Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.7.0.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Stockholders' Equity

NOTE 7 — STOCKHOLDERS’ EQUITY

Preferred Stock

The Board, without further stockholder authorization, may issue from time to time up to 1,000,000 shares of the Company’s preferred stock. Of the 1,000,000 shares of preferred stock, 500,000 shares are designated as Series B Junior Participating Cumulative Preferred Stock. As of December 31, 2016 and 2015, 88,494 shares and 0 shares of preferred stock was issued, respectively. As of December 31, 2016 and 2015, no preferred stock was outstanding.

The Company adopted a stockholder rights plan, as amended (the “Rights Plan”) under which one preferred stock purchase right (“Right”) was distributed on January 11, 1999 with respect to each share of common stock outstanding at the close of business on December 31, 1998 and with respect to each share of common stock issued by the Company since then.  On November 10, 2015, the Company terminated the Rights Plan.  No Rights were executed, traded, or redeemed under the Rights Plan.

Common Stock

At December 31, 2016, the Company had 67,565,951 shares of BIOLASE common stock issued and outstanding. BIOLASE currently has 100,000,000 shares of Company common stock authorized for issuance.

2016 Common Stock Issuance

On August 8, 2016, the Company completed a private placement (the “August 2016 Private Placement”) with several institutional and individual investors, and certain of its directors and officers, under which the Company sold an aggregate of 88,494 shares of BIOLASE Series C Participating Convertible Preferred Stock (“Preferred Stock”) and warrants to purchase up to an aggregate of 2,035,398 unregistered shares of BIOLASE common stock at an exercise price of $2.00 per share. Each share of Preferred Stock was, automatically upon receipt of stockholder approval, convertible into 100 shares of common stock, reflecting a conversion price equal to $1.13 per share, which is the closing price of the common stock quoted on the NASDAQ Capital Market on July 29, 2016. On September 30, 2016, the Company held a meeting of its stockholders and received requisite stockholder approval with respect to the issuance of 8,849,400 shares of common stock upon automatic conversion of the Preferred Stock and the issuance of common stock in connection with the exercise of the warrants by certain holders whose warrants were subject to a beneficial ownership limitation. Gross proceeds from the sale were $10.0 million, and net proceeds, after offering expenses of approximately $0.5 million, were approximately $9.5 million. The warrants became exercisable on February 8, 2017, six months after the closing of the private placement, and have a term of five years from the date of issuance. The Company is using the proceeds from the sale for working capital and general corporate purposes. In connection with the registration rights granted to these investors, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on November 3, 2016.

2014 Common Stock Issuances

On November 7, 2014, the Company completed a private placement (the “November 2014 Private Placement”) with several institutional and individual investors, and certain of its directors and officers, under which the Company agreed to sell an aggregate of 14,162,873 unregistered shares of BIOLASE common stock at the price of $2.39 per share, the closing price of BIOLASE common stock on November 3, 2014, and warrants to purchase up to an aggregate of 9,205,862 unregistered shares of its common stock at an exercise price of $4.00 per share. Gross proceeds from the sale totaled $35.0 million, and net proceeds, after offering expenses of approximately $235,000, were approximately $34.8 million. The warrants became exercisable on May 7, 2015, six months after the closing of the private placement, and have a term of three years from the date of issuance. The Company is using the proceeds for working capital and general corporate purposes. In connection with the registration rights granted to these investors, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on December 12, 2014.

On July 22, 2014, the Company completed a private placement with several institutional and individual investors, and several of its directors and officers, wherein the Company sold 6,250,000 unregistered shares of BIOLASE common stock at a price of $1.92 per share (the closing price of BIOLASE common stock on July 18, 2014). Gross proceeds from the sale totaled $12.0 million, and net proceeds, after offering expenses of approximately $462,000, were approximately $11.5 million. The Company used the proceeds to repay the Company’s lines of credit with Comerica Bank and for working capital and general corporate purposes. In connection with the registration rights granted to these investors, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on September 18, 2014.

On February 10, 2014, the Company entered into a subscription agreement with Oracle Partners L.P., Oracle Institutional Partners, L.P., and Oracle Ten Fund Master, L.P., under which the Company sold an aggregate of 1,945,525 unregistered shares of BIOLASE common stock in a private placement at a price of $2.57 per share. Gross proceeds from the sale totaled $5.0 million and net proceeds, after offering expenses of approximately $188,000, totaled approximately $4.8 million. The Company used the proceeds for working capital and general corporate purposes.

Stock Dividends

There were no dividends paid or declared in 2016 or 2015.  The following table sets forth certain information relating to the Company’s stock dividends declared during 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number

 

 

 

 

 

 

 

 

 

Dividend per

 

 

Number of Shares

 

 

of Shares

 

 

 

Declaration Date

 

Record Date

 

Payment Date

 

Share

 

 

Outstanding

 

 

Distributed

 

Calendar year 2014

 

Mar. 5, 2014

 

Mar. 14, 2014

 

Mar. 28, 2014

 

 

0.50%

 

 

 

37,422,753

 

 

 

193,032

 

 

In August 2016, we completed a private placement with several institutional and individual investors, and certain of our directors and officers. Gross proceeds from the sale were $10.0 million. In accordance with applicable accounting standards, this transaction resulted in a discount from allocation of proceeds to separable instruments of $1.1 million and a beneficial conversion to common stock with a value of $1.1 million, both of which have been reflected as a deemed distribution to preferred shareholders in the year ended December 31, 2016. Further discussion of this transaction is discussed in Note 1 – Basis of Presentation.

 

Warrants

BIOLASE issues warrants for the sale of its common stock as approved by its Board. Warrants to purchase up to an aggregate of 2,035,398 unregistered shares of BIOLASE common stock at an exercise price of $2.00 per share were issued in connection with the August 2016 Private Placement. Warrants to purchase up to an aggregate of 9,205,862 unregistered shares of BIOLASE common stock at an exercise price of $4.00 per share were issued in connection with the November 2014 Private Placement. Both private placements are accounted for within stockholders’ equity on the Consolidated Balance Sheets in accordance with U.S. GAAP. In addition to the aforementioned warrants issued in connection with common stock transactions, the Company may also issue warrants in connection with strategic initiatives.

The following table summarizes warrant activity:

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

Exercise Price

 

 

 

Shares

 

 

Per Share

 

Warrants outstanding, January 1, 2014

 

 

1,697,974

 

 

$

5.44

 

Granted

 

 

9,205,862

 

 

$

4.00

 

Exercised

 

 

(200,000

)

 

$

2.00

 

Forfeited, cancelled, or expired

 

 

(610,000

)

 

$

5.71

 

Warrants outstanding, December 31, 2014

 

 

10,093,836

 

 

$

4.18

 

Granted

 

 

 

 

$

 

Exercised

 

 

 

 

$

 

Forfeited, cancelled, or expired

 

 

 

 

$

 

Warrants outstanding, December 31, 2015

 

 

10,093,836

 

 

$

4.18

 

Granted

 

 

2,035,398

 

 

$

2.00

 

Exercised

 

 

 

 

$

 

Forfeited, cancelled, or expired

 

 

(722,974

)

 

$

6.50

 

Warrants outstanding, December 31, 2016

 

 

11,406,260

 

 

$

3.64

 

Warrants exercisable, December 31, 2016

 

 

9,235,862

 

 

$

4.00

 

Vested warrants expired during the 12 months

   ended December 31, 2016

 

 

 

 

n.a.

 

 

Stock Options

The Company currently has one stock-based compensation plan, the 2002 Stock Incentive Plan (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, August 27, 2014, April 27, 2015 and May 6, 2016) (the “2002 Plan”), which will expire on May 5, 2019. Persons eligible to receive awards under the 2002 Plan include officers and employees of the Company, directors of the Company, and consultants. As of December 31, 2016, a total of 15,550,000 shares have been authorized for issuance under the 2002 Plan, of which 3,557,068 shares of BIOLASE common stock have been issued pursuant to options that were exercised, 7,030,074 shares of BIOLASE common stock have been reserved for options and restricted stock units that are outstanding, and 4,962,858 shares of BIOLASE common stock remain available for future grant.

Stock options may be granted as incentive or non-qualified options; however, no incentive stock options have been granted to date. The exercise price of options is at least equal to the market price of the stock as of the date of grant. Options may vest over various periods but typically vest on a quarterly basis over four years. Options expire after five years, ten years, or within a specified time from termination of employment, if earlier. The Company issues new shares of BIOLASE common stock upon the exercise of stock options. The following table summarizes option activity under the 2002 Plan (in thousands, except per share data):

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

Remaining

 

 

 

 

 

 

 

 

 

 

 

Exercise Price

 

 

Contractual Term

 

 

Aggregate Intrinsic

 

 

 

Shares

 

 

Per Share

 

 

(Years)

 

 

Value(1)

 

Options outstanding, January 1, 2014

 

 

4,441

 

 

$

3.51

 

 

 

 

 

 

 

 

 

Granted at fair market value

 

 

240

 

 

$

2.23

 

 

 

 

 

 

 

 

 

Granted at above fair market value

 

 

369

 

 

$

3.05

 

 

 

 

 

 

 

 

 

Exercised

 

 

(153

)

 

$

2.03

 

 

 

 

 

 

 

 

 

Forfeited, cancelled, or expired

 

 

(1,422

)

 

$

4.50

 

 

 

 

 

 

 

 

 

Options outstanding, December 31, 2014

 

 

3,475

 

 

$

3.03

 

 

 

 

 

 

 

 

 

Granted at fair market value

 

 

1,931

 

 

$

2.22

 

 

 

 

 

 

 

 

 

Granted at above fair market value

 

 

1,340

 

 

$

2.46

 

 

 

 

 

 

 

 

 

Exercised

 

 

(38

)

 

$

1.15

 

 

 

 

 

 

 

 

 

Forfeited, cancelled, or expired

 

 

(2,215

)

 

$

2.64

 

 

 

 

 

 

 

 

 

Options outstanding, December 31, 2015

 

 

4,493

 

 

$

2.72

 

 

 

 

 

 

 

 

 

Granted at fair market value

 

 

3,113

 

 

$

1.42

 

 

 

 

 

 

 

 

 

Exercised

 

 

(1

)

 

$

0.82

 

 

 

 

 

 

 

 

 

Forfeited, cancelled, or expired

 

 

(993

)

 

$

3.01

 

 

 

 

 

 

 

 

 

Options outstanding, December 31, 2016

 

 

6,612

 

 

$

2.06

 

 

 

7.70

 

 

$

178

 

Options exercisable, December 31, 2016

 

 

3,352

 

 

$

2.50

 

 

 

6.22

 

 

$

63

 

Vested options expired during the

   12 months ended December 31, 2016

 

 

387

 

 

$

4.11

 

 

 

 

 

 

 

 

 

 

(1)

The intrinsic value calculation does not include negative values. This can occur when the fair market value on the reporting date is less than the exercise price of a grant.

The following table summarizes additional information for those options under the 2002 Plan that are outstanding and exercisable as of December 31, 2016:

 

 

 

Options Outstanding

 

 

Exercisable

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

Weighted-Average

 

 

Remaining

 

 

Number

 

 

Weighted-Average

 

Range of Exercise Prices

 

of Shares

 

 

Exercise Price

 

 

Life (Years)

 

 

of Shares

 

 

Exercise Price

 

$ 0.82 — $ 1.43

 

 

1,207,757

 

 

$

1.26

 

 

 

8.77

 

 

 

504,736

 

 

$

1.28

 

$ 1.44 — $ 1.55

 

 

1,410,000

 

 

$

1.45

 

 

 

9.80

 

 

 

33,332

 

 

$

1.44

 

$ 1.56 — $ 2.10

 

 

1,470,510

 

 

$

1.87

 

 

 

8.47

 

 

 

547,171

 

 

$

1.94

 

$ 2.11 — $ 2.50

 

 

976,947

 

 

$

2.28

 

 

 

7.22

 

 

 

975,155

 

 

$

2.28

 

$ 2.51 — $ 3.50

 

 

1,054,499

 

 

$

2.70

 

 

 

5.93

 

 

 

805,528

 

 

$

2.70

 

$ 3.51 — $ 8.75

 

 

491,850

 

 

$

4.59

 

 

 

1.53

 

 

 

486,433

 

 

$

4.59

 

Total

 

 

6,611,563

 

 

$

2.06

 

 

 

7.70

 

 

 

3,352,355

 

 

$

2.50

 

 

Cash proceeds, along with fair value disclosures related to grants, exercises, and vesting options, are as follows for the years ended December 31 (in thousands, except per share amounts):

 

 

 

Years Ended

 

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

2014

 

Proceeds from stock options exercised

 

$

1

 

 

$

44

 

 

$

312

 

Tax benefit related to stock options exercised(1)

 

N/A

 

 

N/A

 

 

N/A

 

Intrinsic value of stock options exercised(2)

 

$

 

 

$

52

 

 

$

108

 

Weighted-average fair value of options granted

 

$

1.03

 

 

$

1.54

 

 

$

1.61

 

Total fair value of shares vested during the year

 

$

1,728

 

 

$

2,268

 

 

$

1,208

 

 

(1)

Excess tax benefits received related to stock option exercises are presented as financing cash inflows. For the periods presented, the Company did not receive a tax benefit related to the exercise of stock options due to its net operating losses.

(2)

The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant.

2016 Stock Option Activity

On February 26, 2016, the Compensation Committee of the Board of Directors (the “Board”), awarded to certain employees and consultants of the Company a total of 295,000 non-qualified stock options to purchase shares of BIOLASE common stock.  These awards were issued at $0.86 per share, the closing market price of BIOLASE common stock on the grant date, and expire 10 years from the grant date.  Vesting periods for options are as follows: (i) 185,000 options, awarded to existing employees, vest ratably over a 48 month period, commencing one month from the grant date, and (ii) 110,000 options, awarded to new 2016 employees, vest 25% on the one-year anniversary of the grant date and the remainder ratably over the 36-month period, commencing 13 months after of the grant date.

On April 18, 2016, in connection with the hiring of the two new Vice Presidents, the Compensation Committee of the Board awarded 325,000 non-qualified stock options to purchase shares of BIOLASE common stock.  These awards were issued at $1.43 per share, the closing market price of BIOLASE common stock on the grant date, and expire 10 years from the grant date.  Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting, with 25% vesting as of April 18, 2017 and the remaining 75% vesting ratably monthly over a thirty-six month period commencing on April 18, 2017, and (ii) one-half of the total grant is subject to specific 2016 and 2017 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 243,750 non-qualified stock options to purchase shares of BIOLASE common stock remain outstanding.

On May 6, 2016, non-employee directors of the Company were granted a total of 597,757 non-qualified stock options to purchase shares of BIOLASE common stock.  These awards were issued at $1.41 per share, the closing market price of BIOLASE common stock on the grant date, and expire 10 years from the grant date.  The total grant vests in equal installments over a consecutive twelve month period, commencing on June 6, 2016.

On August 29, 2016, in connection with the hiring of a new Senior Director, the Compensation Committee of the Board awarded 60,000 non-qualified stock options to purchase shares of BIOLASE common stock.  This award was issued at $1.65 per share, the closing market price of BIOLASE common stock on the grant date, and expires 10 years from the grant date.  Vesting periods for the options are as follows: (i) one-half of the total grant is subject to ratable time vesting over a forty-eight month period commencing on September 29, 2016, and (ii) one-half of the total grant is subject to specific 2017 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 60,000 non-qualified stock options to purchase shares of BIOLASE common stock remain outstanding.

On September 15, 2016, in connection with the hiring of a new Vice President, the Compensation Committee of the Board awarded 250,000 non-qualified stock options to purchase shares of BIOLASE common stock.  This award was issued at $1.78 per share, the closing market price of BIOLASE common stock on the grant date, and expires 10 years from the grant date.  Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting with 25% vesting as of September 15, 2017 and the remaining 75% vesting ratably monthly over a thirty-six month period commencing on September 15, 2017, and (ii) one-half of the total grant is subject to specific 2017 and 2018 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 250,000 non-qualified stock options to purchase shares of BIOLASE common stock remain outstanding.

On October 3, 2016, in connection with the hiring of a new Vice President, the Compensation Committee of the Board awarded 125,000 non-qualified stock options to purchase shares of BIOLASE common stock.  This award was issued at $1.72 per share, the closing market price of BIOLASE common stock on the grant date, and expires 10 years from the grant date.  Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting with 25% vesting as of October 3, 2017 and the remaining 75% vesting ratably monthly over a thirty-six month period commencing on October 3, 2017, and (ii) one-half of the total grant is subject to specific 2017 through 2019 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 125,000 non-qualified stock options to purchase shares of BIOLASE common stock remain outstanding.

During the year ended December 31, 2016, the Compensation Committee of the Board granted non-qualified stock options to purchase 1.4 million shares of BIOLASE common stock to the Company’s President and Chief Executive Officer. The exercise price of such options ranged from $1.44-$1.45 per share, vest over two to four years, and expire 10 years from the grant date.

2015 Stock Option Activity

On January 2, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase 1,365,702 shares of BIOLASE common stock to certain officers of the Company in connection with a compensation plan for 2015 and 86,000 shares of BIOLASE common stock to members of the Dental Professional Advisory Board (“DPAB”) as consultants for the Company. These options were granted at an exercise price of $2.64, the closing market price of BIOLASE common stock on the grant date. Options granted to certain officers of the Company expire ten years from the grant date and vest as follows: (i) as to 50% of the options, one-fourth on the one year anniversary of the grant date and the remaining three-fourths, ratably over the next 36 month period, commencing on the thirteenth month from grant date over a requisite service period of four years, and (ii) as to 50% of the options, upon achievement of specific annual Company performance criteria with a requisite service period of one year. Options granted to the DPAB fully vest and become exercisable upon the achievement of specified performance conditions, as defined in the consulting agreements, and expires five years from grant date.

On August 12, 2015, the Compensation Committee of the Board approved a modification to the performance criteria applicable to the unvested options.  As a result of this modification, the fair value of the awards decreased by $661,000, and the Company recognized additional compensation expense of $154,000 for the year ended December 31, 2015.  The vesting schedule and requisite service period of the award remained unchanged by the modification.  

On December 31, 2015 the performance criteria related to the officer grants on January 2, 2015 was partially achieved and 80% of the performance-based options vested on January 2, 2016.  As a result, 122,038 shares became available under the 2002 Plan on December 31, 2015, and options to purchase 488,170 shares vested on January 2, 2016.

Restricted Stock Units

Under the 2002 Plan, effective February 26, 2016, the Compensation Committee of the Board granted the following awards:

 

388,500 restricted stock units (“RSUs”) were awarded to certain employees and consultants of the Company.  These awards were valued at $0.86 per share, the closing market price of BIOLASE common stock on the grant date, and fully vested on July 1, 2016.

 

140,000 RSUs were awarded to certain employees and consultants of the Company as part of their compensation plan.  These awards were valued at $0.86 per share, the closing market price of BIOLASE common stock on the grant date, and vest 25% on each of the first, second, third, and fourth anniversaries of the grant date.

 

In connection with the President and Chief Executive Officer’s employment agreement, the maximum performance bonus was awarded, consisting of (i) $100,000 paid in cash during the nine months ended September 30, 2016, and (ii) the grant of  59,523 RSUs, valued at $0.86 per share, the closing market price of BIOLASE common stock on the grant date.  Half of these RSUs vested on March 30, 2016 and half of these RSUs vested on February 18, 2017.  

On March 10, 2016, the Compensation Committee of the Board approved the grant of 70,000 RSUs to the Company’s Chief Financial Officer as part of his 2015 compensation.  These awards were valued at $1.23 per share, the closing market price of BIOLASE common stock on the grant date, and fully vested on July 1, 2016.

On May 6, 2016, as compensation for their service during the current year, non-employee directors of the Company were granted a total of 248,750 RSUs valued at $1.41 per share, the closing market price of BIOLASE common stock on the grant date.  These awards vest on May 6, 2017.

On August 27, 2014, as compensation for their service, non-employee directors of the Company were granted a total of 36,868 RSUs valued at $2.17 per share, the closing market price of BIOLASE common stock on the grant date. These awards vested over a 12-month period.  

The following table summarize RSU activity under the 2002 Plan:

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

Grant Price

 

 

 

Shares

 

 

Per Share

 

Unvested restricted stock units, January 1, 2014

 

 

 

 

$

 

Granted

 

 

36,868

 

 

$

2.17

 

Vested

 

 

 

 

$

 

Forfeited or cancelled

 

 

 

 

$

 

Unvested restricted stock units, December 31, 2014

 

 

36,868

 

 

$

2.17

 

Granted

 

 

 

 

$

 

Vested

 

 

(36,868

)

 

$

2.17

 

Forfeited or cancelled

 

 

 

 

$

 

Unvested restricted stock units, December 31, 2015

 

 

 

 

$

 

Granted

 

 

906,773

 

 

$

1.06

 

Vested

 

 

(488,262

)

 

$

0.91

 

Forfeited or cancelled

 

 

 

 

$

 

Unvested restricted stock units, December 31, 2016

 

 

418,511

 

 

$

1.23

 

 

Inducement Stock-Based Awards

Effective March 9, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase up to 871,710 shares of BIOLASE common stock to the Company’s Chief Financial Officer in connection with his employment agreement with BIOLASE. These options were granted at an exercise price of $1.99 per share, the closing price of BIOLASE common stock on the grant date. These options expire ten years from the grant date and vest in two tranches as follows: (i) as to options to purchase 523,026 shares (the “First Tranche”), options to purchase 130,757 shares vested and became exercisable on March 9, 2016, and options to purchase 10,896 shares vest and become exercisable each month following March 9, 2016 for a period of 35 consecutive months, and options to purchase 10,909 shares vest and become exercisable on March 9, 2019, and (ii) as to options to purchase 348,684 shares (the “Second Tranche”), all such shares vest and become exercisable on March 9, 2025 or based on the Company’s achievement of certain enumerated financial performance targets or other milestones, at the discretion of the Compensation Committee of the Board. The fair value of the First Tranche of $1.48 per share was estimated using the Black-Scholes option-pricing model with assumptions of 6.1 years for expected term, 88.79% volatility and 1.83% risk-free interest rate. The fair value of the Second Tranche of $1.70 per share was estimated using the Black-Scholes option-pricing model with assumptions of 10.0 years for expected term, 87.87% volatility and 2.19% risk-free interest rate. On December 30, 2016, the Chief Financial Officer tendered his resignation and entered into a transition letter agreement with the Company. Pursuant to the transition letter agreement, modifications occurred to vest 294,205 unvested options and extend the exercise period of 623,026 vested stock options from 90 days to one year. As a result of these modifications, the Company recognized additional compensation expense of $215,000 for the year ended December 31, 2016.  

On June 23, 2015 the Board elected to accelerate options to purchase 100,000 shares in the Second Tranche of the Chief Financial Officer’s award.  As of December 31, 2016, 100,000 shares were vested and exercisable.

Effective July 13, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase up to 870,000 shares of BIOLASE common stock to the Company’s President and Chief Executive Officer in connection with his employment agreement with BIOLASE. These options were granted at an exercise price of $1.64 per share, the closing price of BIOLASE common stock on the grant date. These options expire ten years from the grant date and vest over four years, with options to purchase 217,500 shares vesting and becoming exercisable on July 13, 2016 and options to purchase 18,125 shares vesting and becoming exercisable each month following July 13, 2016 for a period of 36 consecutive months.

Also effective July 13, 2015, the Compensation Committee of the Board awarded 870,000 stock-settled RSUs to its President and Chief Executive Officer in connection with his employment agreement with BIOLASE.  The RSUs are valued at $1.64 per share and vest upon the achievement of specific interim and annual Company performance criteria. As of December 31, 2016, 435,000 stock-settled RSUs remain outstanding.

On July 13, 2014, the Compensation Committee of the Board approved the previous Chief Executive Officer’s stock-based compensation consisting of non-qualified stock options to purchase 172,282 shares of BIOLASE common stock at an exercise price of $1.98 per share and 37,879 RSUs valued at $1.98 per share. All of the non-qualified stock options are vested and outstanding, and none of the RSUs remain outstanding as of December 31, 2016.