**Exhibit 10.17**

 

**CandelaCorporation**

 

ExecutiveRetention Agreement

With

Gerard E. Puorro

 

THIS EXECUTIVE RETENTIONAGREEMENT (this “Agreement”), effective as of November     ,2007 (the “Effective Date”) is made by and between Candela Corporation,a Delaware corporation (the “Company”), and Gerard E. Puorro (the “Executive”).

 

WHEREAS, the Company andthe Executive have entered into that certain Amended and Restated EmploymentAgreement, which restated agreement became effective on the date hereof  (the “Employment Agreement”);

 

WHEREAS, the Companyrecognizes that, as is the case with many publicly-held corporations, thepossibility of a change in control of the Company exists and that suchpossibility, and the uncertainty and questions which it may raise among keypersonnel, may result in the departure or distraction of key personnel to thedetriment of the Company and its stockholders; and

 

WHEREAS, the Board ofDirectors of the Company (the “Board”) has identified key positionswithin the Company (“Key Positions”) and determined that appropriatesteps should be taken to reinforce and encourage the continued employment anddedication of those persons, including the Executive, who hold Key Positionswithin the Company without distraction from the possibility of a change incontrol of the Company and related events and circumstances;

 

NOW, THEREFORE, as aninducement for and in consideration of the Executive remaining in its employ,the Company agrees that notwithstanding any severance provisions contained in theEmployment Agreement, the Executive shall receive the severance benefits setforth in this Agreement in the event the Executive’s employment with theCompany is terminated under the circumstances described below subsequent to aChange in Control (as defined in Section 1.1).

 

# 1                       KeyDefinitions.

#  

Asused herein, the following terms shall have the following respective meanings:

 

## **1.1**                       “Change in Control” means an event or occurrence set forth inany one or more of subsections (a) through (d) below (including anevent or occurrence that constitutes a Change in Control under one of suchsubsections but is specifically exempted from another such subsection):

## ** **

### **a)**                                      the acquisition by an individual, entity or group (withinthe meaning of Section 13(d)(3) or 14(d)(2) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) ofbeneficial ownership of any capital stock and as to which ownership, suchPerson either (i) shall have filed a Form 13D in respect of its ortheir holdings with the Securities and Exchange Commission (“SEC”), or (ii) inthe reasonable opinion of the Company, such Person shouldhavefiled a Form 13D with the SEC in respect of its holdings and itsintentions (and the Executive shall be permitted to request, and the Companyshall promptly furnish, an indication of whether the Board of Directors hasconcluded that such Person should have so filed), of the Company if, after suchacquisition, such Person beneficially owns (within the meaning of Rule 13d-3promulgated under the Exchange Act), 30% or more of either (X) thethen-outstanding shares of common stock of the Company (the “OutstandingCompany Common Stock”) or (Y) the combined voting power of thethen-outstanding securities of the Company entitled to vote generally in theelection of directors (the “Outstanding Company Voting Securities”); provided,however, that for purposes of this subsection (a), the followingacquisitions of beneficial ownership of Outstanding Company Common Stock orOutstanding Company Voting Securities shall not constitute a Change in 

 

1

----

 

### **Control: (1) any acquisition directly from the Company(excluding an acquisition pursuant to the exercise, conversion or exchange ofany security exercisable for, convertible into or exchangeable for common stockor voting securities of the Company, unless the Person exercising, convertingor exchanging such security acquired such security directly from the Company oran underwriter or agent of the Company), (2) any acquisition by theCompany, (3) any acquisition by any**employee benefit plan (orrelated trust) sponsored or maintained by the Company or any corporationcontrolled by the Company, or (4) any acquisition by any corporationpursuant to a transaction which complies with clauses (i) and (ii) ofsubsection (c) of this Section 1.1; or

### ** **

### **b)**                                     such time as the Continuing Directors (as defined below) donot constitute a majority of the Board (or, if applicable, the Board ofDirectors of a successor corporation to the Company), where the term “ContinuingDirector” means at any date a member of the Board (i) who was a member ofthe Board on the date of the execution of this Agreement or (ii) who wasnominated or elected subsequent to such date by at least a majority of thedirectors who were Continuing Directors at the time of such nomination orelection or whose election to the Board was recommended or endorsed by at leasta majority of the directors who were Continuing Directors at the time of suchnomination or election; provided, however, that there shall beexcluded from this clause (ii) any individual whose initial assumption ofoffice occurred as a result of an actual or threatened election contest withrespect to the election or removal of directors or other actual or threatenedsolicitation of proxies or consents, by or on behalf of a person other than theBoard; or

### ** **

### **c)**                                      the consummation of a merger, consolidation,reorganization, recapitalization or statutory share exchange involving theCompany or a sale or other disposition of all or substantially all of theassets of the Company in one or a series of transactions (a “BusinessCombination”), unless, immediately following such Business Combination, each ofthe following two conditions is satisfied: (i) all or substantially all ofthe individuals and entities who were the beneficial owners of the OutstandingCompany Common Stock and Outstanding Company Voting Securities immediatelyprior to such Business Combination beneficially own, directly or indirectly,more than 50% of the then-outstanding shares of common stock and the combinedvoting power of the then-outstanding securities entitled to vote generally inthe election of directors, respectively, of the resulting or acquiringcorporation in such Business Combination (which shall include, withoutlimitation, a corporation which as a result of such transaction owns theCompany or substantially all of the Company’s assets either directly or throughone or more subsidiaries) (such resulting or acquiring corporation is referredto herein as the “Acquiring Corporation”) in substantially the same proportionsas their ownership, immediately prior to such Business Combination, of theOutstanding Company Common Stock and Outstanding Company Voting Securities,respectively; and (ii) no Person (excluding the Acquiring Corporation, anyemployee benefit plan (or related trust) maintained or sponsored by the Companyor by the Acquiring Corporation or any Exempt Person) which has either (X) fileda Form 13D in respect of its holdings with the SEC, or (Y) in thereasonable opinion of the Company, such person shouldhave fileda Form 13D with the SEC in respect of its holdings and its intentions,beneficially owns, directly or indirectly, 30% or more of the then outstandingshares of common stock of the Acquiring Corporation, or of the combined votingpower of the then-outstanding securities of such corporation entitled to votegenerally in the election of directors (except to the extent that suchownership existed prior to the Business Combination); or

### ** **

### **d)**                                     approval by the stockholders of the Company of a completeliquidation or dissolution of the Company (as distinguished from a filing madeby the Company under Chapter 11 of the Federal Bankruptcy laws).

### ** **

## **1.2**                       “Change in Control Date” means the first date during the Term(as defined in Section 2) on which a Change in Control occurs.  Anything in this Agreement to the contrarynotwithstanding, if (a) a Change in Control occurs, (b)  theExecutive’s employment with the Company is terminated prior to the date onwhich the Change in Control occurs, and (c) it is reasonably demonstratedby the Executive that such termination of employment (i) was at therequest of a third party who has taken steps reasonably calculated to effect aChange in Control or (ii) otherwise arose in connection with 

 

2

----

 

## **or in anticipation of a Change in Control, then for allpurposes of this Agreement the “Change in Control Date” shall mean the dateimmediately prior to the date of such termination of employment.**

## ** **

## **1.3**                       “Cause” means:

## ** **

### **a)**                                      the Executive’s abject failure to work cooperatively withthe Company’s other officers and senior employees, as determined in good faithby the Board of Directors, following reasonable notice and opportunity to cure;

### ** **

### **b)**                                     the Executive’s gross negligence or willful misconduct inperforming any action, or not performing any action, that has had, or couldhave, alone or in the aggregate, a material negative impact on the Company;

### ** **

### **c)**                                      the Executive’s theft, dishonesty, willful misconduct,breach of fiduciary duty for personal profit, or falsification of any Companydocuments or records;

### ** **

### **d)**                                     the Executive’s unauthorized use, misappropriation,destruction or diversion of any material asset or corporate opportunity of theCompany (including, without limitation, the Executive’s improper use ordisclosure of the Company’s confidential or proprietary information or hisfailure to abide by Company policies relating to confidentiality);

### ** **

### **e)**                                      any intentional act by the Executive which has a materialdetrimental effect on the Company’s reputation or business;

### ** **

### **f)**                                        any material breach by the Executive of this Agreement andany other agreement between the Company and Executive, which breach is notcured within fifteen (15) days after Executive receives notice from the Companyspecifying such breach; or

### ** **

### **g)**                                     the Executive’s conviction (including any plea of guilty or*nolo contendere*) of any criminalact involving fraud, dishonesty, misappropriation or moral turpitude, or whichimpairs the Employee’s ability to perform his duties with the Company.

### ** **

## **1.4**                       “Involuntary Termination” means the Executive’s voluntaryresignation from his employment within sixty (60) days following (i) anymaterial diminution in the Executive’s authority, duties or responsibilities;provided, however, that a change in job position (including a change in title)shall not be deemed a “material diminution” unless the Executive’s newauthority, duties or responsibilities are materially reduced from the priorauthority, duties or responsibilities, (ii) any material diminution of theExecutive’s base compensation, (iii) a material diminution in theauthority, duties, or responsibilities of the supervisor to whom the Executiveis required to report, including a requirement that the Executive report to acorporate officer or employee instead of reporting directly to the board ofdirectors of the corporation, (iv) a material change in the geographiclocation at which the Executive must perform his duties, which is more than 50miles from the current location, or (v) a material breach by the Companyof the terms of this Agreement, including a failure of the Company to obtain anassumption of this Agreement at or prior to the effectiveness of any successionpursuant to Section 6.1; provided that the Executive’s termination ofemployment shall not be deemed to be an Involuntary Termination unless theCompany or the Board of Directors on behalf of the Company shall have beenprovided with advance notice of the termination and a period of not less than30 days to cure the event or condition described in (i), (ii), (iii) or(iv), and shall have either failed to so cure the event or waived its right tocure the event.

## ** **

Any dispute as to whether any action bythe Company constitutes an “Involuntary Termination” shall be resolved throughthe dispute procedures set forth in Section 5 of this Agreement.

 

## **1.5**                       “Disability” means the Executive’s absence from the full-timeperformance of the Executive’s duties with the Company for 180 consecutivecalendar days as a result of incapacity due to mental or 

 

3

----

 

## **physical illness which is determined to be total andpermanent by a physician selected by the Company or its insurers and acceptableto the Executive or the Executive’s legal representative.**

## ** **

# 2                       Termof Agreement.  This Agreement, and all rights andobligations of the parties hereunder, shall take effect upon the Effective Dateand shall expire upon the first to occur of (a) the expiration of the Term(as defined below) if a Change in Control has not occurred during the Term, (b) thedate the Executive no longer holds a Key Position if negotiations relating to aChange in Control have not commenced prior thereto, (c) the date 24 monthsafter the Change in Control Date, if the Executive is still employed by theCompany as of such later date, or (d) the fulfillment by the Company ofall of its obligations under Sections 4 and 5.2 if the Executive’semployment with the Company terminates within twenty-four (24) months followingthe Change in Control Date.  “Term” shallmean the period commencing as of the Effective Date and continuing in effectthrough December 31, 2009, provided, however, that commencing on January 1,2010, and each January 1 thereafter, the Term shall be automaticallyextended for one additional year unless, not later than 60 days prior to thescheduled expiration of the Term (or any extension thereof), the Company shallhave given the Executive written notice that the Term will not be extended.

#  

# 3                       EmploymentStatus; Termination Following Change in Control.

#  

## **3.1**                       Not an Employment Contract.  The Executive acknowledges that thisAgreement does not constitute a contract of employment or impose on the Companyor the Board of Directors any obligation to retain the Executive as an employeeand that this Agreement does not prevent theExecutive from terminating employment at any time.  Except as otherwise provided in Section 1.2,if the Executive’s employment with the Company terminates for any reason andsubsequently a Change in Control shall occur, the Executive shall not beentitled to any benefits hereunder.

## ** **

## **3.2**                       Termination of Employment.

## ** **

### **a)**                                      If the Change in Control Date occurs during the Term, anytermination of the Executive’s employment by the Company, the Board ofDirectors or by the Executive within 24 months following the Change in ControlDate (other than due to the death of the Executive) shall be communicated by awritten notice to the other party hereto (the “Notice of Termination”), givenin accordance with Section 7.  AnyNotice of Termination shall: (i) indicate the specific terminationprovision (if any) of this Agreement relied upon by the party giving suchnotice, (ii) to the extent applicable, set forth in reasonable detail thefacts and circumstances claimed to provide a basis for termination of theExecutive’s employment under the provision so indicated, and (iii) specifythe Date of Termination (as defined below). The effective date of an employment termination (the “Date ofTermination”) shall be the close of business on the date specified in theNotice of Termination (which date may not be less than 15 days or more than 120days after the date of delivery of such Notice of Termination), in the case ofa termination other than one due to the Executive’s death, or the date of theExecutive’s death, as the case may be. In the event the Company fails to satisfy the requirements of Section 3.2(a) regardinga Notice of Termination, the purported termination of the Executive’semployment pursuant to such Notice of Termination shall not be effective forpurposes of this Agreement.

### ** **

### **b)**                                     The failure by the Executive or the Company to set forth inthe Notice of Termination any fact or circumstance which contributes to ashowing of Involuntary Termination or Cause shall not waive any right of theExecutive or the Company, respectively, hereunder or preclude the Executive orthe Company, respectively, from asserting any such fact or circumstance inenforcing the Executive’s or the Company’s rights hereunder.

### ** **

### **c)**                                      Any Notice of Termination for Cause given by the Companymust be given within 90 days of the occurrence of the event(s) orcircumstance(s) which constitute(s) Cause.

 

4

----

 

### **d)**                                     Any Notice of Involuntary Termination given by theExecutive to the Company must be given within sixty (60) days of the occurrenceof the event(s) or circumstance(s) which constitute(s) anInvoluntary Termination.

### ** **

# 4                       Benefitsto Executive.

#  

## **4.1**                       Stock Acceleration following a Change in Control and upon theTermination of Executive’s Employment.  If a Change in Control occursduring the Term, then, following the Change in Control Date and effective uponan Involuntary Termination of the Executive’s employment or termination of theExecutive’s employment by the Company or the Board of Directors on behalf ofthe Company (other than for Cause, Disability or death), then, (a) eachStock Appreciation Right (“SAR”) issued by the Company to the Executive shallimmediately become vested and exercisable in full; (b) each outstandingoption to purchase shares of Common Stock of the Company held by the Executiveshall become immediately exercisable in full and will no longer be subject to aright of repurchase, if any, by the Company; (c) each outstandingrestricted stock award shall be deemed to be fully vested and will no longer besubject to a right of repurchase by the Company, and (d) notwithstandingany provision in any applicable stock option or other equity instrumentagreement to the contrary, each such option, SAR or alternative equityinstrument shall continue to be exercisable by the Executive (to the extentsuch option was exercisable on the Date of Termination or became exercisablepursuant to this Section 4.1) for the duration of the term set forth inthe stock option agreement, SAR or other equity instrument agreement applicablethereto as if termination of employment had not occurred.

## ** **

## **4.2**                       Compensation.  If the Change in Control Date occurs duringthe Term and the Executive’s employment with the Company terminates within 24months following the Change in Control Date, the Executive shall be entitled tothe following benefits:

## ** **

### **a)**                                      Termination Without Cause or Involuntary Termination.  If the Executive’semployment with the Company is terminated by the Company or the Board ofDirectors on behalf of the Company (other than for Cause, Disability or death)or by the Executive because of an Involuntary Termination, in either casewithin 24 months following the Change in Control Date, then the Executive shallbe entitled to the following benefits:

### ** **

#### **(i)**                                     the Company shall pay to the Executive in a lump sum incash within 30 days after the Date of Termination (or, such later date as maybe required by Section 4.2 (d)), the sum of (A) the Executive’s basesalary through the Date of Termination, (B) the product of (x) theExecutive’s target annual bonus (irrespective of the level of attainment todate of any target bonus benchmarks such as firm wide or individual objectivesor hurdles) for the fiscal year in which the Date of Termination occurs and (y) afraction, the numerator of which is the number of days in the current fiscalyear through the Date of Termination, and the denominator of which is 365, and (C) anyaccrued vacation pay, in each case to the extent not previously paid (the sumof the amounts described in clauses (A), (B), and (C) shall be hereinafterreferred to as the “Accrued Obligations”);

#### ** **

#### **(ii)**                                  the Executive shall receive regular monthly installmentsfor a two-year period equal to one twenty-fourth (1/24th) of theExecutive’s annual salary (at the rate in effect when the Change in ControlDate occurs and before reduction for taxes or other withholdings or deductionssuch as a 401(k) Plan contribution or like payment) multiplied by a factorof three (3.0x) times, with such monthly payments commencing on the payrolldate next following the date of termination or such later date as may berequired by Section 4.2(d);

#### ** **

#### **(iii)**                               the Executive shall receive regular monthly installmentsfor a two-year period equal to one twenty-fourth (1/24th) of theExecutive’s target annual bonus (irrespective of the level of attainment todate of any target bonus bench-marks, such as firm- wide or individualobjectives or hurdles) for the fiscal year in which the Change in Control Dateoccurs and before reduction for taxes or other withholdings or deductions suchas a 401(k) Plan 

 

5

----

 

#### **contribution or like payment) , multiplied by a factor ofthree (3.0x) times, with such monthly payments commencing on the payroll datenext following the date of termination or such later date as may be required bySection 4.2(d);**

#### ** **

#### **(iv)**                              for 18 months after the Date of Termination, or such longerperiod as may be provided by the terms of the appropriate plan, program,practice or policy, the Company shall continue to provide benefits to theExecutive and the Executive’s family at least equal to those which would havebeen provided to them if the Executive’s employment had not been terminated, inaccordance with the applicable Benefit Plans in effect immediately prior to theChange in Control Date or, if more favorable to the Executive and his family,in effect generally at any time thereafter with respect to other peerexecutives of the Company and its affiliated companies; provided, however, thatif the Executive becomes reemployed by another employer and is eligible toreceive a particular type of benefit (e.g., health insurance benefits) from suchemployer on terms at least as favorable to the Executive and his family asthose being provided by the Company, then the Company shall no longer berequired to provide those particular benefits to the Executive and his family;

#### ** **

#### **(v)**                                 to the extent not previously paid or provided, the Companyshall pay or provide to the Executive when due, without accelerating thepayment date of any deferred compensation, any other amounts or benefitsrequired to be paid or provided or which the Executive is eligible to receivefollowing the Executive’s termination of employment under any plan, program,policy, practice, contract or agreement of the Company and its affiliatedcompanies (such other amounts and benefits shall be hereinafter referred to asthe “Other Benefits”); and

#### ** **

#### **(vi)**                              from and after his Termination Date, the Company shallcontinue to make available to the Executive, and to make payments on, oneleased vehicle until the end of the lease term, at which point the Executivemay exercise the purchase option if there is one.

#### ** **

### **b)**                                     Resignation; or Termination for Death or Disability.  If the Executivevoluntarily resigns from his employment with the Company within 24 monthsfollowing the Change in Control Date, excluding a resignation because of anInvoluntary Termination, or if the Executive’s employment with the Company isterminated by reason of the Executive’s death or Disability within 24 monthsfollowing the Change in Control Date, then the Company shall (i) pay theExecutive (or his estate, if applicable), in a lump sum in cash within 30 daysafter the Date of Termination, the Accrued Obligations and (ii) timely payor provide to the Executive the Other Benefits. If upon a termination described in this Section 4.2(b) theExecutive is entitled to receive severance payments or benefits under theEmployment Agreement, the Executive shall remain eligible toreceive such severancepayments or benefits under his Employment Agreement, provided there is noduplication of payments or benefits.

### ** **

### **c)**                                      Termination for Cause.  If the Company orthe Board of Directors terminates the Executive’s employment with the Companyfor Cause within 24 months following the Change in Control Date, then theCompany shall (i) pay the Executive, in a lump sum in cash within 30 daysafter the Date of Termination, the sum of (A) the Executive’s annual basesalary through the Date of Termination and (B) the amount of anycompensation previously deferred by the Executive, in each case to the extentnot previously paid, and (ii) timely pay or provide to the Executive theOther Benefits.

### ** **

### **d)**                                     Section 409A Matters.  It is the intentof the parties hereto that, to the extent permitted, the payments and benefitsprovided pursuant to this Agreement qualify as short-term deferrals, as definedin Treasury Regulation §1.409A-1(a)(4), separation pay due to an involuntaryseparation from service under Treasury Regulation §1.409A-1(b)(9)(iii),reimbursement of medical benefits under Treasury Regulation§1.409A-1(b)(9)(v)(B), and/or limited payments, as defined in TreasuryRegulation §1.409A-1(b)(9)(v)(D).  If (a) itis determined that any payments or benefits provided pursuant to this Agreementthat are paid upon “separation from service” (as that term is used in Section 409Aof the Internal Revenue Code of 1986, as amended (the “Code”), and anyrelated 

 

6

----

 

### **regulations or other applicable guidance promulgatedthereunder (collectively, “Section 409A”)) constitute deferredcompensation for purposes of Section 409A (after taking into account theexceptions listed in the prior sentence and/or any other applicable exceptions)and (b) the Executive is a “specified employee” (as that term is used in Section 409A)on the date on which the separation from service occurs, such payments orbenefits (or portions thereof) that constitute deferred compensation and thatare to be paid or provided during the six (6) month period following theExecutive’s separation from service shall not be paid or provided until thefirst business day after the date that is six (6) months following theExecutive’s separation from service or, if the Executive dies during such six (6) monthperiod, on the first business day after the date of the Executive’s death.  The payment that is made pursuant to theprior sentence shall include the cumulative amount of any amounts that couldnot be paid during the six (6) month period.  All other payments or benefits under thisAgreement shall be paid or provided in accordance with the applicable provisionof this Agreement.  Each installmentpayment under this Agreement shall be treated as a separate payment as definedunder Treasury Regulation §1.409A-2(b)(2). For all purposes under this Agreement, references to termination of theExecutive’s employment and similar terms shall be interpreted to mean “separationfrom service,” as that term is used in Section 409A, and the Executive’semployment shall not be deemed to have terminated for purposes of Section 4unless and until a separation from service shall have occurred for purposes of Section 409A.**

### ** **

## **4.3**                       Taxes.

## ** **

### **a)**                                      In the event that the Company undergoes a “Change inOwnership or Control” (as defined below), the Company shall, within 30 daysafter each date on which the Executive becomes entitled to receive (whether ornot then due) a Contingent Compensation Payment (as defined below) relating tosuch Change in Ownership or Control, determine and notify the Executive (withreasonable detail regarding the basis for its determinations) (i) which ofthe payments or benefits due to the Executive (under this Agreement orotherwise) following such Change in Ownership or Control constitute ContingentCompensation Payments and (ii) the amount, if any, of the excise tax (the “ExciseTax”) which would be payable by the Executive pursuant to Section 4999of the Code, with respect to such Contingent Compensation Payment but for theoperation of this Section 4.3.  Ifit is determined by the Company and the Executive that an Excise Tax would bepayable by the Executive, then in such instance either (i) the ContingentCompensation Payments shall be scaled back (with the latest-to-be-paid of suchPayments to be withheld for this purpose) such that the Contingent CompensationPayments would trigger benefits which, in the aggregate, would generate $1.00less than the threshold which would otherwise cause Contingent CompensationPayments to be subject to the Excise Tax, or (ii) if the value of theContingent Compensation Payments is such that, after deducting any applicableExcise Tax, there would be an amount of Contingent Compensation Paymentsremaining available to him, so that the Executive would receive a net benefit(after deducting all Excise Tax) that is greater than the benefit the Executivewould have retained had his Contingent Compensation Payments beenreduced to avoid the ExciseTax, there shall be no withholding or deducting Contingent CompensationPayments to be made to the Executive.

### ** **

### **b)**                                     For purposes of this Section 4.3, the following termsshall have the following respective meanings:

### ** **

#### **(i)**           “Change in Ownership or Control” shall mean a change in theownership or effective control of the Company or in the ownership of asubstantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) ofthe Code.

#### ** **

#### **(ii)**          “Contingent Compensation Payment” shall mean any payment(or benefit) in the nature of compensation that is made or made available(under this Agreement or otherwise) to a “disqualified individual” (as definedin Section 280G(c) of the Code) and that is contingent (within themeaning of Section 280G(b)(2)(A)(i) of the Code) on a Change inOwnership or Control of the Company.

 

7

----

 

### **c)**                                      The provisions of this Section 4.3 are intended toapply to any and all payments or benefits available to the Executive under thisAgreement or any other agreement or plan of the Company under which theExecutive receives Contingent Compensation Payments.

### ** **

## **4.4**                       Mitigation.  The Executive shall not be required tomitigate the amount of any payment or benefits provided for in this Section 4by seeking other employment or otherwise. Further, except as provided in Section 4.2(a)(iii),the amount of any payment or benefits provided for in this Section 4 shallnot be reduced by any compensation earned by the Executive as a result ofemployment by another employer, by retirement benefits, by offset against anyamount claimed to be owed by the Executive to the Company, or otherwise.

## ** **

## **4.5**                       Outplacement Services.  In the event the Executive is terminated bythe Company or the Board of Directors on behalf of (other than for Cause,Disability or death), or the Executive terminates employment because of anInvoluntary Termination, within 24 months following the Change in Control Date,the Company shall provide outplacement services through one or more outsidefirms of the Executive’s choosing up to an aggregate of $25,000, with suchservices to extend until the earlier of (i) 12 months following thetermination of Executive’s employment or (ii) the date the Executivesecures full time employment.

## ** **

# 5                       Disputes.

#  

## **5.1**                       Settlement of Disputes; Arbitration.  All claims by the Executivefor benefits under this Agreement or to resolve other disputes hereunder shallbe directed to the General Counsel of the Company and shall be in writing.  Any denial by the Company of a claim forbenefits under this Agreement shall be delivered to the Executive in writingand shall set forth the specific reasons for the denial and the specificprovisions of this Agreement relied upon. The Company shall afford a reasonable opportunity to the Executive for areview of the decision denying a claim. Any further dispute or controversy arising under or in connection withthis Agreement shall be settled exclusively by arbitration in Boston,Massachusetts, within thirty (30) days of being introduced into arbitration,and shall be in accordance with the rules of the American ArbitrationAssociation then in effect.  Judgment maybe entered on the arbitrator’s award in any court having jurisdiction.

## ** **

## **5.2**                       Expenses.  The Company agrees to pay, as incurred, tothe full extent permitted by law, all legal, accounting and other fees andexpenses which the Executive may reasonably incur as a result of any claim orcontest (regardless of the outcome thereof) by the Company, the Executive orothers regarding the validity or enforceability of, or liability under, anyprovision of this Agreement or any guarantee of performance thereof (includingas a result of any contest by the Executive regarding the amount of any paymentor benefits pursuant to this Agreement), plus in each case interest on anydelayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) ofthe Code; provided, however, that (a) the amount of such fees and expensespaid (or reimbursed) by the Company during any calendar year may not affect theamount of fees and expenses paid (or reimbursed) by the Company in any othercalendar year, (b) payment (or reimbursement) of fees and expenses by theCompany shall be made on or before the last day of the calendar year followingthe calendar year in which the fees and expenses were incurred, (c) theExecutive’s right to reasonable fees and expenses is not subject to liquidationor exchange for another benefit and (d) this obligation shall survive thetermination of this Agreement and shall remain in effect until the applicablestatute of limitations has expired with respect to any litigation to enforcethe terms of this Agreement.

## ** **

# 6                       Successors.

#  

## **6.1**                       Successor to Company.  The Company shall require any successor(whether direct or indirect, by purchase, merger, consolidation or otherwise)to all or substantially all of the business or assets of the Company expresslyto assume and agree to perform this Agreement to the same extent that theCompany would be required to perform it if no such succession had takenplace.  Failure of the Company to obtainan assumption of this Agreement at or prior to the effectiveness of any 

 

8

----

 

## **succession shall be a breach of this Agreement and shallconstitute Involuntary Termination if the Executive elects to terminateemployment, except that for purposes of implementing the foregoing, the date onwhich any such succession becomes effective shall be deemed the Date ofTermination.  As used in this Agreement, “Company”shall mean the Company as defined above and any successor to its business orassets as aforesaid which assumes and agrees to perform this Agreement, byoperation of law or otherwise.**

## ** **

## **6.2**                       Successor to Executive.  This Agreement shall inure to the benefit ofand be enforceable by the Executive’s personal or legal representatives,executors, administrators, successors, heirs, distributees, devisees andlegatees.  If the Executive should diewhile any amount would still be payable to the Executive or his familyhereunder if the Executive had continued to live, all such amounts, unlessotherwise provided herein, shall be paid in accordance with the terms of thisAgreement to the executors, personal representatives or administrators of theExecutive’s estate.

## ** **

# 7                       Agreementto be Binding on Successors.  The Company shall require any successor(whether direct or indirect, by purchase, merger, consolidation, reorganizationor otherwise) to all or substantially all of the business (including pursuantto acquisition of all or substantially of the Common Stock of the Company) orassets of the Company (the “Acquisition”), as a conditionprecedent to the Acquisition, to expressly assume and agree inwriting, with a copy to the Executive, to perform this Agreement in thesame manner and to the same extent as the Company would be required toperform this Agreement as if no such succession had takenplace.  The Executive acknowledges and agrees, and the Companyacknowledges and agrees, that, without limitation to any other provision ofthis Agreement which is also “material”, this provision is a materialterm of this Agreement and an important clause benefiting theExecutive, to assure the Executive that the obligation of the Company toprovide the Executive with the existing benefits made available underthis Agreement is adhered to by any successor to the Company, and theprovision also benefits the Company in that the assurance to you afforded bythis provision is an important retention incentive to have the Executive remainin the employment of the Company.

#  

# 8                       Notice.  All notices, instructions and othercommunications given hereunder or in connection herewith shall be inwriting.  Any such notice, instruction orcommunication shall be sent either (i) by registered or certified mail,return receipt requested, postage prepaid, or (ii) prepaid via a reputablenationwide overnight courier service, in each case addressed to the Company, atCandela Corporation, Attention of General Counsel, 530 Boston Post Road,Wayland, MA 01778, and to the Executive at[                                            ](orto such other address as either the Company or the Executive may have furnishedto the other in writing in accordance herewith).  Any such notice, instruction or communicationshall be deemed to have been delivered 5 business days after it is sent byregistered or certified mail, return receipt requested, postage prepaid, or 1business day after it is sent via a reputable nationwide overnight courierservice. Either party may give any notice, instruction or other communicationhereunder using any other means, but no such notice, instruction or othercommunication shall be deemed to have been duly delivered unless and until itactually is received by the party for whom it is intended.

#  

# 9                       Miscellaneous.

#  

## **9.1**                       Employment by Subsidiary.  For purposes of this Agreement, the Executive’semployment with the Company shall not be deemed to have terminated solely as aresult of the Executive continuing to be employed by a wholly-owned subsidiaryof the Company.

## ** **

## **9.2**                       Severability.  The invalidity or unenforceability of anyprovision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement, which shall remain in full force andeffect.

## ** **

## **9.3**                       Injunctive Relief.  The Company and the Executive agree that anybreach of this Agreement by the Company is likely to cause the Executivesubstantial and irrevocable damage and therefore, in the 

 

9

----

 

## **event of any such breach, in addition to such otherremedies which may be available, the Executive shall have the right to specificperformance and injunctive relief.**

## ** **

## **9.4**                       Governing Law.  The validity, interpretation, constructionand performance of this Agreement shall be governed by the internal laws of theCommonwealth of Massachusetts, without regard to conflicts of law principles.

## ** **

## **9.5**                       Waivers.  No waiver by the Executive at any time of anybreach of, or compliance with, any provision of this Agreement to be performedby the Company shall be deemed a waiver of that or any other provision at anysubsequent time.

## ** **

## **9.6**                       Counterparts.  This Agreement may be executed incounterparts, each of which shall be deemed to be an original but both of whichtogether shall constitute one and the same instrument.

## ** **

## **9.7**                       Tax Withholding.  Any payments provided for hereunder shall bepaid net of any applicable tax withholding required under federal, state orlocal law.

## ** **

## **9.8**                       Release of Claims.  The Company shall have no obligation to makeany payments or provide any benefits pursuant to this Agreement unless (i) youagree to sign and deliver to the General Counsel of the Company a release ofclaims in substantially the same form as the form attached hereto as Exhibit A(the “Release”) and (ii) the Release has become non-revocable by thesixtieth (60th) day following the date of termination of youremployment.

## ** **

## **9.9**                       Entire Agreement.  This Agreement sets forth the entireagreement of the parties hereto in respect of the subject matter containedherein and supersedes all prior agreements, promises, covenants, arrangements,communications, representations or warranties, whether oral or written, by anyofficer, employee or representative of any party hereto in respect of thesubject matter contained herein; and any prior agreement of the parties heretoin respect of the subject matter contained herein is hereby terminated andcancelled.  Notwithstanding theforegoing, the provisions of the Executive’s Employment Agreement shall not besuperceded by, modified by, or subject to the terms of Section 4.3 of thisAgreement; provided, however, that except as provided in Section 4.2(b) ofthis Agreement, the Executive shall in no event be entitled to receiveseverance payments or benefits under the Employment Agreement if he is entitledto receive severance payments or benefits under this Agreement.

## ** **

## **9.10**                 Amendments.  This Agreement may be amended or modifiedonly by a written instrument executed by both the Company and the Executive.

## ** **

## **[*The rest of this page intentionally left blank.*]**

 

10

----

 

**Exhibit A: Form ofRelease of Claims**

 

In consideration for receiving benefitspursuant to the Candela Corporation Executive Retention Agreement dated November     ,2007 between you and Candela Corporation. (the “Company”) (the “Agreement”),you, on behalf of yourself and your representatives, agents, estate, heirs,successors and assigns, agree to and do hereby forever waive, release anddischarge the Company, and each of its affiliated or related entities, parents,subsidiaries, predecessors, successors, assigns, divisions, owners,stockholders, partners, directors, officers, attorneys, insurers, benefitplans, employees and agents, whether previously or hereinafter affiliated inany manner, as well as all persons or entities acting by, through, or inconcert with any of them (collectively, the “Released Parties”), from any andall claims (other than “Excluded Claims” as hereinafter defeined), debts,contracts, obligations, promises, controversies, agreements, liabilities,demands, wage claims, expenses, charges of discrimination, harassment orretaliation, disputes, agreements, damages, attorneys’ fees, or complaints ofany nature whatsoever, whether or not now known, suspected, claimed, matured orunmatured, existing or contingent, from the beginning of time until the momentyou have signed this Agreement, against the Released Parties (whether directlyor indirectly), or any of them, by reason of any act, event or omissionconcerning any matter, cause or thing, including, without limiting thegenerality of the foregoing, any claims related to or arising out of (i) youremployment  or its termination, (ii) anycontract or agreement (express or implied) between you and any of the ReleasedParties, (iii) any tort or tort-type claim, (iv) any federal, stateor governmental constitution, statute, regulation or ordinance, including butnot limited to the U.S. Constitution; Title VII of the Civil Rights Act of1964, as amended; the Civil Rights Act of 1991; the Age Discrimination inEmployment Act of 1967, as amended (including the Older Workers BenefitProtection Act); the Equal Pay Act of 1963, as amended; the Americans WithDisabilities Act of 1990; the Family and Medical Leave Act of 1993; the WorkerAdjustment Retraining and Notification Act; the Employee Retirement IncomeSecurity Act of 1974; the Fair Labor Standards Act; any applicable ExecutiveOrder Programs; any similar state or local statutes or laws; and any otherfederal, state, or local civil or human rights law, (v) any public policy,contract or tort law, or under common law, (vi) any policies, practices orprocedures of the Company, (vii) any claim for wrongful discharge, breachof contract, infliction of emotional distress, defamation, (vii) any claimfor costs, fees, or other expenses, including attorneys’ fees incurred in thesematters, (viii) any impairment of your ability to obtain subsequentemployment, and (ix) any permanent or temporary disability or loss offuture earnings.  It is acknowledged thatyou may be entitled to satisfaction by the Company of claims you may presentlyhave, or may in the future have, for indemnification arising out of theperformance of your duties as an officer of the Company, pursuant to the termsof the Company’s charter, or its By-laws, or pursuant to the provisions of oneor more directors’ and officers’ (D&O) polices.  Any such claim brought by you shall be consideredan Excluded Claim, but it shall not be presumed that any such claim is valid onits face.

 

For the purpose ofimplementing a full and complete release and discharge of the Released Parties,you expressly acknowledge that this Agreement is intended to include and doesinclude in its effect, without limitation, all claims which you do not know orsuspect to exist in your favor against the Released Parties, or any of them, atthe moment of execution hereof, and that this Agreement expressly contemplatesthe extinguishment of all such claims

 

BYSIGNING THIS GENERAL RELEASE, YOU REPRESENT AND AGREE THAT:

 

YOU UNDERSTAND ALLOF ITS TERMS AND KNOW THAT YOU ARE GIVING UP IMPORTANT RIGHTS, INCLUDING BUTNOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967,AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUALPAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEERETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

YOU HAVE HAD ATLEAST 21 DAYS: (A) FROM THE DATE OF YOUR RECEIPT OF THIS RELEASESUBSTANTIALLY IN ITS FINAL FORM ON                                  ,           ;AND (B) TO CONSIDER IT AND THE CHANGES MADE SINCE THE                                  ,           VERSION OF THIS RELEASE AND SUCH CHANGES ARE NOT MATERIAL AND WILL NOT RESTARTTHE REQUIRED 21-DAY PERIOD; AND

 

YOU UNDERSTANDTHAT YOU HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT ANDTHAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THEREVOCATION PERIOD HAS EXPIRED.

 

11

----