Edgar Filing: COHERENT INC

COHERENT LOGO

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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March 27, 2003

TO OUR STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
COHERENT, INC. (the "Company"), a Delaware corporation, will be held on March
27, 2003 at 5:30 p.m., local time, at the Company's principal offices located
at 5100 Patrick Henry Drive, Santa Clara, California 95054, for the following
purposes:

1. To elect eight directors to serve for the ensuing year and until their
successors are duly elected (Proposal One);

2. To amend the Company's 1998 Director Option Plan to (i) increase the
number of shares reserved for issuance thereunder to 150,000 shares of
Common Stock (with a corresponding change to the 1998 Director Plan's
automatic share replenishment provision), (ii) increase the First Option
to 30,000 shares, (iii) increase the Subsequent Option to 12,000 shares,
(iv) provide for a pool of 50,000 shares that the Board of Directors can
grant to Outside Directors prior to December 31, 2003 and (v) amend the
vesting provisions of Options (Proposal Two);

3. To amend the Company's 1998 Director Option Plan to (i) increase the
terms of Options to ten years, (ii) provide that all Options held by a
Director who has served for at least eight years shall vest upon the
date of his or her retirement and shall remain exercisable for the
lesser of two years following retirement or the expiration of the
Option's original term, (iii) permit the transfer of Options to estate
planning entities and (iv) delete the limitation on an employee director
receiving a First Grant upon becoming an outside member (i.e.
non-employee director) of our board of directors (Proposal Three);

4. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants to the Company for the fiscal year ending September 27, 2003
(Proposal Four); and

5. To transact such other business as may properly be brought before the
meeting and any adjournment(s) thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

Stockholders of record at the close of business on February 7, 2003 are
entitled to notice of and to vote at the meeting.

All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date
and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.

Sincerely,

/s/ John R. Ambroseo
John R. Ambroseo
President and Chief Executive Officer

Santa Clara, California
February 21, 2003

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YOUR VOTE IS IMPORTANT

In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy card as promptly as possible and
return it in the enclosed envelope.

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COHERENT, INC.
5100 PATRICK HENRY DRIVE
SANTA CLARA, CALIFORNIA 95054

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PROXY STATEMENT

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INFORMATION CONCERNING SOLICITATION AND VOTING

General

The enclosed Proxy is solicited on behalf of the Board of Directors of
COHERENT, INC. (the "Company") for use at the Annual Meeting of Stockholders to
be held at the Company's principal offices located at 5100 Patrick Henry Drive,
Santa Clara, California 95054, on March 27, 2003 at 5:30 p.m., local time, and
at any adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Company's telephone
number at the address above is (408) 764-4000. These proxy solicitation
materials were mailed on or about February 21, 2003 to all stockholders
entitled to vote at the meeting.

Record Date and Share Ownership

Stockholders of record at the close of business on February 7, 2003 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. At the Record Date, 29,282,380 shares of the Company's
Common Stock, $0.01 par value, were issued and outstanding.

Revocability of Proxies

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use (i) by delivering to the Company at its
principal offices (Attention: Scott H. Miller, Senior Vice President and
General Counsel) a written notice of revocation or a duly executed proxy
bearing a later date or (ii) by attending the meeting and voting in person.

Voting and Solicitation

On all matters, other than the election of directors, each share has one
vote. See "Election of Directors-- Vote Required" for a description of your
cumulative voting rights with respect to the election of directors.

The cost of this solicitation will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. In addition, proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or facsimile.

Quorum; Abstentions; Broker Non-Votes

The Company's Bylaws provide that stockholders holding a majority of the
shares of Common Stock issued and outstanding and entitled to vote on the
Record Date shall constitute a quorum at meetings of stockholders. Shares that
are voted "FOR," "AGAINST" or "WITHHELD" on a proposal are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as "entitled to vote on the subject matter" (the "Votes Cast") at the
Annual Meeting and with respect to such matter.

Although there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining the presence or
absence of a quorum for the transaction of business and the total number of
Votes Cast with respect to a particular matter (other than the election of
directors). Accordingly, with the exception of the proposal for the election of
directors, abstentions will have the same effect as a vote against the
proposal. Because directors are elected by a plurality vote, abstentions in the
election of directors have no impact once a quorum exists.

If you hold your shares through a broker, bank or other nominee and you do
not instruct them how to vote, your broker may have authority to vote your
shares. However, the New York Stock Exchange has proposed new regulations that
would prohibit brokers or other nominees that are NYSE member organizations
from voting in favor of proposals relating to equity compensation plans unless
they receive specific instructions from the beneficial owner of the shares to
vote in that manner. This new rule may become effective before the meeting, in
which case, for shares held through a broker or other nominee who is a NYSE
member organization, your shares will only be voted in favor of Proposal 2 and
Proposal 3 if you have provided specific voting instructions to your broker or
other nominee to vote your shares in favor of that proposal.

In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, although broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to proposals set
forth in this Proxy Statement will therefore not be considered "Votes Cast"
and, accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.

Deadline for Receipt of Stockholder Proposals

The Company currently intends to hold its 2004 Annual Meeting of
Stockholders in March 2004 and to mail proxy statements relating to such
meeting in February 2004. Proposals of stockholders of the Company that are
intended to be presented by such stockholders at the 2004 Annual Meeting must
be received by the Company no later than October 23, 2003 and must otherwise be
in compliance with applicable laws and regulations in order to be considered
for inclusion in the proxy statement and form of proxy relating to that
meeting.

The attached proxy card grants to the proxyholders discretionary authority
to vote on any matter raised at the Annual Meeting of Stockholders. Assuming
that the Company's 2004 Annual Meeting of Stockholders will be held on March
25, 2004, if a stockholder intends to submit a proposal at the Company's 2004
Annual Meeting of Stockholders which is not eligible for inclusion in the proxy
statement relating to the meeting and the stockholder fails to give the Company
notice, in accordance with the advance notice provisions in the Company's
bylaws, between December 28, 2003 and January 27, 2004, then the proxy holders
will be allowed to use their discretionary authority when and if the proposal
is raised at the Company's 2004 Annual Meeting of Stockholders; provided,
however, if the Company provides less than 65 days notice of the 2004 Annual
Meeting of Stockholders, then a stockholder must give the Company notice of its
intent to submit a proposal no later than the seventh day following the day on
which the Company provided notice of the annual meeting

Further Information

We will provide without charge to each stockholder solicited by these
proxy solicitation materials a copy of Coherent's Annual Report on Form 10-K
upon request of the stockholder made in writing to Coherent, Inc., 5100 Patrick
Henry Drive, Santa Clara, California 95054, Attn: Investor Relations. You can
also access our SEC filings, including our Annual Report on Form 10-K, on the
SEC website at www.sec.gov.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers. Such
officers, directors and ten-percent stockholders are also required by SEC rules
to furnish the Company with copies of all forms that they file pursuant to
Section 16(a). Based solely on its review of the copies of such forms received
by the Company, or on written representations from certain reporting persons
that no other reports were required for such persons, the Company believes
that, during fiscal 2002, its directors, officers and ten-percent stockholders
complied with all applicable Section 16(a) filing requirements.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of February 7, 2003, except as otherwise
indicated below, certain information with respect to the beneficial ownership
of the Company's Common Stock by (i) any person (including any "group" as that
term is used in Section 13(d)(3) of the Exchange Act) known by the Company to
be the beneficial owner of more than 5% of the Company's voting securities,
(ii) each director and each nominee for director to the Company, (iii) each of
the executive officers named in the Summary Compensation Table appearing
herein, and (iv) all executive officers and directors of the Company as a
group. The Company does not know of any arrangements, including any pledge by
any person of securities of the Company, the operation of which may at a
subsequent date result in a change of control of the Company. Unless otherwise
indicated, the address of each listed stockholder is c/o Coherent, Inc., 5100
Patrick Henry Drive, Santa Clara, California 95054.

Number of Percent of
Name and Address Shares (1) Total (2)
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Oppenheimer Funds, Inc. (3) ................... 3,100,000 10.59%
498 7th Avenue
New York, NY 10018
Vanguard PRIMECAP Fund (4) .................... 1,700,000 5.81%
225 S. Lake Ave, #400
Pasadena, CA 91101 ..........................
Franklin Resources, Inc. (5) .................. 2,594,786 8.86%
One Franklin Parkway
San Mateo, CA 94403
Bernard J. Couillaud, PhD (6) ................. 522,718 1.79%
John R. Ambroseo, PhD (7) ..................... 116,560 *
Robert J. Quillinan (8) ....................... 166,079 *
Vittorio Fossati-Bellani, PhD (9) ............. 49,844 *
Kevin McCarthy (10) ........................... 21,188 *
Charles W. Cantoni (11) ....................... 20,000 *
Frank P. Carrubba, PhD (12) ................... 35,000 *
Henry E. Gauthier (13) ........................ 93,330 *
John H. Hart (14) ............................. 15,000 *
Jerry E. Robertson, PhD (15) .................. 41,500 *
All directors and executive officers as a group
(13 persons) (16) ............................ 1,215,572 4.02%

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* Represents less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes
voting or investment power with respect to the securities. In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, each share of Coherent Common Stock subject to
options held by that person that will be exercisable on or before April 8,
2003, are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.

(2) Percentage of beneficial ownership is based upon 29,282,380 shares of
Coherent Common Stock outstanding as of February 7, 2003.

(3) Based on Schedule 13G/A as filed with the SEC by Oppenheimer Funds, Inc. as
of February 14, 2003.

(4) Based on Schedule 13G/A as filed with the SEC by Vanguard PRIMECAP Fund as
of February 14, 2003.

(5) Based on Schedule 13G/A as filed with the SEC by Franklin Resources, Inc.
as of as of February 12, 2003.

(6) Includes 496,000 shares issuable upon exercise of options held by Dr.
Couillaud which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(7) Includes 77,230 shares issuable upon exercise of options held by Dr.
Ambroseo which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(8) Includes 154,000 shares issuable upon exercise of options held by Mr.
Quillinan which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(9) Includes 44,000 shares issuable upon exercise of options held by Dr.
Fossati-Bellani which are currently exercisable or will become exercisable
within 60 days of February 7, 2003.

(10) Includes 20,000 shares issuable upon exercise of options held by Mr.
McCarthy which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(11) Includes 15,000 shares issuable upon exercise of options held by Mr.
Cantoni which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(12) Includes 15,000 shares issuable upon exercise of options held by Dr.
Carrubba which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(13) Includes 30,000 shares issuable upon exercise of options held by Mr.
Gauthier which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(14) Includes 15,000 shares issuable upon exercise of options held by Mr. Hart
which are currently exercisable or will become exercisable within 60 days
of February 7, 2003.

(15) Includes 10,000 shares issuable upon exercise of options held by Dr.
Robertson which are currently exercisable or will become exercisable within
60 days of February 7, 2003.

(16) Includes an aggregate of 963,230 options which are currently exercisable or
will become exercisable within 60 days of February 7, 2003.

PROPOSAL ONE
ELECTION OF DIRECTORS

Nominees

Eight (8) members of our board of directors are to be elected at the
Annual Meeting of Stockholders. Unless otherwise instructed, the proxy holders
will vote the proxies received by them for the Company's nominees named below.
Each nominee has consented to be named a nominee in the proxy statement and to
continue to serve as a director if elected. If any nominee becomes unable or
declines to serve as a director, if additional persons are nominated at the
meeting or if stockholders are entitled to cumulate votes, the proxy holders
intend to vote all proxies received by them in such a manner (in accordance
with cumulative voting) as will assure the election of as many of the nominees
listed below as possible (or, if new nominees have been designated by the Board
of Directors, in such a manner as to elect such nominees), and the specific
nominees to be voted for will be determined by the proxy holders.

The Company is not aware of any reason that any nominee will be unable or
will decline to serve as a director. The term of office of each person elected
as a director will continue until the next Annual Meeting of Stockholders or
until a successor has been elected and qualified. There are no arrangements or
understandings between any director or executive officer and any other person
pursuant to which he is or was to be selected as a director or officer of the
Company.

The names of the nominees, all of whom are currently directors of the
Company, and certain information about them as of the Record Date, are set
forth below.

Director
Name Age Since Principal Occupation
---- --- -------- ----------------------------------------------------------

Bernard J. Couillaud, PhD ........... 58 1996 Chairman of the Board of Directors of the Company,
Retired President and Chief Executive Officer of the
Company
Henry E. Gauthier (1) (3) ........... 62 1983 Vice Chairman of the Board of Directors of the Company
John R. Ambroseo, PhD ............... 41 2002 President and Chief Executive Officer of the Company
Charles W. Cantoni (2) (3) .......... 67 1983 Owner, Cantoni Consulting
Frank P. Carrubba, PhD (2) (3) ...... 65 1989 Retired Chief Technical Officer, Phillips Electronics N.V.
John H. Hart (1) (2) ................ 56 2000 Retired Sr. Vice President and Chief Technical Officer,
3Com Corporation
Jerry E. Robertson, PhD (1) (2) ..... 70 1994 Retired Executive Vice President, Life Sciences Sector
and Corporate Services Division, 3M
Robert J. Quillinan ................. 55 2001 Executive Vice President, Mergers & Acquisitions, of the
Company

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(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

(3) Member of the Governance and Nominating Committee.

Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. There is no
family relationship between any director or executive officer of the Company.

Dr. Couillaud has served as Chairman of the Board of Directors since
October 2002. He served as our President and Chief Executive, and as a member
of the Board of Directors from July 1996 through September 2002. He served as
Vice President and General Manager of the Coherent Laser Group from March 1992
to July 1996. From July 1990 to March 1992, he served as Manager of the
Advanced Systems Business Unit, and from September 1987 to 1990, he served as
Director of Research and Development for the Coherent Laser Group. From
November 1983, when he joined Coherent, to September 1987, Dr. Couillaud held
various managerial positions.

Mr. Gauthier has served as Vice Chairman of the Board of Directors since
October 2002. He served as Chairman of the Board of Directors from 1997 to
October 2002 and as a member of the Board of Directors since 1983.

Dr. Ambroseo has served as our President and Chief Executive Officer and
as a member of the Board of Directors since October 2002. Dr. Ambroseo served
as our Chief Operating Officer from June 2001 through September 2002. Dr.
Ambroseo served as our Executive Vice President and as President and General
Manager of the Coherent Photonics Group from September 2000 to June 2001. From
September 1997 to September 2000, Dr. Ambroseo served as our Executive Vice
President and as President and General Manager of the Coherent Laser Group.
From March 1997 to September 1997, Dr. Ambroseo served as our Scientific
Business Unit Manager. From August 1988, when Dr. Ambroseo joined us, until
March 1997, he served as a Sales Engineer, Product Marketing Manager, National
Sales Manager and Director of European Operations.

Mr. Cantoni has been the owner of Cantoni Consulting, a company providing
management and medical marketing consulting services, since June 1998. Prior to
founding Cantoni Consulting, Mr. Cantoni was a Vice President of Quinton
Instruments, Inc., a manufacturer of medical instrumentation products, a
position he held from October 1994 until June 1998. From August 1988 until
September 1994, he was President of ImageComm Systems, Inc., a value added
reseller of medical image processing systems.

Dr. Carrubba retired from Phillips Electronics, N.V., a diversified
electronics company, in 1997. Mr. Carrubba serves as a member of the Board of
Directors of Exar Corporation.

Mr. Hart retired from 3Com Corporation, a provider of networking products
and Internet protocol service platforms for enterprises, in September 2000. From
September 2000 until September 2001 he was a Fellow at 3Com. Mr. Hart serves as
a member of the Board of Directors of PLX Technologies, Inc.

Dr. Robertson retired from 3M, a diversified technology company, in 1994.
He is a member of the Board of Directors of Steris Corporation and Choice Hotels
International.

Mr. Quillinan has served as our Executive Vice President, Mergers and
Acquisitions since April 2002 and as a member of our Board of Directors since
June 2001. Mr. Quillinan served as our Executive Vice President and Chief
Financial Officer from July 1984 through March 2002. Mr. Quillinan served as our
Vice President and Treasurer from March 1982 to July 1984 and as our Corporate
Controller from May 1980 to March 1982.

Board Meetings and Committees

The Board of Directors of the Company held a total of five meetings during
the fiscal year ended September 28, 2002. No director serving during such fiscal
year attended fewer than 80% of the aggregate of all meetings of the Board of
Directors and the committees of the Board upon which such director served. The
Board of Directors has three committees: the Audit Committee, the Compensation
Committee and the Governance and Nominating Committee.

The Audit Committee of the Board of Directors, which consists of directors
Cantoni, Carrubba, Hart, and Robertson, held 15 meetings during the last fiscal
year. All of the members of the committee are "independent" as defined under
rules promulgated by the SEC. The Audit Committee has the sole authority for
appointing and supervising our independent public accountants and is primarily
responsible for approving the services performed by the Company's independent
public accountants and for reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls. The Audit Committee
charter was recently amended and is attached to this Proxy Statement as Exhibit
A.

The Compensation Committee of the Board of Directors consists of directors
Robertson, Gauthier, and Hart, and held three meetings during the last fiscal
year. The Compensation Committee reviews and approves the Company's executive
compensation policy and grants stock options to employees of the Company,
including officers pursuant to the Company's stock option plans.

The Governance and Nominating Committee was established in January 1998 and
consists of directors Carrubba, Cantoni, and Gauthier, all of whom are
"independent" directors as defined under the rules promulgated by the SEC. The
Governance and Nominating Committee held one meeting during the last fiscal
year. The

Governance and Nominating Committee reviews candidates for officers and
directors and makes recommendations to the full Board of Directors with respect
to such candidates. The Governance and Nominating Committee will consider
nominees recommended by stockholders. Although there are no formal procedures
for stockholders to nominate persons to serve as directors, stockholders wishing
to submit nominations should notify the Company at its principal offices
(Attention: Scott H. Miller, Senior Vice President and General Counsel) of their
intent to do so. To be considered by the Governance and Nominating Committee,
nominations must be received on or before the deadline for receipt of
stockholder proposals. See "Information Concerning Solicitation and
Voting--Deadline for Receipt of Stockholder Proposals."

Director Compensation

In fiscal year 2002, members of the Board of Directors who were not
employees of the Company received $16,000, plus $1,500 per meeting attended,
$750 per committee meeting attended and were reimbursed for their expenses
incurred in attending such meetings. In light of the increased responsibility
placed upon the Audit Committee by the Sarbanes-Oxley Act and rules promulgated
by the SEC and changes proposed to the listing standards for the Nasdaq National
Market, the fees paid to the Chairman of the Audit Committee were increased to
$1,500 per meeting effective March 28, 2002 and $3,000 per meeting effective
September 11, 2002.

The Company's 1990 Directors' Stock Option Plan (the "1990 Directors'
Plan") was adopted by the Board of Directors on December 8, 1989 and was
approved by the stockholders on March 29, 1990. The 1990 Directors' Plan was
amended by the Board of Directors on January 25, 1996, and the amendment was
approved by the stockholders on March 20, 1996. The 1990 Directors' Plan
terminated on December 8, 1999 and no further options were granted under this
plan. The 1990 Directors' Plan provided for the automatic and non-discretionary
grant of a non-statutory stock option to purchase 20,000 shares of the Company's
Common Stock to each non-employee director on the later of the effective date of
the Directors' Option Plan or the date on which such person became a director.
Thereafter, during the term of the 1990 Directors' Plan, each non-employee
director was automatically granted a non-statutory stock option to purchase
5,000 shares of Common Stock on the date of and immediately following each
Annual Meeting of Stockholders at which such non-employee director was reelected
to serve on the Board of Directors, if, on such date, he or she had served on
the Board for at least three months. Such plan provided that the exercise price
was equal to the fair market value of the Common Stock on the date of grant of
the options.

Two of our current non-employee directors each have been granted options to
purchase 65,000 shares of the Company's Common Stock under the 1990 Directors'
Plan at a weighted average exercise price of $11.62 per share. One non-employee
director has been granted options to purchase 45,000 shares of the Company's
Common Stock under the 1990 Directors' Plan at a weighted average exercise price
of $13.73 per share. One non-employee director has been granted options to
purchase 30,000 shares of the Company's Common Stock under such plan at a
weighted average exercise price of $21.33 per share. As of September 28, 2002,
options have been granted to purchase 295,000 shares under the 1990 Directors'
Plan, of which options to purchase 70,000 shares were outstanding on such date.

The Company's 1998 Director Option Plan (the "1998 Director Plan") was
adopted by the Board of Directors on November 24, 1998 and was approved by the
stockholders on March 17, 1999. 100,000 shares of Common Stock were reserved for
issuance thereunder. Under the terms of the 1998 Director Plan, the number of
shares reserved for issuance thereunder is increased each year by the number of
shares necessary to restore the total number of shares reserved to 100,000
shares. The 1998 Director's Plan replaced the 1990 Directors' Plan which expired
on December 8, 1999. Like its predecessor, the 1998 Director Plan provides for
the automatic and non-discretionary grant of a non-statutory stock option to
purchase 20,000 shares of the Company's Common Stock to each non-employee
director on the date on which such person becomes a director. Thereafter, each
non-employee director will be automatically granted a non-statutory stock option
to purchase 5,000 shares of Common Stock on the date of and immediately
following each Annual Meeting of Stockholders at which such non-employee
director is reelected to serve on the Board of Directors, if, on such date, he
or she has served on the Board for at least three months. Such plan provides
that the exercise price shall be equal to the fair market value of the Common
Stock on the date of grant of the options.

Four non-employee directors have each been granted options to purchase
15,000 shares of the Company's Common Stock under such plan at a weighted
average exercise price of $49.22. One non-employee director has been granted
options to purchase 30,000 shares of the Company's Common Stock under such plan
at a weighted average exercise price of $48.82 per share. As of September 28,
2002, options had been granted to purchase 95,000 shares of the Company's Common
Stock under the 1998 Director Plan, of which options to purchase 90,000 shares
were outstanding on such date.

Option Grants in Last Fiscal Year to Directors

The following table shows options granted to each individual who was a
director of the Company during the last fiscal year. All options were granted
under the 1998 Director Plan, except for the options granted to Dr. Couillaud
and Mr. Quillinan, which were granted under the Company's 1995 Stock Plan.

Option Grants to Directors During Last Fiscal Year

Name Number of Options
------------------------------------------ ------------------

Bernard J. Couillaud, PhD .......... 50,000
Henry E. Gauthier .................. 5,000
Charles W. Cantoni ................. 5,000
Frank P. Carrubba, PhD ............. 5,000
John H. Hart ....................... 5,000
Jerry E. Robertson, PhD ............ 5,000
Robert J. Quillinan ................ 25,000

Option Exercises in Last Fiscal Year by Directors

The following table shows, as to each non-employee director, information
concerning options exercised under the 1990 Directors' Plan during the last
fiscal year. No options granted under the 1998 Director Plan were exercised
during the last fiscal year.

Option Exercises in Last Fiscal Year by Directors

Name Shares Acquired on Exercise Value Realized (1)
---------------------------------------- ----------------------------- -------------------

Charles W. Cantoni ............... 2,000 $ 13,750
Frank P. Carrubba, PhD ........... 5,000 $ 62,363
Henry E. Gauthier (2) ............ 22,000 $304,425
John H. Hart ..................... -- $ 0
Jerry E. Robertson, PhD .......... -- $ 0

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(1) The value realized is calculated based on market value less exercise price.
The market value of underlying securities is based on the closing price of
the Company's Common Stock as reported by the NASDAQ National Market on the
date of exercise.

(2) Represents shares exercised under the Company's 1995 Stock Option Plan.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is composed of Directors Robertson, Gauthier,
and Hart. Mr. Gauthier and the Company have entered into a Management Transition
Agreement pursuant to which the Company agreed to provide him with benefits
under the Company's medical, dental and life insurance plans.

Except as set forth above, none of the members of the Compensation
Committee is currently or has been at any time since the beginning of the last
fiscal year, an officer or employee of the Company. No member of the
Compensation Committee serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.

Vote Required

Every stockholder voting for the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
stockholder's shares are entitled. Alternatively, a stockholder may distribute
his or her votes on the same principle among as many candidates as the
stockholder thinks fit, provided that votes cannot be cast for more than eight
candidates. However, no stockholder shall be entitled to cumulate votes for a
candidate unless (i) such candidate's name has been placed in nomination prior
to the voting and (ii) the stockholder, or any other stockholder, has given
notice at the meeting prior to the voting of the intention to cumulate the
stockholder's votes.

If a quorum is present and voting, the eight nominees receiving the highest
number of votes will be elected to the Board of Directors. See "Information
Concerning Solicitation and Voting--Quorum; Abstentions; Broker Non-Votes."

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE EIGHT NOMINEES HEREIN

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

PROPOSAL TWO
APPROVAL OF THE FIRST AMENDMENT TO THE 1998 DIRECTOR OPTION PLAN

We are proposing to make two separate amendments to the Company's 1998
Director Plan. Undefined capitalized terms herein shall have the same meaning
as defined in the 1998 Director Plan. The first amendment involves making
certain changes to the 1998 Director Plan to change the number of shares
available thereunder. This amendment will be discussed in detail under this
Proposal Two to this Proxy Statement ("Proposal Two"). The second amendment
involves certain proposed technical changes to the 1998 Director Plan, such as
the length of the term of an Option and changes to vesting requirements. This
second amendment will be discussed in detail in Proposal Three to this Proxy
Statement ("Proposal Three"). Proposal Two and Proposal Three shall be voted
upon by our stockholders separately. The vote on each of these proposals shall
be independent from one another.

The proposed amendment to our 1998 Director Plan under this Proposal Two
would do the following:

1. Increase in Number of Shares. Approval of this Proposal Two would
increase the number of reserved shares under the 1998 Director Plan from
100,000 shares to 150,000 shares of Common Stock. In addition to the
proposed increase from 100,000 shares to 150,000 shares, the 1998
Director Plan automatic share replenishment provision would be amended
to provide that in addition to the 150,000 shares reserved for issuance,
an annual increase in shares will be added to the Pool on each
anniversary date of the adoption of the 1998 Director Plan equal to (i)
the number of shares needed to restore the maximum aggregate number of
shares that may be optioned and sold to 150,000 or (ii) a lesser amount
determined by our board of directors. This increase is required in order
to accommodate the increased annual grants proposed below.

2. Initial First Grant Increase. Approval of this Proposal Two would
increase the initial grant to a newly elected director ("First Grant")
from 20,000 shares of Common Stock that vest at the rate of 5,000 shares
per year over four years to 30,000 shares of Common Stock that vest at
the rate of 10,000 shares per year over three years.

3. Subsequent Options Increase. Currently under the 1998 Director Plan,
directors that are re-elected to the board of directors (i.e. ones that
have already received a First Grant) receive an annual grant of 5,000
shares of Common Stock. Approval of this Proposal Two would increase, on
a prospective basis, the existing annual grant for directors re-elected
to the board of directors from 5,000 shares to 12,000 shares of Common
Stock.

4. Discretionary Pool. Approval of this Proposal Two would create a
separate pool of 50,000 shares of Common Stock under the 1998 Director
Plan. The sole purpose of this pool is to increase the level of existing
options outstanding under the 1998 Director Plan to the proposed annual
level of 12,000 shares of Common Stock discussed in the paragraph
immediately above (i.e. additional grants out of this pool would be made
to the existing members of the Board of Directors who have been
re-elected to the board to make their existing outstanding options on
par with the proposed share increases discussed in the paragraph
immediately above). This pool would only be used for grants made by the
Board of Directors prior to December 31, 2003.

5. Vesting Schedule Changes to First Grants and Subsequent Grants. Approval
of this Proposal Two would decrease the vesting for First Grants from
four years to three years, and would also change the vesting date from
the anniversary of the date of grant to the dates of succeeding annual
stockholders meetings. If the Company fails to hold an annual
stockholders meeting, the vesting date shall be the anniversary of the
last annual stockholders meeting. For example, a First Grant will vest
equally over the next three annual stockholders meetings. We believe
that this change is necessary because the dates of annual stockholders
meetings may change from year to year and the perceived unfairness of a
retiring director not being able to exercise a stock option because the
annual stockholders meeting date was a few days prior to his or her
vesting date. Subsequent option grants would be exercisable in full on
the third annual stockholders meeting following the date of grant of the
subsequent option grant as opposed to four years that is currently
provided for.

The Board of Directors believes that the proposed amendments under this
Proposal Two are necessary to allow the Company to continue to attract and
retain the best available people for service as directors and to compensate
them for their many hours of service, particularly in light of the increased
responsibilities imposed on directors by the Sarbanes-Oxley Act. The
Compensation Committee and the Board of Directors undertook a review of the
1998 Director Plan, and after consulting with compensation consultants and
legal counsel, determined that the amendment under this Proposal Two is
necessary to bring the 1998 Director Plan up to date and to align our Board
members' equity compensation with their increased responsibilities in light of
the Sarbanes-Oxley Act.

A complete copy of the amended 1998 Director Plan is attached to this
proxy statement. The material features of the 1998 Director Plan, as proposed
to be amended by Proposal Two and Proposal Three, is outlined in Proposal Three
below.

Required Vote

If a quorum is present, the affirmative vote of a majority of the Votes
Cast will be required to approve the amendment to the 1998 Director Plan under
this Proposal Two.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE FIRST AMENDMENT OF THE COMPANY'S 1998 DIRECTOR
STOCK PLAN AS SET FORTH IN THIS PROPOSAL TWO

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

PROPOSAL THREE
SECOND AMENDMENT TO THE 1998 DIRECTOR OPTION PLAN

As discussed in Proposal Two above, we are proposing to make two separate
amendments to the Company's 1998 Director Plan. Undefined capitalized terms
herein shall have the same meaning as defined in the 1998 Director Plan. The
first amendment involves making certain changes to the 1998 Director Plan to
change the number of shares available thereunder. This amendment has been
discussed in detail under Proposal Two above. The second amendment involves
certain proposed technical changes to the 1998 Director Plan, such as the
length of the term of an Option and changes to vesting requirements. This
second amendment is discussed in detail in this Proposal Three to this Proxy
Statement. Proposal Two and Proposal Three shall be voted upon by our
stockholders separately. The vote on each of these proposals shall be
independent from one another.

The proposed amendment to our 1998 Director Plan under this Proposal Three
would do the following:

1. Increased Term. Approval of this Proposal Three would increase the term
of stock options granted under the 1998 Director Plan from six (6) years
to ten (10) years.

2. Vesting on Retirement. Approval of this Proposal Three would provide
that, upon a director's retirement (which means a termination of status
as a director where such director has completed at least eight years of
service as a director), all outstanding options granted under the 1998
Director Plan (i) with an exercise price equal to or greater than the
current Fair Market Value on the date of stockholder approval of this
Proposal Three and (ii) all options granted under the 1998 Director Plan
after the date of stockholder approval of this Proposal Three would
immediately vest and remain exercisable for the lesser of two years
following retirement or the expiration of the option's original term.
Currently, the 1998 Director Plan provides that upon retirement, a
director has 210 days to exercise his or her then vested options.

3. Transfer to Estate Planning Entities. Approval of this Proposal Three
would permit a director to transfer his or her options to an estate
planning entity such as a family trust. Currently, the 1998 Director
Plan provides that a director may not transfer his or her options, and
they may only be exercised during the director's lifetime.

4. First Grant to Employee Director who becomes an Outside Director. The
current form of the 1998 Director Plan provides that in the event an
employee who is a member of our Board becomes an outside director, such
director shall not be eligible to receive a First Grant. Approval of
this amendment, however, would revise the 1998 Director Plan to permit
such a director to be granted a First Grant.

A complete copy of the amended 1998 Director Plan is attached to this proxy
statement. The material features of the 1998 Director Plan, as proposed to be
amended by Proposal Two and Proposal Three, are outlined below.

PURPOSE. The purposes of the 1998 Director Plan are to attract and retain
the best available personnel for service as non-employee directors of the
Company, to provide additional incentive to the non-employee directors and to
encourage their continued service on the Board.

ADMINISTRATION. The 1998 Director Plan is designed as an automatic grant
plan which generally does not require administration. However, if necessary, it
will be administered by the Board of Directors.

PROCEDURE FOR GRANTS. The 1998 Director Plan provides for the grant of
nonstatutory options to non-employee directors of the Company. Each such
director is granted an option to purchase 30,000 shares of Common Stock on the
date on which such person first becomes a director, whether through election by
the stockholders of the Company or appointment by the Board of Directors to fill
a vacancy. Thereafter, immediately following each Annual Meeting of Stockholders
at which such non-employee director is re-elected, each non-employee director
shall be granted an option to purchase 12,000 shares of Common Stock if, on such
date, he shall have served on the Company's Board of Directors for the preceding
three months. The 1998 Director Plan provides for the number of shares that are
included in any grant and the method of making a grant but does not provide for
a maximum number of option shares that may be granted to any one non-employee
director.

STOCK SUBJECT TO 1998 DIRECTOR PLAN. The maximum aggregate number of shares
of Common Stock that may be optioned and sold under the 1998 Director Plan is
150,000 shares, plus an annual increase to

be added on each anniversary date of the adoption of the 1998 Director 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 1998 Director Plan to
150,000 or (ii) a lesser amount determined by the Board of Directors.

TERMS OF OPTIONS. Options granted under the 1998 Director Plan have a term
of ten (10) years. Each option is evidenced by a stock option agreement between
the Company and the director to whom such option is granted.

EXERCISE OF OPTION. The initial option grant becomes exercisable
cumulatively to the extent of one-third (1/3rd) of the shares subject to the
option on each of the next three annual shareholders meetings. If the Company
does not hold its annual meeting in any given year, the vesting is on the
anniversary of the last regularly scheduled annual stockholders meeting.
Subsequent option grants are exercisable in full on the third annual meeting
following the date of grant. An option is exercised by giving written notice of
exercise to the Company, specifying the number of full shares of Common Stock to
be purchased and tendering payment to the Company of the purchase price. Payment
for shares issued upon exercise of an option may consist of cash, check,
exchange of securities held by the optionee for at least six (6) months or a
combination thereof.

OPTION PRICE. The option price is 100% of the fair market value of the
Company's Common Stock on the date of grant. The Board of Directors of the
Company determines such fair market value based upon the closing price of the
Common Stock in the Nasdaq National Market on the date the option is granted.

TERMINATION OF STATUS AS A DIRECTOR. If an optionee ceases to be a director
of the Company for any reason other than death or disability, vesting of the
option shall cease as of the date of termination. Thereafter, the option may be
exercised within two hundred and ten (210) days as to all or part of the shares
that the optionee was entitled to exercise at the date of termination. Provided,
however, that with respect to options that have an exercise price equal to or
greater than the fair market value of the underlying shares on the date of
obtaining stockholder approval of the amended and restated 1998 Director Plan in
2003, and with respect to options granted thereafter, in the event of a
director's retirement (which means a termination of status as a director where
such director has completed at least eight years of service as a director), the
director shall fully vest in and have the right to exercise his or her option as
to all of his or her options, including as to shares that would not have
otherwise been vested or exercisable. Thereafter, the option shall remain
exercisable for the lesser of (i) two (2) years following the date of the
director's retirement, or (ii) the expiration of the option's original term. If
such termination is due to death or disability, within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, the optionee (or the
optionee's legal representative) shall have the right to exercise an existing
unexercised option at any time within twelve (12) months of the termination
date, but only to the extent that the option would have been exercisable had the
optionee continued living or not been disabled and remained a director of the
Company for six (6) months after death or disability. In no event may an option
be exercised after its ten (10) year term has expired.

SUSPENSION OR TERMINATION OF OPTIONS. No option is exercisable by any
person after the expiration of ten (10) years from the date the option was
granted. 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 director accused of such misconduct). If
the Board of Directors (excluding the 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 director accused of such misconduct) shall act
fairly and shall give the optionee an opportunity to appear and present evidence
on the optionee's behalf at a hearing before a committee of the Board.

LIMITED TRANSFERABILITY OF OPTIONS. Except for the transfer of options to
estate planning entities permitted under Form S-8 and the Board in its sole
discretion and subject to such conditions as the Board

may impose, options may not be sold, ledged, 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.

ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of shares covered by
each outstanding option, and the exercise price thereof, shall be
proportionately adjusted in the event of any change, such as a stock split, in
the Company's capitalization. In the event of a stock dividend, each optionee
shall be entitled to receive, upon exercise of the option, the equivalent of any
stock dividend which the optionee would have received had he or she been, on the
record date for such dividend, the holder of record of the shares purchasable
upon such exercise.

CHANGE IN CONTROL. The 1998 Director Plan provides that, in the event of
(i) 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 or (ii) 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. If an option is assumed or substituted for, the option or
equivalent option shall continue to be exercisable for its original term and for
so long as the optionee serves as a director of the Company or a director of the
successor corporation. Following such assumption or substitution, if the
optionee's status as a director is terminated, other than upon a voluntary
resignation by the optionee, the option shall become fully vested and
exercisable. If the 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. 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.

AMENDMENT AND TERMINATION. The Board of Directors may terminate the 1998
Director Plan at any time and may amend the 1998 Director Plan at any time or
from time to time; provided, however, that amendments to the 1998 Director Plan
must be approved by the stockholders to the extent required by applicable law.
However, no action by the Board of Directors or stockholders may alter or impair
any option previously granted under the 1998 Director Plan without the consent
of the optionee. The 1998 Director Plan will terminate by its terms on November
24, 2008.

TAX INFORMATION. An optionee does not recognize any taxable income at the
time he or she is granted a nonstatutory stock option. Upon exercise, the
optionee recognizes taxable income generally measured by the excess of the then
fair market value of the shares over the exercise price. The Company is entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as ordinary income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE DIRECTOR PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES
NOT DISCUSS THE TAX CONSEQUENCES OF THE DIRECTOR'S DEATH OR THE PROVISIONS OF
THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
DIRECTOR MAY RESIDE.

PARTICIPATION IN THE 1998 DIRECTOR PLAN. In fiscal 2002, options to
purchase 25,000 shares of Common Stock were granted to all non-employee
directors. See "Election of Directors--Director Compensation" for the number of
stock options granted to each of the non-employee directors during the last
fiscal year.

Required Vote

If a quorum is present, the affirmative vote of a majority of the Votes
Cast will be required to approve the amendment to the 1998 Director Plan under
this Proposal Three.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE SECOND AMENDMENT OF THE COMPANY'S 1998 DIRECTOR
OPTION PLAN AS SET FORTH IN THIS PROPOSAL THREE

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

PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee of the Board of Directors has selected Deloitte &
Touche LLP, independent public accountants, to audit the financial statements
of the Company for the fiscal year ending September 27, 2003, and recommends
that stockholders vote for ratification of such appointment. Deloitte & Touche
LLP has audited the Company's financial statements since the fiscal year ended
September 25, 1976. Representatives of Deloitte & Touche LLP are expected to be
present at the meeting and will be afforded the opportunity to make a statement
if they desire to do so. The representatives of Deloitte & Touche LLP are also
expected to be available to respond to appropriate questions.

Audit Fees

The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte") for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended September 28, 2002 and
for the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for that fiscal year were $843,893.

Financial Information Systems Design and Implementation Fees

The Company did not engage Deloitte for professional services relating to
financial information systems design and implementation for the fiscal year
ended September 28, 2002.

All Other Fees

The aggregate fees billed by Deloitte for services rendered to the
Company, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees", for the fiscal
year ended September 28, 2002 were $414,354, which were pre-approved by the
Audit Committee.

The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence
and has concluded that the non-audit services provided by Deloitte & Touche LLP
are compatible with maintaining Deloitte & Touche LLP's independence.

Stockholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent public accountants is not required by the Company's
By-Laws or other applicable legal requirement. However, the Audit Committee is
submitting the selection of Deloitte & Touche LLP to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail
to ratify the selection, the Audit Committee and the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the
Audit Committee at its discretion may direct the appointment of a different
independent accounting firm at any time during the year if it determines that
such a change would be in the best interests of the Company and its
stockholders.

Vote Required

The affirmative vote of a majority of the Votes Cast will be required to
ratify the selection of Deloitte & Touche LLP as the Company's independent
public accountants for the fiscal year ending September 27, 2003.

THE AUDIT COMMITTEE UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 27, 2003

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

EXECUTIVE COMPENSATION

Officers

The names, ages and office of all of the executive officers of the
Company, as of September 28, 2002, are set forth below.

Name Age Office Held
---- --- --------------------------------------------------------

Bernard J. Couillaud, PhD .............. 58 President and Chief Executive Officer
John R. Ambroseo, PhD .................. 41 Executive Vice President and Chief Operating Officer
Helene Simonet ......................... 50 Executive Vice President and Chief Financial Officer
Robert J. Quillinan .................... 55 Executive Vice President, Mergers and Acquisitions
Vittorio Fossati-Bellani, PhD .......... 55 Executive Vice President, President and General Manager,
Coherent Telecom-Actives Group
Kevin McCarthy ......................... 46 Executive Vice President and Chief Information Officer
Ronald A. Victor ....................... 58 Executive Vice President, Human Resources
Scott H. Miller ........................ 48 Senior Vice President and General Counsel

There are no family relationships between any of the executive officers
and directors.

Ms. Simonet has served as our Executive Vice President and Chief Financial
Officer since April 2002. Ms. Simonet served as Vice President of Finance of
our former Medical Group and Vice President of Finance, Photonics Division from
December 1999 to April 2002. Prior to joining Coherent, she spent over twenty
years in senior finance positions at Raychem Corporation, in the Division and
Corporate organizations, including as Vice President of Finance of the Raynet
Corporation. Her last assignment was that of Chief Information Officer for
Raychem. Ms. Simonet has both a Master's and Bachelor degree from the
University of Leuven, Belgium.

Mr. Quillinan has served as our Executive Vice President, Mergers and
Acquisitions since April 2002 and as a member of our Board of Directors since
June 2001. Mr. Quillinan served as our Executive Vice President and Chief
Financial Officer from July 1984 through March 2002. Mr. Quillinan served as
our Vice President and Treasurer from March 1982 to July 1984 and as our
Corporate Controller from May 1980 to March 1982. Mr. Quillinan received his MS
degree in Accounting from Clarkson University and is a CPA.

Dr. Fossati-Bellani served as our Executive Vice President and as
President and General Manager of the Coherent Telecom-Actives Group since
September 2000. From September 1997 to September 2000, Dr. Fossati-Bellani
served as our Executive Vice President and as President and General Manager of
the Coherent Semiconductor Group. From May 1992 to September 1997, Dr.
Fossati-Bellani served as our Diode Laser Business Unit Manager. From December
1979, when he joined our Italian office, to May 1992, Dr. Fossati-Bellani
served in the capacity of Scientific Sales Engineer, Product Manager, Director
of Marketing, Director of Business Development, Scientific Business Unit
Manager and Diode Laser Business Unit Manager for the Coherent Laser Group. Dr.
Fossati-Bellani received his PhD degree in Physics from the University of
Milano, Italy.

Mr. McCarthy has served as our Executive Vice President and Chief
Information Officer since May 2000. From August 1999 to May 2000, he was Chief
Information Officer for Unisphere Solutions, Inc., a subsidiary of Siemens AG,
a large diversified industrial company. From September 1993 to July 1999, he
was Vice President Information Technology for General Instrument, Inc., a
company that develops and sells interactive video, voice and data products. Mr.
McCarthy received a BS degree from Lafayette College and an MBA from the
Wharton School of Business.

Mr. Victor has served as our Executive Vice President of Human Resources
since May 2000. From August 1999 to May 2000, he was our Corporate Vice
President of Human Resources. He was Vice President of Human Resources for the
Coherent Medical Group from September 1997 to August 1999. Between November
1996 and September 1997, he was Vice President Human Resources for Netsource
Communication, Inc., an internet advertisement and communication company. From
November 1995 to November 1996, Mr. Victor served as Vice President of Human
Resources for Micronics Computers, Inc., a manufacturer of computer components.
Between January 1982 and September 1995 he was a Vice President of Human
Resources of Syntex, a pharmaceutical company. Mr. Victor received a BA degree
from American International College and a MA degree from Springfield College.

Mr. Miller has served as our General Counsel since October 1988 and as
Senior Vice President since March 1994. Mr. Miller received a BA degree in
Economics from UCLA and a JD from Stanford Law School.

Summary Compensation

The following table shows, as to the Chief Executive Officer and each of
the other four most highly compensated executive officers whose salary plus
bonus exceeded $100,000, information concerning compensation awarded to, earned
by or paid for services to the Company in all capacities during the last three
fiscal years (to the extent that such person was the Chief Executive Officer
and/or executive officer, as the case may be, during any part of such fiscal
year):

Summary Compensation Table

Long-Term
Compensation
Awards
Securities
Underlying All Other
Name Year Salary ($) Bonus ($) Options Compensation
---- ---- -------- --------- ------------ ------------

Bernard J. Couillaud, PhD ............. 2002 $520,000 $197,949 50,000 $36,720(1)
Chairman of the Board of Directors, 2001 495,078 658,432 200,000 31,738
Former President and Chief 2000 422,503 519,459 110,000 30,064
Executive Officer

John R. Ambroseo, PhD ................. 2002 $380,016 $117,781 257,500 $22,191(2)
President and Chief Executive Officer, 2001 335,400 390,682 150,000 16,683
Former Executive Vice President and 2000 267,887 350,074 58,000 12,461
Chief Operating Officer

Robert J. Quillinan ................... 2002 $286,571 $109,362 25,000 $20,213(3)
Executive Vice President, Mergers 2001 284,634 233,666 70,000 15,920
and Acquisitions, Former Chief 2000 243,279 202,731 36,000 15,290
Financial Officer

Vittorio Fossati-Bellani, PhD ......... 2002 $280,010 $ 60,479 50,000 $19,481(4)
Executive Vice President, President 2001 266,547 228,835 75,000 15,004
and General Manager Coherent 2000 223,275 217,498 41,000 13,455
Telecom-Actives Group

Kevin McCarthy ........................ 2002 $223,864 $ 45,342 25,000 $10,319(5)
Executive Vice President and Chief 2001 235,690(6) 161,089 15,000 2,328
Information Officer 2000 120,993 31,312 40,000 199

----------
(1) Includes $31,612 contributed by the Company under defined contribution
plans and $5,108 in life insurance benefits.

(2) Includes $21,924 contributed by the Company under defined contribution
plans and $267 in life insurance benefits.

(3) Includes $18,001 contributed by the Company under defined contribution
plans and $2,212 in life insurance benefits.

(4) Includes $17,127 contributed by the Company under defined contribution
plans and $2,354 in life insurance benefits.

(5) Includes $9,576 contributed by the Company under defined contribution plans
and $743 in life insurance benefits.

(6) Includes $8,786 compensation related to relocation.

Stock Option Grants and Exercises

The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended September 28, 2002.

Option Grants in Last Fiscal Year

Individual Grants
------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees for Option Term (3)
Options In Fiscal Exercise Expiration ------------------------
Name Granted (#)(1) Year (2) Price ($/sh) Date 5% ($) 10% ($)
---- -------------- ---------- ------------ ---------- ---------- ----------

Bernard J. Couillaud, PhD ............. 50,000 4.03 $30.92 4/25/08 $ 525,788 $1,192,833
John R. Ambroseo, PhD ................. 257,500 20.73 $30.92 4/25/08 $2,707,807 $6,143,092
Robert J. Quillinan ................... 25,000 2.01 $30.92 4/25/08 $ 262,894 $ 596,417
Vittorio Fossati-Bellani, PhD ......... 50,000 4.03 $30.92 4/25/08 $ 555,788 $1,192,833
Kevin McCarthy ........................ 25,000 2.01 $30.92 4/25/08 $ 262,894 $ 596,417

----------

(1) The Company's 1987 Stock Option Plan, 1995 Stock Plan and 2001 Stock Option
Plan (collectively the "Option Plans") provide for the grant of options and
stock purchase rights to officers, employees and consultants of the
Company. Options granted under the Option Plans may be either "nonstatutory
options" or "incentive stock options." The exercise price is determined by
the Board of Directors or its Compensation Committee and, in the case of
incentive stock options, may not be less than 100% of the fair market value
of the Common Stock on the date of grant (110% in the case of grants to 10%
shareholders). The options expire not more than six years from the date of
grant and may be exercised only while the optionee is employed by the
Company or within such period of time after termination of employment as is
determined by the Board or its Compensation Committee at the time of grant.
The Board of Directors may determine when options granted may be
exercisable.

(2) The Company granted options to purchase an aggregate of 694,675 shares to
all employees other than executive officers and granted options to purchase
an aggregate of 547,500 shares to all executive officers as a group (8
persons), during fiscal 2002.

(3) This column sets forth hypothetical gains or "option spreads" for the
options at the end of their respective six-year terms, as calculated in
accordance with the rules of the Securities and Exchange Commission. Each
gain is based on an arbitrarily assumed annualized rate of compound
appreciation of the market price at the date of grant of 5% and 10% from
the date the option was granted to the end of the option term. The 5% and
10% rates of appreciation are specified by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices. The Company does not necessarily
agree that this method properly values an option. Actual gains, if any, on
option exercises are dependent on the future performance of the Company's
Common Stock and overall market conditions.

Amendments to Stock Options Granted Bernard Couillaud and Robert Quillinan

During the past fiscal year, the Company entered into management transition
agreements with Dr. Couillaud and Mr. Quillinan that amended the terms of
certain stock options. (Refer to Exhibits 10.13 and 10.14 to the Company's
Annual Report on Form 10-K for the year ended September 28, 2002, filed with the
Securities and Exchange Commission).

Under the terms of Dr. Couillaud's agreement, he was granted the right to
exercise his stock options vesting on February 1, 2003 (72,000 shares
exercisable at $49.875 per share) until February 1, 2006 even if his employment
with the Company is terminated prior to that date, provided that this period
shall be reduced to 90 days from the date (i) the Company determines Dr.
Couillaud has engaged in activities constituting "Cause" under Section 4(b) of
his agreement prior to February 1, 2006 or (ii) Dr. Couillaud voluntarily
terminates his

employment with the Company if such date is prior to September 30, 2003. With
respect to his stock options vesting on February 1, 2004 (38,000 shares
exercisable at $49.875 per share) and April 1, 2004 (200,000 shares at $32.50
per share) he was granted the right to exercise the options until March 5,
2005, even if Dr. Couillaud's employment with the Company is terminated prior
to that date, provided that the Company shall be entitled to cancel these
options, repurchase the stock issued upon their exercise for the exercise
price, or recapture the net proceeds received upon their exercise and sale if
(i) the Company determines Dr. Couillaud has engaged in activities constituting
"Cause" under Section 4(b) of his agreement prior to March 5, 2005 or (ii) Dr.
Couillaud voluntarily terminates his employment with the Company prior to
September 30, 2003.

Under the terms of Mr. Quillinan's agreement, he was granted the right to
exercise his stock options vesting on February 1, 2003 (25,000 shares
exercisable at $49.875 per share) until February 1, 2006 even if his employment
with the Company is terminated prior to that date, provided that this period
shall be reduced to 90 days from the date (i) the Company determines Mr.
Quillinan has engaged in activities constituting "Cause" under Section 4(b) of
his agreement prior to February 1, 2006 or (ii) Mr. Quillinan voluntarily
terminates his employment with the Company if such date is prior to April 30,
2003. With respect to his stock options vesting on February 1, 2004 (10,000
shares exercisable at $49.875 per share) and April 1, 2004 (70,000 shares at
$32.50 per share) he was granted the right to exercise the options until March
5, 2005, even if Mr. Quillinan's employment with the Company is terminated
prior to that date, provided that the Company shall be entitled to cancel these
options, repurchase the stock issued upon their exercise for the exercise
price, or recapture the net proceeds received upon their exercise and sale if
(i) the Company determines Mr. Quillinan has engaged in activities constituting
"Cause" under Section 4(b) of his agreement prior to March 5, 2005 or (ii) Mr.
Quillinan voluntarily terminates his employment with the Company prior to April
30, 2003.

Except as set forth above, Dr. Couillaud's and Mr. Quillinan's stock
options to purchase Coherent stock are governed by the provisions of the
applicable option agreements by and between Dr. Couillaud, Mr. Quillinan and
Coherent, respectively.

The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised during
the fiscal year ended September 28, 2002 and the value of unexercised options
at such date.

Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values

Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options at
Shares Value September 28, 2002 (#)(2) September 28, 2002 ($)(3)
Acquired on Realized --------------------------- ---------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------

Bernard J. Couillaud, PhD ......... 30,000 $140,310 460,000 122,000 $1,560,285 $0
John R. Ambroseo, PhD ............. 35,000 $747,488 41,230 450,500 $ 66,990 $0
Robert J. Quillinan ............... 7,016 $ 63,126 150,000 51,000 $ 406,395 $0
Vittorio Fossati-Bellani, PhD ..... 0 -- 18,000 166,000 $ 54,810 $0
Kevin McCarthy .................... 0 -- 20,000 60,000 $ 0 $0

----------

(1) The value realized is calculated based on the closing price of the
Company's Common Stock as reported by the Nasdaq National Market on the
date of exercise minus the exercise price of the option, and does not
necessarily indicate that the optionee sold such stock.

(2) The Company has not granted any stock appreciation rights and its stock
plans do not provide for the granting of such rights.

(3) The market value of underlying securities is based on the difference
between the closing price of the Company's Common Stock on September 28,
2002 of $18.92 (as reported by Nasdaq National Market) and the exercise
price.

Other Employee Benefit Plans

Employee Retirement and Investment Plan and Supplementary Retirement Plan

Effective January 1, 1979, the Company adopted the Coherent Employee
Retirement and Investment Plan. Employees become eligible to participate upon
their being hired by the Company. Under this plan, the Company will match
employee contributions to the plan up to a maximum of 6% of the individual's
employee earnings after one (1) year of service. The vesting schedule for the
Company matching funds is as follows: employees with two (2) years but less
than three (3) years of service are 20% vested, employees with three (3) years
but less than four (4) years of service are 40% vested, employees with four (4)
years but less than five (5) years of service are 80% vested, and employees
with five (5) years or more of service are 100% vested. Effective as of 1985,
the plan was amended and restated to conform the plan to new regulations and to
qualify under Section 401(k) of the Internal Revenue Code of 1986, as amended
to permit employees to make contributions to the plan from their pre-tax
earnings.

Effective January 1, 1990, the Company adopted the Supplementary
Retirement Plan, which provides that certain senior management, may contribute
income to a trust fund. The Company will match such contributions up to 6% of
the participant's income. Such contributions are subject to the same vesting
requirements as contributions made under the Employment Retirement and
Investment Plan.

Variable Compensation Plan

The Company's Variable Compensation Plan was designed to promote the
growth and profitability of the Company by providing incentive compensation in
keeping with targeted marketplace incentive rates to key employees who are
critical to the attainment of the Company's business objectives. The Plan
provides for the payment of quarterly cash bonuses to participants based upon
performance against pre-established goals for pre-tax profits, revenue and the
management of the Company's assets. Minimal performance thresholds are
established at the beginning of each fiscal year for the Company in general and
for each business unit.

Productivity Incentive Plan

Under the Company's Productivity Incentive Plan (the "Incentive Plan"),
450,000 shares of Common Stock were initially reserved, and as of the fiscal
year ended September 28, 2002, 83,148 shares of Common Stock were available for
issuance to employees of the Company and its designated subsidiaries who are
customarily employed for at least twenty hours per week. The purpose of the
Incentive Plan is to enhance an employee's proprietary interest in the Company
and to create an incentive for the Company's success.

The Incentive Plan provides for the quarterly distribution of cash or
Common Stock, at the election of each participant, based upon the quarterly
profitability of the Company. The amount of cash or number of shares of Common
Stock distributed to each participant is determined by dividing a participant's
"incentive compensation" by the fair market value of the Company's Common Stock
at the end of each three-month period.

Employee Stock Purchase Plan

The Company's Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors and approved by the stockholders in 1980. A
total of 4,575,000 shares of Common Stock have been reserved under the Purchase
Plan, and as of the end of fiscal year 2002, 1,187,424 shares of Common Stock
remained available for issuance thereunder. The Purchase Plan permits employees
who are employed for at least twenty hours per week to purchase Common Stock of
the Company, through payroll deductions at the lower of 85% of the fair market
value of the Common Stock at the beginning or at the end of each six-month
period. Payroll deductions may not exceed 10% of an employee's compensation.
The Purchase Plan provides for two offerings during each fiscal year, each
having a duration of six months.

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following reports and
the Performance Graph included herein shall not be incorporated by reference
into any such filings.

Introduction

The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company, and establishes the compensation
plans and specific compensation levels for executive officers. The Committee
strives to ensure that the Company's executive compensation programs will
enable the Company to attract and retain key people and motivate them to
achieve or exceed certain key objectives of the Company by making individual
compensation directly dependent on the Company's achievement of certain
financial goals, such as profitability and asset management and by providing
rewards for exceeding those goals.

Compensation Programs

Base Salary. The Committee establishes base salaries for executive
officers, normally within ten percent of the average paid for comparable
positions at other similarly sized companies as set forth in national and local
compensation surveys. Base pay increases vary according to individual
contributions to the Company's success and comparisons to similar positions
within the Company and at other comparable companies.

Variable Compensation Plan. Each executive officer participates in the
Variable Compensation Plan which provides for the payment of a quarterly amount
determined by a formula based on pre-tax profits and asset management over
preset threshold levels.

Stock Options. The Committee believes that stock options provide
additional incentive to officers to work towards maximizing stockholder value.
These options are provided through initial grants at or near the date of hire
and through subsequent periodic grants. Options granted by the Company to its
executive officers and other employees have exercise prices equal to the fair
market value at the time of grant. Options vest and become exercisable at such
time as determined by the Board. The initial option grant is designed to be
competitive with those of comparable companies for the level of the job that
the executive holds and is designed to motivate the officer to make the kind of
decisions and implement strategies and programs that will contribute to an
increase in the Company's stock price over time. Periodic additional stock
options within the comparable range for the job are granted to reflect the
executives' ongoing contributions to the Company, to create an incentive to
remain at the Company and to provide a long-term incentive to achieve or exceed
the Company's financial goals.

Other. In addition to the foregoing, officers participate in compensation
plans available to all employees, such as a quarterly profit sharing plan and
participation in both the Company's 401(k) retirement plan and employee stock
purchase plan. See "Executive Compensation--Other Employee Benefit Plans."

Compensation of Chief Executive Officer

The factors considered by the Compensation Committee in determining the
compensation of the Chief Executive Officer, in addition to survey data,
include the Company's operating and financial performance, as well as his
leadership and establishment and implementation of strategic direction for the
Company.

The Compensation Committee considers stock options to be an important
component of the Chief Executive Officer's compensation as a way to reward
performance and motivate leadership for long-term growth and profitability. In
fiscal 2002, Dr. Couillaud was granted options to purchase 50,000 shares with
an exercise price equal to the fair market value at date of grant ($30.92 per
share) which becomes exercisable at the end of three years. In anticipation of
his becoming President and Chief Executive Officer on October 1, 2002, Dr.
Ambroseo was granted stock options during the 2002 fiscal year for 257,500
shares with an exercise price equal to $30.92, the fair market value at the
date of grant. This option vests between April 2003 and April 2006.

Compensation Limitations

Under Section 162(m) of the Internal Revenue Code, adopted in August 1993,
and regulations adopted thereunder by the Internal Revenue Service,
publicly-held companies may be precluded from deducting certain compensation
paid to an executive officer in excess of $1.0 million in a year. The
regulations exclude from this limit performance-based compensation and stock
options provided certain requirements, such as stockholder approval, are
satisfied. The Company plans to take actions, as necessary, to insure that its
stock option plans and executive annual cash bonus plans qualify for exclusion.

Respectively submitted by the
COMPENSATION COMMITTEE

Jerry E. Robertson, Chair
Henry E. Gauthier
John H. Hart

Dated: February 5, 2003

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

In accordance with its written charter adopted by the Board of Directors
("Board"), the Audit Committee of the Board ("Committee") assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. During
the fiscal year, the Committee met 15 times, and the Committee chair, as
representative of the Committee, discussed the interim financial information
contained in each quarterly earnings announcement with the Company's Chief
Financial Officer, controller and independent auditors prior to public release.

In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed
with the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence. The
Committee also discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal
controls and the internal audit function's organization, responsibilities,
budget and staffing. The Committee reviewed with both the independent and the
internal auditors their audit plans, audit scope and identification of audit
risks.

The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Committee also discussed the results of the
internal audit examinations.

The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended September 28, 2002 with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.

Based on the above-mentioned review and discussions with management and
the independent public accountants, the Committee recommended to the Board that
the Company's audited financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended September 28, 2002 for filing with the
Securities and Exchange Commission. The Committee also recommended the
reappointment, subject to shareholder approval, of Deloitte & Touch LLP, as the
Company's independent auditors, and the Board concurred in such recommendation.

Respectively submitted by
THE AUDIT COMMITTEE

Charles W. Cantoni, Chair
Frank P. Carrubba
John H. Hart
Jerry E. Robertson

Dated: February 5, 2003

COMPANY STOCK PRICE PERFORMANCE

The following graph shows a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvestment basis and based on a
$100 investment, from September 27, 1997 through September 28, 2002 comparing
the return on the Company's Common Stock with the Standard & Poors 500 Stock
Index and the Standard & Poors Small Cap 600 Stock Index. No dividends have
been declared or paid on the Company's Common Stock during such period. The
stock price performance shown on the graph following is not necessarily
indicative of future price performance.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG COHERENT, INC.
THE S&P 500 INDEX AND THE S&P SMALL CAP 600 INDEX

[TOTAL SHAREHOLDER RETURNS CHART]

Fiscal Year End Coherent, Inc. S&P 500 Index S&P Small Cap 600 Index
----------------- ---------------- --------------- ------------------------

9/27/97 100.00 100.00 100.00
9/26/98 35.51 112.26 83.55
10/2/99 79.91 139.67 95.52
9/30/00 254.21 158.22 119.76
9/29/01 106.17 116.10 107.05
9/28/02 70.73 93.69 105.11

The information contained above under the captions "Report of the
Compensation Committee of the Board of Directors," "Report of the Audit
Committee of the Board of Directors" and "Company Stock Price Performance"
shall not be deemed to be "soliciting material" or to be "filed" with the SEC,
nor will such information be incorporated by reference into any future SEC
filing except to the extent that Coherent, Inc. specifically incorporates it by
reference into such filing.

CERTAIN TRANSACTIONS

Since the beginning of the Company's last fiscal year, there has not been
nor is there currently proposed any transaction or series of similar
transactions to which the Company was or is to be a party in which the amount
involved exceeds $60,000 and in which any director, executive officer, holder
of more than 5% of the Common Stock of the Company or any member of the
immediate family of any of the foregoing persons had or will have a direct or
indirect material interest other than the transactions described below.

Loans to Executive Officers

The following table sets forth information with respect to all executive
officers of the Company who had indebtedness outstanding during the past fiscal
year. This indebtedness arose as a result of the delivery of promissory notes
in connection with the exercise of stock options.

Largest Amount
New Loans Outstanding Balance at
Name During 2002 Interest Rates Maturity Date(s) During 2002 September 28, 2002
---- ----------- -------------- ---------------- -------------- ------------------

John Ambroseo, PhD ................ $541,017 4.75% 1/25/07 $ 541,017 $ 541,017
Bernard J. Couillaud, PhD ......... $774,306 4.75-8.50% 3/1/04-4/26/07 $1,118,755 $1,118,755
Vittorio Fossati-Bellani, PhD ..... $ 77,649 6.50% 8/31/06 $ 77,649 $ 77,649
Scott H. Miller ................... $ -- 4.83-6.71% 3/1/04-5/24/05 $ 608,609 $ 608,609
Robert J. Quillinan ............... $162,506 4.75% 2/27/07 $ 162,506 $ 162,506

All promissory notes are full recourse and are secured by the shares of
Common Stock of the Company issued upon exercise of the options. Interest is
paid annually. The Company has discontinued this program following adoption of
the Sarbanes-Oxley Act.

Indemnification

The Company has entered into indemnification agreements with each of its
directors and officers. Such indemnification agreements require the Company to
indemnify its directors and officers to the fullest extent permitted by
Delaware law.

Conflict of Interest Policy

The Company believes that all transactions with affiliates described above
were made on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties. The Company's policy is to require
that a majority of the independent disinterested outside directors on the Board
approve all future transactions between Coherent and its officers, directors,
principal stockholders and their affiliates. Such transactions will continue to
be on terms no less favorable to the Company than it could obtain from
unaffiliated third parties. All future transactions between the Company and its
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the Board, including a majority of the independent
and disinterested outside directors, and will continue to be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.

See "Election of Directors--Compensation Committee Interlocks and Insider
Participation" for a description of Mr. Gauthier's agreement with the Company
relating to medical, dental and life insurance.

OTHER MATTERS

The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form Proxy to vote the shares they represent as
the Board of Directors may recommend.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ John R. Ambroseo
John R. Ambroseo
President and Chief Executive Officer

Dated: February 21, 2003

EXHIBIT A

CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
COHERENT, INC.

Purpose:

The primary function of the Audit Committee is to assist the Board of
Directors of Coherent, Inc. (the "Company") in fulfilling its oversight
responsibilities by reviewing: financial reports and certain other financial
information provided by the Company to any government body or the public; the
Company's system of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have approved; and the
Company's auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage continuous
improvement of, and should foster adherence to, the Corporation's policies,
procedures and practices at all levels. Specifically, the purpose of the Audit
Committee of the Board of Directors shall be to:

o Appoint and oversee the independent auditors employed by the Company
(including resolution of disagreements between management and the
auditors regarding financial reporting) for the purpose of preparing or
issuing audited financial statements and related work; such independent
public accounting firm shall report directly to the Audit Committee;

o Oversee the accounting and financial reporting processes of the Company;

o Assist the Board in oversight and monitoring of (i) the quality and
integrity of the Company's financial statements, (ii) the Company's
compliance with legal and regulatory requirements, (iii) the independent
auditor's qualifications, independence and performance, (iv) the
internal auditor's performance and (v) the Company's internal accounting
and financial controls;

o Prepare the report that the rules of the Securities and Exchange
Commission (the "SEC") require be included in the Company's annual proxy
statement;

o Provide the Company's Board with the results of its monitoring and
recommendations derived therefrom; and

o Provide to the Board such additional information and materials as it may
deem necessary to make the Board aware of significant financial matters
that require the attention of the Board.

In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.

Membership:

The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors. The Audit Committee will consist of at
least three members of the Board of Directors. The members of the Committee
shall be elected by the Board until their successors shall be duly elected and
qualified. Unless a Chair is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the full Committee
membership. The Chair shall be responsible for leadership of the committee,
including preparing the agenda, presiding over meetings, making committee
assignments and reporting to the Board of Directors. The Chairperson will also
maintain regular liaison with the CEO, CFO, lead independent audit partner and
director of internal audit.

Members of the Audit Committee must meet the following criteria (as well
as any criteria required by the SEC):

o Each member will be an independent director, as defined in (i) NASDAQ
Rule 4200 and (ii) the rules of the SEC;

A-1

o Each member will be able to read and understand fundamental financial
statements, in accordance with the NASDAQ National Market Audit
Committee requirements. Committee members may enhance their familiarity
with finance and accounting by participating in educational programs
conducted by the Corporation and or outside consultants; and

o At least one member will have accounting or related financial management
competency in order to be an "audit committee financial expert" as
defined by the SEC. The board of Directors shall have the discretion to
determine members' conformity to these qualifications.

Responsibilities:

The responsibilities of the Audit Committee shall include:

o Reviewing on a continuing basis the adequacy of the Company's system of
internal controls, including meeting periodically with the Company's
management and the independent auditors to review the adequacy of such
controls and to review before release the disclosure regarding such
system of internal controls required under SEC rules to be contained in
the Company's periodic filings and the attestations or reports by the
independent auditors relating to such disclosure;

o Appointing, compensating and overseeing the work of the independent
auditors (including resolving disagreements between management and the
independent auditors regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work;

o Pre-approving audit and non-audit services provided to the Company by
the independent auditors (or subsequently approving non-audit services
in those circumstances where a subsequent approval is necessary and
permissible); in this regard, the Audit Committee shall have the sole
authority to approve the hiring and firing of the independent auditors,
all audit engagement fees and terms and all non-audit engagements, as
may be permissible, with the independent auditors; reviewing and
providing guidance with respect to the external audit and the Company's
relationship with its independent auditors by (i) reviewing the
independent auditors' proposed audit scope, approach and independence;
(ii) obtaining on a periodic basis a statement from the independent
auditors regarding relationships and services with the Company which may
impact independence and presenting this statement to the Board of
Directors, and to the extent there are relationships, monitoring and
investigating them; (iii) reviewing the independent auditors' peer
review conducted every three years; (iv) discussing with the Company's
independent auditors the financial statements and audit findings,
including any significant adjustments, management judgments and
accounting estimates, significant new accounting policies and
disagreements with management and any other matters described in SAS No.
61, as may be modified or supplemented; and (v) reviewing reports
submitted to the audit committee by the independent auditors in
accordance with the applicable SEC requirements;

o Reviewing and discussing with management and the independent auditors
the annual audited financial statements and quarterly unaudited
financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," prior to filing the Company's Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q, respectively, with the SEC;

o Directing the Company's independent auditors to review before filing
with the SEC the Company's interim financial statements included in
Quarterly Reports on Form 10-Q, using professional standards and
procedures for conducting such reviews;

o Conducting a post-audit review of the financial statements and audit
findings, including any significant suggestions for improvements
provided to management by the independent auditors;

o Reviewing before release the unaudited quarterly operating results in
the Company's quarterly earnings release and reviewing financial
guidance to be provided to the public;

o Overseeing compliance with the requirements of the SEC for disclosure of
auditor's services and audit committee members, member qualifications
and activities.

o Reviewing the Company's internal audit function quarterly and reviewing
the annual internal audit plan;

A-2

o Reviewing, approving and monitoring the Company's code of ethics for its
senior financial officers to be adopted prior to September 30, 2003;

o Reviewing management's monitoring of compliance with the Company's
standards of business conduct and with the Foreign Corrupt Practices
Act;

o Reviewing, in conjunction with counsel, any legal matters that could
have a significant impact on the Company's financial statements;

o If necessary, instituting special investigations with full access to all
books, records, facilities and personnel of the Company;

o As appropriate, obtaining advice and assistance from outside legal,
accounting or other advisors; reviewing and approving in advance any
proposed related party transactions; the Company shall provide the Audit
Committee with sufficient funding for these services;

o Reviewing its own charter, structure, processes and membership
requirements;

o Providing a report in the Company's proxy statement in accordance with
the rules and regulations of the SEC; and

o Establishing procedures for receiving, retaining and treating complaints
received by the Company regarding accounting, internal accounting
controls or auditing matters and procedures for the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.

Meetings:

The Audit Committee will meet at least four times each year. The Audit
Committee may establish its own schedule, which it will provide to the Board of
Directors in advance.

The Audit Committee will meet separately with the Chief Executive Officer
and separately with the Chief Financial Officer of the Company at such times as
are appropriate to review the financial affairs of the Company. The Audit
Committee will meet separately with the independent auditors of the Company, at
such times as it deems appropriate, but not less than quarterly, to fulfill the
responsibilities of the Audit Committee under this charter.

Minutes:

The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.

Reports:

In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Audit Committee will
summarize its examinations and recommendations to the Board of Directors as may
be appropriate, consistent with the Committee's charter.

Compensation:

Members of the Audit Committee shall receive such fees, if any, for their
service as Audit Committee members as may be determined by the Board of
Directors in its sole discretion. Fees may be paid in such form of
consideration as is determined by the Board of Directors.

Members of the Audit Committee may not receive any compensation from the
Company except the fees that they receive for service as a member of the Board
of Directors or any committee thereof.

Delegation of Authority:

The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to pre-approve audit and permissible non-audit
services, provided such pre-approval decision is presented to the full Audit
Committee at its scheduled meetings.

A-3

COHERENT, INC.

1998 DIRECTOR OPTION PLAN

Amended and Restated Effective as of the Date of Obtaining
Stockholder Approval in 2003

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 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) "Option" means a stock option granted pursuant to the Plan.

(k) "Optioned Stock" means the Common Stock subject to an Option.

(l) "Optionee" means a Director who holds an Option.

(m) "Outside Director" means a Director who is not an Employee.

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

(o) "Plan" means this 1998 Director Option Plan.

(p) "Retirement" means a termination of status as a Director of an
individual who has completed at least eight (8) years of service as
a Director.

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(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 150,000 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 150,000 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.

4. Administration and Grants of Options under the Plan.

(a) Automatic Grants. Except as provided in Section 4(b) hereof, 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 30,000 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.

(iii) Each Outside Director shall be automatically granted an Option
to purchase 12,000 Shares (a "Subsequent Option") immediately following each
annual meeting of stockholders at which such Outside Director is re-elected
(beginning with the 2003 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 ten (10) 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, the First Option shall become
exercisable cumulatively to the extent of one-third of the Shares subject to
such option on each of the next three annual stockholders meetings of the
Company, provided that the Optionee continues to serve as a Director on such
dates, and provided further that if the Company fails to have an annual
stockholder meeting in any of these three years, the vesting date shall be the
anniversary of the last stockholder meeting held.

(E) subject to Section 8(e) and 10 hereof, each Subsequent
Option shall become exercisable with respect to 100% of the Shares subject to
such option on the date of the Company's annual stockholder meeting held in the
third calendar year following the year in which the Subsequent Option was
granted, provided

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that the Optionee continues to serve as a Director on such date, and provided
further that if the Company fails to have an annual stockholder meeting in any
of these three years, the vesting date shall be the anniversary of the last
stockholder meeting held.

(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) Limited Discretionary Option Grants. The Board shall have the
authority to make discretionary Option grants to Outside Directors covering up
to, in the aggregate, no more than fifty thousand (50,000) Shares on or prior to
December 31, 2003. After December 31, 2003, all grants under the Plan shall only
be made automatically in accordance with Section 4(a) hereof. Any such
discretionary option grants shall be made with the same terms and conditions as
the automatic grants, as specified under Section 4(a)(v) hereof.

(c) 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 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.

A-6

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 deathDisability or Retirement), 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 ten (10) 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 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.

(e) Retirement of Optionee. With respect to any Options with an exercise
price equal to or greater than the Fair Market Value of the underlying Shares on
the date of obtaining stockholder approval of the amended and restated Plan in
2003, and with respect to any Options granted hereunder thereafter, in the event
of an Optionee's Retirement, the Optionee shall fully vest in and have the right
to exercise his or her Option as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. Thereafter, the

A-7

Option shall remain exercisable for the lesser of (i) two (2) years following
the date of the Optionee's Retirement, or (ii) the expiration of the Option's
original term.

9. Limited Transferability of Options. Except for the transfer of Options
to estate planning entities permitted under Form S-8 and the Board in its sole
discretion and subject to such conditions as the Board may impose, 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.

(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

A-8

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. 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.

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.

A-9

All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.

In order to assure your representation at the meeting, you are requested to
complete, sign and date this enclosed proxy card as promptly as possible and
return it in the enclosed envelope.

PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COHERENT, INC.
ANNUAL MEETING OF STOCKHOLDERS
March 27, 2003

The undersigned stockholder of COHERENT, INC., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated February 18, 2003, and hereby appoints John R.
Ambroseo and Helene Simonet, and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the Annual Meeting of Stockholders
of COHERENT, INC. to be held on March 27, 2003 at 5:30 p.m., local time, at the
Company's principal offices located at 5100 Patrick Henry Drive, Santa Clara,
California 95054 and at any adjournment(s) thereof and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and there
personally present, on all the matters set forth on the reverse side.

THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED TO ENSURE AS MANY OF THE NOMINEES FOR THE ELECTION OF
DIRECTORS SET FORTH IN PROPOSAL ONE ARE ELECTED AS DIRECTORS, FOR THE AMENDMENT
OF THE COMPANY'S 1998 DIRECTOR OPTION PLAN SET FORTH IN PROPOSAL TWO, FOR THE
AMENDMENT OF THE COMPANY'S 1998 DIRECTOR OPTION PLAN SET FORTH IN PROPOSAL
THREE, FOR THE RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS
MAY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.

SEE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE
REVERSE REVERSE
SIDE SIDE
--------------------------------------------------------------------------------
COHERENT, INC. THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398

[ X ] Please mark
votes as in
this example.

1. To elect eight directors to serve for the ensuing year and until their
successors are duly elected;

Nominees: (01) Bernard J. Couillaud; (02) Henry E. Gauthier; (03) John
R. Ambroseo; (04) Charles W. Cantoni; (05) Frank P. Carrubba; (06) John
H. Hart; (07) Jerry E. Robertson; (08) Robert J. Quillinan
(Proposal One);

[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES

[ ]
--------------------------------
For all nominees except as noted above

FOR AGAINST ABSTAIN

2. To approve the first amendment to the Company's 1998 Director
Option Plan (Proposal Two); [ ] [ ] [ ]

3. To approve the second amendment to the Company's 1998 Director
Option Plan (Proposal Three); and [ ] [ ] [ ]

4. To ratify the appointment of Deloitte & Touche LLP as independent
public accountants to the Company for the fiscal year ending
September 27, 2003 (Proposal Four); and [ ] [ ] [ ]

5. To transact such other business as may properly be brought before
the meeting and any adjournment(s) thereof.

The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.

Stockholders of record at the close of business on February 7, 2003 are entitled
to notice of and to vote at the meeting.

(This Proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)

Signature: Date:
----------------------------- ------------