counsel (contained in Exhibit 5.1).

24.1 Power of Attorney (see page 5).
</TABLE>

ITEM 9. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

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<PAGE>

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Clara, State of California,
on this 8th day of June, 1999.

COHERENT, INC.

By: /s/ Robert J. Quillinan
-----------------------------------------------------
Robert J. Quillinan
Executive Vice President and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert J. Quillinan and Scott H.
Miller jointly and severally, his or her attorneys-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
amendments to this Registration Statement on Form S-8 and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his or her substitute or substitutes, may
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on June 8, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------- ---------------------------------------------
<S> <C>
/s/ BERNARD J. COUILLAUD President and Chief Executive Officer
- ------------------------ (Principal Executive Officer)
Bernard J. Couillaud

/s/ ROBERT J. QUILLINAN Executive Vice President and Chief
- ----------------------- Financial Officer (Principal Financial
Robert J. Quillinan and Accounting Officer)

/s/ HENRY E. GAUTHIER Chairman of the Board of Directors
- ---------------------
Henry E. Gauthier

/s/ THOMAS SLOAN NELSEN Director
- -----------------------
Thomas Sloan Nelsen

/s/ FRANK P. CARRUBBA Director
- ---------------------
Frank P. Carrubba

/s/ CHARLES W. CANTONI Director
- ----------------------
Charles W. Cantoni

/s/ JERRY E. ROBERTSON Director
- ----------------------
Jerry E. Robertson
</TABLE>

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

----------------------

EXHIBITS

----------------------

Registration Statement on Form S-8

COHERENT, INC.

INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
-------------- ---------------------------------------------------------------------
<C> <S>
4.1 1998 Director Option Plan and form of option agreement
thereunder.

4.2 1995 Stock Plan, as amended, and form of option agreement thereunder.

4.3 Employee Stock Purchase Plan, as amended, and form of
subscription agreement thereunder.

5.1 Opinion of Counsel as to legality of securities being
registered.

23.1 Consent of Independent Auditors.

23.2 Consent of Counsel (contained in Exhibit 5.1).

24.1 Power of Attorney (see page 5).

</TABLE>

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<PAGE>

COHERENT, INC.

1998 DIRECTOR OPTION PLAN

1. PURPOSES OF THE PLAN. The purposes of this 1998 Director Option
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors and
to encourage their continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "BOARD" means the Board of Directors of the Company.

(b) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMPANY" means Coherent, Inc.

(e) "DIRECTOR" means a member of the Board.

(f) "DISABILITY" means total and permanent disability as
defined in section 22(e)(3) of the Code.

(g) "EMPLOYEE" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a Director's fee by the Company shall not be
sufficient in and of itself to constitute "employment" by the Company.

(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

(i) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination as
reported in THE WALL STREET JOURNAL or such other source as the Administrator
deems reliable;

(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean

<PAGE>

between the high bid and low asked prices for the Common Stock for the last
market trading day prior to the time of determination, as reported in THE
WALL STREET JOURNAL or such other source as the Board deems reliable; or

(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Board.

(j) "INSIDE DIRECTOR" means a Director who is an Employee.

(k) "OPTION" means a stock option granted pursuant to the Plan.

(l) "OPTIONED STOCK" means the Common Stock subject to an
Option.

(m) "OPTIONEE" means a Director who holds an Option.

(n) "OUTSIDE DIRECTOR" means a Director who is not an Employee.

(o) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(p) "PLAN" means this 1998 Director Option Plan.

(q) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.

(r) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue
Code of 1986.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
10 of the Plan, the maximum aggregate number of Shares that may be optioned
and sold under the Plan is 100,000 Shares (the "POOL") (the Shares may be
authorized, but unissued, or reacquired Common Stock), plus an annual
increase to be added on each anniversary date of the adoption of the Plan
equal to (i) the number of Shares needed to restore the maximum aggregate
number of Shares that may be optioned and sold under the Plan to 100,000 or
(ii) a lesser amount determined by the Board of Directors.

If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not
be returned to the Plan and shall not become available for future
distribution under the Plan.

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<PAGE>

4. ADMINISTRATION AND GRANTS OF OPTIONS UNDER THE PLAN.

(a) PROCEDURE FOR GRANTS. All grants of Options to Outside
Directors under this Plan shall be automatic and nondiscretionary and shall
be made strictly in accordance with the following provisions:

(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options.

(ii) Each Outside Director shall be automatically
granted an Option to purchase 20,000 Shares (the "FIRST OPTION") on the date
on which such person first becomes an Outside Director, whether through
election by the stockholders of the Company or appointment by the Board to
fill a vacancy; PROVIDED, HOWEVER, that an Inside Director who ceases to be
an Inside Director but who remains a Director shall not receive a First
Option.

(iii) Each Outside Director shall be automatically
granted an Option to purchase 5,000 Shares (a "SUBSEQUENT OPTION")
immediately following each annual meeting of stockholders at which such
Outside Director is re-elected (beginning with the 2000 annual meeting of
stockholders) provided he or she is then an Outside Director and if as of
such date, he or she shall have served on the Board for at least the
preceding three (3) months.

(iv) Notwithstanding the provisions of subsections (ii)
and (iii) hereof, any exercise of an Option granted before the Company has
obtained stockholder approval of the Plan in accordance with Section 16
hereof shall be conditioned upon obtaining such stockholder approval of the
Plan in accordance with Section 16 hereof.

(v) The terms of an Option granted hereunder shall be
as follows:

(A) the term of the Option shall be six (6) years.

(B) the Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth
in Sections 8 and 10 hereof.

(C) the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the First Option.

(D) subject to Section 10 hereof, each Option
shall become exercisable cumulatively to the extent of twenty-five percent
(25%) of the Shares subject to such option on each of the first four
anniversaries of the date of grant, provided that the Optionee continues to
serve as a Director on such dates.

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<PAGE>

(E) subject to Section 10 hereof, each Subsequent
Option shall become exercisable with respect to 100% of the Shares subject to
such option on the fifth anniversary of the date of grant, provided that the
Optionee continues to serve as a Director on such date.

(vi) In the event that any Option granted under the Plan
would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then
the remaining Shares available for Option grant shall be granted under
Options to the Outside Directors on a pro rata basis. No further grants
shall be made until such time, if any, as additional Shares become available
for grant under the Plan through action of the Board or the stockholders to
increase the number of Shares that may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.

(b) SUSPENSION OR TERMINATION OF OPTION. If the Chief
Executive Officer or his designee reasonably believes that an Optionee has
committed an act of misconduct, the Chief Executive Officer may suspend the
Optionee's right to exercise any option pending a determination by the Board
of Directors (excluding the Outside Director accused of such misconduct). If
the Board of Directors (excluding the Outside Director accused of such
misconduct) determines an Optionee has committed an act of embezzlement,
fraud, dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company rules resulting in
loss, damage or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential
information, engages in any conduct constituting unfair competition, induces
any Company customer to breach a contract with the Company or induces any
principal for whom the Company acts as agent to terminate such agency
relationship, neither the Optionee nor his estate shall be entitled to
exercise any option whatsoever. In making such determination, the Board of
Directors (excluding the Outside Director accused of such misconduct) shall
act fairly and shall give the Optionee an opportunity to appear and present
evidence on Optionee's behalf at a hearing before the Board or a committee of
the Board.

5. ELIGIBILITY. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4 hereof.

The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the
Director or the Company may have to terminate the Director's relationship
with the Company at any time.

6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 11 of the
Plan.

7. FORM OF CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall consist of (i) cash, (ii) check, (iii) other

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<PAGE>

shares which (x) in the case of Shares acquired upon exercise of an option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised, (iv) consideration received by the Company under a cashless
exercise program (if any) implemented by the Company in connection with the
Plan, or (v) any combination of the foregoing methods of payment.

8. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; PROVIDED, HOWEVER, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 16 hereof
has been obtained.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of
payment allowable under Section 7 of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. A share certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after
exercise of the Option. No adjustment shall be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 10 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

(b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may
exercise his or her Option, but only within 210 days following the date of
such termination, and only to the extent that the Optionee was entitled to
exercise it on the date of such termination (but in no event later than the
expiration of its six (6) year term). To the extent that the Optionee was
not entitled to exercise an Option on the date of such termination, and to
the extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.

(c) DISABILITY OF OPTIONEE. In the event Optionee's status as
a Director terminates as a result of Disability, the Optionee may exercise
his or her Option, but only within twelve (12) months

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<PAGE>

following the date of such termination, and only to the extent that the
Optionee would have been entitled to exercise the Option had the Optionee not
been disabled and remained an Outside Director for six (6) months after such
termination (but in no event later than the expiration of its six (6) year
term). To the extent that the Optionee would not have been entitled to
exercise an Option had the Optionee not been disabled and remained an Outside
Director for six (6) months after such termination, or if he or she does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

(d) DEATH OF OPTIONEE. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance may exercise the Option, but only within
twelve (12) months following the date of death, and only to the extent that
the Optionee would have been entitled to exercise the Option had the Optionee
continued living and remained an Outside Director for six (6) months after
the date of death (but in no event later than the expiration of its six (6)
year term). To the extent that the Optionee would not have been entitled to
exercise an Option had the Optionee continued living and remained an Outside
Director for six (6) months after the date of death, and to the extent that
the Optionee's estate or a person who acquired the right to exercise such
Option does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.

9. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the stockholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding
Option, and the number of Shares issuable pursuant to the automatic grant
provisions of Section 4 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification
of the Common Stock, or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Company;
PROVIDED, HOWEVER, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject
to an Option.

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has
not been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

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<PAGE>

(c) MERGER OR ASSET SALE. In the event of a proposed merger of
the Company with or into another corporation where following such merger the
stockholders of the Company prior to such merger own less than 50% of the
voting securities of the surviving corporation (a "change of control"), or
the sale of all or substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If an Option is assumed or substituted for, the
Option or equivalent option shall continue to be exercisable as provided in
Section 4 hereof for so long as the Optionee serves as a Director or a
director of the successor corporation. Following such assumption or
substitution, if the Optionee's status as a Director or director of the
successor corporation, as applicable, is terminated other than upon a
voluntary resignation by the Optionee, the Option or option shall become
fully exercisable, including as to Shares for which it would not otherwise be
exercisable. Thereafter, the Option or option shall remain exercisable in
accordance with Section 8 above. In the event that such successor
corporation refuses to assume the Option or to substitute an equivalent
option, the Board shall, in lieu of such assumption or substitution, provide
for the Optionee to have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. If an Option becomes fully exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Board shall
notify the Optionee that the Option shall be fully exercisable for a period
of twenty (20) days from the date of such notice, and the Option will
terminate upon the expiration of such period.

For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger
or sale of assets by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares). If such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for
each Share of Optioned Stock subject to the Option, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the merger or
sale of assets.

11. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made that would impair the rights of
any Optionee under any grant theretofore made, without his or her consent.
In addition, to the extent necessary and desirable to comply with any
applicable law, regulation or stock exchange rule, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

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<PAGE>

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date determined in accordance with Section 4 hereof.

13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.

Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.

14. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.

15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

16. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted. Such stockholder approval shall be obtained in the degree and
manner required under applicable state and federal law and any stock exchange
rules.

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<PAGE>

COHERENT, INC.

DIRECTOR OPTION AGREEMENT

Coherent, Inc., a Delaware corporation (the "COMPANY") has granted to
___________ (the "OPTIONEE"), an option to purchase a total of 5,000 shares
of the Company's Common Stock (the "OPTIONED STOCK"), at the price determined
as provided herein, and in all respects subject to the terms, definitions and
provisions of the Company's 1998 Director Option Plan (the "PLAN") adopted by
the Company which is incorporated herein by reference. The terms defined in
the Plan shall have the same defined meanings herein.

1. NATURE OF THE OPTION. This Option is a nonstatutory option and is
not intended to qualify for any special tax benefits to the Optionee.

2. EXERCISE PRICE. The exercise price is $______ for each share of
Common Stock.

3. EXERCISE OF OPTION. This Option shall be exercisable during its
term in accordance with the provisions of Section 8 of the Plan as follows:

(i) RIGHT TO EXERCISE.

(a) This Option shall become exercisable as to 100% of
the Optioned Stock on the fifth anniversary of the date of grant; PROVIDED,
HOWEVER, that in no event shall any Option be exercisable prior to the date
the stockholders of the Company approve the Plan.

(b) This Option may not be exercised for a fraction of a
share.

(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.

(ii) METHOD OF EXERCISE. This Option shall be exercisable by
written notice which shall state the election to exercise the Option and the
number of Shares in respect of which the Option is being exercised. Such
written notice, in the form attached hereto as EXHIBIT A, shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by payment
of the exercise price.

4. METHOD OF PAYMENT. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the Optionee:

(i) cash;

(ii) check; or

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<PAGE>

(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised; or

(iv) delivery of a properly executed exercise notice together
with such other documentation as the Company and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company
of the sale or loan proceeds required to pay the exercise price.

5. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulations, or if
such issuance would not comply with the requirements of any stock exchange
upon which the Shares may then be listed. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or
regulation.

6. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

7. TERM OF OPTION. This Option may not be exercised more than six (6)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.

8. TAXATION UPON EXERCISE OF OPTION. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in
an amount equal to the excess of the then Fair Market Value of the Shares
purchased over the exercise price paid for such Shares. Since the Optionee is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended,
under certain limited circumstances the measurement and timing of such income
(and the commencement of any capital gain holding period) may be deferred,
and the Optionee is advised to contact a tax advisor concerning the
application of Section 83 in general and the availability a Section 83(b)
election in particular in connection with the exercise of the Option. Upon
a resale of such Shares by the Optionee, any difference between the sale
price and the Fair Market Value of the Shares on the date of exercise of the
Option, to the extent not included in income as described above, will be
treated as capital gain or loss.

9. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the laws of the State of
California without giving effect to the conflicts of laws principles thereof.

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<PAGE>

DATE OF GRANT:_______________________ COHERENT, INC.

By:_________________________________

Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.

Dated:_______________________________ ____________________________________
Optionee

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<PAGE>

DIRECTOR OPTION EXERCISE NOTICE

Coherent, Inc.
5100 Patrick Henry Drive
Santa Clara, CA 95056-0980

Attention: General Counsel

1. EXERCISE OF OPTION. The undersigned ("OPTIONEE") hereby elects to
exercise Optionee's option to purchase _______ shares of the Common Stock
(the "SHARES") of Coherent, Inc. (the "COMPANY") under and pursuant to the
Company's 1998 Director Option Plan and the Director Option Agreement dated
______________________ (the "AGREEMENT").

2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee
has received, read and understood the Agreement.

3. FEDERAL RESTRICTIONS ON TRANSFER. Optionee understands that the
Shares must be held indefinitely unless they are registered under the
Securities Act of 1933, as amended, or unless an exemption from such
registration is available, and that the certificate(s) representing the
Shares may bear a legend to that effect. Optionee understands that the
Company is under no obligation to register the Shares and that an exemption
may not be available or may not permit Optionee to transfer Shares in the
amounts or at the times proposed by Optionee.

4. TAX CONSEQUENCES. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

5. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding
taxes required to be paid or withheld by the Company.

<PAGE>

6. ENTIRE AGREEMENT. The Agreement is incorporated herein by
reference. This Exercise Notice and the Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof. This Exercise Notice and the Agreement are governed by
California law except for that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

OPTIONEE: COHERENT, INC.

Name:_________________________________ By:__________________________________

Its:_________________________________

Signature

Address:______________________________ Address: 5100 Patrick Henry Drive
Santa Clara, CA 95056-0980

Dated:________________________________ Dated:_______________________________

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<PAGE>

COHERENT, INC.

1995 STOCK PLAN

(AS AMENDED MARCH 17, 1999)

1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:

- to attract and retain the best available personnel for positions
of substantial responsibility,

- to provide additional incentive to Employees and Consultants, and

- to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
Stock Purchase Rights may also be granted under the Plan.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

(b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under state corporate and securities
laws and the Code.

(d) "CODE" means the Internal Revenue Code of 1986, as amended.

(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.

(f) "COMMON STOCK" means the Common Stock of the Company.

(g) "COMPANY" means Coherent, Inc., a California corporation.

(h) "CONSULTANT" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services and who is
compensated for such services. The term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be

<PAGE>

considered interrupted in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. A leave of absence
approved by the Company shall include sick leave, military leave, or any
other personal leave approved by an authorized representative of the Company.
For purposes of Incentive Stock Options, no such leave may exceed ninety
days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as
an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.

(j) "DIRECTOR" means a member of the Board.

(k) "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.

(l) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.

(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(n) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, the
Fair Market Value of a Share of Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on
such system or exchange (or the exchange with the greatest volume of trading
in Common Stock) on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high
bid and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in THE WALL STREET JOURNAL or
such other source as the Administrator deems reliable;

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.

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<PAGE>

(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

(q) "NOTICE OF GRANT" means a written notice evidencing certain
terms and conditions of an individual Option or Stock Purchase Right grant.
The Notice of Grant is part of the Option Agreement.

(r) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

(s) "OPTION" means a stock option granted pursuant to the Plan.

(t) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of
the Plan.

(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.

(v) "OPTIONED STOCK" means the Common Stock subject to an Option
or Stock Purchase Right.

(w) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option or Stock Purchase Right.

(x) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(y) "PLAN" means this 1995 Stock Plan.

(z) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.

(aa) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

(bb) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

(cc) "SECTION 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.

(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

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<PAGE>

(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is five million five hundred thousand (5,500,000) Shares.
The Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an
Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the
Plan has terminated); PROVIDED, however, that Shares that have actually been
issued under the Plan, whether upon exercise of an Option or Right, shall not
be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, and the original
purchaser of such Shares did not receive any benefits of ownership of such
Shares, such Shares shall become available for future grant under the Plan.
For purposes of the preceding sentence, voting rights shall not be considered
a benefit of Share ownership.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE.

(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.

(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
SUBJECT TO SECTION 16(b). With respect to Option or Stock Purchase Right
grants made to Employees who are also Officers or Directors subject to
Section 16(b) of the Exchange Act, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in a manner complying with the
rules under Rule 16b-3 relating to the disinterested administration of
employee benefit plans under which Section 16(b) exempt discretionary grants
and awards of equity securities are to be made, or (B) a committee designated
by the Board to administer the Plan, which committee shall be constituted to
comply with the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules under
Rule 16b-3 relating to the disinterested administration of employee benefit
plans

-4-
<PAGE>

under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made.

(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to Option or Stock Purchase Right grants made to Employees or
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted to satisfy Applicable Laws. Once
appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board. The Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Applicable Laws.

(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(n) of the Plan;

(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may be granted hereunder;

(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof, are granted hereunder;

(iv) to determine the number of shares of Common Stock to
be covered by each Option and Stock Purchase Right granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder.
Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

(vii) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value
of the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;

(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

-5-
<PAGE>

(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;

(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options
longer than is otherwise provided for in the Plan;

(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;

(xii) to institute an Option Exchange Program;

(xiii) to determine the terms and restrictions applicable
to Options and Stock Purchase Rights and any Restricted Stock; and

(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.

(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options or Stock Purchase Rights.

5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. If otherwise eligible, an Employee or Consultant
who has been granted an Option or Stock Purchase Right may be granted
additional Options or Stock Purchase Rights.

6. LIMITATIONS.

(a) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 6(a), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.

(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
employment or consulting relationship with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such employment or consulting relationship at any time, with or
without cause.

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<PAGE>

(i) No Employee shall be granted, in any fiscal year of
the Company, Options and Stock Purchase Rights to purchase more than 250,000
Shares.

(ii) In connection with his or her initial employment, an
Employee may be granted Options and Stock Purchase Rights to purchase up to
an additional 250,000 Shares which shall not count against the limit set
forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 13.

(iv) If an Option or Stock Purchase Right is cancelled in
the same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 13), the cancelled Option
or Stock Purchase Right will be counted against the limits set forth in
subsections (i) and (ii) above. For this purpose, if the exercise price of
an Option or Stock Purchase Right is reduced, the transaction will be treated
as a cancellation of the Option or Stock Purchase Right and the grant of a
new Option or Stock Purchase Right.

7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or
its approval by the shareholders of the Company as described in Section 19 of
the Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 15 of the Plan.

8. TERM OF OPTION. The term of each Option shall be stated in the
Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such
shorter term as may be provided in the Notice of Grant. Moreover, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the term of the Incentive Stock Option shall be
five (5) years from the date of grant or such shorter term as may be provided
in the Notice of Grant.

9. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) EXERCISE PRICE. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i) In the case of an Incentive Stock Option

(1) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.

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<PAGE>

(2) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.

(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator.

(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator may
specify that an Option may not be exercised until the completion of a service
period.

(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:

(i) cash;

(ii) check

(iii) promissory note;

(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;

(v) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price;

(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

(vii) any combination of the foregoing methods of payment;
or

(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.

10. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and
at such times

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<PAGE>

and under such conditions as determined by the Administrator and set forth in
the Option Agreement.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise
of an Option shall be issued in the name of the Optionee or, if requested by
the Optionee, in the name of the Optionee and his or her spouse. Until the
stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.

Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant).
In the absence of a specified time in the Notice of Grant, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
In the case of an Incentive Stock Option, such period of time for exercise
shall not exceed three (3) months from the date of termination. If, on the
date of termination, the Optionee is not entitled to exercise the Optionee's
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator,
the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

Notwithstanding the above, in the event of an Optionee's change in
status from Consultant to Employee or Employee to Consultant, an Optionee's
Continuous Status as an Employee or Consultant shall not automatically
terminate solely as a result of such change in status. However, in such
event, an Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as
a Nonstatutory Stock Option three months and one day following such change of
status.

(c) DISABILITY OF OPTIONEE. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee

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<PAGE>

may exercise his or her Option at any time within twelve (12) months from the
date of such termination, but only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event
later than the expiration of the term of such Option as set forth in the
Notice of Grant). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

(d) DEATH OF OPTIONEE. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following
the date of death (but in no event later than the expiration of the term of
such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert
to the Plan. If, after death, the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or inheritance does not exercise
the Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

(e) RULE 16b-3. Options granted to individuals subject to
Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.

11. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to
be paid, and the time within which the offeree must accept such offer, which
shall in no event exceed six (6) months from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement
in the form determined by the Administrator.

(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser's employment with the Company for any reason (including
death or Disability). The purchase price for Shares repurchased pursuant to
the Restricted Stock purchase agreement shall be the original price paid by
the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate
determined by the Administrator.

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<PAGE>

(c) RULE 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall
be subject to any restrictions applicable thereto in compliance with Rule
16b-3. An Insider may only purchase Shares pursuant to the grant of a Stock
Purchase Right, and may only sell Shares purchased pursuant to the grant of a
Stock Purchase Right, during such time or times as are permitted by Rule
16b-3.

(d) OTHER PROVISIONS. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock Purchase
Agreements need not be the same with respect to each purchaser.

(e) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company.

No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Stock Purchase Right is exercised,
except as provided in Section 13 of the Plan.

12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. An
Option or Stock Purchase Right may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option
or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase Right.

-11-
<PAGE>

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or
Stock Purchase Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The Board
may, in the exercise of its sole discretion in such instances, declare that
any Option or Stock Purchase Right shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option or Stock
Purchase Right as to all or any part of the Optioned Stock, including Shares
as to which the Option or Stock Purchase Right would not otherwise be
exercisable.

(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation.
In the event that the successor corporation refuses to assume or substitute
for the Option or Stock Purchase Right, the Optionee shall have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If an
Option or Stock Purchase Right is exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee that the Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase
Right immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger
or sale of assets by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets was not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent
of the successor corporation, provide for the consideration to be received
upon the exercise of the Option orStock Purchase Right, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in
the merger or sale of assets.

14. DATE OF GRANT. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes
the determination granting such Option or Stock Purchase Right, or such other
later date as is determined by the Administrator. Notice of the
determination shall be provided to each Optionee within a reasonable time
after the date of such grant.

15. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.

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<PAGE>

(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Rule 16b-3 or with Section 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Such shareholder approval, if required, shall be obtained
in such a manner and to such a degree as is required by the applicable law,
rule or regulation.

(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

16. CONDITIONS UPON ISSUANCE OF SHARES.

(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, Applicable Laws, and the
requirements of any stock exchange or quotation system upon which the Shares
may then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required.

17. LIABILITY OF COMPANY.

(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock
covered by an Option or Stock Purchase Right exceeds, as of the date of
grant, the number of Shares which may be issued under the Plan without
additional shareholder approval, such Option or Stock Purchase Right shall be
void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the
Plan is timely obtained in accordance with Section 15(b) of the Plan.

18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.

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<PAGE>

19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the manner and to the degree required under applicable federal
and state law.

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<PAGE>

COHERENT, INC.

1995 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number __________________________________

Date of Grant ___________________________________

Vesting Commencement Date ___________________________________

Exercise Price per Share $__________________________________

Total Number of Shares Granted ___________________________________

Total Exercise Price $__________________________________

Type of Option: _________ Incentive Stock Option

_________ Nonstatutory Stock Option

Term/Expiration Date: ___________________________________

VESTING SCHEDULE:

This Option may be exercised, in whole or in part, in accordance with
the following schedule:

[25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter].

<PAGE>

TERMINATION PERIOD:

This Option may be exercised for ______ [days/months] after termination
of the Optionee's employment or consulting relationship with the Company.
Upon the death or Disability of the Optionee, this Option may be exercised
for such longer period as provided in the Plan. In the event of the
Optionee's change in status from Employee to Consultant or Consultant to
Employee, this Option Agreement shall remain in effect. In no event shall
this Option be exercised later than the Term/Expiration Date as provided
above.

II. AGREEMENT

1. GRANT OF OPTION. The Plan Administrator of the Company hereby
grants to the Optionee named in the Notice of Grant attached as Part I of
this Agreement (the "Optionee") an option (the "Option") to purchase the
number of Shares, as set forth in the Notice of Grant, at the exercise price
per share set forth in the Notice of Grant (the "Exercise Price"), subject to
the terms and conditions of the Plan, which is incorporated herein by
reference. Subject to Section 15(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of
Code Section 422(d) it shall be treated as a Nonstatutory Stock Option
("NSO").

2. EXERCISE OF OPTION.

(a) RIGHT TO EXERCISE. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event
of Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by
the applicable provisions of the Plan and this Option Agreement.

(b) METHOD OF EXERCISE. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other represenations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall
be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of
law and the requirements of any stock exchange or quotation service upon
which the Shares are then listed. Assuming such compliance, for income tax

-2-

<PAGE>

purposes the Exercised Shares shall be considered transferred to the Optionee
on the date the Option is exercised with respect to such Exercised Shares.

3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

(a) cash;

(b) check;

(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company
of the sale or loan proceeds required to pay the exercise price; or

(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.

5. TERM OF OPTION. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

6. TAX CONSEQUENCES. Some of the federal and California tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) EXERCISING THE OPTION.

(i) NONSTATUTORY STOCK OPTION. The Optionee may incur
regular federal income tax and California income tax liability upon exercise
of a NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the
Fair Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former
Employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation
income at

-3-

<PAGE>

the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.

(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or California
income tax liability upon its exercise, although the excess, if any, of the
Fair Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to alternative
minimum taxable income for federal tax purposes and may subject the Optionee
to alternative minimum tax in the year of exercise. In the event that the
Optionee undergoes a change of status from Employee to Consultant, any
Incentive Stock Option of the Optionee that remains unexercised shall cease
to qualify as an Incentive Stock Option and will be treated for tax purposes
as a Nonstatutory Stock Option on the ninety-first (91st) day following such
change of status.

(b) DISPOSITION OF SHARES.

(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes. If the Optionee disposes of ISO Shares within
one year after exercise or two years after the grant date, any gain realized
on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the lesser of
(A) the difference between the Fair Market Value of the Shares acquired on
the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price.

(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to an ISO on or before the later of (i) two years after the grant date, or
(ii) one year after the exercise date, the Optionee shall immediately notify
the Company in writing of such disposition. The Optionee agrees that he or
she may be subject to income tax withholding by the Company on the
compensation income recognized from such early disposition of ISO Shares by
payment in cash or out of the current earnings paid to the Optionee.

7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by
the Company and Optionee. This agreement is governed by California law except
for that body of law pertaining to conflict of laws.

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<PAGE>

By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan and this Option Agreement.
Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing
this Option Agreement and fully understands all provisions of the Plan and
Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Option Agreement. Optionee further agrees
to notify the Company upon any change in the residence address indicated
below.

OPTIONEE: COHERENT, INC.

______________________________________ By:_______________________________
Signature

______________________________________ Title:____________________________
Print Name

______________________________________
Residence Address

______________________________________

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<PAGE>

EXHIBIT A

1995 STOCK PLAN

EXERCISE NOTICE

Coherent, Inc.
5100 Patrick Henry Drive
P.O. Box 54980
Santa Clara, CA 95056-0980

Attention: Secretary

1. EXERCISE OF OPTION. Effective as of today, __________, 199__, the
undersigned ("Purchaser") hereby elects to purchase ___________ shares (the
"Shares") of the Common Stock of Coherent, Inc. (the "Company") under and
pursuant to the 1995 Stock Plan (the "Plan") and the Stock Option Agreement
dated ____________, 19__ (the "Option Agreement"). The purchase price for the
Shares shall be $________________, as required by the Option Agreement.

2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price for the Shares.

3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.

5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition
of the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company
for any tax advice.

6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the

<PAGE>

entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by California law except for
that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

PURCHASER: COHERENT, INC.

By:
- ------------------------------------ ---------------------------------------
Signature

Its:
- ------------------------------------ --------------------------------------
Print Name

ADDRESS: ADDRESS:

- ------------------------------------ 5100 Patrick Henry Drive
- ------------------------------------ P.O. Box 54980
Santa Clara, CA 95056-0980

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<PAGE>

COHERENT, INC.

EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED MARCH 17, 1999)

The following constitutes the provisions of the Employee Stock Purchase
Plan (herein called the "Plan") of Coherent, Inc. (herein called the
"Company").

1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its subsidiaries with an opportunity to purchase Common Stock of
the Company through payroll deductions. It is the intention of the Company
to have the Plan qualify as an "Employee Stock Purchase Plan" under Section
423 of the Internal Revenue Code of 1986. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.

2. DEFINITIONS.

(a) "Base pay" or "base salary" means regular straight-time
earnings and commissions, excluding payments for overtime, shift premiums,
incentive compensation, bonuses and any other special payments.

(b) "Employee" means any person, including an officer, who is
customarily employed for at least twenty (20) hours per week by the Company
or its subsidiaries (50% or more of whose voting shares are owned directly or
indirectly by the Company).

3. ELIGIBILITY.

(a) Any employee as defined in paragraph 2 who shall be employed
by the Company on the date his participation in the Plan is effective shall
be eligible to participate in the Plan, subject to limitations imposed by
Section 423(b) of the Internal Revenue Code of 1954.

(b) Any provisions of the Plan to the contrary notwithstanding,
no employee shall be granted an option under the Plan (i) if, immediately
after the grant, such employee would own shares and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of shares of the Company or of
any subsidiary of the Company, or (ii) which permits his rights to purchase
shares under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds Twenty Five Thousand Dollars
($25,000) for each calendar year in which such stock option is outstanding at
any time, where the value of the option is calculated as the fair market
value of the shares (determined at the time such option is granted).

4. OFFERING DATES. The Plan shall be implemented by two Offerings
during each fiscal year, each of twelve months duration. Offering I shall
commence on or about May 1 of each year and Offering II shall commence on or
about November 1 of each year. Both shall continue thereafter until
terminated in accordance with paragraph 19 hereof.

<PAGE>

5. PARTICIPATION.

(a) An eligible employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deduction on the form
provided by the Company and filing it with the Company's payroll office prior
to the applicable offering date.

(b) Payroll deductions for a participant shall commence on the
first payroll following the commencement offering date and shall end on the
termination date of the offering to which such authorization is applicable,
unless sooner terminated by the participant as provided in paragraph 10.

6. PAYROLL DEDUCTIONS.

(a) At the time a participant files his subscription agreement,
he shall elect to have payroll deductions made on each payday during the
offering period. The aggregate of payroll deductions elected to be made
under Offering I and Offering II shall not be greater than ten percent (10%)
of the base pay which he received on such payday nor less than ten dollars
($10.00) per pay period, and the aggregate of such payroll deductions during
the offering period shall not exceed ten percent (10%) of his aggregate base
salary during said offering period.

(b) All payroll deductions made by a participant shall be
credited to his account under the Plan. A participant may not make any
additional payments into such account.

(c) A participant may discontinue his participation in the Plan
as provided in paragraph 10, or may lower, but not increase, the rate of his
payroll deductions (within the limitations set forth in subparagraph (a)
above) during the offering by completing or filing with the Company a new
authorization for payroll deduction. The change in rate shall be effective
within fifteen (15) days following the Company's receipt of the new
authorization.

7. GRANT OF OPTION.

(a) At the beginning of each twelve month offering period under
each of the two Offerings, each eligible employee participating in the Plan
shall be granted an option to purchase (at the per share option price) up to
a number of shares of the Company's Common Stock purchasable by each
employee's accumulated payroll deductions (not to exceed an aggregate amount
under both Offerings equal to ten percent (10%) of his base salary for the
offering period as of the date of the commencement of the applicable offering
period) divided by eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock at the beginning of said offering period,
subject to the limitations set forth in Section 3(b) and 12 hereof. Fair
market value of a share of the Company's Common Stock shall be determined as
provided in Section 7(b) herein.

(b) The option price per share of such shares shall be the lower
of: (i) 85% of the fair market value of a share of the Common Stock of the
Company at the commencement of the twelve month offering period; or (ii) 85%
of the fair market value of a share of the Common Stock of the Company at the
time the option is exercised at the termination of the twelve month offering
period. The fair market value of the Company's Common Stock on said dates
shall be determined by the Company's Board of Directors in the exercise of
their discretion in good faith.

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<PAGE>

8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan
as provided in paragraph 10, his option for the purchase of shares will be
exercised automatically at the end of the offering period, and the maximum
number of full shares subject to option will be purchased for him at the
applicable option price with the applicable amount of the accumulated payroll
deductions in his account. During his lifetime, a participant's option to
purchase shares hereunder is exercisable only by him.

9. DELIVERY. As promptly as practicable after the termination of
each Offering, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise
of his option. Any cash remaining to the credit of a participant's account
under the Plan after a purchase by him of shares at the termination of each
offering period, or which is insufficient to purchase a full share of Common
Stock of the Company, shall be returned to said participant.

10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

(a) A participant may withdraw all but not less than all the
payroll deductions credited to his account under the Plan for one or both
Offerings at any time prior to the end of the applicable offering period by
giving written notice to the Company. All of the participant's payroll
deductions credited to his account for the Offering or Offerings from which
he has withdrawn will be paid to him promptly after receipt of his notice of
withdrawal and his option for the current period under that Offering or
Offerings will be automatically terminated, and no further payroll deductions
for the purchase of shares under the Offering or Offerings withdrawn from
will be made during the applicable offering period.

(b) Upon termination of the participant's employment prior to
the end of an offering period for any reason, including retirement or death,
the payroll deductions credited to his account will be returned to him or, in
the case of his death, to the person or persons entitled thereto under
paragraph 14, and his option will be automatically terminated.

(c) In the event an employee fails to remain in the continuous
employ of the Company for at least twenty (20) hours per week during the
offering period in which the employee is a participant, he will be deemed to
have elected to withdraw from the Plan and the payroll deductions credited to
his account will be returned to him and his option terminated.

(d) A participant's withdrawal from one of the two Offerings
will not have any effect upon his eligibility to participate in the other
Offering or any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company.

11. INTEREST. To the extent that a participant's payroll deductions
exceed that amount required to purchase shares subject to option at the end
of an offering period, he shall be refunded such excess amount with interest
on said refundable amount at a net rate of 3%. Otherwise, no interest shall
accrue on the payroll deductions of a participant in the Plan.

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<PAGE>

12. STOCK.

(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 6,325,000
shares, subject to adjustment upon changes in capitalization of the Company
as provided in paragraph 18. The shares to be sold to participants under the
Plan may, at the election of the Company, be either treasury shares or shares
authorized but unissued. If the total number of shares which would otherwise
be subject to options granted pursuant to Section 7(a) hereof at the
beginning of an offering period exceeds the number of shares then available
under the Plan (after deduction of all shares for which options have been
exercised or are then outstanding), the Company shall make a pro rata
allocation of the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be equitable. In
such event, the Company shall give written notice of such reduction of the
number of shares subject to the option to each employee affected thereby and
shall similarly reduce the rate of payroll deductions, if necessary.

(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan will
be registered in the name of the participant or in the name of the
participant and his spouse.

13. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company or a committee appointed by the Board. The
administration, interpretation or application of the Plan by the Board or its
committee shall be final, conclusive and binding upon all participants.
Members of the Committee who are eligible employees are permitted to
participate in the Plan.

14. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of the offering period but prior to delivery to him of
such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to the end of an offering period.

(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion,
may deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company
may designate.

15. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned,

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<PAGE>

transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as provided in paragraph 14 hereof)
by the participant. Any such attempt at assignment, transfer, pledge or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with paragraph 10.

16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.

17. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating employees annually promptly following the stock purchase date,
which statements will set forth the total amount of payroll deductions, the
amount applicable to each of the two Offerings, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.

18. CHANGES IN CAPITALIZATION. If any option under this Plan is
exercised subsequent to any stock dividend, stock split, spinoff,
recapitalization, merger, consolidation, exchange of shares or the like,
occurring after such option was granted, as result of which shares of any
class shall be issued in respect of the outstanding shares, or shares shall
be changed into the same, whether a different number of the same or another
class or classes, the number of shares to which such option shall be
applicable and the option price for such shares shall be appropriately
adjusted by the Company.

19. AMENDMENT OR TERMINATION. The Board of Directors of the Company
may at any time terminate or amend the Plan. No such termination can affect
options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant, nor may an amendment be made without prior approval of the
shareholders of the Company if such amendment would:

(a) Increase the number of shares that may be issued under the
Plan;

(b) Permit payroll deductions at an aggregate rate in excess of
ten percent (10%) of the participant's base salary;

(d) Materially increase the benefits which may accrue to
participants under the Plan.

20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.

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<PAGE>

COHERENT, INC.

EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT

______ Original Application
______ Change in Payroll Deduction Rate
______ Change of Beneficiary(ies)

1. ______________________ hereby elects to participate in the COHERENT, INC.
Employee Stock Purchase Plan (the "Stock Purchase Plan") and subscribes
to purchase shares of the Company's Common Stock, without par value, in
accordance with this Subscription Agreement and the Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount of
______% of my base salary in accordance with the Stock Purchase Plan, to
be applied to Offering ______ (I or II) which begins on ______ of each
year.

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock, par value $.50, at the applicable
purchase price determined in accordance with the Stock Purchase Plan. I
further understand that, except as otherwise set forth in the Stock
Purchase Plan, shares will be purchased for me automatically at the end
of the offering period unless I otherwise withdraw from the Stock
Purchase Plan by giving written notice to the Company for such purpose.

4. I understand that prior to the commencement of the offering period I will
receive a copy of the Company's summary of the provisions of the Stock
Purchase Plan. A copy of the complete "Coherent, Inc. Employee Stock
Purchase Plan" is on file with the Company at its corporate offices in
Palo Alto, California.

5. Shares purchased for me under the Stock Purchase Plan should be issued in
the name(s) of:
------------------------------------------------------------------------

------------------------------------------------------------------------.

6. I hereby agree to be bound by the terms of the Stock Purchase Plan. The
effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Stock Purchase Plan.

<PAGE>

7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Stock Purchase Plan:

NAME: (Please print)
-------------------------------------------------------
(First) (Middle) (Last)

- -------------------------------- ----------------------------------------
Relationship
----------------------------------------
(Address)

NAME: (Please print)
-------------------------------------------------------
(First) (Middle) (Last)

- -------------------------------- ----------------------------------------
Relationship
----------------------------------------
(Address)

Dated:
--------------------- ----------------------------------------
Signature of Employee

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

I do not wish to participate in the Employee Stock Purchase Plan.

----------------------------------------
Signature of Employee

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<PAGE>

EXHIBIT 5.1

June 8, 1999

Coherent, Inc.
5100 Patrick Henry Drive
Santa Clara, California 95056
Attn: Scott Miller, Esq.

RE: REGISTRATION STATEMENT ON FORM S-8

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8 to be filed
by you with the Securities and Exchange Commission on or about June 8, 1999
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 100,000 shares of your
Common Stock reserved for issuance under the 1998 Director Option Plan, an
additional 3,000,000 shares of your Common Stock reserved for issuance under
the 1995 Stock Plan and an additional 1,750,000 shares of your Common Stock
reserved for issuance under the Employee Stock Purchase Plan (collectively,
the "Shares") (collectively, the "Plans"). As legal counsel for Coherent,
Inc., we have examined the proceedings taken and are familiar with the
proceedings proposed to be taken by you in connection with the sale and
issuance of the Shares under the Plans.

It is our opinion that, when issued and sold in the manner referred
to in the Plans and pursuant to the respective agreement that accompanies
each grant under the Plans, the Shares will be legally and validly issued,
fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever it
appears in the Registration Statement and any amendments to it.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

/s/ Wilson Sonsini Goodrich & Rosati, P.C.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Registration
Statement of Coherent, Inc. on Form S-8 of our reports dated October 26, 1998
(December 7, 1998 as to Note 13) and December 15, 1998, appearing in the
Annual Report on Form 10-K of Coherent, Inc. for the year ended September 26,
1998.

/s/ Deloitte & Touche LLP

San Jose, California
June 7, 1999