EXHIBIT 10.4
SEPARATION AND GENERAL RELEASE AGREEMENT
     This Separation and General Release Agreement (this “Agreement”) is being
entered into as of this 31st day of January, 2008 (the “Date of this
Agreement”), by and between Biolase Technology, Inc. (the “Company”), and
Jeffrey W. Jones, an individual (“Employee”) (each of the Company and Employee
is sometimes hereinafter referred to individually, as a “Party” and
collectively, as the “Parties”).
     WHEREAS, Employee and the Company are parties to that certain Employment
Agreement, dated as of December 29, 2005, as amended by that certain Amendment
No. 1 to Employment Agreement, dated as of February 10, 2006 (as amended, the
“Employment Agreement”).
     WHEREAS, Employee was employed by the Company as Chief Executive Officer
through November 5, 2007.
     WHEREAS, the Parties wish to provide for severance benefits in lieu of any
severance benefits provided under the Employment Agreements on the terms and
conditions set forth below.
     WHEREFORE in consideration of the foregoing premises and the terms and
conditions set forth below, the Parties agree as follows:
     1. Termination of Employment; Partial Cancellation of Stock Option.
          a. The Company terminated Employee’s employment, effective as of
November 5, 2007 (the “Termination Date”). The Company terminated Employee from
his positions as the Chief Executive Officer and President of the Company,
effective as of the Termination Date. Employee hereby resigns as a member of the
Board of Directors of the Company, and from each position as a director, officer
and/or employee of any subsidiary or affiliate of the Company, effective as of
the Date of this Agreement.
          b. Employee acknowledges that he has been paid all salary and wages
through the Termination Date, including without limitation, any accrued unused
vacation benefits, and has been reimbursed for all business expenses. Except as
otherwise provided for in this Agreement, the rights and obligations of Employee
and the Company under the Employment Agreement terminated on the Termination
Date and shall have no further force or effect after the Termination Date.
          c. Provided that within twenty-one days of the date on which Employee
receives this Agreement, Employee executes and delivers to the Company the
Termination Certification attached hereto as Exhibit A and the Mutual Release
and Waiver of Claims (the “Release”) attached hereto as Exhibit B, and further
provided that Employee does not revoke the Release in accordance with its terms
and conditions, the Company shall provide to Employee, in lieu of any
compensation or benefits under the Employment Agreement, the following severance
benefits:

 

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          (1) On the first business day that is at least eight days following
the date on which Employee executes and delivers the Release to the Company (the
“Payment Date”), the Company shall pay to Employee a lump sum payment in cash in
the amount of $374,822.18, subject to applicable tax withholding. The Company
shall report such amount as wages paid on the Payment Date and shall remit the
amount of the required tax withholding to the relevant tax authorities.
          (2) On the Payment Date, Employee shall deliver to the Company the
2005 Porsche Turbo Carerra automobile, VIN number WPOCB29925S675140, leased by
the Company for the benefit of Employee (the “Leased Car”), and Employee shall
have no further right to use the Leased Car on or after the Payment Date. Upon
the delivery of the Leased Car by Employee to the Company, the Company shall
provide to Employee documentation evidencing that Employee’s name has been
totally removed from the lease for the Leased Car and any other financing or
payment obligation relating to the lease of the Leased Car. Such documentation
shall include notice from the lease or finance company indicating that Employee
is no longer liable to make any payments relating to the lease of the Leased
Car. Employee shall have use of the Leased Car through the Payment Date. The
Company shall remain responsible for and shall pay the lease payments under the
lease of the Leased Car. Employee shall be responsible for all maintenance and
fuel expenses incurred subsequent to the Termination Date and prior to
Employee’s delivery of the Leased Car to the Company. The Company shall continue
to maintain through the Payment Date adequate comprehensive and liability
insurance on the Leased Car (as is normally required for a leased vehicle)
through the Payment Date.
          (3) Provided that Employee elects and continues to remain eligible for
COBRA benefits, the Company shall pay the premiums for the continuation coverage
for Employee and Employee’s eligible spouse and dependent children under the
Company’s health care insurance plan, as in effect from time to time, as
required under Section 4980B of the Internal Revenue Code of 1986, as amended
(“COBRA”), for the months of December 2007 through February 2008. Following such
period, Employee and his eligible spouse and his dependent children will be
required to pay any applicable premium for such COBRA continuation coverage for
any subsequent period during which such COBRA continuation coverage remains in
effect. Employee, his eligible spouse and his dependent children will be
provided only such continuation coverage as is required under COBRA, and the
Company shall pay any applicable premium for the period described in the first
sentence only to the extent that continuation coverage is elected by and
provided to Employee, his eligible spouse or his dependent children under COBRA.
This Agreement shall not restrict in any way the Company’s right to amend,
modify or terminate any group health plan of the Company.
          d. No Future Compensation or Benefits. Except as provided for in this
Agreement, Employee understands and agrees that he is giving up any right or
claim to further compensation from the Company. Employee and the Company have no
further rights or obligations under the Employment Agreement, except as
otherwise specified in this Agreement.

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          e. Partial Cancellation of Stock Option.
          (1) On December 12, 2003, the Company granted to Employee a
nonqualified stock option (the “2003 Option”) to purchase 200,000 shares of the
Company’s common stock (“Common Stock”), at a per share exercise price of
$14.01, under the Company’s 2002 Stock Incentive Plan (the “2002 Plan”). The
2003 Option is subject to terms and conditions of the 2002 Plan and the Notice
of Grant of Stock Option and Stock Option Agreement, dated 12/12, 2003, between
the Company and Employee (the “2003 Stock Option Agreement”). As of the Date of
this Agreement, no portion of the 2003 Option has been exercised by Employee.
          (2) Effective as of the Date of this Agreement, the 2003 Option shall
terminate and be cancelled with respect to 100,000 shares of Common Stock, and
Employee hereby waives and releases any and all rights to exercise the 2003
Option with respect to such shares of Common Stock. The Company and Employee
hereby agree to amend the 2003 Stock Option Agreement in accordance with such
partial termination and cancellation and to reduce the number of shares of
Common Stock subject to the 2003 Option to 100,000 shares of Common Stock. The
2003 Option shall continue in full force and effect with respect to the
remaining 100,000 shares of Common Stock, subject to the terms and conditions of
the 2003 Plan and the 2003 Stock Option Agreement, as so amended.
          f. Employee’s Outstanding Stock Options. As of the Date of this
Agreement, and after giving effect to Section 1.e above, the outstanding stock
options granted by the Company to Employee are set forth on Exhibit C attached
hereto. Each such stock option is subject to the terms and conditions of the
Company plan under which such stock option was granted and the stock option
agreement between the Company and Employee with respect to such stock option.
     2. No Admission. Employee and the Company further understand and agree that
neither the payment of money nor the execution of this Agreement, including the
Release, shall constitute or be construed as an admission of any liability
whatsoever by either Party.
     3. Severability. The provisions of this Agreement are severable, and if any
part of this Agreement is found to be unenforceable, the other paragraphs (or
portions thereof) shall remain fully valid and enforceable.
     4. No Encouragement of Actions/Cooperation with the Company. Employee
agrees that he will not assist any person or entity in bringing or pursuing
legal action against the Company, its agents, successors, representatives,
employees and related and/or affiliated companies, based on events occurring
prior to the Termination Date; provided, however, that this Section 4 shall not
apply to any legal action arising from or related to this Agreement or to any
conduct compelled by or pursuant to applicable law, nor shall it prohibit, in
any way, Employee from responding to a subpoena or taking any other action
required by law. To the extent Employee is subpoenaed or otherwise requested or
required to provide any documents, testimony or other information concerning the
Company, he shall notify the Company as soon as practicable, and cooperate with
the Company in opposing any such request or requirement to the

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extent permitted by applicable law. Employee shall also provide information
requested by the Company, and make himself available at reasonable time upon
reasonable request to assist the Company in defending or prosecuting any legal
action or arbitration to the extent it concerns events occurring during his
employment as to which he may have knowledge. The Company shall reimburse
Employee for any reasonable out of pocket expenses incurred and shall compensate
Employee for Employee’s actual time spent, including travel time, providing
information or assistance to the Company under the next preceding sentence at
the rate of $250 per hour.
     5. No Disparagement. The Company and Employee agree that for a period of
three (3) years after Employee’s employment with the Company ceases, they will
not, in any communication with any person or entity, including any actual or
potential customer, client, investor, vendor, or business partner of the
Company, or any third party media outlet, make any derogatory or disparaging or
critical negative statements — orally, written or otherwise — against the other,
or against the Employee’s affiliates, or any of the Company’s directors,
officers, or agents (in the case of any of Employee’s affiliates, at such time
as they are affiliated with Employee or, in the case of any of the Company’s
directors, officers or agents, at such time as they are employed by, or acting
for, the Company). The parties acknowledge and agree that the obligation on the
part of the Company not to make any derogatory statements as set forth in this
paragraph shall only apply to the Company’s officers and directors.
     6. Company Property. Employee agrees to search his/her home, office and all
other storage areas for all property owned by the Company and to return all
Company equipment to the Company within twenty-one (21) days of his receipt of
this Agreement.
     7. Choice of Law and Venue. The Parties acknowledge and agree that this
Agreement shall be interpreted in accordance with California law. If any claims
or actions arising out of or relating to this Agreement or Employee’s service
with the Company are determined by an arbitrator not to be subject to Section 9,
they shall be filed in either the Superior Court of the State of California for
the County of Orange, or the Federal District Court for the Central District of
California.
     8. Sole and Entire Agreement; Obligations of Employee. This Agreement and
the exhibits hereto represent the sole and entire agreement among the Parties
and supersedes all prior agreements (including, without limitation, the
Employment Agreement), negotiations, and discussions between the Parties hereto
and/or their respective counsel, excluding the Proprietary Information
Agreement, dated as of December 29, 2005, by and between the Company and the
Employee (the “Proprietary Information Agreement”), and the provisions set forth
in Part One, Paragraph 9 of the Employment Agreement. Employee’s obligations
under this Agreement, the Proprietary Information Agreement and Part One,
Paragraph 9 of the Employment Agreement shall remain in full force and effect
and shall survive the termination of Employee’s employment with the Company and
the termination of the Employment Agreement, and Employee acknowledges and
agrees that the Company shall have the right to communicate with any future or
prospective employer of Employee concerning Employee’s obligations under this
Agreement, and the Proprietary Information Agreement and Part One, Paragraph 9
of the Employment Agreement. Employee is not relying on any promise or
representation by the Company that is not expressly stated herein and the
Company is not relying on any promise or representation by Employee that is not
expressly stated herein. Any agreement amending or superseding this Agreement
must be in writing, signed by duly authorized representatives of the Parties,

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specifically reference this Agreement; and state the intent of the Parties to
amend or supersede this Agreement. This Agreement may only be modified by a
writing signed by both Employee and a duly authorized officer of the Company.
     9. Arbitration. The Parties hereby agree to submit any claim or dispute
arising out of or relating to the terms of this Agreement to private and
confidential arbitration by a single neutral arbitrator. Subject to the terms of
this Section, the arbitration proceedings shall be governed by the rules of the
Judicial Arbitration and Mediation Service (“JAMS”) applicable to employment
disputes as they may be in effect from time to time, and shall take place in
Orange County, California. The arbitrator shall be appointed by agreement of the
Parties hereto or, if no agreement can be reached, by the JAMS pursuant to its
rules. The decision of the arbitrator shall be rendered in writing and be final
and binding on all Parties to this Agreement, and judgment thereon may be
entered in any court having jurisdiction. The arbitrator’s fees and/or any other
fees payable to JAMS shall be shared in accordance with the rules of JAMS;
provided, however, that Employee shall not be required to pay any such fees that
are unique to arbitration and/or would exceed the cost of filing the same
claim(s) in a court of competent jurisdiction, and any shortfall shall be borne
by the Company. The Parties shall each bear their own attorneys’ fees, witness
expenses, expert fees and other costs, except to the extent they may be awarded
otherwise by the arbitrator in accordance with applicable law. This arbitration
procedure is intended to be the sole and exclusive method of resolving any claim
between the Parties, and each of the Parties hereby waives any right to a jury
trial with respect to such claims.
     10. Headings; Construction of Agreement. The headings in this Agreement are
provided solely for the Parties’ convenience, and are not intended to be part
of, nor to affect or alter the interpretation or meaning of this Agreement. Both
Parties have been represented by, or had the opportunity to be represented by,
counsel in connection with this Agreement.
     11. Counterparts. For the convenience of the Parties hereto, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
[Remainder of page intentionally left blank]

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     12. Authority to Execute this Agreement. The person or persons executing
this Agreement on behalf of a Party warrants and represents that he has the
authority to execute this Agreement on behalf of the Party and has the authority
to bind that Party to the performance of its obligations hereunder.
     IN WITNESS WHEREOF, the parties have entered into this Separate and General
Release Agreement as of the date first set forth above.

            “COMPANY”

BIOLASE TECHNOLOGY, INC.
      By:   /s/ GEORGE V. D'ARBELOFF         Name:   George V. d'Arbeloff       
Title:   Chairman        “EMPLOYEE”
      /s/ JEFFREY W. JONES       Jeffrey W. Jones         

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EXHIBIT A
BIOLASE TECHNOLOGY, INC.
TERMINATION CERTIFICATION
This is to certify that based on a reasonably diligent search by me, and to the
best of my knowledge, I do not have in my possession, nor have I failed to
return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items which is a trade secret and/or proprietary information belonging to
BioLase Technology, Inc., its subsidiaries, affiliates, successors or assigns
(together, the “Company”).
I further certify that, to the best of my knowledge, I have complied with all
the terms of the Company’s Employee Proprietary Information Agreement signed by
me.
I further agree that, in compliance with the Employee Proprietary Information
Agreement, I will preserve as confidential all trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any Business of the Company or any of its clients, consultants or licensees
which is proprietary and/or confidential information to the Company. The
Employee Proprietary Information Agreement and this Termination Certificate do
not prohibit me from using or disclosing information that is generally known to
the public or in the industry, or becomes generally known to the public or in
the industry, provided that the information did or does not become known due to
a violation of the Employee Proprietary Information Agreement.
Date:                     

                        (Employee’s Signature)                  (Type/Print
Employee's Name)           

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EXHIBIT B
MUTUAL RELEASE AND WAIVER OF CLAIMS
          In consideration of the payments and other benefits set forth in the
Separation and General Release Agreement dated           , 2008 to which this
document is Exhibit B (the “Agreement”), Biolase Technology, Inc. (the
“Company”) and Jeffrey W. Jones (“Employee”) hereby agree to the following
mutual release and waiver of claims (“Release and Waiver”).
          In exchange for the consideration provided to Employee under the terms
and conditions of the Agreement (including, without limitation Employee’s
execution, delivery and non-revocation of this Release and Waiver), Employee
hereby generally and completely releases the Company and its directors,
officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns
from any and all claims, liabilities and obligations, both known and unknown,
that arise out of or are in any way related to events, acts, conduct, or
omissions occurring prior to my signing this Release and Waiver. This general
release includes, but is not limited to: (1) all claims arising out of or in any
way related to Employee’s employment with the Company or the termination of that
employment; (2) all claims related to Employee’s compensation or benefits from
the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, or any other ownership
interests in the Company; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(4) all tort claims, including claims for fraud, defamation, emotional distress,
and discharge in violation of public policy; and (5) all federal, state, and
local statutory claims, including claims for discrimination, harassment,
retaliation, attorneys’ fees, or other claims arising under Title VII of the
1964 Civil Rights Act, as amended, the Age Discrimination in Employment Act, the
California Fair Employment and Housing Act, the Equal Pay Act of 1963, as
amended, the provisions of the California Labor Code, the Americans with
Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), the Sarbanes-Oxley Act of 2002, and
any other state, federal, or local laws and regulations relating to employment
and/or employment discrimination. Notwithstanding the foregoing, Employee does
not release any claims Employee may have for unemployment compensation and
worker’s compensation; rights to indemnification under the Company’s articles,
bylaws or applicable state law; vested pension or welfare benefits; or rights
under any stock option or restricted stock agreement between Employee and the
Company.
          In consideration of Employee’s release of claims as set forth above,
the Company, on behalf of itself and each of its respective officers, directors,
shareholders, employees, attorneys, partners, associates, agents,
representatives, predecessors, successors, assigns, and anyone who could claim
by or through them, past, present and future, hereby unconditionally and
irrevocably releases and forever discharge Employee, his representatives,
predecessors, successors, assigns, spouses, heirs, executors and trustees, past,
present and future, from any and all claims, demands, causes of action, damages
and expenses, whether known or unknown, suspected or unsuspected, with respect
to: (1) all claims arising out of or in any way related to Employee’s employment
with the Company or the termination of that employment; and (2) all claims
related to Employee’s compensation or benefits from the Company, including
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, or any other ownership interests in the Company. By
this release of claims, the Company

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is not releasing Employee from his continuing obligations under the Agreement,
the Proprietary Information Agreement, dated as of December 29, 2005, by and
between the Company and Employee (the “Proprietary Information Agreement”) and
the provisions set forth in Part One, Paragraph 9 of that certain Employment
Agreement, dated as of December 29, 2005, by and between the Company and
Employee, as amended by that certain Amendment No. 1 to Employment Agreement,
dated as of February 10, 2006 (as amended, the “Employment Agreement”).
Employee’s obligations under Part One, Paragraph 9 of the Employment Agreement
and the Proprietary Information Agreement shall remain in full force and effect
and shall survive the termination of the Employment Agreement.
          Both Employee and the Company expressly waive and relinquish any and
all rights and benefits they now have or may have in the future under the terms
of Section 1542 of the Civil Code of the State of California, which sections
reads in full as follows:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.
Notwithstanding said Code Section, and subject to the continuing obligations
under the Agreement, the Proprietary Information Agreement and the provisions
set forth in Part One, Paragraph 9 of the Employment Agreement, the Parties
knowingly and voluntarily waive the provisions of Section 1542 as well as any
other statutory or common law provisions of similar effect and acknowledge and
agree that this waiver is an essential part of this Release and Waiver.
          Employee acknowledges that, among other rights, Employee is waiving
and releasing any rights Employee may have under ADEA, that this Release and
Waiver is knowing and voluntary, and that the consideration given for this
Release and Waiver is in addition to anything of value to which Employee was
already entitled as an employee of the Company. Employee further acknowledge
that Employee has been advised, as required by the Older Workers Benefit
Protection Act, that: (a) the release and waiver granted herein does not relate
to claims under the ADEA which may arise after this Release and Waiver is
executed; (b) Employee has the right to consult with an attorney prior to
executing this Release and Waiver (although Employee may choose voluntarily not
to do so); and (c) Employee has twenty-one (21) days from the date of
termination of Employee’s employment with the Company in which to consider this
Release and Waiver (although Employee may choose voluntarily to execute this
Release and Waiver earlier, in which case he waives the remainder of the
twenty-one (21) day period); (d) Employee has seven (7) days following the
execution of this Release and Waiver to revoke his consent to this Release and
Waiver; and (e) this Release and Waiver shall not be effective until the seven
(7) day revocation period has expired.
          Employee acknowledges his continuing obligations under the Agreement,
the Proprietary Information Agreement and the provisions set forth in Part One,
Paragraph 9 of the Employment Agreement. Nothing contained in this Release and
Waiver shall be deemed to modify, amend or supersede the obligations set forth
in the Agreement, the Proprietary Information Agreement or Part One, Paragraph 9
of the Employment Agreement.
          By signing this Release and Waiver, Employee hereby represents that he
is not aware of any affirmative conduct or the failure to act on the part of the
Company, its officers,

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directors, and/or employees concerning the Company’s business practices, its
reporting obligations, its customers and/or prospective customers, its products,
and/or any other any other aspect of the Company’s business, which Employee has
any reason to believe rises to the level of unfair, improper and/or unlawful
conduct pursuant to any state or federal law, rule, regulation or order,
including, but not limited to, any rule, regulation or decision promulgated or
enforced by the Securities and Exchange Commission, or which has been
promulgated or enforced by any other state or federal office or administrative
body pursuant to the Sarbanes-Oxley Act of 2002.
          This Release and Waiver constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and Employee with regard
to the release and waiver of claims between them. Employee is not relying on any
promise or representation by the Company that is not expressly stated herein and
the Company is not relying on any promise or representation by Employee that is
not expressly stated herein. This Release and Waiver may only be modified by a
writing signed by both Employee and a duly authorized officer of the Company.
          The parties agree that this Mutual Release does not in any way
compromise or lessen Employee’s rights to be indemnified by the Company or
otherwise be covered under any applicable insurance policies that Employee would
otherwise be entitled to receive and/or be covered by.
          The parties agree that in no way does this mutual release of claims
preclude Employee from enforcing his ownership rights pertaining to any stock or
stock options which may have been purchased by Employee or granted to Employee
by the Company pursuant to a written stock option grant and/or as memorialized
in a written Board Resolution (and as reported periodically in the Company’s
proxy statements).

            BIOLASE TECHNOLOGY, INC.
      By:         Title:        Dated:                      Jeffrey W. Jones   
        Dated:     

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EXHIBIT C
EMPLOYEE’S OUTSTANDING STOCK OPTIONS

                                                      Per Share Exercise  
Original Grant           Grant Shares   Grant Shares     Grant Date   Price  
Shares   Plan   Outstanding   Exercisable   Expiration Date
December 18, 1998
  $ 2.125       407,000       1998       407,000       407,000     December 18,
2008
December 15, 1999
  $ 2.125       50,000       1998       50,000       50,000     November 5, 2009
December 15, 1999
  $ 2.125       50,000       1998       50,000       50,000     November 5, 2009
December 20, 2001
  $ 5.170       300,000       1998       300,000       300,000     November 5,
2009
December 12, 2003
  $ 14.010       200,000       2002       100,000       100,000     November 5,
2009
December 29, 2005
  $ 8.110       50,000       2002       50,000       50,000     February 5, 2008
June 27, 2007
  $ 5.950       50,000       2002       4,166       4,166     February 5, 2008