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**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

# **FORM 10-K/A**

# ** **

**AmendmentNo. 1**

 

**ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIESEXCHANGE ACT OF 1934**

 
| **For the  fiscal year ended June 28, 2008** | ** ** | **Commission  file number 000-14742** |
|---------------------------------------------------|------------|---------------------------------------|

 

## **CANDELA CORPORATION**

(Exact name ofregistrant as specified in its charter)

 

| **Delaware**                                                      | ** ** | **04-2477008**                        |
|-------------------------------------------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of

incorporation or  organization) | ** ** | (I.R.S. Employer  Identification No.) |
| ** **                                                        | ** ** | ** **                            |
| **530  Boston Post Road, Wayland, Massachusetts**                 | ** ** | **01778**                             |
| (Address of  principal executive offices)                         | ** ** | (Zip Code)                            |

 

Registrant’stelephone number, including area code:  **508-358-7400**

 

Securitiesregistered pursuant to Section 12(b) of the Act:  **None**

 

Securitiesregistered pursuant to section 12(g) of the Act:

 

**CommonStock, $.01 par value per share**

(Title of Class)

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.
| Yes o |   | No x |
|------------|--------|------|

 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act.
| Yes o |   | No x |
|------------|--------|------|

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period than the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.
| Yes x |   | No o |
|------------|--------|------|

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof the registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  [   ]

 

Indicate by check mark whether the registrant is an large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule12b-2 of the Exchange Act.  (Check one):

 
| Large accelerated filer o |   | Accelerated filer x |   | Non-accelerated filer o  (Do not check if a smaller reporting company) |   | Smaller reporting  company o |
|---------------------------|--------|---------------------|--------|------------------------------------------------------------------------|--------|------------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule12b-2 of theExchange Act)
| Yes o |   | No x |
|------------|--------|------|

 

 

 

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Theaggregate market value of our voting stock held by non-affiliates wasapproximately $125,875,893 on December 29, 2007 based on the last reportedsale price of our common stock on the NASDAQ Stock Market on that day.  As of September 9, 2008, 22,868,829shares of the registrant’s common stock, $.01 par value per share, were issuedand outstanding.  As of October 13,2008, 22,835,433 shares of the registrant’s common stock, $.01 par value pershare, were issued and outstanding.

 

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**EXPLANATORYNOTE**

 

This amendment to theregistrant’s Annual Report on Form 10-K for the year ended June 28,2008, originally filed with the Securities and Exchange Commission (“SEC”) on September 11,2008 (the “Original Filing”), is being filed solely to amend Part III and Part IVof the Original Filing.

 

This amendment does notreflect events occurring after the filing of the Original Filing, and is notintended to modify or update the disclosures therein or the exhibits filedtherewith in any way, except as set forth herein.

 

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**TABLE OF CONTENTS**

 
| **PART III** | ** ** | ** **                                                                                        | ** ** |
|-------------------|------------|---------------------------------------------------------------------------------------------------|------------|
|              |       |                                                                                              |       |
| Item  10.         |       | Directors,  Executive Officers and Corporate Governance.                                          | 5          |
|              |       |                                                                                              |       |
| Item 11.          |       | Executive Compensation.                                                                           | 8          |
|              |       |                                                                                              |       |
| Item 12.          |       | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters. | 18         |
|              |       |                                                                                              |       |
| Item 13.          |       | Certain Relationships and Related  Transactions, and Director Independence.                       | 20         |
|              |       |                                                                                              |       |
| Item 14.          |       | Principal  Accounting Fees and Services.                                                          | 21         |
|              |       |                                                                                              |       |
| **PART IV**  | ** ** | ** **                                                                                        | ** ** |
|              |       |                                                                                              |       |
| Item 15.          |       | Exhibits, Financial Statement  Schedules.                                                         | 23         |

 

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**PART III**

 

**Item 10.         Directors and Executive Officers and Corporate Governance.**

 

**DIRECTORS**

 

Thefollowing table sets forth the names, ages and positions held with CandelaCorporation (the “Company”) of the current members of the Board ofDirectors (the “Board of Directors”) of the Company.  The Board of Directors has nominated suchDirectors for reelection as Directors of the Company at the next annual meetingof the Company’s stockholders.  Each Directorhas indicated his or her willingness to serve if reelected.

 
| **Name**                    | ** ** | **Age** | ** ** | **Position**                                     |
|-----------------------------|------------|---------|------------|--------------------------------------------------|
| George  A. Abe (2)(3)       |       | 47      |       | Director                                         |
| Ben  Bailey III (1)(3)      |       | 59      |       | Director                                         |
| Nancy  E. Nager (1)(2)(3)   |       | 57      |       | Director                                         |
| Gerard  E. Puorro (4)       |       | 61      |       | President,  Chief Executive Officer and Director |
| Kenneth  D. Roberts (1)(3)  |       | 75      |       | Chairman  of the Board of Directors              |
| Douglas  W. Scott (1)(2)(3) |       | 62      |       | Director                                         |

 

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| (1)    |   | Member  of the Audit Committee.          |
|--------|--------|------------------------------------------|
|   |   |                                     |
| (2)    |   | Member  of the Compensation Committee.   |
|   |   |                                     |
| (3)    |   | Member  of the Nominating Committee.     |
|   |   |                                     |
| (4)    |   | Member  of the Option and SAR Committee. |

 

Furtherinformation with respect to the Board of Directors is set forth below.

 

**Mr. Abe** has been a Director of the Company since January 2003.  Mr. Abe has been President and ChiefExecutive Officer of Cambridge Research and Instrumentation (“CRI”), a providerof diagnostic imaging solutions for life science and medical research, since June 2003.  From February 2002 until June 2003,Mr. Abe was a Vice President of CRI. From May 1997 to November 2001, Mr. Abe held VicePresident positions in Strategy, Development and Marketing with Genuity(formerly GTE), an internet infrastructure service provider.  Prior to that, Mr. Abe held severaltechnical and management positions with BBN Corp, a high technology andservices company.

 

**Mr. Bailey** has been a Director of the Company since January 2003.  Mr. Bailey has been a Vice President ofMassachusetts Capital Resource Company, a source of risk capital forMassachusetts businesses, since May 1985. From June 1976 until May 1985, Mr. Bailey held a numberof positions (most recently as a Vice President) with the High TechnologyLending Group at Bank of Boston.  From June 1974until June 1976, Mr. Bailey was employed at Chemical Bank in NewYork.  Mr. Bailey served on theNational Science Foundation’s Advisory Committee for Smaller BusinessIndustrial Innovation (SBIR) from June 1995 to April 2001.

 

**Ms. Nager** has been a Director of the Company since February 1999.Ms. Nager has been the Principal and Chief Executive Officer of SBSC, Inc.,formerly known as SBS Consulting, Inc. and Specialized Health Management, Inc.,a privately-held behavioral healthcare and medical billing corporation, since1990. From 1976 until 1990, Ms. Nager held a number of positions innursing and hospital administration (most recently as Chief Operating Officer)with Charles River Hospital, a private psychiatric facility in Wellesley,Massachusetts. From 1990 until 1993, Ms. Nager also provided corporatelevel consulting to Community Care Systems, Inc., the parent company ofCharles River Hospital.

 

**Mr. Puorro** has been a Director of the Company since September 1991.  Mr. Puorro has been President and ChiefExecutive Officer of the Company since April 1993.  From December 1992 until April 1993,Mr. Puorro was Senior Vice President, Chief Financial Officer and ChiefOperating Officer of the Company, and from April 1989 until December 1992,Mr. Puorro was Senior Vice President and Chief Financial Officer of theCompany.  Prior to joining the Company, Mr. Puorrowas Vice President and Controller at Massachusetts Computer Corporation, amanufacturer of micro-supercomputers.

 

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**Mr. Roberts** has been a Director of the Company since August 1989and Chairman of the Board of Directors since November 1991.  Mr. Roberts has been an independentmanagement consultant since January 1989. From November 1992 until June 1995, Mr. Roberts wasemployed on a part-time basis as Vice President and Chief Financial Officer ofFoster Miller, Inc., an engineering services company.  From July 1986 until December 1988,Mr. Roberts was Vice President, Treasurer and Chief Financial Officer ofMassachusetts Computer Corporation, a manufacturer ofmicro-supercomputers.  Prior to that, Mr. Robertswas Senior Vice President and Treasurer of Dynatech Corporation (now namedActerna Corporation), a provider of diversified high technology products andservices.

 

**Mr. Scott** has been a Director of the Company since September 1991.  Mr. Scott has been a partner atPhildius, Kenyon & Scott, a health care consulting and investmentfirm, since 1985.  From 1989 until June 2008,Mr. Scott was the President, Chief Operating Officer and a Director ofAvitar, Inc., a publicly-held health care company.  From December 1989 until April 1991,Mr. Scott was Chief Executive Officer of Avitar, Inc.

 

**EXECUTIVEOFFICERS**

 

Thefollowing table sets forth the names, ages and positions held with the Companyof the current executive officers of the Company.

 
| **Name**                | ** ** | **Age** | ** ** | **Position**                                                  |
|-------------------------|------------|---------|------------|---------------------------------------------------------------|
| Jay  D. Caplan          |       | 46      |       | Chief  Operating Officer                                      |
| Dennis  S. Herman       |       | 58      |       | Senior  Vice President, North American Sales                  |
| Dr. James  C. Hsia |       | 62      |       | Chief  Technical Officer                                      |
| Paul  R. Lucchese       |       | 42      |       | Senior  Vice President, General Counsel, and Secretary        |
| Gerard  E. Puorro       |       | 61      |       | President,  Chief Executive Officer, and Director             |
| Robert  E. Quinn        |       | 54      |       | Vice  President, Finance, Corporate Controller, and Treasurer |

 

Executiveofficers are appointed to serve at the discretion of the Board ofDirectors.  There are no familyrelationships among any of the executive officers or Directors of the Company.

 

**Mr. Caplan** was appointed Chief Operating Officer in November 2007.  Prior to joining the Company, Mr. Caplanwas Chief Technology Officer of InfraReDx, Inc., a developer ofphotonic-based medical devices, from September 2001 to November 2007,and Vice President of Operations at Thermo Cardiosystems, Inc., a supplierof ventricular devices for heart failure, from December 1999 to May 2001.  From 1988 to 2000, Mr. Caplan held anumber of positions (most recently as Vice President of Operations) inmarketing, finance, and international at the Company.  Mr. Caplan holds a B.S. in Electrical Engineeringfrom the Massachusetts Institute of Technology and an M.B.A., with distinction,from the Wharton School of The University of Pennsylvania.  He is an inventor on both issued and pendingpatents, and is the author of several peer-reviewed publications in medicaljournals.

 

**Mr. Herman** was appointed Senior Vice President, NorthAmerican Sales, in April 2004.  FromOctober 2001 until April 2004, Mr. Herman was Vice President,North American Sales, of the Company and from February 1999 until October 2001,Mr. Herman was Eastern Regional Sales Manager of the Company.  Prior to joining the Company, Mr. Hermanwas Vice President of Sales at Palomar Medical Technologies, Inc., amedical device company, from August 1997 to December 1998 andNational Sales Manager of Spectrum Medical Technologies, a medical devicecompany that was acquired by Palomar Medical Technologies, from March 1991to August 1997.

 

**Dr. Hsia** was appointed Chief Technology Officer in January 2004.  From March 2003 until January 2004,Dr. Hsia was a Director of the Company. Prior to joining the Company, Dr. Hsia was President and Co-Founderof Lasersharp Corporation, a developer of fiber laser products for the telecomand film industries, from July 2000 to January 2003.  From 1985 until July 2000, Dr. Hsiawas Senior Vice President of Research and Development of the Company.  Dr. Hsia has twenty-five years ofexperience in photonics product development and medical devices.  Dr. Hsia holds a B.S. in Physics and anM.S. and a Ph.D. in Nuclear Engineering from the Massachusetts Institute ofTechnology, specializing in plasma physics and controlled fusion.

 

**Mr. Lucchese** was appointed Senior Vice President, GeneralCounsel, and Secretary in July 2007. From July 2006 until July 2007, Mr. Lucchese was VicePresident, General Counsel, and Secretary of the Company.  Prior to joining the Company, Mr. Lucchesewas the General Counsel of Aspect Software, Inc., a developer of customerinteraction management hardware and software, from December 1998 to November 2005.  Mr. Lucchese holds a M.B.A. from SuffolkUniversity, a J.D. from the University of Dayton School of Law, and a B.A. fromProvidence College.

 

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**Mr. Quinn** was appointed Vice President, Finance,Corporate Controller and Treasurer in August 2008 and acting ChiefFinancial Officer in April 2007. From October 2003 until August 2008, Mr. Quinn wasCorporate Controller and Treasurer of the Company.  Prior to joining the Company, Mr. Quinnwas Corporate Controller of Ezenia! Inc., a provider of real-timecollaboration, from December 1999 to June 2003, Vice President ofFinance of Vantage Travel, a provider of travel and tourism services, from April 1999to December 1999, a consultant to Gamma Graphix, a business specializingin color management, from September 1998 to April 1999, Director ofFinance of Genus, Inc., a semiconductor capital equipment manufacturer, fromFebruary 1996 to September 1998, Vice President and Chief FinancialOfficer of ACSYS, Inc., a provider of professional staffing solutions,from February 1994 to February 1996, and held the positions of VicePresident, Corporate Controller and Manager of Accounting and Financial Systemsat Atex Publishing Systems, a subsidiary of Kodak providing software to thepublishing industry, from November 1986 to February 1994.

 

**LEGALPROCEEDINGS**

 

OnApril 2 and April 22, 2008, respectively, two substantially similarputative class action lawsuits, entitled Western Pa. Elec. Employees PensionFund, et al., 1:08-cv-10551-DPW (“Western Pa.”) and Caballero v. Candela Corp.,et al., Civ. No. 1:08-cv-10673-DPW, were filed against the Company and twoof its officers in the United States District Court for the District ofMassachusetts purporting to assert claims for violations of §§10(b) and 20(a) ofthe Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,and seeking, among other things, compensatory damages and reasonable costs andexpenses.  On June 2, 2008,plaintiffs in the Western Pa. case formally moved for consolidation and theappointment of lead plaintiff and lead counsel. On July 10, 2008, that motion was granted, the cases wereconsolidated, and a lead plaintiff and lead counsel were appointed.  On August 25, 2008, the lead plaintifffiled a consolidated amended complaint. The consolidated and amended complaint purports to be brought on behalfof all open-market purchasers of the Company’s Common Stock from November 1,2005 through August 21, 2006 and alleges that the Company made certainfalse and misleading statements to investors expressing optimism regarding itsfinancial condition and failed to disclose (i) the possibility thatPalomar Medical Technologies, Inc., one of the Company’s competitors,would initiate patent enforcement litigation against the Company and (ii) thatthe Company was purportedly losing market share to its competitors.

 

OnApril 16, 2008, a stockholder derivative action entitled Forlenzo v.Puorro, et al., Civ. No. 08-1532, was filed in Middlesex County,Massachusetts Superior Court against the individual members of the Company’sBoard of Directors and certain of its current and former officers purporting toassert claims for breach of fiduciary duty and related claims arising out ofallegations similar to those asserted in the class action litigation discussedabove.  The complaint seeks, on behalf ofthe Company, among other things, damages, restitution, and injunctive relief.

 

**SECTION 16(a) BENEFICIALOWNERSHIP REPORTING COMPLIANCE**

 

Section 16(a) ofthe Securities Exchange Act of 1934, as amended, requires the Company’sDirectors, executive officers, and persons who own more than 10% of aregistered class of the Company’s equity securities (collectively, “ReportingPersons”) to file initial reports of ownership and reports of changes inownership with the SEC.  ReportingPersons are required by SEC regulations to furnish the Company with copies ofall such filings.  Based on its review ofthe copies of such filings, if any, and written representations from certainReporting Persons received by it with respect to the fiscal year ended June 28,2008, the Company believes that all Reporting Persons complied with all Section 16(a) filingrequirements in the fiscal year ended June 28, 2008, except that Mr. Caplanfailed to timely file one Initial Statement of Beneficial Ownership on Form 3of Securities and one Statement of Changes in Beneficial Ownership on Form 4.  Mr. Caplan subsequently filed thenecessary Form 3 and Form 4.

 

**CODE OFBUSINESS CONDUCT AND ETHICS**

 

TheCompany has adopted a Code of Business Conduct and Ethics that applies to allDirectors, officers (including its Chief Executive Officer, Chief FinancialOfficer, Chief Accounting Officer, and Controller), and employees of theCompany.  The Company has posted its Codeof Business Conduct and Ethics to the “Investor Relations” section of itswebsite at www.candelalaser.com.

 

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**PROCEDURESBY WHICH STOCKHOLDERS MAY RECOMMEND NOMINEES TO THE BOARD OF DIRECTORS**

 

TheCompany has not changed the procedures by which its stockholders may recommendnominees to the Board of Directors since the Company last provided disclosurein response to the requirements of Item 407(c)(2)(iv) or Item 407(C)(3) ofRegulation S-K.

 

Stockholdersmay communicate with the Board of Directors by sending proposals,recommendations for nomination and other communications (each a “Submission”)to:

 

CandelaCorporation

530Boston Post Road

Wayland,Massachusetts  01778

Attention:Paul R. Lucchese, Secretary

 

EachSubmission should bear a clear notation indicating that it is a “Stockholder –Director Communication.”

 

TheSecretary of the Company will make copies of all such Submissions and circulatethem to the Board of Directors or the appropriate committee thereof.  In order to avoid uncertainty as to the date onwhich a Submission was received by the Company, the Company suggests thatproponents send Submissions by Certified Mail – Return Receipt Requested.

 

**AUDITCOMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT**

 

TheCompany has a standing Audit Committee, of which Mr. Roberts, Mr. Bailey,Mr. Scott and Ms. Nager are members.

 

TheAudit Committee reviews all financial functions of the Company, includingmatters relating to the appointment, compensation and activity of the Company’sindependent registered public accounting firm. The Audit Committee met seven times during the fiscal year ended June 28,2008.  The Board of Directors hasdetermined that Mr. Roberts and Mr. Bailey are audit committeefinancial experts and that all members of the Audit Committee are independentdirectors (as defined in NASDAQ Stock Market Rule 4200(a)(15)).  The Audit Committee operates under a writtencharter adopted by the Board of Directors and amended at a meeting of the AuditCommittee on January 26, 2004.  TheCompany has posted the charter to the “Investor Relations” section of itswebsite at www.candelalaser.com.

 

**Item 11.         Executive Compensation.**

 

**COMPENSATIONDISCUSSION AND ANALYSIS**

 

Pursuantto the authority delegated by the Board of Directors, the Company’scompensation program is administered by the Compensation Committee, whichconsists of Mr. Scott, Mr. Abe and Ms. Nager.  All three members of the CompensationCommittee are independent directors (as defined in NASDAQ Stock Market Rule 4200(a)(15)).  Each year the Compensation Committeedetermines the compensation of the Chief Executive Officer and the otherexecutive officers, including approval of annual base salaries and bonuses aswell as the grant of stock options and SARs. The Compensation Committee operates under a written charter adopted bythe Board of Directors on February 11, 2005.  The Company has posted the charter to the “InvestorRelations” section of its website at www.candelalaser.com.

 

**Objectivesof the Company’s Compensation Program**

 

Theobjectives of the Company’s compensation program are:

 

·                  tomaximize stockholder value; and

·                  toenhance the Company’s profitability.

 

Toachieve these objectives, the Company’s compensation program is designed:

 

·                  tointegrate compensation with the Company’s annual and long-term performancegoals;

·                  toreward strong revenue growth, operating results, and earning performance;

·                  toreward individual initiative, achievement and hard work; and

 

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·                  toassist the Company in attracting and retaining qualified executive officers andemployees.

 

**Elementsof Executive Compensation**

 

Infiscal 2007, the Compensation Committee directly engaged Mercer Human ResourceConsulting (“Mercer”) as its compensation consultant.  Mercer reviewed the compensation of seniormanagement at the Company and at the Company’s peer group (the “Peer Group”),which consisted of:

 

·                  ArthrocareCorporation;

·                  AspectMedical Systems, Inc.;

·                  CardiacScience Corporation;

·                  Cutera, Inc.;

·                  Cyberonics, Inc.;

·                  Cynosure, Inc.;

·                  HomeDiagnostics, Inc.;

·                  IntralaseCorporation;

·                  IntuitiveSurgical, Inc.;

·                  PalomarMedical Technologies, Inc.;

·                  Sonosite, Inc.;

·                  ThoratecCorporation;

·                  VolcanoCorporation; and

·                  ZollMedical Corporation.

 

Mercerthen assisted the Compensation Committee with the design of the Company’scompensation program, which is comprised of the following elements:  (i) cash compensation in the form ofannual base salary and bonus; (ii) long-term incentive compensation in theform of SARs; (iii) severance benefits; and (iv) perquisites andother benefits.  The following table setsforth the primary purpose of each of these elements.

 
| **Element**                                   | ** ** | **Purpose** |
|-----------------------------------------------|------------|-------------|
| Cash  Compensation – Base Salary         |       | ·      | to assist the Company in attracting and retaining qualified executive  officers and employees |
| Cash  Compensation – Bonus               |       | ·      | to integrate compensation with the Company’s annual performance goals |
|                                          |       | ·      | to reward strong revenue growth, operating results, and earning  performance |
|                                          |       | ·      | to reward individual initiative, achievement and hard work |
|                                          |       | ·      | to assist the Company in attracting and retaining qualified executive  officers and employees |
| Long-Term  Incentive Compensation – SARs |       | ·      | to integrate compensation with the Company’s long-term performance  goals |
|                                          |       | ·      | to reward strong revenue growth, operating results, and earning  performance |
|                                          |       | ·      | to assist the Company in attracting and retaining qualified executive  officers and employees |
| Severance  Benefits                           |       | ·      | to assist the Company in attracting and retaining qualified executive  officers and employees |
| Perquisites  and Other Benefits               |       | ·      | to assist the Company in attracting and retaining qualified executive  officers and employees |

 

***Cash Compensation – Base Salary.***  TheCompensation Committee reviews each executive officer’s base salaryannually.  The Compensation Committeefixes each executive officer’s base salary at a level that is comparable tothose of senior executives with comparable qualifications, experience andresponsibilities at the Company’s Peer Group. In addition, each executive officer’s base salary reflects (i) theCompany’s performance compared to its Peer Group and (ii) the executiveofficer’s performance.

 

***Cash Compensation – Bonus.***  TheCompensation Committee has established an Executive Bonus Plan (the “ExecutiveBonus Plan”) to provide participating executive officers with the opportunityto earn bonus compensation upon the achievement of certain performanceobjectives.  The Compensation Committeeselects participants in the Executive Bonus Plan and establishes theirperformance objectives and target bonus compensation annually.

 

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Infiscal 2008, each participant’s performance objectives were tied to theachievement of (i) target levels of consolidated pre-tax profits (“TargetProfits”) and (ii) individual metrics. The following table sets forth percentages of Target Profits and thecorresponding target bonus compensation (expressed as a percentage of theparticipant’s base salary) that a participant could receive pursuant to theExecutive Bonus Plan.

 
| ** **                             | ** ** | **Target Bonus Compensation  (as percentage of base salary)**                 |
|----------------------------------------|------------|-------------------------------------------------------------------------------|
| **% of Target Profits** | ** ** | **Participants Other than  the Chief Executive  Officer** | ** ** | **Chief Executive Officer** |
| 80%                                    |       |                                                                          | 0.0% |   |   | 0.0% |   |
| 81%                                    |       |                                                                          | 1.0% |   |   | 1.5% |   |
| 82%                                    |       |                                                                          | 2.0% |   |   | 3.0% |   |
| 83%                                    |       |                                                                          | 3.0% |   |   | 4.5% |   |
| 84%                                    |       |                                                                          | 4.0% |   |   | 6.0% |   |
| 85%                                    |       |                                                                          | 5.0% |   |   | 7.5% |   |
| 86%                                    |       |                                                                          | 6.0% |   |   | 9.0% |   |
| 87%                                    |       |                                                                          | 7.0% |   |   | 10.5% |   |
| 88%                                    |       |                                                                          | 8.0% |   |   | 12.0% |   |
| 89%                                    |       |                                                                          | 9.0% |   |   | 13.5% |   |
| 90%                                    |       |                                                                          | 10.0% |   |   | 15.0% |   |
| 91%                                    |       |                                                                          | 11.0% |   |   | 16.5% |   |
| 92%                                    |       |                                                                          | 12.0% |   |   | 18.0% |   |
| 93%                                    |       |                                                                          | 13.0% |   |   | 19.5% |   |
| 94%                                    |       |                                                                          | 14.0% |   |   | 21.0% |   |
| 95%                                    |       |                                                                          | 15.0% |   |   | 22.5% |   |
| 96%                                    |       |                                                                          | 16.0% |   |   | 24.0% |   |
| 97%                                    |       |                                                                          | 17.0% |   |   | 25.5% |   |
| 98%                                    |       |                                                                          | 18.0% |   |   | 27.0% |   |
| 99%                                    |       |                                                                          | 19.0% |   |   | 28.5% |   |
| 100%                                   |       |                                                                          | 30.0% |   |   | 45.0% |   |
| 101% and up                            |       | Add 1.5% for each 1.0%  increase in Target Profits                            |   | Add 2.25% for each 1.0% increase in Target Profits |

 

Asillustrated in the table, the Company does not pay any bonuses to participantsunless it achieves a threshold level of 81% of Target Profits.  In fiscal 2008, the Company did not achievethis threshold and therefore none of its executive officers earned any bonuscompensation.

 

***Long-Term Incentive Compensation – SARs.***  TheCompany has established the 1998 Stock Plan, pursuant to which it has grantedequity awards to executive officers and other employees.  In fiscal 2008, the Compensation Committeegranted equity awards in the form of SARs. Please see the section entitled Executive Compensation – Grants of PlanBased Awards for additional information regarding such grants.  Prior to fiscal 2006, the CompensationCommittee also granted equity awards in the form of stock options.  The 1998 Stock Plan expired on September 18,2008.

 

TheCompany has also established the 2008 Stock Plan, subject to approval andadoption by the Company’s stockholders. Pursuant to the 2008 Stock Plan, the Company may grant equity awards(which may include SARs, stock options, restricted stock awards and RSUs) toexecutive officers and other employees. The Compensation Committee will administer the 2008 Stock Plan.

 

TheCompensation Committee considers equity compensation to be an integral part ofa competitive compensation package and an important mechanism to align theinterests of the Company’s management with those of the Company’sstockholders.  The Compensation Committeegrants equity awards to integrate compensation with the Company’s long-termperformance goals, to reward strong revenue growth, operating results, andearning performance, and to assist the Company in attracting and retainingqualified executive officers and employees, thereby helping the Company tomaximize stockholder value and to enhance its profitability.

 

TheCompensation Committee generally grants SARs to executive officers and otheremployees based on the Company’s performance and the recipient’s level ofseniority, in each case at a level that is comparable to equity awards grantedto executive officers and other employees at the Company’s Peer Group.  The Compensation

 

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Committeealso considers such factors as individual initiative, achievement andperformance and individual equity holdings (including the exercise price,vesting, and the then current value of unvested options and SARs).

 

TheCompensation Committee determines the exercise price, vesting period, andexpiration date for SARs and stock options at the time of grant.  Freestanding SARs and “incentive stockoptions” have an exercise price not less than the fair market value of theunderlying Common Stock on the date of grant. SARs and stock options generally become exercisable based upon a vestingschedule tied to years of future service to the Company.  SARs and stock options generally expire 10years from their date of grant (5 years for incentive stock options granted to10% or more stockholders).

 

Thevalue realizable from exercisable SARs and stock options depends on the extentto which the Company’s performance is reflected in the market price of theCompany’s Common Stock at any particular point in time.  Therefore, executive officers and otheremployees are rewarded economically only to the extent that the Company’sstockholders also benefit through stock price appreciation in the market.

 

***Severance Benefits.***  TheCompany has entered into employment agreements with its executive officers thatprovide for, among other things, certain severance benefits, the material termsof which are described below in the section entitled Additional Disclosure toSummary Compensation Table and Grants of Plan-Based Awards – EmploymentAgreements and Arrangements and Potential Payments upon Termination orChange-in-Control.  The CompensationCommittee believes that these agreements assist the Company in attracting andretaining qualified executive officers, thereby helping the Company to achieveits objective of maximizing stockholder value and enhancing the Company’sprofitability.

 

***Perquisites and Other Benefits.***  Inaddition to the main elements of compensation discussed above, the Company’sexecutive officers are eligible for the same welfare and defined benefits asare generally available to the Company’s other employees.  These benefits include medical and dentalinsurance, short- and long-term disability insurance, life and accidental deathinsurance, and a 401(k) plan.  TheCompany also provides its executive officers with certain perquisites that theCompensation Committee believes are reasonable, competitive and consistent withthe Company’s overall compensation philosophy. In 2008, these perquisites included matching contributions by theCompany pursuant to the Company’s 401(k) Plan and a Company providedautomobile.

 

**Section 162(m)**

 

Ingeneral, under Section 162(m) of the Code, the Company cannot deduct,for federal income tax purposes, compensation in excess of $1,000,000 paid tocertain executive officers.  However,this deduction limitation does not apply to compensation that constitutes “qualifiedperformance-based compensation” within the meaning of Section 162(m) ofthe Code and the regulations promulgated thereunder.  The Company has considered the limitations ondeductions imposed by Section 162(m) of the Code, and it is theCompany’s present intention that, for so long as it is consistent with itsoverall compensation objective, substantially all tax deductions attributableto executive compensation will not be subject to the deduction limitations of Section 162(m) ofthe Code.

 

TheCompensation Committee is satisfied that the executive officers of the Companyare dedicated to achieving significant improvements in the long-term financialperformance of the Company and that the compensation policies and programsimplemented and administered have contributed and will continue to contributetoward achieving this goal.

 

**CompensationCommittee Report**

 

TheCompensation Committee has reviewed and discussed the Compensation Discussionand Analysis required by Item 402(b) of Regulation S-K with management,and based on such review and discussions, the Compensation Committeerecommended to the Board of Directors that the Compensation Discussion andAnalysis be included in this Annual Report on Form 10-K.

 

DouglasW. Scott

GeorgeA. Abe

NancyE. Nager

 

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**SUMMARYCOMPENSATION TABLE**

 

Thefollowing table summarizes cash and non-cash compensation information withrespect to services rendered to the Company, in all capacities, during thefiscal year ended June 28, 2008 for (i) the individual who served asthe Chief Executive Officer for the fiscal year ended June 28, 2008, (ii) theindividual who served as the Chief Financial Officer for the fiscal year ended June 28,2008, and (iii) each of the three other most highly compensated executiveofficers who was serving in that capacity as of June 28, 2008.

 
| **Name and Principal Position**                         | ** ** | **Fiscal  Year** | ** ** | **Salary  ($)** | ** ** | **Bonus  ($)  (1)** | ** ** | **Stock  Awards  ($)  (2)** | ** ** | **Option /  SAR  Awards  ($)  (3)** | ** ** | **Non-  Equity  Incentive  Plan  Compen-sation  ($)  (4)** | ** ** | **Change in  Pension  Value and  Nonqualified  Deferred  Compensation  Earnings  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|------------------------------------------------------------------------|------------|------------------|------------|-----------------|------------|---------------------|------------|-----------------------------|------------|------------------------------------------|------------|------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| Dennis S. Herman  Senior Vice President,                               |       | 2008             |       | 232,213         |       | —              |       | —                      |       | 155,695                                  |       | —                                                     |       | —                                                                                           |       | 97,327                                | (5)        | 485,235        |       |
| North American  Sales                                                  |       | 2007             |       | 222,917         |       | —              |       | —                      |       | 127,123                                  |       | —                                                     |       | —                                                                                           |       | 8,240                                 | (5)        | 358,280        |       |
| Dr. James C.  Hsia                                                |       | 2008             |       | 254,980         |       | —              |       | —                      |       | 155,695                                  |       | —                                                     |       | —                                                                                           |       | 14,868                                | (6)        | 425,543        |       |
| Chief Technical  Officer                                               |       | 2007             |       | 242,594         |       | —              |       | —                      |       | 120,085                                  |       | —                                                     |       | —                                                                                           |       | 12,788                                | (6)        | 375,467        |       |
| Paul R. Lucchese  Senior Vice President,  General Counsel and          |       | 2008             |       | 215,562         |       | —              |       | —                      |       | 138,606                                  |       | —                                                     |       | —                                                                                           |       | 16,238                                | (7)        | 370,406        |       |
| Secretary                                                              |       | 2007             |       | 195,060         |       | —              |       | —                      |       | 86,141                                   |       | —                                                     |       | —                                                                                           |       | 8,905                                 | (7)        | 290,106        |       |
| Gerard E. Puorro  President, Chief Executive                           |       | 2008             |       | 499,200         |       | —              |       | —                      |       | 454,225                                  |       | —                                                     |       | —                                                                                           |       | 14,487                                | (8)        | 967,912        |       |
| Officer and  Director                                                  |       | 2007             |       | 501,502         |       | —              |       | —                      |       | 349,812                                  |       | —                                                     |       | —                                                                                           |       | 11,033                                | (8)        | 862,347        |       |
| Robert E. Quinn  Vice President, Finance,  Corporation Controller, and |       | 2008             |       | 182,070         |       | —              |       | —                      |       | 109,536                                  |       | —                                                     |       | —                                                                                           |       | 9,429                                 | (9)        | 301,035        |       |
| Treasurer                                                              |       | 2007             |       | 166,034         |       | —              |       | —                      |       | 90,460                                   |       | —                                                     |       | —                                                                                           |       | 4,684                                 | (9)        | 261,178        |       |

 

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| (1)    | Bonuses  for prior years were previously reported in this column. However, under  current reporting rules, only purely discretionary or guaranteed bonuses are  disclosed in this column. As discussed more fully in the Compensation  Discussion and Analysis, the Named Executive Officers earn cash bonuses under  the Company’s Executive Bonus Plan based on pre-established performance  measures. Accordingly, annual bonus amounts are reported in the Non-Equity  Incentive Plan Compensation column.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (2)    | All  equity incentive plan compensation was granted under the Company’s 1998 Stock  Plan. The amounts in this column are calculated based on FAS 123R and equal  the financial statement compensation cost for restricted stock awards as  reported in the Company’s consolidated statement of income for the fiscal  years ended June 30, 2007 and June 28, 2008. Under FAS 123R, a pro-rata  portion of the total expense at the time the restricted stock award is  granted is recognized over the applicable service period generally  corresponding with the vesting schedule of the grant.                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (3)    | All  equity incentive plan compensation was granted under the Company’s 1998 Stock  Plan. The amounts in this column are calculated based on FAS 123R and equal  the financial statement compensation cost for stock options and SARs as  reported in the Company’s consolidated statement of income for the fiscal  years ended June 30, 2007 and June 28, 2008. Under FAS 123R, a  pro-rata portion of the total expense at the time of grant is recognized over  the applicable service period generally corresponding with the vesting  schedule of the grant. The initial expense is based on the fair value of the  stock options or SARs grants as estimated using the Black-Scholes  option-pricing model. The assumptions used to arrive at the Black-Scholes  value are disclosed in Note 1 to the Company’s consolidated financial  statements included in the Company’s Annual Report on Form 10-K for the  fiscal year ended June 28, 2008. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (4)    | The  amounts in this column consist of annual bonus amounts earned under the  Company’s Executive Bonus Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (5)    | For  fiscal 2008, consists of $87,100 in commissions, $7,998 in matching  contributions by the Company pursuant to the Company’s 401(k) Plan, and  $2,229 for a Company provided automobile. For fiscal 2007, consists of $6,427  in matching contributions by the Company pursuant to the Company’s  401(k) Plan and $1,813 for a Company provided automobile.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (6)    | For  fiscal 2008, consists of $6,930 in matching contributions by the Company  pursuant to the Company’s 401(k) Plan and $7,938 for a Company provided  automobile. For fiscal 2007, consists of $6,600 in matching contributions by  the Company pursuant to the Company’s 401(k) Plan and $6,188 for a  Company provided automobile.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 

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| (7)    | For  fiscal 2008, consists of $6,300 in matching contributions by the Company  pursuant to the Company’s 401(k) Plan and $9,938 for a Company provided  automobile. For fiscal 2007, consists of $5,230 in matching contributions by  the Company pursuant to the Company’s 401(k) Plan and $3,675 for a  Company provided automobile. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                       |
| (8)    | For  fiscal 2008, consists of $6,750 in matching contributions by the Company  pursuant to the Company’s 401(k) Plan and $7,737 for a Company provided  automobile. For fiscal 2007, consists of $6,600 in matching contributions by  the Company pursuant to the Company’s 401(k) Plan and $4,433 for a  Company provided automobile. |
|   |                                                                                                                                                                                                                                                                                                                                                       |
| (9)    | For  fiscal 2008, consists of $5,346 in matching contributions by the Company  pursuant to the Company’s 401(k) Plan and $4,083 for a Company provided  automobile. For fiscal 2007, consists of $4,684 in matching contributions by  the Company pursuant to the Company’s 401(k) Plan.                                               |

 

**GRANTSOF PLAN-BASED AWARDS**

 

Thefollowing table summarizes grants of non-equity and equity plan-based awards tothe Named Executive Officers during the fiscal year ended June 28, 2008.

 
| ** **              | ** ** | ** **          | ** ** | **Estimated Future Payouts Under Non-  Equity Incentive Plan Awards (1)** | ** ** | **Estimated Future Payouts Under  Equity Incentive Plan Awards (2)** | ** ** | **Exercise or  Base Price  of Option** | ** ** | **Grant Date  Fair Value  of Stock  and Option  Awards** | ** ** |
|-------------------------|------------|---------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|------------------------------------------------------------------------------|------------|
| **Name**                | ** ** | **Grant Date** | ** ** | **Threshold  ($)**                                                                                                | ** ** | **Target  ($)**                                                                                         | ** ** | **Maximum  ($)**                                      | ** ** | **Threshold  (#)**                                                           | ** ** | **Target  (#)** | ** ** | **Maximum  (#)** | ** ** | **Awards  ($/share)** | ** ** | **($)  (3)** | ** ** |
| Dennis S. Herman        |       | 07/01/2007          |       | —                                                                                                            |       | 71,727                                                                                                  |       |                                                  | (4)        | —                                                                       |       | — |   | — |   | — |   | — |   |
|                    |       | 01/25/2008          |       | —                                                                                                            |       | —                                                                                                  |       | —                                                |       | —                                                                       |       | 60,000 |   | 60,000 |   | 4.29 |   | 126,972 |   |
| Dr. James C.  Hsia |       | 07/01/2007          |       | —                                                                                                            |       | 76,355                                                                                                  |       |                                                  | (4)        | —                                                                       |       | — |   | — |   | — |   | — |   |
|                    |       | 01/25/2008          |       | —                                                                                                            |       | —                                                                                                  |       | —                                                |       | —                                                                       |       | 60,000 |   | 60,000 |   | 4.29 |   | 126,972 |   |
| Paul R. Lucchese        |       | 07/01/2007          |       | —                                                                                                            |       | 75,005                                                                                                  |       |                                                  | (4)        | —                                                                       |       | — |   | — |   | — |   | — |   |
|                    |       | 01/25/2008          |       | —                                                                                                            |       | —                                                                                                  |       | —                                                |       | —                                                                       |       | 60,000 |   | 60,000 |   | 4.29 |   | 126,972 |   |
| Gerard E. Puorro        |       | 07/01/2007          |       | —                                                                                                            |       | 202,500                                                                                                 |       |                                                  | (4)        | —                                                                       |       | — |   | — |   | — |   | — |   |
|                    |       | 01/25/2008          |       | —                                                                                                            |       | —                                                                                                  |       | —                                                |       | —                                                                       |       | 120,000 |   | 120,000 |   | 4.29 |   | 253,944 |   |
| Robert E. Quinn         |       | 07/01/2007          |       | —                                                                                                            |       | 64,916                                                                                                  |       |                                                  | (4)        | —                                                                       |       | — |   | — |   | — |   | — |   |
|                    |       | 01/25/2008          |       | —                                                                                                            |       | —                                                                                                  |       | —                                                |       | —                                                                       |       | 20,000 |   | 20,000 |   | 4.29 |   | 42,324 |   |

 

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| (1)    | In  fiscal 2008, all non-equity plan-based awards were granted under the  Company’s Executive Bonus Plan.                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                               |
| (2)    | In  fiscal 2008, all equity plan-based awards were granted under the Company’s  1998 Stock Plan.                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                               |
| (3)    | Represents  the aggregate fair value of stock and option awards as of the grant date.                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                               |
| (4)    | As  illustrated in the section entitled Executive Compensation – Compensation  Discussion and Analysis, the maximum estimated future payouts under the  Executive Bonus Plan are a function of Target Profits and cannot be  determined at the time of grant. |

 

**ADDITIONALDISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS**

 

**EmploymentAgreements and Arrangements and Potential Payments upon Termination orChange-in-Control**

 

***Executive Officers other than the Chief ExecutiveOfficer.***  On November 26, 2007, the Companyentered into Employment, Non-competition and Nondisclosure Agreements (the “EmploymentAgreements”) and Senior Officer Executive Retention Agreements (the “RetentionAgreements”) with each of Jay D. Caplan, Dennis S. Herman, James C. Hsia, PaulR. Lucchese, and Robert E. Quinn.  TheEmployment Agreements and Retention Agreements were approved by theCompensation Committee on November 15, 2007.

 

EachEmployment Agreement provides that the executive officer:

 
| (i) | is  entitled to an annual base salary; |
|-----|----------------------------------------|

 

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| (ii)   | may  be entitled to cash bonuses as well as equity awards in the form of options,  SARs, shares of restricted stock, or such other equity grants as may be  determined by the Company’s Board of Directors; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                 |
| (iii)  | is  entitled to an automobile leased by the Company for use by the executive  officer.                                                                                                                               |

 

EachEmployment Agreement also generally provides for at-will employment.  If the executive officer is dischargedwithout cause or is involuntarily terminated (as such term is used in theEmployment Agreement), then

 
| (i)    | the  executive officer will be entitled to severance payments for a period of 12  months, the aggregate amount of which will equal the executive officer’s  salary for 12 months; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                   |
| (ii)   | the  Company will continue to pay the executive officer’s premiums relating to  health and dental insurance for 12 months;                                                        |
|   |                                                                                                                                                                                   |
| (iii)  | the  Company will make two additional monthly payments on the automobile leased by  the Company for use by the executive officer; and                                                  |
|   |                                                                                                                                                                                   |
| (iv)   | the  Company will provide outplacement services with a value of up to $10,000 to  the executive officer.                                                                               |

 

Additionally,each Employment Agreement contains a covenant by the executive officer toprotect the Company’s intellectual property, to refrain from competing againstthe Company, and to refrain from soliciting employees of the Company.

 

EachRetention Agreement provides that the executive officer will be entitled tocertain benefits in the event that (i) a change in control occurs between November 26,2007 and December 31, 2009 and (ii) the executive officer’semployment with the Company terminates within 24 months following the date ofthe change in control.

 

Ifthe executive officer is terminated without cause or by involuntary terminationwithin 24 months of the change in control, then:

 
| (i)    | the  executive officer will be entitled to payments for a period of 12 months, the  aggregate amount of which will equal the executive officer’s annual base  salary multiplied by two;                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                 |
| (ii)   | the  executive officer will be entitled to payments for a period of 12 months, the  aggregate amount of which will equal the executive officer’s target annual  bonus (irrespective of the level of attainment to that date of any target  bonus benchmarks) multiplied by two; |
|   |                                                                                                                                                                                                                                                                                 |
| (iii)  | the  executive officer will be entitled to receive any accrued obligations owing  to him by the Company, including any unpaid base salary and prorated bonus  (irrespective of the level of attainment to that date of any target bonus  benchmarks);                                |
|   |                                                                                                                                                                                                                                                                                 |
| (iv)   | any  then-unvested equity awards shall immediately become exercisable and vested  in full;                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                 |
| (v)    | the  executive officer will be provided with benefits for 18 months following the  executive officer’s termination;                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                 |
| (vi)   | the  Company will make a one-time payment of $5,000 to the executive officer to  cover some or all of the lease payments remaining due on the automobile  leased by the Company for use by the executive officer; and                                                                |
|   |                                                                                                                                                                                                                                                                                 |
| (vii)  | the  Company will provide outplacement services with a value of up to $10,000 to  the executive officer.                                                                                                                                                                             |

 

Ifthe executive officer resigns, is terminated due to death or disability, or isterminated for cause, in each case within 24 months of the change in control,then, pursuant to the Retention Agreement, the executive officer will beentitled to receive accrued obligations owing to him by the Company.

 

***Chief Executive Officer.***  On November 26,2007, the Company entered into an Amended and Restated Employment Agreement(the “Puorro Employment Agreement”) and an Executive Retention Agreement (the “PuorroRetention Agreement”) with Gerard E. Puorro, the Company’s President and ChiefExecutive Officer.  The Puorro EmploymentAgreement and Puorro Retention Agreement were approved by the Compensation Committeeon November 15, 2007.

 

ThePuorro Employment Agreement is generally similar to the Employment Agreementswith the other executive officers, which are described above.  However, Mr. Puorro may terminate hisemployment for any reason at any time upon at least 60 days’ prior writtennotice; if Mr. Puorro terminates his employment at his option, either Mr. Puorroor the Company can elect, prior to the expiration of the sixty (60) day noticeperiod, that Mr. Puorro receive severance payments (which shall cause thenon-compete provisions applicable to Mr. Puorro to become activated).

 

ThePuorro Employment Agreement generally provides for at-will employment.  If Mr. Puorro voluntarily resigns or isterminated without cause, then Mr. Puorro will be entitled to severancepayments for a period of 24 months.  For

 

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thefirst 12 months of the severance period, Mr. Puorro will receive 100% ofhis monthly salary in effect at the time of his resignation ortermination.  For the second 12 months ofthe severance period, if a successor Chief Executive Officer was hired prior toMr. Puorro’s termination date, then Mr. Puorro will receive 100% ofhis monthly salary in effect at the time of his resignation or termination,otherwise Mr. Puorro will receive 50% of his monthly salary in effect atthe time of his resignation or termination. In addition, for the full severance period, the Company will pay 100% ofMr. Puorro’s premium payments for health and dental insurance continuationcoverage.  The Company will also provideoutplacement services with a value of up to $25,000 to Mr. Puorro.

 

ThePuorro Retention Agreement provides that Mr. Puorro will be entitled tocertain benefits in the event that (i) a change in control occurs between November 26,2007 and December 31, 2009 and (ii) Mr. Puorro’s employment withthe Company terminates within 24 months following the date of the change incontrol.

 

IfMr. Puorro is terminated without cause or by involuntary terminationwithin 24 months of the change in control, then:

 
| (i)    | Mr. Puorro  will be entitled to monthly payments for a period of 24 months, with the  amount of each monthly payment equal to one-twenty-fourth (1/24) of his  annual base salary multiplied by three;                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                |
| (ii)   | Mr. Puorro  will be entitled to monthly payments for a period of 24 months, with the  amount of each monthly payment equal to one-twenty-fourth (1/24) of his  target annual bonus (irrespective of the level of attainment to that date of  any target bonus benchmarks) multiplied by three; |
|   |                                                                                                                                                                                                                                                                                                |
| (iii)  | Mr. Puorro  will be entitled to receive any accrued obligations owing to him by the  Company, including any unpaid base salary and prorated bonus (irrespective of  the level of attainment to that date of any target bonus benchmarks);                                                      |
|   |                                                                                                                                                                                                                                                                                                |
| (iv)   | any  then-unvested equity awards shall immediately become exercisable and vested  in full;                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                |
| (v)    | Mr. Puorro  will be provided with benefits for 18 months following his termination;                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                |
| (vi)   | the  Company will make payments to Mr. Puorro to cover all of the lease  payments remaining due on the automobile leased by the Company for use by  Mr. Puorro, at which point Mr. Puorro may exercise the purchase option  on the automobile should one exist; and                  |
|   |                                                                                                                                                                                                                                                                                                |
| (vii)  | the  Company will provide outplacement services with a value of up to $25,000 to  Mr. Puorro.                                                                                                                                                                                                  |

 

Pursuantto the Retention Agreement, if Mr. Puorro resigns, is terminated due todeath or disability, or is terminated for cause, in each case within 24 monthsof the change in control, then he (or his estate) will be entitled to receiveaccrued obligations owing to him by the Company.

 

Eachof the executive officers is subject to nonsolicitation and noncompetitionprovisions for the period during which he or she receives severancepayments.  Upon a change-in-control,options and SARs held by the executive officers and all other employees willfully vest.

 

Thefollowing table sets forth the estimated incremental payments and benefits,beyond existing compensation and benefit entitlements described in this AnnualReport on Form 10-K that are not contingent upon a termination or changein control, payable to each Named Executive Officer upon a change in control ofthe Company or termination of such Named Executive Officer’s employment, ineach case assuming that the triggering event occurred on June 28, 2008.

 
| ** **              | ** ** | **Change in Control** | ** ** | **Termination**                 | ** ** | **Resignation**     | ** ** |
|-------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------|------------|
| **Name**                | ** ** | **Without  Termination**        | ** ** | **Termination  Without  Cause** | ** ** | **With Cause** | ** ** | **Without  Cause** | ** ** | **For Good  Reason** | ** ** | **Death,  Disability, or  Otherwise** | ** ** |
| Dennis S. Herman        |       | —                          |       | 744,893                         |       | —              |       | 267,225 |   | 267,225 |   | — |   |
| Dr. James  C. Hsia |       | —                          |       | 786,843                         |       | —              |       | 282,729 |   | 282,729 |   | — |   |
| Paul R. Lucchese        |       | —                          |       | 773,336                         |       | —              |       | 278,051 |   | 278,051 |   | — |   |
| Gerard E. Puorro  (1)   |       | —                          |       | 2,306,934                       |       | —              |       | 947,184 |   | 947,184 |   | 947,184 |   |
| Robert E. Quinn         |       | —                          |       | 666,814                         |       | —              |       | 238,980 |   | 238,980 |   | — |   |

 

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| *      | Excludes  information with respect to contracts, agreements, plans or arrangements that  do not discriminate in scope, terms or operation in favor of the Company’s  executive officers and that are available generally to all salaried  employees.                                                                                                                                                                                                                                                                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (1)    | As  discussed above, if Mr. Puorro voluntarily resigns or is terminated  without cause, then Mr. Puorro will be entitled to severance payments  for a period of 24 months. For the first 12 months of the severance period,  Mr. Puorro will receive 100% of his monthly salary in effect at the time  of his resignation or termination. For the second 12 months of the severance  period, if a successor Chief Executive Officer was hired prior to  Mr. Puorro’s termination date, then Mr. Puorro will receive 100% of  his monthly salary |

 

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|   | in  effect at the time of his resignation or termination, otherwise Mr. Puorro  will receive 50% of his monthly salary in effect at the time of his  resignation or termination. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Non-EquityIncentive Plan Awards**

 

Infiscal 2008, all non-equity plan-based awards were granted under the Company’sExecutive Bonus Plan.  The ExecutiveBonus Plan provides participating executive officers with the opportunity toearn bonus compensation upon the achievement of certain performance objectives.  Please see the section entitled ExecutiveCompensation – Compensation Discussion and Analysis for additional informationregarding the Executive Bonus Plan.

 

**EquityIncentive Plan Awards**

 

Infiscal 2008, all equity plan-based awards were granted under the Company’s 1998Stock Plan.  In fiscal 2008, theCompensation Committee granted equity awards in the form of CommonStock-settled SARs to executive officers. The exercise price per share of the Common Stock underlying each SAR isnot less than the last reported sale price per share of the Common Stock on theNASDAQ Global Select Market on the date of grant.  Each SAR generally vests over four years inequal installments of 25% of the total number of shares of Common Stockunderlying such SAR on each anniversary of the date of grant.  The Compensation Committee has the right toaccelerate the date of exercise of any installment of such SAR.  In addition, upon certain acquisitions, suchSAR shall become fully vested.  SARs maybe exercised from time to time, in whole or in part, up to the total number ofshares with respect to which the SAR is then exercisable.  Each SAR generally expires 10 years after thedate of grant.  SARs are subject to earlytermination in certain circumstances.

 

**OUTSTANDINGEQUITY AWARDS AT FISCAL YEAR-END**

 

Thefollowing table summarizes the unexercised options and SARs for each NamedExecutive Officer outstanding as of June 28, 2008.  Other than as set forth below, no NamedExecutive Officer had any unvested stock or other equity incentive plan awardsas of June 28, 2008.

 
| **Name**                | ** ** | **Number of Securities  Underlying  Unexercised Options /  SARs  (Exercisable)  (#)** | ** ** | **Number of Securities  Underlying  Unexercised Options /  SARs  (Unexercisable)  (#)** | ** ** | **Option / SAR  Exercise Price  ($)** | ** ** | **Option / SAR  Expiration Date** | ** ** |
|-------------------------|------------|-----------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------|------------|
| Dennis S. Herman        |       | 15,000                                                                                                    |       | —                                                                                                      |       | 4.67                                                 |       | 04/29/2013                                       |       |
|                    |       | 5,158                                                                                                     |       | —                                                                                                      |       | 11.98                                                |       | 01/29/2014                                       |       |
|                    |       | 9,842                                                                                                     |       | —                                                                                                      |       | 11.98                                                |       | 01/29/2014                                       |       |
|                    |       | 5,000                                                                                                     |       | —                                                                                                      |       | 9.50                                                 |       | 02/11/2015                                       |       |
|                    |       | 15,000                                                                                                    |       | 15,000                                                                                                      |       | 15.33                                                |       | 01/30/2016                                       |       |
|                    |       | 7,500                                                                                                     |       | 22,500                                                                                                      |       | 11.53                                                |       | 04/03/2017                                       |       |
|                    |       | —                                                                                                    |       | 60,000                                                                                                      |       | 4.29                                                 |       | 01/25/2018                                       |       |
| Dr. James  C. Hsia |       | 30,000                                                                                                    |       | —                                                                                                      |       | 4.08                                                 |       | 03/03/2013                                       |       |
|                    |       | 42,104                                                                                                    |       | —                                                                                                      |       | 9.50                                                 |       | 01/12/2014                                       |       |
|                    |       | 7,896                                                                                                     |       | —                                                                                                      |       | 9.50                                                 |       | 01/12/2014                                       |       |
|                    |       | 15,000                                                                                                    |       | —                                                                                                      |       | 9.50                                                 |       | 02/11/2015                                       |       |
|                    |       | 15,000                                                                                                    |       | 15,000                                                                                                      |       | 15.33                                                |       | 01/30/2016                                       |       |
|                    |       | 7,500                                                                                                     |       | 22,500                                                                                                      |       | 11.53                                                |       | 04/03/2017                                       |       |
|                    |       | —                                                                                                    |       | 60,000                                                                                                      |       | 4.29                                                 |       | 01/25/2018                                       |       |
| Paul R. Lucchese        |       | 3,750                                                                                                     |       | 11,250                                                                                                      |       | 14.22                                                |       | 07/17/2016                                       |       |
|                    |       | 7,500                                                                                                     |       | 22,500                                                                                                      |       | 11.53                                                |       | 04/03/2017                                       |       |
|                    |       | —                                                                                                    |       | 60,000                                                                                                      |       | 4.29                                                 |       | 01/25/2018                                       |       |
| Gerard E. Puorro        |       | 9,150                                                                                                     |       | —                                                                                                      |       | 11.96                                                |       | 01/26/2014                                       |       |
|                    |       | 20,850                                                                                                    |       | —                                                                                                      |       | 11.96                                                |       | 01/26/2014                                       |       |
|                    |       | 858                                                                                                       |       | —                                                                                                      |       | 11.98                                                |       | 01/29/2014                                       |       |
|                    |       | 29,142                                                                                                    |       | —                                                                                                      |       | 11.98                                                |       | 01/29/2014                                       |       |
|                    |       | 8                                                                                                         |       | —                                                                                                      |       | 10.35                                                |       | 08/23/2014                                       |       |
|                    |       | 69,992                                                                                                    |       | —                                                                                                      |       | 10.35                                                |       | 08/23/2014                                       |       |
|                    |       | 5,000                                                                                                     |       | —                                                                                                      |       | 9.50                                                 |       | 02/11/2015                                       |       |
|                    |       | 15,000                                                                                                    |       | —                                                                                                      |       | 9.50                                                 |       | 02/11/2015                                       |       |
|                    |       | 40,000                                                                                                    |       | 40,000                                                                                                      |       | 15.33                                                |       | 01/30/2016                                       |       |
|                    |       | 25,000                                                                                                    |       | 75,000                                                                                                      |       | 11.53                                                |       | 04/03/2017                                       |       |
|                    |       | —                                                                                                    |       | 120,000                                                                                                     |       | 4.29                                                 |       | 01/25/2018                                       |       |
| Robert E. Quinn         |       | 10,000                                                                                                    |       | —                                                                                                      |       | 6.56                                                 |       | 08/11/2013                                       |       |
|                    |       | 10,000                                                                                                    |       | 10,000                                                                                                      |       | 15.33                                                |       | 01/30/2016                                       |       |
|                    |       | 6,250                                                                                                     |       | 18,750                                                                                                      |       | 11.53                                                |       | 04/03/2017                                       |       |
|                    |       | —                                                                                                    |       | 20,000                                                                                                      |       | 4.29                                                 |       | 01/25/2018                                       |       |

 

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**OPTIONEXERCISES AND STOCK VESTED**

 

Thefollowing table summarizes information with respect to each exercise of stock options,SARs and similar instruments, and each vesting of stock (including restrictedstock, restricted stock units and similar instruments), for each NamedExecutive Officer during the fiscal year ended June 28, 2008.

 
| **Name**                | ** ** | **Number of Shares  Acquired on Exercise  (#)** | ** ** | **Value Realized on  Exercise  ($) (1)** | ** ** | **Number of Shares  Acquired on Vesting  (#)** | ** ** | **Value Realized on  Vesting  ($)** | ** ** |
|-------------------------|------------|---------------------------------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| Dennis S. Herman        |       | —                                                              |       | —                                                  |       | —                                                             |       | —                                        |       |
| Dr. James  C. Hsia |       | —                                                              |       | —                                                  |       | —                                                             |       | —                                        |       |
| Paul R. Lucchese        |       | —                                                              |       | —                                                  |       | —                                                             |       | —                                        |       |
| Gerard E. Puorro        |       | —                                                              |       | —                                                  |       | —                                                             |       | —                                        |       |
| Robert E. Quinn         |       | —                                                              |       | —                                                  |       | —                                                             |       | —                                        |       |

 

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| (1) | Amounts  described in this column were calculated based on the difference between  (i) the fair market value of the underlying Common Stock, which is  deemed to be the closing price of the Common Stock on the date of exercise,  or if sold on that date, the actual sale price, and (ii) the exercise  price of the options, SAR or similar instrument, in accordance with  regulations promulgated under the Securities Exchange Act of 1934, as  amended, and do not necessarily reflect amounts received by the Named  Executive Officers. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**DIRECTORCOMPENSATION**

 

TheCompensation Committee regularly reviews the compensation for Directors who arenot employees of the Company (“Non-Employee Directors”).  The following table summarizes cash andnon-cash compensation information with respect to the compensation ofNon-Employee Directors during the fiscal year ended June 28, 2008.

 
| **Name**                | ** ** | **Fees  Earned or  Paid in  Cash  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option /  SAR  Awards  ($) (1)** | ** ** | **Non-  Equity  Incentive  Plan  Compensation  ($)** | ** ** | **Change in  Pension  Value and  Nonqualified  Deferred  Compensation  Earnings  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|-------------------------|------------|---------------------------------------------------|------------|------------------------|------------|----------------------------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| George A. Abe  (2)      |       | 36,000                                            |       | —                 |       | 54,574                                       |       | —                                               |       | —                                                                                           |       | —                                |       | 117,394        |       |
| Ben Bailey III  (3)     |       | 77,000                                            |       | —                 |       | 54,574                                       |       | —                                               |       | —                                                                                           |       | —                                |       | 158,394        |       |
| Nancy E. Nager  (4)     |       | 42,000                                            |       | —                 |       | 54,574                                       |       | —                                               |       | —                                                                                           |       | —                                |       | 123,394        |       |
| Kenneth D.  Roberts (5) |       | 43,000                                            |       | —                 |       | 54,574                                       |       | —                                               |       | —                                                                                           |       | —                                |       | 124,394        |       |
| Douglas W. Scott  (6)   |       | 46,000                                            |       | —                 |       | 54,574                                       |       | —                                               |       | —                                                                                           |       | —                                |       | 127,394        |       |

 

----

| (1)    | Amounts  described in this column were calculated based on the dollar amount  recognized for financial statement reporting purposes with respect to the  fiscal year ended June 28, 2008 in accordance with FAS 123R. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                       |
| (2)    | Mr. Abe  had an aggregate of 130,000 option / SAR awards outstanding as of  June 28, 2008. The grant date fair value of such awards, computed in  accordance with FAS 123R, was $961,630.                        |
|   |                                                                                                                                                                                                                       |
| (3)    | Mr. Bailey  had an aggregate of 70,000 option / SAR awards outstanding as of  June 28, 2008. The grant date fair value of such awards, computed in  accordance with FAS 123R, was $610,877.                      |

 

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| (4)    | Ms. Nager  had an aggregate of 85,000 option / SAR awards outstanding as of  June 28, 2008. The grant date fair value of such awards, computed in  accordance with FAS 123R, was $710,247.      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                      |
| (5)    | Mr. Roberts  had an aggregate of 205,000 option / SAR awards outstanding as of  June 28, 2008. The grant date fair value of such awards, computed in  accordance with FAS 123R, was $1,119,479. |
|   |                                                                                                                                                                                                      |
| (6)    | Mr. Scott  had an aggregate of 130,000 option / SAR awards outstanding as of  June 28, 2008. The grant date fair value of such awards, computed in  accordance with FAS 123R, was $961,507.     |

 

Duringthe fiscal year ended June 28, 2008, Non-Employee Directors received (i) anannual retainer of $20,000; (ii) an additional annual retainer of $5,000for the Chair of the Board of Directors; (iii) an additional annualretainer of $5,000 for the Chair of the Audit Committee (unless such person isalso Chair of the Board of Directors); (iv) an additional annual retainerof $2,500 for the Chair of the Compensation Committee; (v) a fee of $1,500per meeting of the Board of Directors that such Non-Employee Director attendsin person; (vi) a fee of $1,000 per meeting of the Board of Directors thatsuch Non-Employee Director attends by telephone; (vii) a fee of $1,000 percommittee meeting, that takes place on a day other than a day on which there isa regularly scheduled meeting of the Board of Directors, and that suchNon-Employee Director attends in person; and (viii) a fee of $500 percommittee meeting, that takes place on a day other than a day on which there isa regularly scheduled meeting of the Board of Directors, and that suchNon-Employee Director attends by telephone. In addition, commencing September 1, 2006, Mr. Bailey receiveda retainer of $3,000 per month relating to his liaising with management onbehalf of the Board of Directors relating to certain litigation matters.

 

Directorswho are employees of the Company receive no additional compensation for theirservice as a Director.

 

**COMPENSATIONCOMMITTEE INTERLOCKS AND INSIDER PARTICIPATION**

 

Mr. Scott,Mr. Abe and Ms. Nager currently serve on the Compensation Committeeand served on the Compensation Committee during the fiscal year ended June 28,2008.  The foregoing persons were notofficers or employees of the Company during the fiscal year ended June 28,2008 and were not formerly officers or employees of the Company.  No person who served on the CompensationCommittee had any relationship requiring disclosure under Item 404 ofRegulation S-K.

 

**Item 12.****                           ****Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.**

 

**SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

 

Thefollowing table sets forth certain information with respect to the beneficialownership of the Company’s Common Stock as of October 13, 2008 by (i) eachperson known to the Company to be the beneficial owner of more than fivepercent of its Common Stock, (ii) each Director, or nominee for Director,of the Company, (iii) each executive officer named in the SummaryCompensation Table under the caption “Compensation and Other InformationConcerning Directors and Officers” below and (iv) all Directors, nomineesfor Director and executive officers of the Company as a group.  Except as otherwise indicated in thefootnotes to the table, to the Company’s knowledge, the beneficial ownerslisted have sole voting and sole investment power (subject to communityproperty laws where applicable) as to all shares beneficially owned bythem.  The address of each of the Company’sDirectors and executive officers is c/o Candela Corporation, 530 Boston PostRoad, Wayland, Massachusetts 01778.  Asof October 13, 2008, there were 22,835,433 shares of Common Stock issuedand outstanding.

 

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| ** **                                                                                             | ** ** | **Amount and Nature of Beneficial Ownership** | ** ** | ** **            | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|-----------------------|------------|
| **Name and Address of Beneficial Owner**                                      | ** ** | **Common  Stock**                                                      | ** ** | **Options/SARs  (1)** | ** ** | **Total** | ** ** | **Percent of  Class** | ** ** |
|                                                                                                   |       |                                                                   |       |                  |       |   |   |   |   |
| **5%  Owners**                                                                                         |       |                                                                   |       |                  |       |   |   |   |   |
| JPMorgan  Chase & Co. (2) 270 Park Avenue New York, New York 10017                            |       | 3,354,235                                                              |       | —                |       | 3,354,235 |   | 14.7 | % |
| Signia Capital  Management, LLC (3) 108 N. Washington Street Suite 305 Spokane,  Washington 99201 |       | 2,635,461                                                              |       | —                |       | 2,635,461 |   | 11.5 | % |
|                                                                                                   |       |                                                                   |       |                  |       |   |   |   |   |
| **Directors**                                                                                          |       |                                                                   |       |                  |       |   |   |   |   |
| George A. Abe                                                                                          |       | —                                                                 |       | 90,000                |       | 90,000 |   | * |   |
| Ben Bailey III  (4)                                                                                    |       | 1,000                                                                  |       | 30,000                |       | 31,000 |   | * |   |
| Nancy E. Nager                                                                                         |       | —                                                                 |       | 45,000                |       | 45,000 |   | * |   |
| Gerard E. Puorro                                                                                       |       | 141,000                                                                |       | 215,000               |       | 356,000 |   | 1.5 | % |
| Kenneth D.  Roberts                                                                                    |       | 72,400                                                                 |       | 165,000               |       | 237,400 |   | 1.0 | % |
| Douglas W. Scott  (5)                                                                                  |       | 7,500                                                                  |       | 90,000                |       | 97,500 |   | * |   |
|                                                                                                   |       |                                                                   |       |                  |       |   |   |   |   |
| **Named  Executive Officers**                                                                          |       |                                                                   |       |                  |       |   |   |   |   |
| Dennis S. Herman                                                                                       |       | —                                                                 |       | 57,500                |       | 57,500 |   | * |   |
| Dr. James  C. Hsia                                                                                |       | 30,000                                                                 |       | 117,500               |       | 147,500 |   | * |   |
| Paul R. Lucchese                                                                                       |       | —                                                                 |       | 15,000                |       | 15,000 |   | * |   |
| Gerard E. Puorro                                                                                       |       | 141,000                                                                |       | 215,000               |       | 356,000 |   | 1.5 | % |
| Robert E. Quinn                                                                                        |       | —                                                                 |       | 26,250                |       | 26,250 |   | * |   |
|                                                                                                   |       |                                                                   |       |                  |       |   |   |   |   |
| All Directors  and Executive Officers as a Group (11 persons) (6)                                      |       | 392,900                                                                |       | 1,091,250             |       | 1,484,150 |   | 6.2 | % |

 

----

| *      | Represents  less than 1% of the Company’s outstanding Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (1)    | Pursuant  to the rules of the Securities and Exchange Commission (the “SEC”), the  number of shares of Common Stock deemed beneficially owned includes, for each  person or group referred to in the table, shares issuable pursuant to options  and shares underlying stock appreciation rights held by the respective person  or group that are currently exercisable or will become exercisable within 60  days from October 13, 2008.                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (2)    | Information  obtained from the Schedule 13G/A filed by JPMorgan Chase & Co. on  behalf of itself, J.P. Morgan Securities Inc. and J.P. Morgan Ventures  Corporation with the SEC on January 30, 2008. JPMorgan Chase &  Co. is the beneficial owner of 3,354,235 shares of Common Stock, of which it  has sole voting power as to 3,354,235 shares, no shared voting power, sole  dispositive power as to 3,354,325 shares, and no shared dispositive power. On  October 10, 2008, J.P. Morgan Ventures Corporation filed a Form 4  indicating that J.P. Morgan Ventures Corporation has a pecuniary interest in  1,580,000 shares of Common Stock. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (3)    | Information  obtained from the Schedule 13G filed by Signia Capital Management, LLC with  the SEC on July 10, 2008. Signia Capital Management, LLC is the  beneficial owner of 2,635,461 shares of Common Stock, of which it has sole voting  power as to 573,328 shares, no shared voting power, sole dispositive power as  to 2,635,461 shares, and no shared dispositive power.                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)    | Does  not include 300,000 shares owned by Massachusetts Capital Resource Company,  where Mr. Bailey serves as Vice President, as to which Mr. Bailey  disclaims beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (5)    | Includes  3,750 shares owned by Mr. Scott’s spouse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (6)    | See  Notes 4 and 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

**EQUITYCOMPENSATION PLAN INFORMATION**

 

Thefollowing table sets forth a summary of the equity compensation plans offeredby the Company as of June 28, 2008:

 

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| ** **                                                  | ** ** | **As of June 28, 2008**                                                                                                                        | ** ** |
|-------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| **Plan category**                                      | ** ** | **Number of securities to  be issued upon exercise  of outstanding options,  warrants and rights  (a) (1)** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights  (b) (1)** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation  plans (excluding  securities reflected in  column (a))  (c)** | ** ** |
| Equity  compensation plans approved by security holders (2) |       | 1,044,294                                                                                                                                                          |       | 7.95 |   | 1,032,251 |   |
| Equity  Compensation plans not approved by security holders |       | —                                                                                                                                                             |       | — |   | — |   |
| **Total**                                                   |       | 1,044,294                                                                                                                                                          |       | 7.95 |   | 1,032,251 |   |

 

----

| (1)    | Represents  the number of shares of Common Stock that would have been issued if all  outstanding options, warrants, and rights had been exercised on June 28,  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | As  of June 28, 2008, there were 3,799,682 shares of Common Stock underlying  all outstanding options, warrants, and rights. This consisted of  (i) 1,044,294 shares of Common Stock underlying outstanding Options and  (ii) 2,755,388 shares of Common Stock underlying outstanding Common  Stock-settled SARs. If all such Options had been exercised on June 28,  2008, then 1,044,294 shares of Common Stock would have been issued. If all  such Common Stock-settled SARs had been exercised on June 28, 2008, no  shares of Common Stock would have been issued because the exercise price of  each Common Stock-settled SAR exceeded the fair market value of the  underlying Common Stock on such date. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (2)    | The  equity compensation plan approved by security holders is the 1998 Stock Plan,  which expired pursuant to its terms on September 18, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

**Item 13.****                           ****Certain Relationships andRelated Transactions and Director Independence.**

 

**CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS**

 

Duringfiscal 2008, the Company did not engage in any transaction that would requiredisclosure under Item 404(a) of Regulation S-K.

 

TheCompany maintains policies and procedures for the review, approval, orratification of transactions in which (i) the Company was or is to be aparticipant and the amount involved exceeds $120,000 and (ii) any relatedperson (as such term is defined in Item 404(a) of Regulation S-K) had orwill have a direct or indirect material interest (a “Related PersonTransaction”).

 

Asa general matter, the Company prefers to avoid Related PersonTransactions.  Nevertheless, the Companyrecognizes that there are situations where Related Person Transactions may bein, or may not be inconsistent with, the best interests of the Company and itsstockholders, including but not limited to situations where the Company mayobtain products or services of a nature, quantity or quality, or on otherterms, that are not readily available from alternative sources or when theCompany provides products or services to related persons on an arm’s lengthbasis on terms comparable to those provided to unrelated third parties.

 

RelatedPerson Transactions that are identified as such prior to the consummationthereof or amendment thereto shall be consummated or amended only if thefollowing steps are taken:

 

·                 Priorto entering into the Related Person Transaction (a) the related person, (b) thedirector, executive officer, nominee or beneficial owner who is an immediatefamily member of the related person, or (c) the business unit orfunction/department leader responsible for the potential Related PersonTransaction shall provide notice to the Company’s General Counsel of the factsand circumstances of the proposed Related Person Transaction.

·                 Theproposed Related Person Transaction shall be submitted to the Audit Committeefor consideration at the next Audit Committee meeting.

·                 TheAudit Committee shall consider all of the relevant facts and circumstancesavailable to the Audit Committee, including (if applicable) but not limitedto:  (i) the benefits to the Company;(ii) the impact on a director’s independence in the event the relatedperson is a director, an immediately family member of a director or an entityin which a director is a partner, shareholder or executive officer; (iii) theavailability of other sources for comparable products or services; (iv) theterms of the transaction; and (v) the terms available to unrelated thirdparties or to employees generally.   Nomember of the Audit Committee shall participate in any review, consideration orapproval of any Related Person Transaction with respect to which such member orany of his or her immediate family members is the related person.  The Audit Committee shall approve only thoseRelated Person Transactions that are in, or are not inconsistent with, the bestinterests of the Company and its stockholders, as the Audit Committeedetermines in good faith.

 

Inthe event the Company’s Chief Executive Officer, Chief Financial Officer orGeneral Counsel becomes aware of a Related Person Transaction that has not beenpreviously approved or previously ratified:

 

·                 Ifthe transaction is pending or ongoing, it will be promptly submitted to theAudit Committee, and the Audit Committee shall consider all of the relevantfacts and circumstances available to the Audit Committee, including (ifapplicable) but not limited to:  (i) thebenefits to the Company; (ii) the impact on a director’s independence inthe event the related person is a director, an immediately family member of adirector or an entity in which a director is a partner, shareholder orexecutive officer; (iii) the availability of other sources for comparableproducts or services; (iv) the terms of the transaction; and (v) theterms available to unrelated third parties or to employees generally.  Based on the conclusions reached, the AuditCommittee shall evaluate all options, including but not limited toratification, amendment or termination of the Related Person Transaction.

·                 Ifthe transaction is completed, the Audit Committee shall evaluate the transaction,taking into account the same factors described above, to determine ifrescission of the transaction is appropriate.

 

20

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**DIRECTORINDEPENDENCE**

 

TheBoard of Directors has determined that a majority of members of the Board ofDirectors are independent directors (as defined in NASDAQ Stock Market Rule 4200(a)(15))and that Mr. Roberts, Mr. Abe, Mr. Bailey, Ms. Nager and Mr. Scottare independent directors.

 

**Item 14.****                           ****Principal Accountant Fees andServices.**

 

**ACCOUNTINGFEES**

 

TheAudit Committee has considered whether the Company’s independent registeredpublic accounting firm’s provision of non-audit services to the Company and thefees charged for them, as set forth below, are compatible with the independentregistered public accounting firm’s independence and believes such services arecompatible with the independent registered public accounting firm’sindependence.

 

***Audit Fees.***  The aggregate fees billed by BDO Seidman, LLPfor professional services rendered for the audit of the Company’s annualfinancial statements for fiscal 2008, for the reviews of the financialstatements included in the Company’s Forms 10-Q for fiscal 2008 and for theindependent audit of the Company’s internal control over financial reportingrequired under the Sarbanes-Oxley Act of 2002 for fiscal 2008 were$781,490.  The aggregate fees billed byBDO Seidman, LLP for professional services rendered for the audit of theCompany’s annual financial statements for fiscal 2007, for the reviews of thefinancial statements included in the Company’s Forms 10-Q for fiscal 2007 andfor the independent audit of the Company’s internal control over financialreporting required under the Sarbanes-Oxley Act of 2002 for fiscal 2007 were$680,015.

 

***Audit-Related Fees.***  There were no fees billed by BDOSeidman, LLP for assurance and related services that were reasonably related tothe performance of the audit of the Company’s annual financial statements forfiscal 2008 and 2007 or reviews of the financial statements included in theCompany’s Forms 10-Q for fiscal 2008 and 2007.

 

***Tax Fees.***  There were no fees billed by BDO Seidman, LLPfor professional services rendered for tax compliance, tax advice and taxplanning for fiscal 2008 and 2007.

 

***All Other Fees.***  There were no fees billed by BDOSeidman, LLP for products and services provided other than those describedabove for fiscal 2008 and 2007.

 

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**AUDIT COMMITTEE PRE-APPROVAL POLICIES ANDPROCEDURES**

 

The Company’s Audit Committee has adopted aPre-Approval Policy for Audit and Non-Audit Services in order to assure thatsuch services do not impair the independent registered public accounting firm’sindependence.  Pursuant to this policy,the Audit Committee annually reviews and pre-approves the independentregistered public accounting firm’s year-end audit and quarterly reviews, aswell as other known or anticipated audit or non-audit services. During thecourse of the year, the Audit Committee (or its delegatee) may pre-approveadditional non-audit services that have not been pre-approved at the annualreview.

 

100% of the services described under the caption “AccountingFees” above were approved by the Audit Committee pursuant to 17 CFR210.2-02(c)(7)(i)(C).

 

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**PART IV**

 
| **Item 15.** | **Exhibits,  Financial Statement Schedules.** |
|--------------|-----------------------------------------------|

 

(a)                                  The following Consolidated FinancialStatements, notes thereto and Report of Independent Registered PublicAccounting Firm are set forth under Item 8 of the Original Filing:

 

(1)                                  Consolidated Financial Statements:

 

Reportof Registered Independent Public Accounting Firm

 

ConsolidatedBalance Sheets – June 28, 2008 and June 30, 2007

 

ConsolidatedStatements of Income (Loss) and Comprehensive Income (Loss) – Years ended June 28,2008, June 30, 2007 and July 1, 2006

 

ConsolidatedStatements of Stockholders’ Equity – Years ended June 28, 2008, June 30,2007 and July 1, 2006

 

ConsolidatedStatements of Cash Flows – Years ended June 28, 2008, June 30, 2007and July 1, 2006

 

Notesto Consolidated Financial Statements

 

(2)                                  Consolidated Financial Statement Schedules:

 

ScheduleII - Valuation and Qualifying Accounts

 

Allother financial statements and schedules not listed have been omitted since therequired information is included in the consolidated financial statements orthe notes thereto, or is not applicable, material, or required.

 

(3)                                  Exhibits:  Except as otherwise noted, thefollowing documents are incorporated by reference from the Company’s RegistrationStatement on Form S-1 (File Number 333-78339) or filed herewith:

 
| **Exhibit** | ** ** | **Footnote**   | ** ** | **Description**                                                     |
|-------------|------------|----------------|------------|---------------------------------------------------------------------|
| ** **  | ** ** | ** **     | ** ** | ** **                                                          |
| 3.1         |       | <FN  19> |       | Certificate  of Incorporation, as amended                           |
|        |       |           |       |                                                                |
| 3.2         |       | <FN  9>  |       | By-laws  of the Company, as amended and restated                    |
|        |       |           |       |                                                                |
| 10.1        |       | <FN  1>  |       | 1985  Incentive Stock Option Plan                                   |
|        |       |           |       |                                                                |
| 10.2        |       | <FN  2>  |       | 1987  Stock Option Plan                                             |
|        |       |           |       |                                                                |
| 10.2.1      |       | <FN  2>  |       | 1989  Stock Plan                                                    |
|        |       |           |       |                                                                |
| 10.2.2      |       | <FN  3>  |       | 1990  Employee Stock Purchase Plan                                  |
|        |       |           |       |                                                                |
| 10.2.3      |       | <FN  3>  |       | 1990  Non-Employee Director Stock Option Plan                       |
|        |       |           |       |                                                                |
| 10.2.4      |       | <FN  7>  |       | 1993  Non-Employee Director Stock Option Plan                       |
|        |       |           |       |                                                                |
| 10.2.5      |       | <FN  13> |       | 1998  Amended and Restated Stock Plan                               |
|        |       |           |       |                                                                |
| 10.2.6      |       | <FN  18> |       | 1998  Second Amended and Restated Stock Plan                        |
|        |       |           |       |                                                                |
| 10.3        |       | <FN  7>  |       | Lease  for premises at 526 Boston Post Road, Wayland, Massachusetts |

 

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| 10.4     |   | <FN  7>  |   | Lease  for premises at 530 Boston Post Road, Wayland, Massachusetts                                                                                                                                                      |
|----------|--------|----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.5     |   | <FN  7>  |   | Patent  License Agreement between the Company and Patlex Corporation effective as of  July 1, 1988                                                                                                                  |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.6     |   | <FN  4>  |   | License  Agreement among the Company, Technomed International, Inc. and Technomed  International S.A. dated as of December 20, 1990                                                                            |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.7     |   | <FN  5>  |   | License  Agreement between the Company and Pillco Limited Partnership effective as of  October 1, 1991                                                                                                              |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.8     |   | <FN  8>  |   | Distribution  Agreement between the Company and Cryogenic Technology Limited, dated  October 15, 1993                                                                                                               |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.9     |   | <FN  10> |   | Asset  Purchase Agreement between the Company and Derma-Laser, Limited and  Derma-Lase, Inc. dated June 23, 1994                                                                                               |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.10    |   | <FN  11> |   | Letter  Agreement between the Company and Fleet Bank dated February 13, 1997                                                                                                                                        |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.10.1  |   | <FN  11> |   | Amendment  to Letter Agreement between the Company and Fleet Bank dated  December 15, 1998                                                                                                                          |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.12*   |   | <FN  14> |   | Amended  and Restated License Agreement between the Company and The Regents of  the University of California for Dynamic Skin Cooling Method and  Apparatus effective as of August 11, 2000               |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.12.1* |   | <FN  15> |   | Settlement  Agreement dated August 11, 2000 by and among the Company, the Regents of  the University of California, and Cool Touch, Inc                                                                             |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.13    |   | <FN  12> |   | Note  and Warrant Purchase Agreement, dated as of October 15, 1998 by and  among the Company, Massachusetts Capital Resource Company, William D. Witter  and Michael D. Witter                                      |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.13.1  |   | <FN  12> |   | Form of  Note delivered to the Company in the aggregate principal amount of $3,700,000  to Massachusetts Capital Resource Company, William D. Witter and Michael D.  Witter.                                        |
|     |   |           |   |                                                                                                                                                                                                                     |
| 10.13.2  |   | <FN  12> |   | Form of  Common Stock Purchase Warrant to purchase an aggregate of 370,000 shares of  the Company’s Common Stock delivered to Massachusetts Capital Resource  Company, William D. Witter and Michael D. Witter |
|     |   |           |   |                                                                                                                                                                                                                     |
| 21.1**   |   | <FN  20> |   | Subsidiaries  of the Company                                                                                                                                                                                             |
|     |   |           |   |                                                                                                                                                                                                                     |
| 23.1**   |   | <FN  20> |   | Consent  of BDO Seidman, LLP (Independent Registered Public Accounting Firm)                                                                                                                                             |
|     |   |           |   |                                                                                                                                                                                                                     |
| 31.1**   |   |           |   | Rule 13a-14(a)/15d-14(a) Certification  of Chief Executive Officer                                                                                                                                             |
|     |   |           |   |                                                                                                                                                                                                                     |
| 31.2**   |   |           |   | Rule 13a-14(a)/15d-14(a) Certification  of Chief Financial Officer                                                                                                                                             |
|     |   |           |   |                                                                                                                                                                                                                     |
| 32.1**   |   |           |   | Section 1350  Certification of Chief Executive Officer                                                                                                                                                              |
|     |   |           |   |                                                                                                                                                                                                                     |
| 32.2**   |   |           |   | Section 1350  Certification of Chief Financial Officer                                                                                                                                                              |
|     |   |           |   |                                                                                                                                                                                                                     |
| 99.1     |   | <FN  16> |   | McKesson Medical-Surgical Inc. Distribution  Agreement                                                                                                                                                                   |
|     |   |           |   |                                                                                                                                                                                                                     |
| 99.2     |   | <FN  17> |   | First Amendment to the Amended and Restated  License Agreement by and between The Regents of the University of California  and Candela Corporation                                                                       |

** **

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| *      | Portions  of the exhibit have been omitted and filed separately with the SEC in  reliance upon the Company’s request for confidential treatment pursuant to Rule 24b-2. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                              |
| **     | Filed  herewith                                                                                                                                                                   |

 
| <FN  1> | Previously  filed as an exhibit to Registration Statement No. 33-54448B and incorporated  herein by reference.                                                                                                                 |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                |
| <FN  2> | Previously  filed as an exhibit to the Company’s Amended and Restated Annual Report on  Form 10-K for the fiscal year ended June 30, 1988 (Commission file  number 000-14742), and incorporated herein by reference. |

 

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| <FN  3>        | Previously  filed as an exhibit to the Company’s Annual Report on Form 10-K for the  fiscal year ended June 30, 1990 (Commission file number 000-14742), and  incorporated herein by reference.                      |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                |
| <FN  4>        | Previously  filed as an exhibit to Form 10-Q for the quarter ended December 29,  1990 (Commission file number 000-14742), and incorporated herein by  reference.                                                          |
|                 |                                                                                                                                                                                                                                |
| <FN  5>        | Previously  filed as an exhibit to Form 10-Q for the quarter ended  September 28, 1991 (Commission file number 000-14742), and incorporated  herein by reference.                                                         |
|                 |                                                                                                                                                                                                                                |
| <FN  6>        | Previously  filed as an exhibit to Form 8-K, dated September 8, 1992  (Commission file number 000-14742), and incorporated herein by reference.                                                                           |
|                 |                                                                                                                                                                                                                                |
| <FN  7>        | Previously  filed as an exhibit to the Company’s Annual Report on Form 10-K for the  fiscal year ended July 3, 1993 (Commission file number 000-14742), and  incorporated herein by reference.                       |
|                 |                                                                                                                                                                                                                                |
| <FN  8>        | Previously  filed as an exhibit to Form 10-Q for the quarter ended January 1,  1994 (Commission file number 000-14742), and incorporated herein by  reference.                                                            |
|                 |                                                                                                                                                                                                                                |
| <FN  9>        | Previously  filed as an exhibit to Form 10-Q for the quarter ended April 2,  1994 (Commission file number 000-14742), and incorporated herein by  reference.                                                              |
|                 |                                                                                                                                                                                                                                |
| <FN  10>       | Previously  filed as an exhibit to the Company’s Annual Report on Form 10-K for the  fiscal year ended July 2, 1994 (Commission file number 000-14742), and  incorporated herein by reference.                       |
|                 |                                                                                                                                                                                                                                |
| <FN  11>       | Previously  filed as an S1 filed on May 12, 1999 (Commission file number 333-78339),  and incorporated herein for reference.                                                                                                   |
|                 |                                                                                                                                                                                                                                |
| <FN  12>       | Previously  filed as an exhibit to the Company’s Amended and Restated Annual Report on  Form 10-K for the fiscal year ended June 27, 1998 (Commission file  number 000-14742), and incorporated herein by reference. |
|                 |                                                                                                                                                                                                                                |
| <FN  13>       | Previously  filed as Appendix A to the Company’s Schedule 14A, filed December 28,  2002, and incorporated herein by reference.                                                                                            |
|                 |                                                                                                                                                                                                                                |
| <FN  14>       | Previously  filed as an exhibit to Form 10-Q for the quarter ended March 31,  2001 (Commission file number 000-14742), and incorporated herein by  reference.                                                             |
|                 |                                                                                                                                                                                                                                |
| <FN  15>       | Previously  filed as an exhibit to Form 10-K for the fiscal year ended July 1,  2000 (Commission file number 000-14742), and incorporated herein by  reference.                                                           |
|                 |                                                                                                                                                                                                                                |
| <FN  16>       | Previously  filed as an exhibit to Form 10-K for the fiscal year ended July 2,  2005 and incorporated herein by reference.                                                                                                |
|                 |                                                                                                                                                                                                                                |
| <FN  17>       | Previously  filed as an exhibit to Form 10-Q for the fiscal quarter ended  December 31, 2005 and incorporated herein by reference.                                                                                        |
|                 |                                                                                                                                                                                                                                |
| <FN  18>       | Previously  filed as an exhibit to Form 10-Q for the fiscal quarter ended  March 31, 2007 and incorporated herein by reference.                                                                                           |
|                 |                                                                                                                                                                                                                                |
| <FN  19>       | Previously  filed as an exhibit to the Company’s Registration Statement on Form S-1  (File Number 333-78339) incorporated herein by reference.                                                                            |
|                 |                                                                                                                                                                                                                                |
| <FN  20>  | Previously  filed as an exhibit to the Original Filing.                                                                                                                                                                             |

 

(c)                                  The Company hereby files, as part of this Form 10-K,the exhibits listed in Item 15(a)(3) above, other than exhibits 32.1 and32.2, which the Company hereby furnishes.

 

(d)                                 The Company hereby files, as part of this Form 10-K,the consolidated financial Statement schedules listed in Item 15(a)(2) above.

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on October 27, 2008.

 

 
|   | CANDELA CORPORATION |
|--------|---------------------|
|   |                |   |
|   | By:                 | /s/ Gerard E. Puorro |
|   | Name:               | Gerard E. Puorro |
|   | Title:              | President, Chief Executive Officer and Director |

 

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the datesindicated.

 
| **Signature**            | ** ** | **Title**                         | ** ** | **Date**              |
|--------------------------|------------|-----------------------------------|------------|-----------------------|
| ** **               | ** ** | ** **                        | ** ** | ** **            |
| /s/ Gerard E. Puorro     |       | President, Chief  Executive       |       | October 27, 2008 |
| Gerard E. Puorro         |       | Officer, and Director  (Principal |       |                  |
|                     |       | Executive Officer)                |       |                  |
|                     |       |                              |       |                  |
| /s/ Robert E. Quinn      |       | Vice President, Finance,          |       | October 27, 2008 |
| Robert E. Quinn          |       | Corporate Controller, and         |       |                  |
|                     |       | Treasurer (Principal  Financial   |       |                  |
|                     |       | Officer)                          |       |                  |
|                     |       |                              |       |                  |
| /s/ Kenneth D. Roberts   |       | Chairman of the Board of          |       | October 27, 2008 |
| Kenneth D. Roberts       |       | Directors                         |       |                  |
|                     |       |                              |       |                  |
| /s/ Nancy Nager          |       | Director                          |       | October 27, 2008 |
| Nancy Nager              |       |                              |       |                  |
|                     |       |                              |       |                  |
| /s/ Douglas W. Scott     |       | Director                          |       | October 27, 2008 |
| Douglas W. Scott         |       |                              |       |                  |
|                     |       |                              |       |                  |
| /s/ Ben Bailey, III |       | Director                          |       | October 27, 2008 |
| Ben Bailey, III     |       |                              |       |                  |
|                     |       |                              |       |                  |
| /s/ George Abe           |       | Director                          |       | October 27, 2008 |
| George Abe               |       |                              |       |                  |

 

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**EXHIBIT INDEX**

 
| **Exhibit** | ** ** | **Footnote** | ** ** | **Description**                                                              |
|-------------|------------|--------------|------------|------------------------------------------------------------------------------|
|        |       |         |       |                                                                         |
| 31.1**      |       |         |       | Rule 13a-14(a)/15d-14(a) Certification  of Chief Executive Officer |
|        |       |         |       |                                                                         |
| 31.2**      |       |         |       | Rule 13a-14(a)/15d-14(a) Certification  of Chief Financial Officer |
|        |       |         |       |                                                                         |
| 32.1**      |       |         |       | Section 1350  Certification of Chief Executive Officer                  |
|        |       |         |       |                                                                         |
| 32.2**      |       |         |       | Section 1350  Certification of Chief Financial Officer                  |

 

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