SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
COHERENT, INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:"
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(2) "Aggregate number of securities to which transaction
applies:"
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(3) "Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined."
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(4) "Proposed maximum aggregate value of transaction:"
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(5) "Total fee paid:"
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/ / Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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(2) "Form, Schedule or Registration Statement No.:"
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(3) "Filing Party:"
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(4) "Date Filed:"
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[COHERENT LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 23, 2001
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
COHERENT, INC. (the "Company"), a Delaware corporation, will be held on
March 23, 2001 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 six directors to serve for the ensuing year and until their
successors are duly elected (Proposal One);
2. To approve an amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock, $.01 par value,
by 450,000,000 shares, from 50,000,000 shares to 500,000,000 shares
(Proposal Two);
3. To approve an amendment to the Company's 1995 Stock Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by
5,000,000 shares, from 5,500,000 shares to 10,500,000 shares (Proposal
Three);
4. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants to the Company for the fiscal year ending September 29, 2001
(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 9, 2001 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/ BERNARD J. COUILLAUD
Bernard J. Couillaud
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Santa Clara, California
February 22, 2001
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.
COHERENT, INC.
5100 PATRICK HENRY DRIVE
SANTA CLARA, CALIFORNIA 95054
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PROXY STATEMENT
---------------------
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 23, 2001 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 22, 2001 to all stockholders entitled
to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on February 9, 2001 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. At the Record Date, 27,379,452 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."
The cost of this solicitation will be borne by the Company. The Company has
retained the services of D.F. King & Co., Inc. (the "Solicitor") to aid in the
solicitation of proxies from brokers, bank nominees and other institutional
owners. The Company estimates that it will pay the Solicitor a fee not to exceed
$3,500 for its services and will reimburse the Solicitor for certain
out-of-pocket expenses estimated to be $5,000. In addition, 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. Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation, personally or
by telephone or telegram.
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 matter 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.
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 2002 Annual Meeting of
Stockholders in March 2002 and to mail proxy statements relating to such meeting
in February 2002. Proposals of stockholders of the Company that are intended to
be presented by such stockholders at the 2002 Annual Meeting must be received by
the Company no later than October 25, 2001 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. If a
stockholder intends to submit a proposal at the Company's 2002 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 requirements set forth in the Securities Exchange Act of
1934, as amended ("the Exchange Act"), no later than January 8, 2002, then the
proxy holders will be allowed to use their discretionary authority when and if
the proposal is raised at the Company's 2002 Annual Meeting of Stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of 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
2
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 2000, 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 9, 2001 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 Securities Exchange Act of 1934, as amended (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.
NUMBER OF PERCENT
NAME AND ADDRESS SHARES(1) OF TOTAL
---------------- --------- --------
Oppenheimer Funds, Inc. (2)................................. 3,022,000 11.04%
Two World Trade Center, 31st Floor
New York, NY 10048
PRIMECAP Management (3)..................................... 2,420,000 8.84
225 S. Lake Ave, #400
Pasadena, CA 91101
Franklin Advisers, Inc. (4)................................. 2,545,193 9.30
777 Mariners Island Blvd., 7th Floor
San Mateo, CA 94404
Bernard, J. Couillaud, PhD (5).............................. 192,618 *
Henry E. Gauthier (6)....................................... 102,130 *
Robert J. Quillinan (7)..................................... 70,694 *
John Ambroseo, PhD (8)...................................... 37,855 *
Vittorio Fossati-Bellani, PhD (9)........................... 33,824 *
James L. Taylor (10)........................................ 32,861 *
Frank Carrubba (11)......................................... 30,000 *
Thomas Sloan Nelsen (12).................................... 25,500 *
Jerry Robertson (13)........................................ 25,000 *
Charles W. Cantoni (14)..................................... 17,000 *
John H. Hart (15)........................................... 5,000 *
All directors and executive officers as a group (14 persons)
(16)...................................................... 630,228 2.27
------------------------
* 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
3
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 10, 2001, are deemed outstanding. Such shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of
any other person.
(2) As reported on Form SC 13G/A filed with the Securities and Exchange
Commission on May 9, 2000.
(3) As reported on Form SC 13G/A filed with the Securities and Exchange
Commission on September 13, 2000.
(4) As reported on Form SC 13G/A filed with the Securities and Exchange
Commission on February 12, 2001. Includes 157,993 shares owned by Franklin
Management, Inc.
(5) Includes 144,000 shares issuable upon exercise of options held by
Dr. Couillaud which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(6) Includes 59,000 shares issuable upon exercise of options held by
Mr. Gauthier which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(7) Includes 39,744 shares issuable upon exercise of options held by
Mr. Quillinan which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(8) Includes 17,230 shares issuable upon exercise of options held by
Dr. Ambroseo which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(9) Includes 2,614 shares issuable upon exercise of options held by
Dr. Fossati-Bellani which are currently exercisable or will become
exercisable within 60 days of February 9, 2001.
(10) Includes 32,000 shares issuable upon exercise of options held by
Mr. Taylor which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(11) Includes 15,000 shares issuable upon exercise of options held by
Mr. Carrubba which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(12) Includes 10,000 shares issuable upon exercise of options held by
Dr. Nelsen which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(13) Includes 10,000 shares issuable upon exercise of options held by
Mr. Robertson which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(14) Includes 7,000 shares issuable upon exercise of options held by
Mr. Cantoni which are currently exercisable or will become exercisable
within 60 days of February 9, 2001.
(15) Includes 5,000 shares issuable upon exercise of options held by Mr. Hart
which are currently exercisable or will become exercisable within 60 days
of February 9, 2001.
(16) Includes an aggregate of 355,588 options which are currently exercisable
or will become exercisable within 60 days of February 9, 2001.
4
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of six (6) directors is 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. Thomas Sloan Nelsen has declined to stand for re-election.
DIRECTOR
NAME OF DIRECTOR AGE SINCE PRINCIPAL OCCUPATION
---------------- -------- -------- --------------------------------------
Bernard J. Couillaud, PhD............. 56 1996 President and Chief Executive Officer
of the Company
Henry E. Gauthier (1) (3)............. 60 1983 Chairman of the Board of Directors of
the Company
Charles W. Cantoni (2) (3)............ 65 1983 Owner, Cantoni Consulting
Frank P. Carrubba (2) (3)............. 63 1989 Retired Chief Technical Officer,
Phillips Electronics N.V.
John H. Hart (1) (2).................. 54 2000 Sr. Vice President and Chief Technical
Officer, 3Com Corporation
Jerry E. Robertson (1) (2)............ 68 1994 Retired Executive Vice President, Life
Sciences Sector and Corporate
Services Division, 3M
------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee
There is no family relationship between any director or executive officer of
the Company.
5
Dr. Couillaud has served as our President and Chief Executive Officer as
well as a member of our Board of Directors since July 1996. Dr. Couillaud served
as Vice President and General Manager of the Coherent Laser Group from
March 1992 to July 1996. From July 1990 to March 1992, Dr. Couillaud served as
Manager of our Advanced Systems Business Unit, and from September 1987 to
July 1990 he served as Director of Research and Development for the Coherent
Laser Group. From November 1983, when he joined us, to September 1987,
Dr. Couillaud held various managerial positions with us. Dr. Couillaud received
his PhD in Chemistry from Bordeaux University, Bordeaux, France.
Mr. Gauthier has served on our Board of Directors since 1983 and as our
Chairman of the Board since 1997. From August 1988 until his retirement in
June 1996, Mr. Gauthier served as our President and Chief Operating Officer. He
served as President and Chief Executive Officer of Coherent, Inc. from
March 1983 through July 1988 and as President of Coherent General, Inc. from
June 1986 through January 1987. Mr. Gauthier served as General Manager of the
Coherent Medical Group from May 1987 through July 1988.
Mr. Cantoni has served on our Board of Directors since 1983. Since
June 1998, Mr. Cantoni has been providing management and medical consulting
services through Cantoni Consulting, of which Mr. Cantoni is the founder. From
October 1994 to June 1998, Mr. Cantoni served as Vice President of Quinton
Instruments, Inc., a manufacturer of medical instrumentation products.
Mr. Carrubba has served on our Board of Directors since 1989. From
September 1991 to April 1997, Mr. Carrubba served as Executive Vice President
and Chief Technical Officer of Phillips Electronics, N.V., a large consumer
electronics company. Mr. Carrubba is currently retired. Mr. Carrubba serves as a
member of the Board of Directors of Exar Corporation, a manufacturer of
mixed-signal integrated circuits for the communications and video and imaging
markets.
Mr. Hart has served on our Board of Directors since March 2000. Since
September 1990, Mr. Hart served as a Senior Vice President and Chief Technical
Officer of 3Com Corporation, a manufacturer of data network systems.
Mr. Robertson has served on our Board of Directors since 1994. From 1986 to
1994, Mr. Robertson served as Executive Vice President of the Life Sciences
Sector and Corporate Services Division of 3M, a large diversified company whose
businesses include selling health care products. Mr. Robertson serves as a
member of the Board of Directors of Cardinal Health, Inc., Steris Corporation
and Choice Hotels International. Mr. Robertson is currently retired.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year ended September 30, 2000. No director serving during such fiscal
year attended fewer than 75% 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 Nominating Committee.
The Audit Committee of the Board of Directors, which consists of directors
Cantoni, Carrubba, Nelsen and Robertson, held four meetings during the last
fiscal year. The Audit Committee recommends engagement of the Company's
independent public accountants. In addition, the Audit Committee is primarily
responsible for approving the services performed by the Company's
6
independent public accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors consists of directors
Robertson, Gauthier, and Hart, and held three meeting 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 Nominating Committee was established in January 1998 and consists of
directors Carrubba, Gauthier and Cantoni. The Nominating Committee held one
meeting during the last fiscal year. The Nominating Committee reviews candidates
for officers and directors and makes recommendations with respect to such
candidates. The 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 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 2000, members of the Board of Directors who were not
employees of the Company received $16,000 plus $1,500 per meeting attended plus
$750 per committee meeting attended and were reimbursed for their expenses
incurred in attending such meetings.
The Company's 1990 Directors' Stock Option Plan (the "Directors' Option
Plan") was adopted by the Board of Directors on December 8, 1989 and was
approved by the stockholders on March 29, 1990. The Directors' Option 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 Directors' Option Plan
terminated on December 8, 1999 and no further options will be granted under this
plan. The Directors' Option Plan provided for the automatic and
non-discretionary grant of a non-statutory stock options 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 Directors' Option
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 shall be equal to the fair market value of the Common
Stock on the date of grant of the options.
Three non-employee directors each have been granted options to purchase
65,000 shares of the Company's Common Stock under the Directors' Option 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 such 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 February 9, 2001, options to purchase 295,000 shares of
the Company's Common Stock had been granted under the Directors' Option Plan.
7
The Company's 1998 Directors' Stock Option Plan (the "1998 Directors' 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 Directors' 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 Directors' Option Plan which
expired on December 8, 1999. Like its predecessor, the 1998 Directors' Plan
provides for the automatic and non-discretionary grant of a non-statutory stock
options 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.
Five non-employee directors have each been granted options to purchase 5,000
shares of the Company's Common Stock under the 1998 Directors' Plan at a
weighted average exercise price of $75.75. One non-employee director has been
granted options to purchase 20,000 shares of the Company's Common Stock under
such plan at a weighted average exercise price of $75.75 per share. As of
February 9, 2001, options had been granted to purchase 45,000 shares of the
Company's Common Stock under the 1998 Directors' Plan.
The following table shows options granted to each director of the Company
during the last fiscal year. All options were granted under the 1998 Directors'
Plan, except for the options granted to Mr. Couillaud, which were granted under
the Company's 1995 Stock Plan.
OPTION GRANTS TO DIRECTORS DURING LAST FISCAL YEAR
NAME NUMBER OF OPTIONS
---- -----------------
Bernard Couillaud........................................... 110,000
Henry E. Gauthier........................................... 5,000
Charles W. Cantoni.......................................... 5,000
Frank P. Carrubba........................................... 5,000
John H. Hart................................................ 20,000
Thomas Sloan Nelsen, MD..................................... 5,000
Jerry E. Robertson.......................................... 5,000
OPTION EXERCISES IN LAST FISCAL YEAR BY DIRECTORS
The following table shows, as to each non-employee director, information
concerning options exercised under the Directors' Option Plan during the last
fiscal year. No options granted under the 1998 Directors' Plan were exercised
during the last fiscal year.
8
OPTION EXERCISES IN LAST FISCAL YEAR BY DIRECTORS
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1)
---- --------------- -----------
Charles W. Cantoni......................................... 8,000 $256,188
Frank Carrubba............................................. 5,000 313,438
Thomas Sloan Nelsen, MD.................................... 5,000 189,750
Jerry E. Robertson......................................... 10,000 658,125
------------------------
(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.
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 or executive officer of the Company 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 six
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 six 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."
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES LISTED ABOVE
------------------------
9
PROPOSAL TWO
AMENDMENT TO CERTIFICATE OF INCORPORATION
GENERAL
The Company's Certificate of Incorporation currently authorizes the issuance
of 50,000,000 shares of Common Stock. In November 2000, the Board of Directors
adopted a resolution approving an amendment to the Certificate of Incorporation
to increase the authorized number of shares of Common Stock by 450,000,000
shares to 500,000,000 shares, subject to stockholder approval of the amendment.
The stockholders are being asked to approve the amendment to the Certificate of
Incorporation at the Annual Meeting of Stockholders.
CURRENT USE OF SHARES
As of February 9, 2001 there were 27,379,452 shares of Common Stock
outstanding and 7,092,850 shares reserved for issuance under the Company's
incentive stock plans, of which options to purchase 3,526,777 shares were
outstanding under the 1995 Stock Plan, options to purchase 112,000 shares were
outstanding under the 1990 Directors Option Plan, options to purchase 45,000
shares were outstanding under the 1998 Directors Option Plan, 1,489,057 shares
were reserved for issuance under the Company's Employee Stock Purchase Plan and
104,953 shares were reserved for issuance under the Company's Productivity
Incentive Plan. Based upon the foregoing number of outstanding and reserved
shares of Common Stock, the Company has approximately 20,286,602 shares
remaining available for other purposes.
PROPOSED AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Board of Directors has adopted resolutions setting forth the proposed
amendment to Article 4 of the Company's Certificate of Incorporation (the
"Amendment"), the advisability of the Amendment, and a call for submission of
the Amendment for approval by the Company's stockholders at the Annual Meeting.
The following is the text of Article 4 of the Certificate of Incorporation of
the Company, as proposed to be amended:
"This corporation is authorized to issue one class of shares, designated
"Common Stock." The total number of shares which this corporation shall
have authority to issue is Five Hundred Million (500,000,000) shares of
Common Stock with a par value of $.01 per share."
PURPOSE AND EFFECT OF PROPOSED AMENDMENT
The authorization of a total of 500,000,000 shares of Common Stock would
give the Board the express authority, without further action of the Company's
stockholders, to issue such shares of Common Stock from time to time as the
Board deems necessary or advisable. The amendment would authorize sufficient
shares to permit the Company to issue shares pursuant to its shareholder rights
plan.
The Company expends substantial funds on research and development and other
commercialization activities, including investment in complementary businesses,
obtaining the rights to use complementary technologies, marketing activities and
administrative support of these activities. The Board believes that having the
additional shares authorized and available for issuance will allow the Company
to have greater flexibility in considering potential future actions involving
the issuance of
10
stock which may be desirable or necessary to accommodate the Company's business
plan, including capital raising transactions.
In addition, the Board believes it is necessary to have the ability to issue
such additional shares for general corporate purposes. Such general corporate
uses of the additional authorized shares of Common Stock may include acquisition
transactions, stock dividends or distributions, and future issuances of stock
options or warrants.
In any case, the additional shares of Common Stock would be available for
issuance by the Board without future action by the stockholders, unless such
action were specifically required by applicable law or rules of any securities
market on which the Company's securities may be traded. The Company has no
current plans or proposals to issue any portion of the additional shares of
Common Stock. Although the proposed increase in the authorized capital stock of
the Company could be construed as having potential anti-takeover effects,
neither the Board nor management of the Company views this proposal in that
perspective. Nevertheless, the Company could use the additional shares to
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company by, for example, privately placing shares to purchasers who might side
with the Board in opposing a hostile takeover bid. The Company is not aware of
any such hostile takeover bid at this time. Shares of Common Stock could also be
issued to a holder that would thereafter have sufficient voting power to assure
that any proposal to amend or repeal the By-Laws of the Company or certain
provisions of the Certificate of Incorporation would not receive the requisite
vote required. Such uses of the Common Stock could render more difficult or
discourage an attempt to acquire control of the Company, if such transactions
were opposed by the Board. Further, an issuance of additional shares by the
Company could have the effect on the potential realizable value of a
stockholder's investment in the Company.
In the absence of a proportionate increase in the Company's earnings and
book value, an increase in the aggregate number of outstanding shares of Common
Stock would dilute the earnings per share and book value per share of all
outstanding shares of the Company's Common Stock. The foregoing factors, if
reflected in the price per share of Common Stock, could adversely affect the
realizable value of a stockholder's investment in the Company.
VOTE REQUIRED
If a quorum is present, the affirmative vote of a majority of the Votes Cast
will be required for approval of the Amendment.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
FROM 50,000,000 SHARES TO 500,000,000 SHARES.
------------------------
11
PROPOSAL THREE
AMENDMENT OF THE 1995 STOCK PLAN
The Company's 1995 Stock Plan (the "Stock Plan") was adopted by the Board of
Directors in 1995 and approved by the stockholders in 1996. The Stock Plan
provides for the grant of incentive stock options to the Company's employees and
nonstatutory stock options and stock purchase rights to the Company's employees,
directors and consultants. On November 10, 2000 the Company's Board of Directors
authorized an amendment of the Stock Plan, subject to stockholder approval, to
increase the number of shares authorized for issuance under the Stock Plan by
5,000,000 shares, from 5,500,000 shares to 10,500,000. The stockholders are
being requested to approve this amendment at the Annual Meeting of Stockholders.
As of February 9, 2001, options to purchase an aggregate of 3,526,777 shares of
the Company's Common Stock were outstanding under the Stock Plan with a weighted
average exercise price of $28.57 per share, options to purchase an aggregate of
463,288 shares of the Company's Common Stock had been exercised and 1,509,935
shares of Common Stock were available for future grant under the Stock Plan.
The Stock Plan is structured to allow the Board of Directors broad
discretion in creating equity incentives in order to assist the Company in
attracting, retaining and motivating the best available personnel for the
successful conduct of the Company's business. The Company believes that linking
employee compensation to corporate performance motivates employees to improve
stockholder value. The Company has, therefore, consistently included equity
incentives as a significant component of compensation for its employees. This
practice has enabled the Company to attract and retain the talent that it
continues to require. In order to attract the service of valuable employees as
the Company continues to grow, it will be necessary to continue to offer these
equity incentives, particularly in the extremely competitive job market in
Silicon Valley. In addition, in order to retain the services of the Company's
current employees, it will be necessary to grant additional options to these
employees as older options become fully vested. With the demand for highly
skilled employees at an all time high, especially in the technology industries,
management believes it is critical to the Company's success to maintain
competitive employee compensation programs. The Board believes that the number
of shares reserved under the Stock Plan and the other plans described above will
be inadequate to satisfy the other equity needs of the Company, and that the
proposed increase in the number of shares of Common Stock reserved under the
Stock Plan would be in the best interests of the Company and its stockholders.
REQUIRED VOTE
If a quorum is present, the affirmative vote of a majority of the Votes Cast
will be required to approved the amendment to the Stock Plan.
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
AMENDMENT OF THE COMPANY'S 1995 STOCK PLAN
The material features of the Stock Plan are outlined below:
SUMMARY OF THE 1995 STOCK PLAN
GENERAL. The Stock Plan provides for the grant of options and rights to
purchase shares of the Company's Common Stock to employees (including officers)
and consultants. Options granted under
12
the Stock Plan may either be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonstatutory stock options, as determined by the Board of Directors or a
committee designated by the Board.
PURPOSE. The general purposes of the Stock Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to the employees and consultants of the Company and
to promote the success of the Company's business.
ADMINISTRATION. The Stock Plan is administered by the Board of Directors
("Board") or a committee designated by the Board ("Committee"), as may be
necessary to comply with the rules governing plans intended to qualify as
discretionary grant plans under Rule 16b-3.
ELIGIBILITY. The Stock Plan provides that nonstatutory stock options and
stock purchase rights may be granted to employees (including officers) and
consultants of the Company and its majority-owned subsidiaries. Incentive stock
options may be granted only to employees. The Board or the Committee shall
determine which eligible persons shall be granted options.
GRANT LIMITATION. The Stock Plan provides that no employee shall be
granted, in any fiscal year of the Company, options and stock purchase rights to
purchase more than 500,000 shares of Common Stock. An employee may also be
granted options and stock purchase rights in connection with his or her initial
employment to purchase up to 500,000 shares, an amount that is not to be counted
against the annual limit of the preceding sentence.
EXERCISE PRICE. The exercise price of options and stock purchase rights
granted under the Stock Plan is determined by the Board or the Committee and
must not be less than 100% of the fair market value of the Company's Common
Stock at the time of grant. Incentive stock options granted to stockholders
owning more than 10% of the voting stock of the Company, if any, are subject to
the additional restriction 12 that the exercise price per share of each option
must be at least 110% of the fair market value at the time of grant.
EXERCISE OF OPTIONS AND RIGHTS. Options become exercisable at such times as
are determined by the Board or the Committee and are set forth in the individual
option agreements. Generally, options granted to newly hired employees vest as
to 25% per year over a four (4) year period. Subsequent options, which are
granted to existing employees, generally vest as to 100% of the shares on the
third or fourth anniversary date of the date of grant, such that the vesting of
any previously granted option has been completed. An option is exercised by
giving written notice to the Company specifying the number of full shares of
Common Stock to be purchased and tendering payment of the purchase price. The
method of payment of the exercise price for the shares purchased upon exercise
of an option shall be determined by the Board or the Committee.
TERMINATION. The Stock Plan gives the Board or the Committee the authority
to vary the terms of the individual option agreements. However, generally, if
the optionee ceases to be an employee or consultant for any reason other than
death or disability, then the optionee shall have the right to exercise an
existing unexercised option within thirty (30) days after the date of
termination, but only to the extent that the optionee was entitled to exercise
such option at the date of such termination. If such termination is due to death
or disability within the meaning of Section 422(c) of the Code, 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
13
optionee was entitled to exercise such option at the date of such termination.
In no event shall an option be exercisable beyond the option term.
TERMINATION OF OPTIONS. Options granted under the Stock Plan expire as
determined by the Board or Committee, but in no event later than ten (10) years
from date of grant. No option may be exercised by any person after its
expiration.
NONTRANSFERABILITY OF OPTIONS. An option is non-transferable by the
optionee other than by will or laws of descent and distribution, and is
exercisable during an optionee's lifetime only by the optionee.
STOCK PURCHASE RIGHTS. The Stock Plan permits the Company to grant rights
to purchase Common Stock either alone or in tandem with other awards granted
under the Stock Plan and/or cash awards made outside the Stock Plan. The Board
or the Committee determines who may be granted a stock purchase right, the
number of shares to be offered, the price to be paid and the time within which
the offeree must accept such offer which may not exceed six (6) months. The
offer of a stock purchase right is accepted by the execution of a restricted
stock purchase agreement between the Company and the offeree and the payment of
the purchase price of the shares. Unless the Board or Committee determines
otherwise, the restricted stock purchase agreement will give the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment or consulting relationship with the Company for any
reason (including death and disability). The purchase price for any shares
repurchased by the Company shall be the original price paid by the purchaser and
may be paid be cancellation of indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate fixed by the Board or Committee. A stock
purchase right is nontransferable by the offeree, other than by will or the laws
of descent and distribution.
ADJUSTMENTS UPON CHANGE IN CAPITALIZATION. The number of shares covered by
each outstanding option or stock purchase right, and the exercise price thereof,
shall be proportionately adjusted for any 13 increase or decrease in the number
of issued shares resulting from a change in the Company's capitalization, such
as a stock split, reverse stock split, stock dividend, recapitalization or other
change in the capital structure of the Company.
TRANSFER OF CONTROL. In the event that the Company is a participant in any
merger, consolidation, acquisition of assets or like occurrence involving the
Company, each outstanding option or stock purchase right shall be assumed or an
equivalent option or right substituted by a successor corporation. If such
options and stock purchase rights are not assumed, they become fully exercisable
prior to the closing of such merger or consolidation. Any option or stock
purchase right which is neither assumed nor exercised as of the date of such
merger or consolidation will terminate upon the effectiveness thereof.
AMENDMENT OR TERMINATION OF THE STOCK PLAN. The Board may amend, alter,
suspend or terminate the Stock Plan or any part thereof from time to time, with
respect to any shares at such time not subject to options or stock purchase
rights; provided, however, that without the approval of a majority of the
Company's stockholders, no amendment may (a) increase the number of shares
reserved for issuance under the Stock Plan, (b) change the designation of the
class of persons eligible to receive options and stock purchase rights or
(c) amend the provisions to defeat the stated purpose. In any event, the Plan
shall terminate ten (10) years from its approval by the stockholders of the
Company.
14
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not generally recognize taxable income at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon a disposition of the shares more than two
years after grant of the option and one year after exercise of the option, any
gain or loss is treated as long-term capital gain or loss. If these holding
periods are not satisfied, the optionee recognizes ordinary income at the time
of disposition equal to the difference between the exercise price and the lower
of (i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is an officer, director, or 10%
stockholder of the Company. The Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. 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 by the excess of the
then fair market value of the shares over the exercise price. Any taxable income
recognized in connection with an option exercise by an employee of the Company
is subject to tax withholding by the Company. 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
taxable income as provided above, is treated as long-term or short-term capital
gain or loss, depending on the holding period.
STOCK RIGHTS. Restricted stock is generally acquired pursuant to Stock
Rights. At the time of acquisition, restricted stock is subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of the Code.
As a result, the recipient will not generally recognize ordinary income at the
time of acquisition. Instead, the recipient will recognize ordinary income on
the dates when the stock ceases to be subject to a substantial risk of
forfeiture. The stock will generally cease to be subject to a substantial risk
of 14 forfeiture when it is no longer subject to the Company's right to
reacquire the stock upon the recipient's termination of employment with the
Company. At such times, the recipient will recognize ordinary income measured as
the difference between the purchase price (if any) and the fair market value of
the stock on the date the stock is no longer subject to a substantial risk of
forfeiture. The purchaser may accelerate to the date of acquisition his or her
recognition of ordinary income, if any, and the beginning of any capital gain
holding period, by timely filing an election pursuant to Section 83(b) of the
Code. In such event, the ordinary income recognized, if any, is measured as the
difference between the purchase price and the fair market value of the stock on
the date of purchase and the capital gain holding period commences on such date.
The ordinary income recognized by a purchaser who is an employee will be subject
to tax withholding by the Company. Different rules may apply if the purchaser is
also an officer, director, or 10% stockholder of the Company.
RESTRICTED STOCK. A purchaser of restricted stock recognizes ordinary
income equal to the difference between the purchase price, if any, and the fair
market value of the shares (the "spread") as any right of the Company to
repurchase the shares at the original purchase price lapses (that is, as the
15
stock "vests"). Under current federal tax law, the purchaser may elect to
include the spread in ordinary income at the time of grant. Any subsequent gain
or loss upon resale of the shares by the purchaser is treated as long or
short-term capital gain or loss, depending on how long the shares are held. The
Company is entitled to a federal tax deduction in the same amount and at the
same time as the purchaser realizes ordinary income.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE EMPLOYEE OR CONSULTANT AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE
STOCK PLAN AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO
THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS
SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF AN OPTIONEE'S OR PURCHASER'S
DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR
FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
PARTICIPATION IN THE STOCK PLAN
The grant of options under the Stock Plan to directors and executive
officers, including the officers named in the Summary Compensation Table below,
is subject to the discretion of the Administrator. As of the date of this proxy
statement, there has been no determination by the Administrator with respect to
future awards under the Stock Plan. Accordingly, future awards are not
determinable. In fiscal 2000, options to purchase 967,850 shares of Common Stock
were granted to all employees (excluding executive officers) and options to
purchase 324,000 shares of Common Stock were granted to executive officers. See
"Executive Compensation--Stock Option Grants and Exercises" for the number of
stock options granted to each of the executive officers named in the Summary
Compensation Table during the last fiscal year and "Election of
Directors--Director Compensation" for the number of stock options granted to
each of the directors during the last fiscal year.
------------------------
16
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
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 29, 2001, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote or
ratification, the Board of Directors will reconsider its selection. 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 30, 2000 and for
the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for that fiscal year were $788,000.
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 30, 2000.
ALL OTHER FEES
The aggregate fees billed by Deloitte for services rendered to the Company,
other than the services described above under "Audit Fees" for the fiscal year
ended September 30, 2000 were $1,490,000.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant'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 Board 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 Board 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 29, 2001.
MANAGEMENT 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 29, 2001
------------------------
17
EXECUTIVE COMPENSATION
OFFICERS
The names, ages and office of all of the executive officers of the Company
are set forth below. See page 6 for additional information about Dr. Couillaud.
NAME OF OFFICER AGE OFFICE HELD
--------------- -------- ------------------------------------------
Bernard J. Couillaud, PhD................. 56 President and Chief Executive Officer
Robert J. Quillinan....................... 53 Executive Vice President and Chief
Financial Officer
John R. Ambroseo, PhD..................... 39 Executive Vice President, President and
General Manager, Coherent Photonics
Group
Vittorio Fossati-Bellani, PhD............. 53 Executive Vice President, President and
General Manager, Coherent
Telecom-Actives Group
James L. Taylor........................... 51 Executive Vice President, President and
General Manager, Coherent Medical Group
Kevin McCarthy............................ 44 Executive Vice President and Chief
Information Officer
Ronald A. Victor.......................... 56 Executive Vice President, Human Resources
Scott H. Miller........................... 46 Senior Vice President and General Counsel
There are no family relationships between any of the executive officers and
directors.
Mr. Quillinan has served as Executive Vice President and Chief Financial
Officer since July 1984. He served as Vice President and Treasurer from
March 1982 to July 1984 and as Corporate Controller from April 1980 to
March 1982. Mr. Quillinan received his MS degree in Accounting from Clarkson
University and is a CPA.
Dr. Ambroseo has served as Executive Vice President, President and General
Manager of the Coherent Photonics Group since September 2000. From July 1997 to
September 2000, Dr. Ambroseo served as Executive Vice President, President and
General Manager Coherent Laser Group. From March 1997 to September 1997,
Dr. Ambroseo served as our Scientific Business Unit Manager. From August 1988,
when he joined Coherent, until March 1997, he served as a Sales Engineer,
Product Marketing Manager, National Sales Manager and Director of European
Operations. Dr. Ambroseo received his PhD in Chemistry from the University of
Pennsylvania.
Dr. Fossati-Bellani has served as Executive Vice President, President and
General Manager of the Coherent Telecom-Actives Group since September 2000. From
September 1997 to September 2000, Dr. Fossati-Bellani served as Executive Vice
President, 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, he 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, Coherent Laser
Group. Dr. Fossati-Bellani received his PhD degree in Physics from the
University of Milano, Italy.
18
Mr. Taylor has served as Executive Vice President, President and General
Manager, Coherent Medical Group since February 1999. From April 1997 to
February 1999, Mr. Taylor served as President and Chief Executive Officer of
Andros, Inc., an analytical instruments company headquartered in Berkeley,
California. From January 1995 to April 1997, Mr. Taylor served as President of
the Medical Systems Division of Ohmeda Medical, Inc., a manufacturer of
anesthesia delivery and monitoring systems and from April 1993 to December 1994
as Vice President, Marketing of the Medical Systems Division of Ohmeda.
Mr. Taylor received a BS degree from the US Naval Academy, a MS degree from John
Hopkins University and attended the Stanford Executive Institute.
Mr. McCarthy has served as 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 Instruments, Inc. a company that
develops and sells interactive video, voice and data products. Mr. McCarthy
received a BSEE degree from Lafayette College in 1978 and a MBA from the
University of Pennsylvania, Wharton School in 1991.
Mr. Victor has served as Executive Vice President of Human Resources since
May 2000. From August 1999 to May 2000, he was Corporate Vice President of Human
Resources. Mr. Victor 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 Micronic Computers, Inc., a manufacturer of computer components.
Between January 1982 and September 1995 he was 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 General Counsel to the Company since October 1988
and as Senior Vice President since March 1994. Mr. Miller received a BA degree
in Economics from UCLA in 1977 and a JD from Stanford Law School in 1980.
19
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................ 2000 $422,503 $519,459 110,000 $30,064(1)
President and Chief Executive Officer 1999 363,467 302,571 60,000 27,530
1998 337,492 147,578 138,000 23,393
Robert J. Quillinan...................... 2000 $243,279 $202,731 36,000 $15,290(2)
Executive Vice President 1999 222,665 130,662 22,000 15,067
and Chief Financial Officer 1998 220,201 65,138 34,000 14,723
John Ambroseo, PhD....................... 2000 $267,887 $350,074 58,000 $12,461(3)
Executive Vice President, President and 1999 240,292(4) 267,814 30,000 13,714
General Manager Coherent Photonics 1998 206,898(5) 108,668 36,000 8,672
Group
Vittorio Fossati-Bellani, PhD............ 2000 $223,275 $217,498 41,000 $13,455(6)
Executive Vice President, President and 1999 189,566 153,813 18,000 11,998
General Manager Coherent Telecom- 1998 178,288 46,669 24,000 11,207
Actives Group
James L. Taylor.......................... 2000 $272,280 $198,629 21,000 $ 9,317(7)
Executive Vice President, President and 1999 152,894 97,275 80,000 1,234
General Manager Coherent Medical Group 1998 -- -- -- --
------------------------
(1) Includes $22,192 contributed by the Company under defined contribution plans
and $7,872 in life insurance benefits.
(2) Includes $14,047 contributed by the Company under defined contribution plans
and $1,243 in life insurance benefits.
(3) Includes $11,523 contributed by the Company under defined contribution plans
and $938 in life insurance benefits.
(4) Includes $10,779 compensation related to European assignment.
(5) Includes $19,282 compensation related to European assignment.
(6) Includes $12,131 contributed by the Company under defined contribution plans
and $1,324 in life insurance benefits.
(7) Includes $7,964 contributed by the Company under defined contribution plans
and $1,353 in life insurance benefits.
20
STOCK OPTION GRANTS AND EXERCISES
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended September 30, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (4)
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME (#) (1)(2) FISCAL YEAR (3) ($/SH) DATE 5% ($) 10% ($)
---- --------------- --------------- -------- ---------- ------------ ------------
Bernard J. Couillaud, PhD.... 4,010 .30 $49.875 2/1/06 $ 68,019 $ 154,311
105,990 7.93 49.875 2/1/06 1,797,831 4,078,665
Robert J. Quillinan.......... 4,010 .30 49.875 2/1/06 68,019 154,311
31,990 2.39 49.875 2/1/06 542,623 1,231,027
John Ambroseo, PhD........... 4,010 .30 49.875 2/1/06 68,019 154,311
53,990 4.04 49.875 2/1/06 915,793 2,077,622
Vittorio Fossati-Bellani,
PhD........................ 4,010 .30 49.875 2/1/06 68,019 154,311
36,990 2.77 49.875 2/1/06 627,434 1,423,435
James L. Taylor.............. 2,005 .15 49.875 2/1/06 34,009 77,156
18,995 1.42 49.875 2/1/06 322,198 730,958
------------------------
(1) The Company's 1987 Stock Option Plan and 1995 Stock 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 first entry for each individual sets forth the number of options awarded
that are intended to qualify as "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986. The second entry for
each individual sets forth the number of options that are nonstatutory stock
options.
(3) The Company granted options to purchase an aggregate of 967,850 shares to
all employees other than executive officers and granted options to purchase
an aggregate of 324,000 shares to all executive officers as a group (8
persons), during fiscal 2000.
(4) 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.
21
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 30, 2000 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 30, 2000 (#)(2) SEPTEMBER 30, 2000 ($)(3)
ACQUIRED ON REALIZED --------------------------- ----------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------- ----------- ------------- ------------ -------------
Bernard J. Couillaud, PhD..... 12,000 $ 768,000 144,000 230,000 $7,718,625 $8,665,000
Robert J. Quillinan........... 12,256 982,723 30,838 78,000 1,666,121 2,980,500
John Ambroseo, PhD............ 29,770 1,104,100 17,230 102,000 925,125 3,469,625
Vittorio Fossati-Bellani,
PhD......................... 25,886 963,025 2,614 73,000 114,363 2,508,250
James L. Taylor............... 8,000 467,900 12,000 81,000 630,000 3,530,625
------------------------
(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 30, 2000 of
$68.00 (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 after
completing one year of service. Under this plan, the Company will match employee
contributions to the plan up to a maximum of 6% of the employee's individual
earnings. An employee is not entitled to any part of the Company's contribution
until the completion of his or her third year of employment. After the end of
the third year of employment, 20% of the Company's contribution vests.
Thereafter, an additional 20% of the Company's contribution vests at the end of
each year of completed service until the end of the seventh year of employment
when such contributions become 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 employees 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.
22
VARIABLE COMPENSATION PLAN
The Company's Variable Compensation Plan provides for the payment of
quarterly cash bonuses to members of management designated by the Board of
Directors determined by a formula based on improvements of pre-tax profits, cash
flow and asset management over preset threshold levels for each operating group
or business unit. Those employees who participate in the Plan who are not
assigned to an operating group or business unit receive an average of such
amounts.
PRODUCTIVITY INCENTIVE PLAN
Under the Company's Productivity Incentive Plan (the "Incentive Plan"),
2,025,000 shares of Common Stock were initially reserved, and as of the fiscal
year ended September 30, 2000, 108,425 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
6,325,000 shares of Common Stock have been reserved under the Purchase Plan, and
as of the end of fiscal year 2000, 1,682,754 shares of Common Stock remained
available for issuance thereunder. The Purchase Plan permits employees who are
employed for at least twenty hours per week and more than five months in a
calendar year 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 twelve-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 twelve months.
23
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 REPORT 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 improvements of pre-tax profits and asset
management over preset threshold levels for each operating group or business
unit.
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."
24
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
2000, Mr. Couillaud was granted options to purchase 110,000 shares with an
exercise price equal to the fair market value at date of grant ($49.875 per
share). 72,000 options subject to this grant become exercisable at the end of
three years and 38,000 options subject to this grant become exercisable at the
end of four years. The Committee believes that the quantity of shares granted to
Mr. Couillaud is consistent with its philosophy of granting options to many
management personnel rather than concentrating grants on a few senior
executives.
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.
COMPENSATION COMMITTEE
Jerry E. Robertson
Henry E. Gauthier
John Hart
Dated: January 26, 2001
25
REPORT OF THE AUDIT COMMITTEE
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 four 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 30, 2000 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 auditors, 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 30, 2000 for filing with the Securities and
Exchange Commission. The Committee also recommended the reappointment, subject
to shareholder approval, of the independent auditors and the Board concurred in
such recommendation.
Respectfully Submitted by:
Charles W. Cantoni
Frank P. Carruba
John H. Hart
Thomas Sloan Nelsen
Jerry Robertson
26
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 30, 1995 through September 30, 2000 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
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COHERENT INC. S&P 500 INDEX S&P SMALL CAP 600 INDEX
9/30/95 100.0000 100.0000 100.0000
9/28/96 96.5753 117.6075 114.1652
9/27/97 151.7123 162.0917 154.9810
9/26/98 51.1986 174.0234 125.0786
10/2/99 122.2603 219.4880 114.7885
9/30/00 372.6028 245.8052 179.7865
FISCAL YEAR END COHERENT INC. S&P 500 INDEX S&P SMALL CAP 600 INDEX
------------------------------ ------------- ------------- -----------------------
9/30/95 100.0000 100.0000 100.0000
9/28/96 96.5753 117.6075 114.1652
9/27/97 151.7123 162.0917 154.9810
9/26/98 51.1986 174.0234 125.0786
10/2/99 122.2603 219.4880 114.7885
9/30/00 372.6028 245.8052 179.7865
27
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 BALANCE AT
OUTSTANDING INTEREST OUTSTANDING SEPTEMBER 30,
NAME LOANS RATES MATURITY DATE(S) DURING 2000 2000
---- ----------- ---------- ---------------- ----------- --------------
John Ambroseo, PhD............... $158,688 6.21% 1/12/05 $158,688 $158,688
Bernard J. Couillaud, PhD........ 76,500 4.83-6.8% 3/1/04-3/15/05 160,500 160,500
Vittorio Fossati-Bellani, PhD.... 411,375 5.96-6.71% 8/31/04-4/28/05 504,188 504,188
Scott H. Miller.................. 365,125 4.83-7.1% 3/1/04-5/24/05 400,125 400,125
Robert J. Quillinan.............. 99,992 6.8% 2/28/05 212,250 99,992
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.
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.
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, including loans, 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.
28
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
Dated: February 22, 2001 /s/ BERNARD J. COUILLAUD
------------------------------------------------
Bernard J. Couillaud
PRESIDENT AND CHIEF EXECUTIVE OFFICER
29
CHARTER
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
COHERENT, INC.
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any government body or the public; the Corporation's system of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have approved; and the Corporation'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. The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
- Provide an open venue of communication among the independent accountants,
financial and senior management, the internal auditing department, and the
Board of Directors.
- Review and appraise the Corporation's Code of Ethical Conduct and legal
compliance matters.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section II of this Charter.
II. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports or
other financial information submitted to any government body, or the public,
including certification, report, opinion or review rendered by the
independent accounts.
3. Review the regular internal reports to management prepared by the internal
auditing department and management's response.
4. Review with financial management the 10-Q prior to its filing or prior to
the release of earnings to the public. The Chair of the Committee or a
delegate may represent the entire committee for purposes of this review,
conducting the review in person or by phone.
INDEPENDENT ACCOUNTANTS
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees
and other compensation to be paid to the
30
independent accountants. On an annual basis, the Committee should review and
discuss with the accountants all significant relationships the accountants
have with the Corporation to determine the accountant's independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant
7. Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
organization's financial statements.
FINANCIAL REPORTING PROCESS
8. In consultation with the independent accountants and the internal auditors,
review the integrity of the organization's financial reporting process, both
internal and external.
9. Consider the independent accountant's judgements about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate, major change to the Corporation's
auditing principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
PROCESS IMPROVEMENT
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants and the internal auditors
regarding any significant judgement made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgements.
12. Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing department
any significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
14. Review with the independent accountants, the internal auditing department
and management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit committee, have been
implemented. (This review should be conducted at an appropriate time
subsequent to implementation of changes or improvements, as decided by the
Committee).
ETHICAL AND LEGAL COMPLIANCE
15. Review and update periodically (at least annually) the Corporation's Code of
Ethical Conduct and ensure that management has established a system to
enforce this Code.
16. Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that Corporation's financial statements,
reports and other financial information disseminated to governmental
organizations, and the public satisfy legal requirements.
31
17. Review activities, organizational structure, and qualifications of the
internal audit department.
18. Review, with the organization's in-house counsel, legal compliance matters
including corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
20. Perform any other activities consistent with this Charter, the Corporation's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
III. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgement as a member of the Committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management competency. The board of Directors
shall have the discretion to determine members' conformity to these
qualifications. Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Corporation
or and outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or 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.
IV. MEETINGS AND MINUTES
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of the
internal auditing department, and the independent accountants in separate
executive sessions to discuss any matters that the Committee or each of its
groups believe should be discussed privately. In addition, the Committee, or at
least its Chair or delegate should meet in person or by phone with the
independent accountants and management quarterly to review the Corporation's
financials consistent with II.4 of this Charter.
The Committee's Chair shall appoint a member of the Committee or an employee
of the Company to keep regular minutes of Committee proceedings.
32
COHERENT, INC.
1995 STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Coherent, Inc., a California corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services. The term "Consultant" shall not include Directors who are
paid only a director's fee by the Company or who are not compensated by the
Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no such
leave may exceed ninety days, unless reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 181st day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, the
Fair Market Value of a Share of Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume of trading in
Common Stock) on the last market trading day prior to the day of determination,
as reported in THE WALL STREET JOURNAL or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
- 2 -
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written notice evidencing certain
terms and conditions of an individual Option or Stock Purchase Right grant. The
Notice of Grant is part of the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of
the Plan.
(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option or
Stock Purchase Right.
(w) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option or Stock Purchase Right.
(x) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this 1995 Stock Plan.
(z) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.
(aa) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
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(bb) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(cc) "SECTION 16(B)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is ten million five hundred thousand (10,500,000) Shares.
The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
SUBJECT TO SECTION 16(B). With respect to Option or Stock Purchase Right grants
made to Employees who are also Officers or Directors subject to Section 16(b) of
the Exchange Act, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in a manner complying with the rules under Rule
- 4 -
16b-3 relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made, or (B) a committee designated by the Board to
administer the Plan, which committee shall be constituted to comply with the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to Option or Stock Purchase Right grants made to Employees or
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted to satisfy Applicable Laws. Once
appointed, such Committee shall serve in its designated capacity until otherwise
directed by the Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options
and Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the
- 5 -
exercise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to determine the terms and restrictions applicable to
Options and Stock Purchase Rights and any Restricted Stock; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. If otherwise eligible, an Employee or Consultant who has
been granted an Option or Stock Purchase Right may be granted additional Options
or Stock Purchase Rights.
- 6 -
6. LIMITATIONS.
(a) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
employment or consulting relationship with the Company, nor shall they interfere
in any way with the Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options and Stock Purchase Rights to purchase more than 250,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options and Stock Purchase Rights to purchase up to an
additional 250,000 Shares which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option or Stock Purchase Right is cancelled in
the same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 13), the cancelled Option or
Stock Purchase Right will be counted against the limits set forth in subsections
(i) and (ii) above. For this purpose, if the exercise price of an Option or
Stock Purchase Right is reduced, the transaction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant of a new Option
or Stock Purchase Right.
7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the shareholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years
- 7 -
from the date of grant or such shorter term as may be provided in the Notice of
Grant. Moreover, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) An incentive stock Option granted to an Employee who, at
the time such Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(ii) An option granted to any Employee other than an Employee
described in paragraph (i) immediately above, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator may
specify that an Option may not be exercised until the completion of a service
period.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
- 8 -
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.
- 9 -
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for three (3) months following the Optionee's termination. In the
case of an Incentive Stock Option, such period of time for exercise shall not
exceed three (3) months from the date of termination. If, on the date of
termination, the Optionee is not entitled to exercise the Optionee's entire
Option, the Shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
Notwithstanding the above, in the event of an Optionee's change in
status from Consultant to Employee or Employee to Consultant, an Optionee's
Continuous Status as an Employee or Consultant shall not automatically terminate
solely as a result of such change in status. However, in such event, an
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option three months and one day following such change of status.
(c) DISABILITY OF OPTIONEE. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance
- 10 -
does not exercise the Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) RULE 16b-3. Options granted to individuals subject to Section
16 of the Exchange Act ("Insiders") must comply with the applicable provisions
of Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer, which shall in no event exceed six (6)
months from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) RULE 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3.
An Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(d) OTHER PROVISIONS. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(e) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company.
- 11 -
No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. An Option or
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option or Stock
Purchase Right has not been previously exercised, it will terminate immediately
prior to the consummation of such proposed action. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option or
Stock Purchase Right shall terminate as of a date fixed by the Board and give
each Optionee the right to exercise his or her Option or Stock Purchase Right as
to all or any part of the Optioned Stock, including Shares as to which the
Option or Stock Purchase Right would not otherwise be exercisable.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall have the right to exercise
the Option or Stock Purchase Right as to all of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If an Option or Stock
- 12 -
Purchase Right is exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee that
the Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
- 13 -
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock
covered by an Option or Stock Purchase Right exceeds, as of the date of grant,
the number of Shares which may be issued under the Plan without additional
shareholder approval, such Option or Stock Purchase Right shall be void with
respect to such excess Optioned Stock, unless shareholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 15(b) of the Plan.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
- 14 -
COHERENT, INC.
1995 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
VESTING SCHEDULE:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
[25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter].
TERMINATION PERIOD:
This Option may be exercised for _____ [days/months] after termination of
the Optionee's employment or consulting relationship with the Company. Upon the
death or Disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In the event of the Optionee's change in
status from Employee to Consultant or Consultant to Employee, this Option
Agreement shall remain in effect. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
- 2 -
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal and California tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONSTATUTORY STOCK OPTION. The Optionee may incur
regular federal income tax and California income tax liability upon exercise of
a NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if
- 3 -
any, of the Fair Market Value of the Exercised Shares on the date of exercise
over their aggregate Exercise Price. If the Optionee is an Employee or a former
Employee, the Company will be required to withhold from his or her compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if
such withholding amounts are not delivered at the time of exercise.
(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or California income
tax liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Consultant, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on
the ninety-first (91st) day following such change of status.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as long-
term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely
- 4 -
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by California law except for that body
of law pertaining to conflict of laws.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: COHERENT, INC.
____________________________________ By:____________________________________
Signature
____________________________________ Title:_________________________________
Print Name
____________________________________
Residence Address
____________________________________
- 5 -
EXHIBIT A
1995 STOCK PLAN
EXERCISE NOTICE
Coherent, Inc.
5100 Patrick Henry Drive
P.O. Box 54980
Santa Clara, CA 95056-0980
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Coherent, Inc. (the "Company") under and
pursuant to the 1995 Stock Plan (the "Plan") and the Stock Option Agreement
dated ____________, 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $____________, as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 13 of
the Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
PURCHASER: COHERENT, INC.
__________________________________ By: _________________________________
Signature
__________________________________ Its: ________________________________
Print Name
ADDRESS: ADDRESS:
___________________________ 5100 Patrick Henry Drive
___________________________ P.O. Box 54980
Santa Clara, CA 95056-0980
- 2 -
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.
--------------------------------------------------------------------------------
DETACH HERE
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COHERENT, INC.
ANNUAL MEETING OF STOCKHOLDERS
MARCH 23, 2001
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 22, 2001, and hereby appoints Bernard J.
Couillaud and Robert J. Quillinan, 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 23, 2001 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 FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION, FOR THE AMENDMENT OF THE
COMPANY'S 1995 STOCK PLAN, 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 REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
--------------- ---------------
COHERENT, INC. THIS IS YOUR PROXY.
C/O EQUISERVE YOUR VOTE IS IMPORTANT.
P.O. BOX 9040
BOSTON, MA 02256-9040
DETACH HERE
/ / PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. To elect six directors to serve for the ensuing year and until their
successors are duly elected;
NOMINEES: (01) Bernard J. Couillaud; (02) Henry E. Gauthier; (03) Charles
W. Cantonl; (04) Frank P. Carrubba; (05) John H. Hart; (06) Jerry E.
Robertson (Proposal One);
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
/ / _______________________________________ MARK HERE
For all nominees except as noted above FOR ADDRESS / /
CHANGE AND
NOTE BELOW
FOR AGAINST ABSTAIN
2. To approve the amendment of the Company's / / / / / /
Certificate of Incorporation to increase
the number of authorized shares of Common
Stock by 450,000,000 shares, from 50,000,000
shares to 500,000,000 shares (Proposal Two);
FOR AGAINST ABSTAIN
3. To approve the amendment to the Company's / / / / / /
1995 Stock Plan to increase the number of
shares of Common Stock reserved for issuance
thereunder by 5,000,000 shares, from
5,500,000 shares to 10,500,000 shares
(Proposal Three);
FOR AGAINST ABSTAIN
4. To ratify the appointment of Deloitte & Touche / / / / / /
LLP as independent public accountants to the
Company for the fiscal year ending
September 29, 2001 (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 9, 2001 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:_______ Signature:________________ Date:_______