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EXHIBIT 10.14    
  


COHERENT, INC.

MANAGEMENT TRANSITION AGREEMENT  


        THIS AGREEMENT is effective as of April 8, 2002 (the "Effective Date"), by and between Coherent, Inc. ("Coherent") and Robert J. Quillinan
("Quillinan"). 


 
 

RECITALS    
  


	A.
	Quillinan
is employed by Coherent and is a member of the Board of Directors of Coherent.



	B.
	Effective
April 8, 2002, Quillinan shall cease to be Executive Vice-President and Chief Financial Officer and shall become Executive Vice-President of
Business Development.



	C.
	Quillinan
will remain a member of the Board of Directors of Coherent until he either resigns, is not re-elected or is removed from the Board of Directors.



	D.
	Coherent
desires to retain Quillinan's services as Executive Vice-President of Business Development for the period commencing April 8, 2002 and ending
April 30, 2003 (the "Employment Term"), upon the terms set forth herein.



	E.
	Quillinan
is willing to provide services as an employee pursuant to this Agreement. 





        NOW
THEREFORE, the parties agree as follows: 


        1.    Term.    The term of this Agreement shall commence on the Effective Date and shall continue until all the
payments due and all other obligations of the parties hereunder have been made or satisfied; provided, however, that notwithstanding any other provision of this Agreement, Quillinan's and Coherent's
representations, obligations, covenants and duties under the Employee Agreement by and between Quillinan and Coherent dated April 2, 1980 shall survive any termination of this Agreement. 


        2.    Duties of Quillinan.    As of the Effective Date, Quillinan shall cease to be Executive
Vice-President and Chief Financial Officer and shall become Executive Vice-President of Business Development of Coherent. While employed as such, Quillinan shall continue to
report to Coherent's Chief Executive Officer. During the Employment Term, Quillinan shall remain a member of the Board of Directors of Coherent, until he either resigns, is not re-elected
or is removed from the Board of Directors. During the Employment Term, Quillinan's compensation and other benefits shall be as provided in Section 3(a). 


        3.    Compensation.    



        (a)    Cash Compensation.    While employed by Coherent during the Employment Term (i) Quillinan shall be paid
a base salary of $220,000 per year in accordance with Coherent's standard payroll practices, and (ii) Quillinan's Variable Compensation Plan shall initially be set with a target bonus equal to
50% of his base salary, but such bonus percentage shall be subject to adjustment by Coherent's board of directors (or compensation committee) consistent with the adjustments made to other participants
in the VCP Plan. Quillinan shall also receive, promptly following the termination of the Employment Term, full payment for all accrued wages, including but not limited to, unused vacation days to
which he is entitled pursuant to Coherent policy 


        (b)    Benefits.    While employed by Coherent during the Employment Term, Quillinan shall be eligible to participate
in the employee benefit plans and executive compensation programs maintained by Coherent applicable to other key executives of Coherent, including (without limitation) retirement plans, savings or
profit sharing plans, stock option, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations, and similar plans or programs, subject, in each
case, to the generally applicable terms and conditions of the 






 





applicable plan or program in question and to the determination of any committee administering such plan or program. 



        (c)    Medical, Dental and Vision Coverage.    During the Employment Term and thereafter while Quillinan is retired,
Quillinan shall receive from Coherent Group Medical, Dental and Vision Insurance, including an annual $5,000 supplemental out of pocket payment feature (the "Coverage"), for Quillinan and his eligible
dependents under the following conditions: 



        (1)  Any
cash contribution required from Coherent officers for similar coverage will be invoiced by Coherent by December 31 of each year, and must be paid by Quillinan
no later than January 30 of the following year. The cash contribution amount will be pro-rated for Quillinan's first partial year. Failure to make such payment on time or within a
thirty (30) day notice period will be grounds for termination of the Coherent Group Medical, Dental and Vision Insurance. 


        (2)  The
Coverage for Mr. Quillinan shall immediately terminate at the end of the month following the month of Quillinan's death. For his eligible dependents, coverage
shall terminate at the end of the first calendar year following Mr. Quillinan's death. In the event of Mr. Quillinan's death, his surviving spouse will be eligible to apply for the
continuation of such benefits through COBRA. 


        (3)  If
Quillinan accepts medical, dental and vision insurance coverage by another entity, Quillinan shall notify Coherent in writing, and the Coverage shall thereafter
become secondary. Quillinan agrees to apply for Medicare upon reaching eligibility at which time the benefits set forth in this Agreement shall become secondary to Medicare benefits. 


        (4)  The
Coverage shall immediately terminate if Quillinan violates any provision of Section 5 or ceases to be retired. 



        (5)  If
Coherent changes or reduces the medical, dental or life insurance coverage offered to its officers generally, such changes or reductions shall be applicable to the
Coverage. 




        (d)    Life Insurance.    During the Employment Period and thereafter during Quillinan's retirement (if Quillinan does
not return to work), Coherent will reimburse Quillinan for the cost of a "second to die" life insurance policy covering Quillinan and his wife with a face value of five hundred thousand dollars
($500,000). Quillinan shall be responsible for any taxes that arise as a result of such reimbursement. Quillinan agrees to undergo physical examinations and other requirements of the carrier in order
to obtain and continue such coverage. 


        (e)    Amendment to Stock Options.    Quillinan has been granted stock options as follows: 



	Vesting Date
 
	 	No. of Shares
	 	Exercise Price

	

2/1/03	
 	

2,005	
 	
$	

49.875
	

2/1/03	
 	

23,995	
 	
$	

49.875
	

2/1/04	
 	

2,005	
 	
$	

49.875
	

2/1/04	
 	

7,995	
 	
$	

49.875
	

4/1/04	
 	

70,000	
 	
$	

32.50






        Those
options vesting in 2003 are referred to as the 2003 Options and those options vesting in 2004 are referred to as the 2004 Options. 




        (1)  Mr. Quillinan
shall be entitled to exercise the 2003 Options until February 1, 2006, even if Mr. Quillinan's employment with the Company is
terminated prior to that date, 




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provided that this period shall be reduced to 90 days from the date (i) the Company terminates this Agreement under Section 4(b) or (ii) Mr. Quillinan voluntarily
terminates his employment with the company if such date is prior to April 30, 2003. 


        (2)  The
2004 Options shall be hereby amended to vest as of March 5, 2002. Mr. Quillinan shall be entitled to exercise the 2004 Options until March 5,
2005, even if Mr. Quillinan's employment with the Company is terminated prior to that date, provided that the Company shall be entitled to cancel the 2004 Options, repurchase the stock issued
upon exercise of the 2004 Options for the exercise price, or recapture the net proceeds received upon exercise and sale of the 2004 Options if (i) the Company terminates this Agreement under
Section 4(b) or (ii) Mr. Quillinan voluntarily terminates his employment with the company prior to April 30, 2003. 


        (3)  Except
as set forth above, Quillinan's options to purchase Coherent stock shall be governed by the provisions of the applicable option agreements by and between
Quillinan and Coherent. During the Employment Term, any additional option grants will reflect Quillinan's new position. 




        (f)    Imputed Income.    QUILLINAN ACKNOWLEDGES AND AGREES THAT HE SHALL BE SOLELY RESPONSIBLE FOR ALL TAXES
ASSOCIATED WITH ANY INCOME IMPUTED TO QUILLINAN AS A RESULT OF BENEFITS PROVIDED UNDER THIS AGREEMENT. 




        3.    Termination.    



        (a)    Termination by Quillinan.    



        (1)    Voluntary Termination.    Quillinan may voluntarily terminate this Agreement upon thirty (30) days
written notice or by voluntarily terminating his employment prior to the Employment Term. Upon the effectiveness of such termination, Quillinan shall immediately cease to accrue any benefits
hereunder. 


        (2)    Death of Quillinan.    Except as otherwise provided herein, upon Quillinan's death during the term of this
Agreement, Quillinan shall immediately cease to accrue any benefits hereunder. In such event, any compensation already accrued by Quillinan shall be paid to Quillinan's estate in accordance with his
testamentary disposition or the laws of descent and distribution. 




        (b)    Termination of Agreement for Cause.    Other than pursuant to Quillinan's death or total disability, this
Agreement may only be terminated by Coherent for "Cause." Quillinan will immediately cease to accrue any compensation or benefits hereunder upon such termination. Before exercising its right to
terminate this Agreement under this Section, the Company shall provide Quillinan with written notice setting forth in reasonable detail the facts and circumstances relating to its determination, and
granting Quillinan the opportunity to cure any such default within 30 days following his receipt of the notice. The term "Cause" is defined as any one or more of the following occurrences: 



	(i)
	Quillinan's
commission of an act of fraud or misappropriation of funds, whether prior to or subsequent to the date hereof, upon Coherent; or



	(ii)
	Quillinan's
continuing repeated willful failure or refusal to perform his material duties as required by this Agreement or gross negligence by
Quillinan in the scope of his provision of services to Coherent; or



	(iii)
	Any
breach by Quillinan of any provision of Section 5; or



	(iv)
	Violation
by Quillinan of any duty of loyalty to Coherent. 




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        4.    Covenants Not to Compete or Solicit.    



        (a)    Covenant Not to Compete.    For a period of three years following the date Quillinan terminates his employment
with the Company, Quillinan will not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or
participate in the financing, operation, management or control of, any person, firm, corporation or business that engages in a "Restricted Business" in a "Restricted Territory," as such terms are
defined below. It is agreed, however, that ownership of no more than 2% of the outstanding voting stock of a publicly traded corporation shall not constitute a violation of this provision. 



        (b)    Covenant Not to Solicit.    During the three-year term of this covenant not to compete, Quillinan
will not directly or indirectly: 



        (1)  solicit,
encourage, or take any other action which is intended to induce any other employee, independent contractor, customer or supplier of Coherent or any affiliated
corporation to terminate his or its relationship with Coherent or any affiliated corporation, or 



        (2)  interfere
in any manner with the contractual or employment relationship between Coherent or any affiliated corporation and any such employee, independent contractor,
customer or supplier of Coherent or any affiliated corporation. 




        (c)    Representations.    The parties intend that the covenants contained in Sections 5(a) and (b) shall be
construed as a series of separate covenants, one for each county, city, state, territory, jurisdiction, country or analogous entity of the Restricted Territory. Except for geographic coverage, each
such separate covenant shall be deemed identical. Quillinan represents that he (i) is familiar with the covenants not to compete and not to solicit contained herein, and (ii) is fully
aware of his obligations hereunder, including, without limitation, the reasonableness of the length of time, scope and geographic coverage of these covenants. 


        (d)    Definitions.    As used in this Section 5, the terms listed below shall have the following meanings: 



        (1)    Restricted Business.    "Restricted Business" means any business that manufactures or sells lasers or optical
components for lasers. 


        (2)    Restricted Territory.    "Restricted Territory" means any county, city, state, territory, jurisdiction, country
or analogous entity in which Coherent currently conducts its business or may in the future conduct its business. 





        5.    Arbitration.    



        (a)  Quillinan
agrees that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction,
performance, breach, or termination thereof, shall be finally settled by binding arbitration to be held in Santa Clara County, California under the Commercial Arbitration Rules, supplemented by the
Supplemental Procedures for Large Complex Disputes, of the American Arbitration Association as then in effect (the "Rules"). The arbitrator(s) may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator(s) shall be final, conclusive and binding on the parties to the arbitration, and judgment may be entered on the decision of the arbitrator(s) in any court
having jurisdiction. 


        (b)  The
arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to rules of conflicts of law, and the arbitration proceedings shall
be governed by federal arbitration law and by the Rules, without reference to state arbitration law. 



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        (c)  Coherent
shall pay the costs and expenses of such arbitration, and each party shall pay its own counsel fees and expenses. 



        (d)  QUILLINAN
HAS READ AND UNDERSTANDS THIS SECTION 6, WHICH DISCUSSES ARBITRATION. QUILLINAN UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, QUILLINAN AGREES TO SUBMIT ANY
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF QUILLINAN'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO QUILLINAN'S RELATIONSHIP WITH COHERENT. 




        6.    General Provisions.    



        (a)    Entire Agreement.    This Agreement and any written Coherent plan or written agreement between Quillinan and
Coherent that are referenced herein represent the entire agreement and understanding between the parties as to the subject matter hereof, and supersede all prior or contemporaneous agreements, whether
written or oral. No waiver, alteration, or modification, if any, of the provisions of this Agreement shall be binding unless in writing and signed by duly authorized representatives of the parties
hereto. 


        (b)    Severability.    Except as provided in Section 5(c), if one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in full force and effect. 


        (c)    Successors.    



        (1)    Coherent's Successors.    Any successor to Coherent (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of Coherent's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same extent as Coherent would be required to perform such obligations in the absence of a succession. For all purposes under this
Agreement, the term "Coherent" shall include any successor to Coherent's business and/or assets that agrees to assume Coherent's obligations hereunder or which becomes bound by the terms of this
Agreement by operation of law. 


        (2)    Quillinan's Successors.    The terms of this Agreement and all rights of Quillinan hereunder shall inure to the
benefit of, and be enforceable by, Quillinan's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 




        (d)    Conflicting Obligations.    Quillinan represents that he has not entered into, and will not enter into, any
oral or written agreement in conflict herewith. 


        (e)    Counterparts.    This Agreement may be executed by either of the parties hereto in counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 



        (f)    Governing Law; Consent to Personal Jurisdiction.    This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law rules, of the State of
California. Quillinan hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants. 



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        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. 



	COHERENT, INC.	 	ROBERT QUILLINAN
	

By:	
 	

        
	
 	

 	
 	

        

	Title:	 	        
	 	Date:	 	        

	Date:	 	        
	 	Spouses Consent:	 	        





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EXHIBIT 10.14


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