UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | July 12, 2015 |
Biolase, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 000-19627 | 87-0442441 |
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_____________________ (State or other jurisdiction |
_____________ (Commission |
______________ (I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
| 4 Cromwell, Irvine, California | 92618 | |
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_________________________________ (Address of principal executive offices) |
___________ (Zip Code) |
| Registrant’s telephone number, including area code: | 949-361-1200 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of President and Chief Executive Officer, and Director
On July 12, 2015, Jeffrey M. Nugent resigned as President and Chief Executive Officer of Biolase, Inc. (the "Company"), and resigned as a member of the Board of Directors (the "Board") of the Company.
Appointment of President and Chief Executive Officer, and Director
As previously disclosed, Harold C. Flynn, Jr. was appointed President and Chief Executive Officer of the Company, effective July 13, 2015. On July 13, 2015, the Board appointed Mr. Flynn to the Board.
As a result of the resignation and appointment disclosed above, the Company's Board currently consists of five directors.
On July 13, 2015, the Compensation Committee of the Board (the "Compensation Committee") approved equity incentive compensation for Mr. Flynn consisting a non-qualified stock option to purchase 870,000 shares of Company common stock at an exercise price of $1.65 per share (the closing selling price per share of Company common stock on The Nasdaq Stock Market on July 13, 2015), and 870,000 restricted stock units ("RSUs"). The RSUs vest based upon specific performance criteria established by the Compensation Committee, and one-fourth of the stock options vest on July 13, 2016 and the remaining three-fourths vest ratably monthly over a thirty-six month period, commencing on August 13, 2016, subject to Mr. Flynn’s continued service with the Company through the applicable vesting dates.
The stock options and the RSUs are subject to accelerated vesting upon a change of control unless (a) they are assumed by the successor corporation (or parent thereof) or are otherwise continued in full force and effect pursuant to the terms of the change in control transaction or (b) they are replaced with a cash incentive program of the successor corporation that meets the requirements specified in Mr. Flynn’s award agreements. In addition, the stock options and the RSUs are subject to accelerated vesting in connection with certain qualifying terminations of service, as specified in Mr. Flynn’s award agreements.
The stock options and RSUs were granted outside of the Company’s stockholder-approved equity incentive plan.
The foregoing description of Mr. Flynn’s stock option agreement and restricted stock unit award agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements. Copies of such agreements are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
10.1 Inducement Stock Option Agreement, dated July 13, 2015.
10.2 Inducement Restricted Stock Unit Award Agreement, dated July 13, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Biolase, Inc. | ||||
| July 15, 2015 | By: |
/s/ David C. Dreyer
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| Name: David C. Dreyer | ||||
| Title: Chief Financial Officer | ||||
Exhibit Index
| Exhibit No. | Description | |
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10.1
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Inducement Stock Option Agreement, dated July 13, 2015. | |
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10.2
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Inducement Restricted Stock Unit Award Agreement, dated July 13, 2015. |
Biolase, Inc.
Notice of Grant of Stock Option
Optionee: Harold C. Flynn, Jr.
You have been granted an option to purchase shares of Common Stock of the Corporation pursuant to the terms and conditions specified in this Grant Notice and the Stock Option Agreement which is attached hereto. Terms not defined in this Grant Notice have the meanings specified in the Stock Option Agreement attached hereto.
Option Shares: Grant Date: Exercise Price: |
870,000 July 13, 2015 $1.65 per share |
Vesting Schedule: The Option Shares shall vest (i) as to one-fourth, on the one-year anniversary of the Grant Date, and (ii) as to the remaining three-fourths, ratably monthly (i.e., one thirty-sixth of the number of shares to be become exercisable) over a thirty-six month period, commencing on the thirteenth month anniversary of the Grant Date; provided the Optionee remains continuously employed by the Corporation through the applicable vesting date.
| Expiration Date: | July 13, 2025 | |||
BIOLASE, INC. |
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By:/s/ David C. Dreyer |
| Name: David C. Dreyer Title: Chief Financial Officer |
Accepted this 14th day of July, 2015
/s/ Harold C. Flynn, Jr.
Harold C. Flynn, Jr.
Inducement Option Grant
BIOLASE, INC.
STOCK OPTION AGREEMENT
A. The Board has granted the Option to Optionee as an inducement material to Optionee’s employment with the Corporation.
B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to the Corporation’s grant of the Option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.
Now, therefore, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase no more than the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. The Option shall expire on the Expiration Date, unless sooner terminated in accordance with this Agreement.
3. Limited Transferability. Except as otherwise provided in this Paragraph 3, the Option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee. The Option may be assigned in whole or in part during Optionee’s lifetime to one or more of Optionee’s family members (as such term is defined in the instructions to Form S-8), or to Optionee’s former spouse through a gift or domestic relations order. The terms applicable to the assigned portion shall be the same as those in effect for the Option immediately prior to such assignment.
4. Dates of Exercise. The Option shall become exercisable for the Option Shares as specified in the Grant Notice. If the Option is exercisable in installments, then as the Option becomes exercisable for such installments, those installments shall accumulate, and the Option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the Option pursuant to this Agreement.
5. Cessation of Service. Should Optionee’s Service cease for any reason while the Option is outstanding, then the Option shall be exercisable for the number of Option Shares for which the Option was vested and exercisable at the time Optionee’s Service ceased and shall remain outstanding and exercisable until the earlier of (i) the Close of Business on the last day of the three month period commencing on the date Optionee’s Service ceased or (ii) the Expiration Date; provided, however, that if Optionee terminates Service voluntarily and does not give the Corporation at least 30 days’ notice, then the Option shall terminate immediately upon cessation of Service with respect to all Option Shares.
6. Change in Control.
(a) If Optionee’s is terminated without Cause or Optionee resigns for Good Reason (as defined in Optionee’s Employment Agreement) within twelve months following the effective date of a Change in Control (as defined in Optionee’s Employment Agreement), the Option shall vest and become exercisable for all of the Option Shares and may be exercised for any or all of those Option Shares.
(b) If the Option is assumed or otherwise continued in effect in connection with a Change in Control, then the Option shall be appropriately adjusted by the Board, upon such Change in Control, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Change in Control had the Option been exercised immediately prior to such Change in Control, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent that the holders of Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation (or its parent) may, in connection with the assumption of the Option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control. The adjustments determined by the Board shall be binding on all parties who have an interest in the Option.
(c) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
7. Other Transactions. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made by the Board to (a) the number and/or class of securities subject to the Option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder. The adjustments determined by the Board shall be binding on all parties who have an interest in the Option.
8. Stockholder Rights. The holder of the Option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become the holder of record of the purchased Option Shares.
9. Manner of Exercising Option.
(a) In order to exercise the Option with respect to all or any part of the Option Shares for which the Option is at the time exercisable, Optionee (or any other person or persons permitted to exercise the Option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of Exercise for the Option Shares for which the Option is exercised;
(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) shares of Common Stock (1) held by Optionee (or any other person or persons permitted to exercise the Option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and (2) valued at Fair Market Value on the Exercise Date; or
(C) to the extent the Option is exercised for vested shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons permitted to exercise the Option) shall concurrently provide irrevocable instructions (1) to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (2) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise.
(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise the Option.
(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all income and employment tax withholding requirements applicable to the Option exercise.
(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising the Option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.
(c) In no event may the Option be exercised for any fractional shares.
10. No Right to Continued Service. Nothing in the Grant Notice or this Agreement shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.
11. Compliance with Laws and Regulations.
(a) The exercise of the Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any applicable stock exchange or quotation system on which the Common Stock may be traded at the time of such exercise and issuance. The Option cannot be exercised if doing so would violate the Corporation’s internal policies, including, but not limited to, its insider trading policy.
(b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to the Option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.
12. Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s permitted assigns, the legal representatives, heirs and legatees of Optionee’s estate, whether or not any such person shall have become a party to this Agreement or has agreed in writing to join herein and be bound by the terms hereof.
13. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice or at such other address as Optionee may designate by ten days advance written notice to the Corporation. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon the third day following deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice.
14. Entire Agreement. The Grant Notice and this Agreement (and any exhibit and appendix hereto) constitute the entire agreement between the parties hereto with regard to the subject matter hereof. All decisions of the Board with respect to any question or issue arising under the Grant Notice and this Agreement shall be and binding on all persons having an interest in the Option.
15. Amendments. The Grant Notice and this Agreement may only be amended in an instrument executed by both parties. Approval of the Board is required for all material amendments to the Grant Notice or this Agreement.
16. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without giving effect to that State’s choice-of-law or conflict-of-law rules.
17. Additional Terms and Conditions. The Option, and the Grant Notice and this Agreement, shall be subject to the additional terms and conditions set forth in the attached Appendix B.
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Exhibit I
Notice of Exercise
I hereby notify Biolase, Inc. (the “Corporation”) that I elect to purchase shares of the Corporation’s common stock (the “Purchased Shares”) at the option exercise price of $1.65 per share (the “Exercise Price”) pursuant to that certain option (the “Option”) granted to me by Biolase, Inc. under the Notice of Grant of Stock Option and Stock Option Agreement on July 13, 2015.
Concurrently with the delivery of this Exercise Notice to the Corporation, I shall hereby pay to the Corporation the Exercise Price for the Purchased Shares in accordance with the provisions of my agreement with the Corporation (or other documents) evidencing the Option. In addition, I shall deliver whatever additional documents may be required by such agreement as a condition for exercise.
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Date
| Optionee | ||||
| Address: | ||||
Print name in exact manner it is to appear on the stock certificate: |
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Address to which certificate is to be sent, if different from address above: |
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Social Security Number:
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Appendix A
Additional Definitions
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation’s Board of Directors.
C. Close of Business shall mean the close of business at the Corporation’s headquarters.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation’s common stock.
F. Corporation shall mean Biolase, Inc., a Delaware corporation, or the successor to all or substantially all of the assets or voting stock of Biolase, Inc. that assumes this option.
G. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
H. Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
I. Exercise Date shall mean the date on which this option shall have been exercised in accordance with this Agreement.
J. Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice.
K. Expiration Date shall mean the Close of Business on the date on which this option expires as specified in the Grant Notice.
L. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq Stock Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq Stock Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any stock exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the stock exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any stock exchange or the Nasdaq Stock Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate but shall be determined without regard to any restrictions other than a restriction which, by its term, will never lapse.
(iv) For purposes of same day sales, the Fair Market Value shall be deemed to be the amount per share for which the shares of Common Stock were sold.
M. Grant Date shall mean the date of grant of the Option as specified in the Grant Notice.
N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying this Agreement.
O. Incentive Option shall mean an option that satisfies the requirements of Code Section 422.
P Non-Statutory Option shall mean an option that does not qualify as an Incentive Option.
Q. Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit 1.
R. Option Shares shall mean the shares of Common Stock subject to the Option.
S. Optionee shall mean the person to whom the Option is granted as specified in the Grant Notice.
T. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
U. Service shall mean Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a member of the board of directors or an independent contractor.
V. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
W. Withholding Taxes shall mean the applicable income and employment withholding taxes to which the holder of the Option may become subject in connection with the exercise of the Option.
Appendix B
Additional Terms and Conditions
1. Administration of the Option.
(a) The Board shall have authority to administer the terms and conditions of the Option set forth in the Grant Notice and this Agreement.
(b) The Board shall, within the scope of its administrative functions under the Option, have full power and authority (subject to the provisions of the Grant Notice and this Agreement) to establish such rules and procedures as it may deem appropriate for proper administration of the Option and to make such determinations under, and issue such interpretations of, the provisions of the Option as it may deem necessary or advisable. Decisions of the Board within the scope of its administrative functions under the Grant Notice and this Agreement shall be binding on all parties who have an interest in the Option.
2. Tax Withholding
(a) The Corporation’s obligation to deliver shares of Common Stock upon the exercise of the Option shall be subject to the satisfaction of all applicable income and employment tax withholding requirements.
(b) The Board may, in its discretion, provide any holder of the Option with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holder may become subject in connection with the exercise of the Option. Such right may be provided to any such holder in either or both of the following formats:
(i) Stock Withholding. The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of the Option, a portion of those shares. So as to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose may not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules.
(ii) Stock Delivery. The election to deliver to the Corporation, at the time the Option is exercised, one or more shares of Common Stock previously acquired by such holder (other than in connection with the Option exercise triggering the Withholding Taxes). So as to avoid adverse accounting treatment, the number of shares that may be withheld for this purpose may not exceed the minimum number needed to satisfy the applicable income and employment tax withholding rules.
3. Restriction on Repricing of the Option. Except with the approval of the stockholders of the Corporation, the Option may not be amended to reduce the exercise price per share of the Common Stock of the Corporation subject to the Option below the exercise price of the Option as of the date the Option is granted, except to reflect the substitution for or assumption of the Option in connection with a Change in Control of the Corporation or if any change is made in the Common Stock subject to the Option without the receipt of consideration by the Corporation (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Corporation) in which case the Option will be appropriately adjusted in the class or classes and number of securities and price per share of Common Stock subject to the Option. In the event of the substitution for or assumption of the Option in connection with a Change in Control of the Corporation or if any change is made in the Common Stock subject to the Option without the receipt of consideration by the Corporation, the Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Corporation shall not be treated as a transaction “without receipt of consideration” by the Corporation.).
4. Amendment of the Option. The Board shall have complete and exclusive power and authority to amend the Grant Notice and this Agreement. However, no such amendment of the Grant Notice and this Agreement shall adversely affect the rights and obligations with respect to the Option unless the Optionee consents to such amendment.
5. Use of Proceeds. Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Option shall be used for any corporate purpose.
6. Regulatory Approvals.
(a) The granting of the Option and the issuance of any shares of Common Stock upon the exercise of the Option shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Option, and the shares of Common Stock issued pursuant to the Option.
(b) No shares of Common Stock or other assets shall be issued or delivered under the Option unless and until there shall have been compliance with all applicable requirements of applicable securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Option, and all applicable requirements of any stock exchange or the Nasdaq Stock Market on which Common Stock is then listed for trading or traded.
Biolase, Inc.
2002 Stock Incentive Plan
Inducement Restricted Stock Unit Award Agreement
BIOLASE, Inc., a Delaware corporation (the “Company”), hereby grants to Harold C. Flynn, Jr. (the “Holder”) as of July 13, 2015 (the “Grant Date”) an inducement restricted stock unit award (the “Award”) with respect to 870,000 shares of the Company’s common stock (“Common Stock”), upon and subject to the restrictions, terms and conditions set forth in this agreement (the “Agreement”). This Award is not granted pursuant to the BIOLASE, Inc. 2002 Stock Incentive Plan (the “Plan”), however, except to the extent otherwise set forth herein, the terms and conditions of the Plan applicable to restricted stock units are incorporated herein by reference and shall apply as though the Award was granted pursuant to the Plan.
1. Award Subject to Acceptance of Agreement. The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company.
2. Rights as a Stockholder. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares. As of each date on which the Company pays a cash dividend to record owners of shares of Common Stock (a “Dividend Date”), then the number of shares subject to the Award shall increase by (i) the product of the total number of shares subject to the Award immediately prior to such Dividend Date multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such Dividend Date, divided by (ii) the Fair Market Value of a share of Common Stock on such Dividend Date. Any such additional shares shall be subject to the same vesting conditions and payment terms set forth herein as the shares to which they relate.
3. Restriction Period and Vesting.
3.1. Service-Based Vesting Condition. Except as otherwise provided in the Plan, the Agreement or any other agreement between the Company and the Holder, the Award shall vest as to one-fourth of the number of shares subject thereto based upon achievement of four specific performance criteria as established by the Compensation Committee of the Board of Directors of the Company; provided the Holder remains continuously employed by the Company through the applicable vesting date. The period of time prior to the vesting of the Award shall be referred to herein as the “Restriction Period.”
3.2. Change in Control. If Holder is terminated without Cause or Holder resigns for Good Reason (as defined in Holder’s Employment Agreement) within twelve months following the effective date of a Change in Control (as defined in Holder’s Employment Agreement), the one-half of the unvested Award shall become fully vested and one-half the shares of Common Stock subject to the unvested Award, or a cash payment equal to the Fair Market Value of such shares, shall be issued or paid to the Holder as of the date of such termination or resignation.
3.3. Termination of Employment. Subject to Section 3.2 above, if the Holder’s employment with the Company terminates prior to the end of the Restriction Period, then the portion of the Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.
4. Delivery of Shares. Subject to Section 6, and unless otherwise elected by the Holder pursuant to procedures in compliance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), as soon as practicable (but no later than thirty (30) days) after the vesting of the Award, in whole or in part, the Company shall issue to the Holder the number of vested shares of Common Stock. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 6.1. Prior to the issuance to the Holder of the shares of Common Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.
5. Transfer Restrictions and Investment Representation.
5.1. Nontransferability of Award. The Award may not be transferred by the Holder other than by will or the laws of descent and distribution or, to the extent permitted by the Plan Administrator, pursuant to the designation of one or more beneficiaries on the form prescribed by the Company, a trust or entity established by the Holder for estate planning purposes, a charitable organization designated by the Holder or pursuant to a qualified domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.
5.2. Investment Representation. The Holder hereby represents and covenants that (a) any share of Common Stock acquired upon the vesting of the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Common Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
6. Additional Terms and Conditions of Award.
6.1. Withholding Taxes. (a) The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock upon the vesting of the Award, payment by the Holder of such Award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award (the “Required Tax Payments”).
(b) The Holder may satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date the obligation to withhold or pay taxes arises in connection with the Award (the “Tax Date”), equal to the Required Tax Payments, (3) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered or an amount of cash which would otherwise be payable to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments or (4) any combination of (1), (2) and (3). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the Holder.
6.2. Compliance with Applicable Law. The Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Common Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.
6.3. Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The payments to the Holder pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4). In the event the terms of this Agreement would subject the Holder to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Holder shall cooperate diligently to amend the terms of this Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to the Holder’s termination of employment, such term shall be deemed to refer to the Holder’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, if the Holder is a “specified employee,” as defined in Section 409A of the Code, as of the date of Holder’s separation from service, then to the extent any amount payable to the Holder (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Holder’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Holder’s separation from service, such payment shall be delayed until the earlier to occur of (a) the first business day following the six-month anniversary of the separation from service and (b) the date of the Holder’s death.
6.4. Award Confers No Rights to Continued Employment. In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement, give or be deemed to give the Holder any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time.
6.5. Decisions of Plan Administrator. The Plan Administrator shall have the right to resolve all questions which may arise in connection with the Award. Any interpretation, determination or other action made or taken by the Plan Administrator regarding the Plan or this Agreement shall be final, binding and conclusive.
6.6. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.
6.7. Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to BIOLASE, Inc., Attn: General Counsel, 4 Cromwell, Irvine, California 92618, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.8. Governing Law. This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.9. Award Subject to the Terms and Conditions of the Plan. Notwithstanding the fact that the Award is not granted pursuant to the Plan, the terms and conditions of the Plan applicable to restricted stock units are incorporated herein by reference and shall apply as though the Award was granted pursuant to the Plan. Capitalized terms not defined herein shall have the meanings specified in the Plan. The Holder hereby acknowledges receipt of a copy of the Plan.
6.10. Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
6.11. Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
6.12. Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
6.13. Counterparts. This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
[Signature page follows]
BIOLASE, INC.
By:/s/ David C. Dreyer
Name: David C. Dreyer
Title: Chief Financial Officer
Accepted this 14th day of July, 2015
/s/ Harold C. Flynn, Jr.
Harold C. Flynn, Jr.