Chief Technical Officer Employment Agreement - Jeffrey W. Jones

EXHIBIT 10.1


EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT (the " Agreement" ) made as of the 29th day of December, 2005 by and between, Biolase Technology, Inc. (the " Company" ) and Jeffrey W. Jones (" Executive" ).


WHEREAS , the Company and Executive wish to enter into a formal employment contract which will govern the terms and conditions applicable to Executive' s employment with the Company and will provide certain severance benefits for Executive in exchange for the Executive' s agreement to abide by the terms and conditions set forth in this Agreement.

NOW, THEREFORE , the parties agree as follows:

PART ONE - TERMS AND CONDITIONS OF EMPLOYMENT

1. Duties and Responsibilities .

A. Executive shall serve as the Chief Technical Officer of the Company and shall in such capacity report directly to the Company' s President and Chief Executive Officer. Executive shall perform such duties and functions as may be assigned to Executive from time to time by the President and Chief Executive Officer of the Company. Executive shall comply with all proper and reasonable directives and instructions of the President and Chief Executive Officer of the Company.

B. Subject to the exceptions set forth in Paragraph 6., Executive agrees to devote his full business time and attention to the Company, to use his best efforts to advance the business and welfare of the Company, to render his services under this Agreement fully, faithfully, diligently, competently and to the best of his ability, and not to engage in any other employment activities while employed by the Company.


2. Period of Employment . Executive' s employment with the Company shall be governed by the provisions of this Agreement for the period commencing December 29, 2005 (the " Effective Date" ), and continuing until this Agreement is terminated in accordance with the provisions of Paragraph 10. The period during which Executive' s employment continues in effect shall be referenced as the " Employment Period."

3. Cash Compensation .

A. Executive shall be paid a base salary at the annual rate of not less than two hundred and fifty thousand dollars ($250,000) per annum (hereinafter " Base Salary" ) during the Employment Period. Executive' s Base Salary shall be paid at periodic intervals in accordance with the Company' s payroll practices for salaried employees.


B. The Company shall deduct and withhold from the compensation payable to Executive, including but not limited to Executive' s Base Salary, any and all applicable Federal, State and local income and employment withholding taxes and any other amounts required to be deducted or withheld by the Company under applicable statutes,

regulations, ordinances or orders governing or requiring the withholding or deduction of amounts otherwise payable as compensation or wages to employees.


4. Bonus . Executive shall be entitled to earn an annual Performance Bonus of one-hundred thousand dollars ($100,000) (the " Performance Bonus Target" ) based on achievement of objective or subjective criteria to be set forth in a separate writing and established by the Company at or after the time the Company' s 2006 budget is issued. At a minimum, Executive shall earn a guaranteed bonus of forty-two thousand dollars ($42,000), from which the Company will deduct the housing allowance paid to Executive by the Company during that same fiscal year pursuant to Paragraph 6. E. Additionally, Executive may be entitled to earn a greater performance bonus than the Performance Bonus Target, which shall be determined within the sole discretion of the Company.

5. Fringe Benefits .

A. Executive shall, throughout the Employment Period, be eligible to participate in any and all group term life insurance plans, group health plans, accidental death and dismemberment plans and short-term disability programs and other executive perquisites which are made available to the Company' s executives and for which Executive qualifies. Additionally, the Company shall continue to provide Executive with a car and pay related expenses, or an auto allowance, which is meant to reimburse executive for the costs associated with leasing and maintaining a car in California.


B. Executive shall earn and accrue vacation time during the Employment Period in an amount of no less than four (4) weeks of vacation annually. The Company has agreed to, pay to Executive any accrued but unused vacation upon Executive signing this Agreement. Executive shall not be permitted to accrue more than one and one half (1 1 / 2 ) times) the annual vacation entitlement. Once this maximum has been reached, all further accruals will cease. Vacation accruals will recommence after Executive has taken vacation and his accrued hours have dropped below the accrual maximum. Executive will not earn vacation during any unpaid leaves. If a recognized holiday falls during Executive' s vacation period, it will not be considered as a vacation day.


C. During the Employment Period, Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation.

D. Subject to the offset provision set forth in Paragraph 4, the Company will pay Executive a housing allowance of three thousand five hundred dollars ($3,500) per month to compensate Executive for expenses related to maintaining a dual residence away from his permanent residence in Wyoming.

E. Executive shall also be entitled to be reimbursed a maximum of five thousand dollars ($5,000) per annum for travel expenses associated with Executive traveling to his home in Wyoming. However, should Executive travel through Wyoming to or from a place of business on behalf of the Company, such travel expenditures will not be counted towards satisfying the annual travel cap.

6. Restrictive Covenants . During the Employment Period:

A. Executive shall devote Executive' s full business time and energy solely and exclusively to the performance of Executive' s duties, except during periods of illness or vacation periods. Paragraph 6. C. are allowable exceptions.


B. Executive shall not directly or indirectly provide services to or through any person, firm or other entity except the Company, unless otherwise authorized by the Board in writing. However, Executive may continue to serve during the Employment Period as a non-employee member of the board of directors of any companies for which he so serves on the effective date of this Agreement and may join the board of directors of other companies in the future with the Board' s written consent.

C. Executive shall not render any services of any kind or character for Executive' s own account or for any other person, firm or entity without first obtaining the written consent of each of the Company' s Board members. However, Executive shall have the right to perform such incidental services as are necessary in connection with (i) Executive' s private investments, but only if Executive is not obligated or required to (and shall not in fact) devote any significant managerial efforts which interfere with the services required to be performed by him, or (ii) Executive' s charitable or community activities, or participation in trade or professional organizations, or (iii) Executive' s ranch and real estate holdings, but only if such incidental services do not interfere with the performance of Executive' s services.


7. Non-Competition . During the Employment Period, Executive shall not directly or indirectly own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed by or connected in any manner with, any enterprise which is engaged in any business competitive with or similar to that of the Company; provided , however, that such restriction shall not apply to any passive investment representing an interest of less than two percent (2%) of an outstanding class of publicly-traded securities of any corporation or other enterprise which is not, at the time of such investment, engaged in a business competitive with the Company' s business.


Executive acknowledges that monetary damages may not be sufficient to compensate the Corporation for any economic loss which may be incurred by reason of his breach of the foregoing restrictive covenants. Accordingly, in the event of any such breach, the Company shall, in addition to the termination of this Agreement and any remedies available to the Company under other provisions of this Agreement and/or at law, be entitled to obtain equitable relief in the form of an injunction precluding Executive from continuing such breach.

8. Proprietary Information .

A. As a condition of Executive' s receipt of the benefits provided for per this Agreement, Executive will execute the Company' s Confidential Information and Assignment of Inventions Agreement, a true and correct copy of which is attached to this Agreement as Exhibit A.

B. Executive' s obligations under this Paragraph 9 shall continue in effect after the termination of his employment with the Company, whatever the reason or reasons

for such termination, and Executive acknowledges and agrees that the Company shall have the right to communicate with any future or prospective employer of Executive concerning Executive' s continuing obligations under this Paragraph 9.


9. Non-Solicitation Of Employees And Customers . Executive agrees that for the Employment Period and for a period of twenty-four (24) months after termination of his employment with the Company, he shall not, directly or indirectly, through any other individual or entity, solicit, entice or induce any employee of the Company, to cease his or her employment with the Company, and Executive will not approach any such employee for any such purpose or authorize the taking of any such action by any other individual or entity. Executive also agree that for the term of my employment and for a period of twenty-four (24) months after termination of my employment with the Company, Executive shall not, without the prior written approval of the Company, directly or indirectly, through any other individual or entity, solicit, entice or induce any business from any of the Company' s customers (including actively sought prospective customers) or suppliers/vendors, the identity of whom, or information concerning, rises to the level of a " trade secret" within the meaning of the Uniform Trade Secrets Act (" UTSA" ).

10. Termination of Employment .

A. At Will Employment . Executive' s employment with the Company is at will and not for a specific term, and may be terminated by either the Company or Executive at any time, for any reason, with or without Cause, and without prior notice, except as otherwise provided in Paragraph 10. C. Any contrary representations, which may have been made to Executive shall be superseded by this Agreement. This Agreement shall constitute the full and complete agreement between Executive and the Company on the " at will" nature of Executive' s employment, which may only be changed in an express written agreement signed by Executive and a duly authorized officer or director of the Company, as approved in a written resolution of the Board.

B. For purposes of this Agreement, termination for " Cause" shall mean the involuntary termination of the Executive' s employment for any of the following reasons:

(i) Executive' s conviction by, or entry of a plea of guilty in, a court of competent jurisdiction for any crime involving any felony punishable by imprisonment in the jurisdiction involved;


(ii) the repeated failure by Executive to perform his duties and functions hereunder in accordance with the instructions of the Board as embodied in written resolutions of the Board (provided that such instructions do not require Executive to take any actions that are unlawful or otherwise improper);

(iii) the willful and material breach of this Agreement by Executive if Executive fails to cure such breach within 30 business days following written notice from the Company;

(iv) Executive' s conviction by, or entry of a plea of guilty in, a court of competent jurisdiction, for any act of fraud in connection with his employment by the Company; or

(v) Executive' s death.

An involuntary termination of Executive' s employment in any other circumstances or for any other reason will be a termination " Without Cause."


C. For purposes of this Agreement, resignation for " Good Reason" shall mean the resignation of employment by Executive within ninety (90) days following the occurrence of: (i) a change in Executive' s position with the Company which materially reduces his duties or level of responsibility or amounts to a compensation reduction; (ii) any requirement that Executive relocate (on a regular basis) his place of employment to an office outside of Orange County, California, provided such reduction, change or relocation is effected by the Company without his written consent. In order for Executive to resign for Good Reason, as defined herein, Executive must provide thirty (30) day' s advance written notice of such resignation to the Company. Further, Executive agrees that should the Company remedy the basis for such resignation prior to the expiration of such thirty (30) days notice period, then Executive may not resign for Good Reason.

D. Upon the termination of Executive' s employment for any reason during the Employment Period, Executive shall be paid all salary (through the end of the Employment Period), prorated incentive pay to the extent that the bonus criteria has been satisfactorily achieved as specified in Paragraph 4, unpaid business expenses, and unused vacation earned through the date of such termination.


PART TWO - SEVERANCE BENEFITS


11. Benefit Entitlement . Executive shall be entitled to receive the severance benefits specified in Paragraph 12 in the event the Company involuntarily terminates Executive' s employment other than for Cause or Executive resigns for Good Reason (providing the notice and allowing the Company to cure as provided in Paragraph 10. C.) and Executive properly executes, and does not revoke or attempt to revoke, a bilateral release of claims against the Company, its Board, its affiliates, and their employees and agents substantially in the form of Exhibit B (the " Mutual Release" ). Upon Executive executing the Mutual Release, the Company agrees to execute the same, releasing any claims it may have against Executive, his heirs, his representatives, predecessors, successors, assigns, spouses, heirs, executors and trustees as set forth in the Mutual Release. Under no circumstances shall any severance benefits be payable pursuant to this Part Two if Executive' s employment is terminated for Cause or Executive resigns for something other than Good Reason (as such term is defined in Paragraphs 10. B. and C., respectively).

12. Nature of Severance Benefits . Immediately upon execution of the Mutual Release, and provided that Executive does not exercise any right he may have to revoke the Release within the statutory time frame for doing so, Executive shall be paid a lump sum equal to one (1) years worth of his annual Base Salary in effect for hi ...