Exhibit 10.26

 

NEW EMPLOYEES- initial grant

 

NOTICE OF GRANT OF STOCK OPTION

BIOLASE TECHNOLOGY, INC.

2002 STOCK INCENTIVE PLAN

Discretionary Option Grant Program

 

Notice is hereby given of the following grant (the “Option”) to purchase shares
of the Common Stock of the Corporation:

 

Optionee               Employee ID# Type of option   Non-Statutory        X  
Incentive Grant date         Vesting Commencement Date   Same as grant date    
Expiration Date   Ten years from grant date     Number of Option Shares        
Exercise Price per Share        

BioLase Technology, Inc.

    By

            Title   CEO    

Optionee

    Signature

            Address        

 

Exercise schedule: This Option shall become exercisable for one-third of the
Option Shares upon Optionee’s completion of one year of Service measured from
the Vesting Commencement Date. The Option shall become exercisable for the
balance of the Option Shares in a series of eight successive three-month equal
installments upon Optionee’s completion of each additional three months of
Service over the twenty-four month period measured from the first anniversary of
the Vesting Commencement Date. In no event shall the Option become exercisable
for any additional Option Shares after Optionee’s cessation of Service.

 

Terms and conditions: Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the BioLase Technology, Inc. 2002
Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the
terms of the Plan

 

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and the terms of the Option as set forth in the Stock Option Agreement attached
hereto as Exhibit A. Optionee acknowledges that the right to exercise the
options expires 90 days after termination of employment. Optionee hereby
acknowledges the receipt of a copy of the official prospectus for the Plan in
the form attached hereto as Exhibit B. A copy of the Plan is available upon
request to the Corporate Secretary at the Corporation’s principal offices.

 

Prior Agreements. This Notice and Stock Option Agreement constitute the entire
agreement and understanding of the Corporation and Grantee with respect to the
terms of the Option and supersede all prior and contemporaneous written or
verbal agreements and understandings between Optionee and the Corporation
relating to such subject matter. Any and all prior agreements, understandings or
representations relating to the Option are terminated and cancelled in their
entirety and are of no further force or effect.

 

No Right to Continued Service. Nothing in this Notice or in the attached Stock
Option Agreement or in the Plan 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 of 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.

 

Definitions. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Stock Option Agreement.

 

ATTACHMENTS

Exhibit A – Stock Option Agreement

Exhibit B – Prospectus

 

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Discretionary Option Grant Program

 

BIOLASE TECHNOLOGY, INC.

2002 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

A. The Board has adopted the Plan for the purpose of retaining the services of
selected Employees, non-Employee members of the Board (or the board of directors
of any Parent or Subsidiary) and independent contractors who provide Services to
the Corporation (or any Parent or Subsidiary).

 

B. Optionee is to render valuable services to the Corporation (or a Parent or
Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation’s grant
of an option to Optionee.

 

C. All capitalized terms in this Agreement shall have the meaning assigned to
them in the attached Appendix.

 

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. This 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,
this 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. If this option is
designated a Non-Statutory Option in the Grant Notice, then this 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 this option immediately prior to such assignment.

 

4. Dates of Exercise. This option shall become exercisable for the Option Shares
as specified in the Grant Notice. If this option is exercisable in installments,
then as this option becomes exercisable for such installments, those
installments shall accumulate, and this option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of this
option pursuant to this Agreement.

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5. Cessation of Service.

 

(a) Immediately upon Optionee’s cessation of Service for any reason while this
option is outstanding, this option shall terminate with respect to any Option
Shares for which this option is not otherwise exercisable.

 

(b) Should Optionee’s Service be terminated for Misconduct or should Optionee
otherwise engage in any Misconduct while this option is outstanding, then this
option shall terminate immediately with respect to all Option Shares.

 

(c) Should Optionee’s Service cease for any reason (other than death, Permanent
Disability or Misconduct) while this option is outstanding, then this option
shall be exercisable for the number of Option Shares for which this 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 three month anniversary of 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 (A) 30 days notice if
Optionee is a manager or (B) 14 days notice if the Optionee is not a manager,
then this option shall terminate immediately upon cessation of Service with
respect to all Option Shares.

 

(d) Should Optionee’s Service cease due to death or permanent disability while
this option is outstanding, then this option shall be exercisable for the number
of Option Shares for which this option was 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 twelve month anniversary of the date Optionee’s
Service ceased or (ii) the Expiration Date.

 

(e) Upon the expiration of such limited post-Service exercise period or (if
earlier) upon the Expiration Date, this option shall terminate with respect to
all Option Shares for which this option is exercisable.

 

6. Change in Control.

 

(a) Immediately prior to the effective date of a Change in Control, this option
shall vest and become exercisable for all of the Option Shares and may be
exercised for any or all of those Option Shares. However, this option shall not
vest and become exercisable on an accelerated basis if and to the extent: (i)
this option is to be assumed by the successor corporation (or parent thereof) or
is otherwise to be continued in full force and effect pursuant to the terms of
the Change in Control transaction or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Change in Control on the Option Shares for which
this option is not otherwise at that time exercisable (the excess of the Fair
Market Value of those Option Shares over the aggregate Exercise Price payable
for such shares) and provides for subsequent payout of that spread no later than
the time this option would have vested and become exercisable for those shares.

 

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(b) Immediately following the consummation of the Change in Control, this option
shall terminate, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise continued in effect pursuant to the terms of the
Change in Control transaction.

 

(c) If this option is assumed or otherwise continued in effect in connection
with a Change in Control, then this option shall be appropriately adjusted, 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 this 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 this 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.

 

(d) 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 to (a) the number and/or
class of securities subject to this option and (b) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

 

8. Stockholder Rights. The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised
this 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 this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any
other person or persons permitted to exercise this option) must take the
following actions:

 

(i) Execute and deliver to the Corporation a Notice of Exercise for the Option
Shares for which this 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;

 

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(B) a promissory note payable to the Corporation, but only to the extent
authorized by the Plan Administrator in accordance with Paragraph 14;

 

(C) shares of Common Stock (1) held by Optionee (or any other person or persons
permitted to exercise this 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

 

(D) to the extent this 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 this option) shall concurrently provide
irrevocable instructions (1) to a Corporation-designated 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 this option (if other than Optionee) have the right to
exercise this 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 this option)
a certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.

 

(c) In no event may this option be exercised for any fractional shares.

 

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10. No Right to Continued Service. Nothing in the Grant Notice, this Agreement
or the Plan 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 this 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. This
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 this 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. Financing. Provided that Optionee is not an executive officer or director of
the Corporation, the Plan Administrator may, in its absolute discretion and
without any obligation to do so, permit Optionee to pay the Exercise Price for
the purchased Option Shares (to the extent such Exercise Price is in excess of
the par value of those shares) by delivering a full-recourse, interest bearing
promissory note secured by those Option Shares. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.

 

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15. Entire Agreement. The Plan is hereby incorporated by reference. This
Agreement (and any addendum hereto) and the Plan constitute the entire agreement
between the parties hereto with regard to the subject matter hereof. To the
extent there is a conflict between the terms of this Agreement and the terms of
the Plan, the terms of this Agreement shall prevail. All decisions of the Plan
Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be and binding on all persons having an interest in this
option.

 

16. Amendments. This Agreement may only be amended in an instrument executed by
both parties. Approval of the Plan Administrator is required for all material
amendments to this Agreement.

 

17. 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.

 

18. Additional Terms Applicable to an Incentive Option. In the event this option
is designated an Incentive Option in the Grant Notice, the following terms and
conditions shall also apply to the grant:

 

(a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares: (i) more than three months after the date Optionee ceases to be
an Employee for any reason other than death or Permanent Disability or (ii) more
than twelve months after the date Optionee ceases to be an Employee by reason of
Permanent Disability.

 

(b) No installment under this option shall qualify for favorable tax treatment
as an Incentive Option if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder would, when added to the aggregate value
(determined as of the respective Grant Date or Grant Dates) of the Common Stock
or other securities for which this option or any other Incentive Options granted
to Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed $100,000 in the aggregate. Should such
$100,000 limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such calendar year as a
Non-Statutory Option.

 

(c) Should the exercisability of this option be accelerated upon a Change in
Control, then this option shall qualify for favorable tax treatment as an
Incentive Option only to the extent the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which this option first becomes
exercisable in the calendar year in which such acceleration occurs does not,
when added to the aggregate value (determined as of the respective Grant Date or
Grant Dates) of the Common Stock or other securities for which this option or
one or more other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar year,
exceed $100,000 in the aggregate. Should the applicable $100,000 limitation be
exceeded in the calendar year of such acceleration, this option may nevertheless
be exercised for the excess shares in such calendar year as a Non-Statutory
Option.

 

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(d) Should Optionee hold, in addition to this option, one or more other options
to purchase Common Stock which become exercisable for the first time in the same
calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be first applied to
the option granted second.

 

(e) Optionee shall promptly notify the Corporation if Optionee sells or
transfers the Option Shares prior to the second anniversary of the Grant Date
and the first anniversary of the Exercise Date.

 

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Exhibit I

Notice of Exercise

 

I hereby notify BioLase Technology, Inc. (the “Corporation”) that I elect to
purchase                      shares of the Corporation’s common stock (the
“Purchased Shares”) at the option exercise price of $              per share
(the “Exercise Price”) pursuant to that certain option (the “Option”) granted to
me under the BioLase Technology, Inc. 2002 Stock Incentive Plan on
                        ,             .

 

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.

 

                    ,             

Date

 

   

_________________________________________

Optionee

    Address: _________________________________ Print name in exact manner it is
to appear on the stock certificate:   _________________________________________
Address to which certificate is to be sent, if different from address above:  
_________________________________________    
_________________________________________ Social Security Number:  
_________________________________________

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Appendix

 

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. Change in Control shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:

 

(i) a merger, consolidation or other reorganization approved by the
Corporation’s stockholders, unless securities representing more than 50% of the
total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly, by the persons who beneficially owned the Corporation’s outstanding
voting securities immediately prior to such transaction, or

 

(ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets, or

 

(iii) the acquisition, directly or indirectly, by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation),
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than 50% of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation’s stockholders.

 

D. Close of Business shall mean the close of business at the Corporation’s
headquarters.

 

E. Code shall mean the Internal Revenue Code of 1986, as amended.

 

F. Common Stock shall mean the Corporation’s common stock.

 

G. Corporation shall mean BioLase Technology, Inc., a Delaware corporation, or
the successor to all or substantially all of the assets or voting stock of
BioLase Technology, Inc. that assumes this option.

 

H. 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.

 

I. Exchange Act shall mean the Securities Exchange Act of 1934, as amended.

 

J. Exercise Date shall mean the date on which this option shall have been
exercised in accordance with this Agreement.

 

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K. Exercise Price shall mean the exercise price payable per Option Share as
specified in the Grant Notice.

 

L. Expiration Date shall mean the Close of Business on the date on which this
option expires as specified in the Grant Notice.

 

M. 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.

 

N. Grant Date shall mean the date of grant of this option as specified in the
Grant Notice.

 

O. Grant Notice shall mean the Notice of Grant of Stock Option accompanying this
Agreement.

 

P. Incentive Option shall mean an option that satisfies the requirements of Code
Section 422.

 

Q. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other

 

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intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not in any way preclude or restrict the right of the
Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee or
other person in the Service of the Corporation (or any Parent or Subsidiary) for
any other acts or omissions, but such other acts or omissions shall not be
deemed, for purposes of the Plan or this Agreement to constitute grounds for
termination for Misconduct.

 

R. Non-Statutory Option shall mean an option that does not qualify as an
Incentive Option.

 

S. Notice of Exercise shall mean the notice of exercise in the form attached
hereto as Exhibit I.

 

T. Option Shares shall mean the shares of Common Stock subject to this option.

 

U. Optionee shall mean the person to whom this option is granted as specified in
the Grant Notice.

 

V. 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.

 

W. Permanent Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or has lasted or can
be expected to last for a continuous period of 12 months or more.

 

X. Plan shall mean the BioLase Technology, Inc. 2002 Stock Incentive Plan.

 

Y. Plan Administrator shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.

 

Z. 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.

 

AA. 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.

 

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