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                                                      EXHIBIT 10.1

                                 COHERENT, INC.

                          EMPLOYEE STOCK PURCHASE PLAN


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

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

         2.       DEFINITIONS.

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

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

         3.       ELIGIBILITY.

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

                  (b) Any provisions of the Plan to the contrary
notwithstanding, no

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employee shall be granted an option under the Plan (i) if, immediately after
the grant, such employee would own shares and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined
voting power or value of the Company, or (ii) which permits his rights to
purchase shares under all employee stock purchase plans of the Company and
its subsidiaries to accrue at a rate which exceeds Twenty Five Thousand
Dollars ($25,000) for each calendar year in which such stock option is
outstanding at any time, where the value of the option is calculated as the
fair market value of the shares (determined at the time such option is
granted).

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

         5.       PARTICIPATION.

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

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

         6.       PAYROLL DEDUCTIONS.

                  (a) At the time a participant files his subscription
agreement, he shall elect to have payroll deductions made on each payday
during the offering period. The aggregate of payroll deductions elected to be
made under Offering I and Offering II shall not be greater than ten percent
(10%) of the base pay which he received on such payday

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nor less than ten dollars ($10.00) per pay period, and the aggregate of such
payroll deductions during the offering period shall not exceed ten percent
(10%) of his aggregate base salary during said offering period.

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

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

         7.       GRANT OF OPTION.

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

                  (b) The option price per share of such shares shall be the
lower of: (I) 85% of the fair market value of a share of the Common Stock of
the Company at the commencement of the twelve month offering period; or (ii)
85% of the fair market value of a share of the Common Stock of the Company at
the time the option is exercised at the termination of the twelve month
offering period. The fair market value of the Company's

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Common Stock on said dates shall be determined by the Company's Board of
Directors in the exercise of their discretion in good faith.

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

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

         10.      WITHDRAWAL; TERMINATION OF EMPLOYMENT.

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

                  (b) Upon termination of the participant's employment prior
to the end of an offering period for any reason, including retirement or
death, the payroll deductions credited to his account will be returned to him
or, in the case of his death, to the person or

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persons entitled thereto under paragraph 14, and his option will be
automatically terminated.

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

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

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

         12.      STOCK.

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

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and shall similarly reduce the rate of payroll deductions, if necessary.

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

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

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

         14.      DESIGNATION OF BENEFICIARY.

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

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

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         15.      TRANSFERABILITY. Neither payroll deductions credited a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in paragraph 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.

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

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

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

         19.      AMENDMENT OR TERMINATION. The Board of Directors of the
Company may at any time terminate or amend the Plan. No such termination can
affect options previously granted, nor may an amendment make any change in
any option theretofore

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granted which adversely affects the rights of any participant, nor may an
amendment be made without prior approval of the shareholders of the Company
if such amendment would:

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

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

                  (c)      Change the designation of the employees (or class
of employees) eligible for participation in the Plan; or

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

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